United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q4 2021 Earnings Presentation
36 slides from United Parcel Service's earnings presentation, Feb 1, 2022
Slide 1: February 1, 2022
February 1, 2022 © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 1
Slide 2: Scott Childress, Investor Relations Officer
Scott Childress Investor Relations Officer 2
Slide 3: Speakers
UPS Speakers Carol B. Tomé Chief Executive Officer Brian Newman Chief Financial Officer © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved.
Slide 4: Forward-Looking Statements and Non-GAAP Reconciliations
Forward-Looking Statements and Non-GAAP Reconciliations Forward-Looking Statements health and/or pension benefits; potential additional U.S. or international tax liabilities; potential claims or litigation related to labor and employment, personal injury, property damage, business practices, environ
Slide 5: Diluted EPS
Diluted EPS 4Q21 4Q20** $4.00 $0.05 $3.59* $3.00 $0.85 $2.66* $3.52 $0.02 $3.50 $2.00 $5.63 $3.00 $1.00 $2.50 $0.00 $2.00 -$1.00 $1.50 -$2.00 $1.00 -$3.00 $0.50 -$4.00 ($3.84) $0.00 4Q21 EPS Defined Benefit Transformation & 4Q21 Adj. EPS* -$5.00 Plans MTM Charges Other 4Q20 EPS Defined Benefit Trans
Slide 6: Carol B. Tomé, Chief Executive Officer
Carol B. Tomé Chief Executive Officer 6
Slide 7: © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the
© 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved.
Slide 8: Consolidated Results: Q4 and Full Year
Consolidated Results GAAP Adjusted In $ Millions In $ Millions 4Q21 4Q20 Change 4Q21 4Q20 Change (except per share) (except per share) Total Revenue $27,771 $24,896 11.5% Total Revenue $27,771 $24,896 11.5% Q4 Operating Profit $3,891 $2,037 91.0% Operating Profit* $3,952 $2,870 37.7% Operating Margi
Slide 9: UPS Strategic Framework
UPS Strategic Framework Better Not Bigger Purpose Moving our world forward by delivering what matters Strategy Customer first People led Innovation driven Goals Net promoter score > 50 Likelihood to recommend ≥ 80 Return on invested capital increases • U.S. SMB ADV grew 18% • Likelihood to recommend
Slide 10: UPS Increases Quarterly Dividend by 49% to $1.52 per Share
UPS Increases Quarterly Dividend by 49% to $1.52 per Share; Largest in History $1.52 $1.50 $1.01 $1.01 $1.01 $1.01 $1.02 $1.02 $1.02 $1.02 $0.96 $0.96 $0.96 $0.96 $1.00 $0.91 $0.91 $0.91 $0.91 $0.83 $0.83 $0.83 $0.83 $0.50 $0.00 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3
Slide 11: 2022 Financial Goals
2022 Financial Goals • Consolidated revenues ~$102 billion • Consolidated adjusted operating margin* ~13.7% • Return on invested capital* above 30% We expect to deliver our 2023 consolidated revenue and operating margin targets one year early. * Non-GAAP financial measure. See Appendix for reconcili
Slide 12: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 12
Slide 13: Fourth-Quarter 2021 Consolidated Results
Fourth-Quarter 2021 Consolidated Results GAAP Adjusted In $ Millions In $ Millions (except per share) 4Q21 4Q20 Change 4Q21 4Q20 Change (except per share) Total Revenue $27,771 $24,896 11.5% Total Revenue $27,771 $24,896 11.5% Operating Profit $3,891 $2,037 91.0% Operating Profit* $3,952 $2,870 37.7
Slide 14: U.S. Domestic: 4Q Average Daily Volume Growth Led By B2B
U.S. Domestic 4Q Average Daily Volume Growth Led By B2B 4Q21 Monthly B2C ADV (Y/Y) • B2C down 4.1% 80% • Split was 64% B2C +0.2% vs. Last Year 25,300 40% +46 +5 -12 0% 25,100 25,155 25,194 In Thousands -40% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 24,900 2021 2020 4Q21 Monthly B2B ADV (Y/Y) •
Slide 15: U.S. Domestic: 4Q Revenue Increased 12.4% to $17.7B
U.S. Domestic 4Q Revenue Increased 12.4% to $17.7B Driven by 10.5% increase in revenue per piece U.S. Revenue Per Piece Trend $12.00 +12.4% vs. Last Year $11.00 $18.0 $10.00 +$1.7B $17.7B $9.00 $17.0 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 In Billions • Revenue quality initiatives resulted in 10.5% $16.0 RPP
Slide 16: U.S. Domestic: 4Q Operating Profit and Margin Increased YoY
U.S. Domestic 4Q Operating Profit and Margin Increased YoY Adjusted our network to match the needs of our customers Operating Profit (In Millions) • Productivity improvements helped partially $856 $2,103 offset expense increases GAAP $1,247 4Q20 Operating Performance 4Q21 Operating Profit Profit • W
Slide 17: International: 4Q Average Daily Volume Down 4.8%
International 4Q Average Daily Volume Down 4.8%; Up 17.1% on a 2-year Stack B2B ADV grew 4.7% Asia Monthly ADV (Y/Y) Europe Monthly ADV (Y/Y) 40% 70% 30% 40% 20% 10% 10% 0% -20% -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -20% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2020 2021 2
Slide 18: International: Generated 4Q Record Operating Profit of $1.3B
International Generated 4Q Record Operating Profit of $1.3B Fifth consecutive quarter of operating profit over $1B Operating Profit (In Millions) +$178 $1,148 $1,326 • Revenue up 13.1% to $5.4B GAAP • Revenue per piece increased 16.4% 4Q20 Operating Profit Performance 4Q21 Operating Profit • Include
Slide 19: Supply Chain Solutions: Record 4Q Top- and Bottom-Line Results
Supply Chain Solutions Delivered Record 4Q Top- and Bottom-Line Results Operating Profit (Loss) (In Millions) • Forwarding revenue increased 37.9% and $462 +$820 operating profit more than doubled GAAP ($358) 4Q20 Operating Profit Performance 4Q21 Operating Profit Operating Margin: • Healthcare port
Slide 20: UPS Delivered Record Consolidated Financial Results in 2021
UPS Delivered Record Consolidated Financial Results in 2021 Revenue Adjusted Op Profit* $97.3B $13.1B $84.6B $8.7B 2020 2021 2020 2021 Adjusted Op Margin* Return on Invested Capital* 30.8% 13.5% 10.3% 21.7% 2020 2021 2020 2021 © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and
Slide 21: Cash Flow and Adjusted EBITDA
Cash Flow and Adjusted EBITDA* FY 2021 Cash from Operations of $15.0B; Adjusted Debt to Adjusted EBITDA* Trend FY 2021 Free Cash Flow* of $10.9B (Trailing 12 Month Basis) 4 $16.0 $14.0 $12.0 $10.0 In Billions 3 $8.0 $6.0 $4.0 $2.0 2 $0.0 1Q 2Q 3Q 4Q CFO 2021 CFO 2020 FCF* 2021 FCF* 2020 1 2019 2020
Slide 22: Full Year 2021 Segment Highlights
Full Year 2021 Segment Highlights Full Year 2021 U.S. Domestic International SCS Adjusted Operating Profit* $6.7B $4.7B $1.7B Adjusted Operating Profit Growth Y/Y* 62.7% 33.6% 61.3% Adjusted Operating Margin* 11.1% 24.2% 9.8% Adjusted Operating Margin BP Change Y/Y* +340 bps +200 bps +280 bps * Non-
Slide 23: 2022 Outlook
2022 Outlook + Expect macro environment to remain Full-year 2022 Outlook dynamic in 2022 with global GDP • Consolidated: growing 4.2% • Revenue around $102B • Adjusted operating margin* about 13.7% + Planning volume and revenue per piece • Adjusted Return on Invested Capital* >30% growth and continu
Slide 24: 2022 Capital Allocation Plan
2022 Capital Allocation Plan CapEx of Around $5.5B Free Cash Flow* of Around $9B $15.0 +$1.2B $10.9B $12.0 ~$9B $9.0 -$1.7B In Billions -$1.3B $6.0 $3.0 $0.0 $1.0B $2.6B $1.1B $0.8B 2021 FCF Cash Flows Pension CapEx 2022 FCF Aircraft Buildings & Vehicles IT from Operations Contributions Target Facil
Slide 25: Questions & Answers
Questions & Answers © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved. 25
Slide 26: Appendix
Appendix 26 © 2022 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks of United Parcel Service of America, Inc. All rights reserved.
Slide 27: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Non-GAAP Financial Measures; Reconciliations Mark-To-Market Pension and Postretirement Adjustments From time to time we supplement the reporting of our financial information determined under generally We recognize changes in the fair value of pl
Slide 28: Reconciliations
Reconciliations United Parcel Service, Inc. Reconciliation of GAAP and As Adjusted Income Statement Data (unaudited) Three Months Ended December 31, (in millions, except per share amounts) 2021 2020 % Change % Change As Reported Pension Transformation & As Adjusted As Reported Pension Transformation
Slide 29: Reconciliations
Reconciliations United Parcel Service, Inc. Reconciliation of GAAP and As Adjusted Income Statement Data (unaudited) Twelve Months Ended December 31, (in millions, except per share amounts) 2021 2020 % Change % Change As Reported Pension Transformation & As Adjusted As Reported Pension Transformatio
Slide 30: Reconciliations
Reconciliations Reconciliation of Currency Neutral Revenue Per Piece, Revenue and As Adjusted Operating Profit (in millions, except per piece amounts): Three Months Ended Currency December 31 Neutral 2021 2020 % Change Currency 2021(1) % Change Average Revenue Per Piece: International Package: Domes
Slide 31: Reconciliations
Reconciliations Reconciliation of Currency Neutral Revenue Per Piece, Revenue and As Adjusted Operating Profit (in millions, except per piece amounts): Twelve Months Ended Currency December 31 Neutral 2021 2020 % Change Currency 2021(1) % Change Average Revenue Per Piece: International Package: Dome
Slide 32: Reconciliations
Reconciliations United Parcel Service, Inc. Reconciliation of Adjusted Debt to Adjusted EBITDA (Non-GAAP measure) (unaudited) (amounts in millions): December 31 December 31 December 31 2021 2020 2019 Net income $ 12,890 $ 1,343 $ 4,440 Add back: Income tax expense 3,705 501 1,212 Interest expense 69
Slide 33: Reconciliations
Reconciliations United Parcel Service, Inc. Reconciliation of Return on Invested Capital (Non-GAAP measure) (unaudited) (amounts in millions): December 31 December 31 2021 2020 Net income $ 12,890 $ 1,343 Add back (deduct): Income tax expense 3,705 501 Interest expense 694 701 Other pension (income)
Slide 34: Reconciliations
Reconciliations Reconciliation of Free Cash Flow (Non-GAAP measure) (in millions): 2020 2021 Q1 YTD Q2 YTD Q3 YTD Q4 YTD Q1 YTD Q2 YTD Q3 YTD Q4 YTD Cash flows from operating activities $ 2,550 $ 5,947 $ 9,283 $ 10,459 $ 4,531 $ 8,454 $ 11,761 $ 15,007 Capital expenditures (933) (2,065) (3,219) (5,4
Slide 35: 2021 Remeasurement
2021 Remeasurement Unrecognized Loss Within Shareowners’ Equity as of 12/31/2020 $7,019 Gain due to reduction of Central States coordinating benefits1 (5,065) Net gain due to UPS Freight Divestiture2 (166) Net loss due to changes in demographic data and assumptions 973 Including turnover, salaries,
Slide 36: UPS U.S. Average Discount Rate Trend
UPS U.S. Average Discount Rate Trend 7.0% 6.0% 5.32% 4.86% 5.0% 4.50% 4.42% 4.40% 4.41% 3.84% 4.0% 3.60% 3.13% 2.90% 3.0% 2.0% 1.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Discount Rate • Rates above reflect the weighted average discount rate for the big three US Plans • UPS uses a hypothe
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