United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q2 2021 Earnings Presentation
32 slides from United Parcel Service's earnings presentation, Jul 27, 2021
Slide 1: 2Q21 Earnings Call
G 2Q21 Earnings Call July 27, 2021
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 3 © 2021 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 2Q21 2Q20 $4.00 $4.00 $3.05 $0.01 $3.06* $3.00 $3.00 $2.03 $0.10 $2.13* $2.00 $2.00 $1.00 $1.00 $0.00 $0.00 2Q21 EPS Transformation & Other 2Q21 Adj. EPS* 2Q20 EPS Transformation & Other 2Q20 Adj. EPS* * Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measur
Slide 6: Carol B. Tomé, Chief Executive Officer
Carol B. Tomé Chief Executive Officer 6
Slide 7: © 2021 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the
© 2021 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
Consolidated Results GAAP Adjusted In $ Millions % In $ Millions % 2Q21 2Q20 2Q21 2Q20 (except per share) Change (except per share) Change Revenue $23,424 $20,459 14.5% Revenue $23,424 $20,459 14.5% Operating Profit $3,258 $2,212 47.3% Operating Profit* $3,273 $2,324 40.8% Operating Margin 13.9% 10.
Slide 9: Customer First, People Led, Innovation Driven
Customer First, People Led, Innovation Driven Through a better not bigger framework • Weekend expansion continues; Saturday Ground delivery volume up 13.0% • Expanding healthcare capabilities; global healthcare customer revenue up 19.8% • Launched daily flight from Osaka to Shenzhen to speed up time
Slide 10: Annual Sustainability Report
Annual Sustainability Report To be published in August • 19th GRI Content Index • 2nd Sustainability Accounting Standards Board (SASB) report • 1st Task Force on Climate-related Financial Disclosures (TCFD) report © 2021 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color da
Slide 11: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 11
Slide 12: Macro Environment
Macro Environment Major economic indicators remain strong Economic growth is forecast to remain positive in the back half of the year, with growth rates slowing Full-Year GDP expected to grow 6.6% in the U.S. and 5.8% globally Second-quarter global GDP expected to finish up 10.6%; U.S. GDP is expect
Slide 13: Consolidated Results
Consolidated Results GAAP Adjusted In $ Millions % In $ Millions % 2Q21 2Q20 2Q21 2Q20 (except per share) Change (except per share) Change Revenue $23,424 $20,459 14.5% Revenue $23,424 $20,459 14.5% Operating Profit $3,258 $2,212 47.3% Operating Profit* $3,273 $2,324 40.8% Operating Margin 13.9% 10.
Slide 14: U.S. Domestic: Unique YoY Comparisons Visible in Volume Mix
U.S. Domestic Unique YoY Comparisons Visible in Volume Mix B2B average daily volume increased 25.7% 2Q21 Monthly B2C ADV (Y/Y) • B2C down 15.8% 80% • Split was 60% B2C -2.9% vs. Last Year 40% +206 -121 -704 21,000 0% 21,127 20,508 -40% In Thousands Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 19,
Slide 15: U.S. Domestic: Revenue Increased 10.2% to $14.4B
U.S. Domestic Revenue Increased 10.2% to $14.4B Driven by 13.4% increase in revenue per piece U.S. Revenue Per Piece (Y/Y) 15% +13.4% +10.2% vs. Last Year 10% 5% $14.5 $14.4B 0% +$1.7B $13.5 -5% 2Q20 3Q20 4Q20 1Q21 2Q21 $13.1B -$0.4B In Billions $12.5 Driven by mix, surcharge, and base rates $11.5
Slide 16: U.S. Domestic Operating Profit and Margin Increased YoY
U.S. Domestic U.S. Domestic Operating Profit and Margin Increased YoY Revenue growth significantly above expense growth Operating Profit (In Millions) $385 $1,567 Total adjusted expense* increased 7.3%, including: GAAP $1,182 220 bps due to fuel 2Q20 Operating Performance 2Q21 Operating Profit P
Slide 17: International: Average Daily Volume Up 12.7%
International Average Daily Volume Up 12.7% B2C ADV decreased 4.1%; B2B ADV grew 25.0% Asia Monthly ADV (Y/Y) Europe Monthly ADV (Y/Y) 40% 70% 30% 40% 20% 10% 10% 0% -20% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2020 2021 2020 Americas
Slide 18: International Generated $1.2B of Operating Profit
International International Generated $1.2B of Operating Profit Operating Profit (In Millions) +$413 $1,184 Revenue up 30% to $4.8 billion All major regions grew revenue GAAP $771 by double-digit percentages 2Q20 Operating Profit Performance 2Q21 Operating Profit Operating Margin: Revenue per
Slide 19: Supply Chain Solutions Generated Record Operating Profit and Margin
Supply Chain Solutions Supply Chain Solutions Generated Record Operating Profit and Margin Operating Profit (In Millions) Ocean Freight Forwarding more than doubled its operating profit GAAP +$248 $507 $259 In healthcare, clinical trials, along with 2Q20 Operating Profit Performance 2Q21 Operati
Slide 20: Cash Flow and Adjusted Debt to Adjusted EBITDA Trend
Cash Flow and Adjusted Debt to Adjusted EBITDA Trend 2Q21 YTD Cash from Operations of $8.5B; Adjusted Debt to Adjusted EBITDA** Trend YTD Free Cash Flow* of $6.8B (Trailing 12 Month Basis) 4 $12.0 $10.0 $8.0 In Billions 3 $6.0 $4.0 $2.0 2 $0.0 1Q 2Q 3Q 4Q CFO 2021 CFO 2020 FCF* 2021 FCF* 2020 1 2019
Slide 21: The UPS dividend is a hallmark of our financial strength
The UPS dividend is a hallmark of our financial strength $4.25 $4.08 $4.04 $3.84 $3.75 $3.64 $3.32 $3.25 $2.75 2017 2018 2019 2020 2021** ** Estimated based on 1Q and 2Q21 dividends declared per share. © 2021 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown ton
Slide 22: Outlook
Outlook Second half of 2021 Expect market conditions to remain favorable and our Consolidated: initiatives to continue delivering positive results in our Revenue growth of around 5.4% business Operating margin around 12% Effective tax rate around 23% Paying close attention to: COVID-19
Slide 23: Questions & Answers
Questions & Answers © 2021 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. 23
Slide 24: Appendix
Appendix 24 © 2021 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 25: 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 26: Reconciliations
Reconciliations Reconciliation of GAAP and Non-GAAP Income Statement Items Reconciliation of GAAP and Non-GAAP Income Statement Items (in millions, except per share amounts): (in millions, except per share amounts): Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 As-Reported Transf
Slide 27: Reconciliations
Reconciliations Reconciliation of Currency Adjusted Revenue, Revenue Per Piece, and Adjusted Operating Profit (in millions, except per piece amounts): Three Months Ended June 30 2021 2021 2020 Currency- As-Reported As-Reported % Change Currency Neutral % Change (GAAP) (GAAP) (GAAP) Impact (Non-GAAP)
Slide 28: 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 Cash flows from operating activities $ 2,550 $ 5,947 $ 9,283 $ 10,459 $ 4,531 $ 8,454 Capital expenditures (933) (2,065) (3,219) (5,412) (834) (1,670) Proceeds from
Slide 29: Reconciliations
Reconciliations © 2021 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 30: Reconciliations
Reconciliations © 2021 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 31: Reconciliations
Reconciliations © 2021 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 32: 2021 Interim Remeasurements
2021 Interim Remeasurements UPS Freight divestiture closed on 04/30/21, triggering 2Q remeasurement of certain US Plans (In Millions) Unrecognized Loss Within Shareowners’ Equity as of 3/31/2021 $3,864 Gain due to Discount Rate Change1 (3,680) Discount rate increased from 2.87% to 3.36% Loss due to
United Parcel Service — Q2 2021 Earnings Presentation on 6ix