United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q2 2020 Earnings Presentation
27 slides from United Parcel Service's earnings presentation, Jul 30, 2020
Slide 1: 2Q20 Earnings Announcement
2Q20 Earnings Announcement July 30, 2020
Slide 2: Scott Childress, Investor Relations Officer
Scott Childress Investor Relations Officer © 2020 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. 2
Slide 3: UPS Speakers
UPS Speakers Carol Tomé Chief Executive Officer Brian Newman Chief Financial Officer © 2020 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. 3
Slide 4: Forward-Looking Statements and Non-GAAP Reconciliations
Forward-Looking Statements and Non-GAAP Reconciliations This presentation, our Annual Report on Form 10-K for the year ended employees; the effects of changing prices of energy, including gasoline, diesel and jet fuel, and December 31, 2019 and our other filings with the Securities and Exchange Comm
Slide 5: Diluted EPS
Diluted EPS 2Q20 2Q19 $0.10 $2.13* $2.03 $0.02 $2.00 $1.94 $1.96* $1.15* $2.00 $1.11 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2Q20 EPS Transformation 2Q20 Adj. EPS* 2Q19 EPS Transformation 2Q19 Adj. EPS* Costs Costs * Non-GAAP financial measure. See Appendix for reconciliation to GAAP financi
Slide 6: Carol Tomé
Carol Tomé Chief Executive Officer © 2020 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. 6
Slide 7: Thank You UPSers
Thank You UPSers © 2020 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. 7
Slide 8: Consolidated Results Were Stronger Than Expected
Consolidated Results Were Stronger Than Expected GAAP Adjusted In Millions % In Millions % 2Q20 2Q19 2Q20 2Q19 (except per share) Change (except per share) Change Total Revenue $20,459 $18,048 13.4% Total Revenue $20,459 $18,048 13.4% Operating Profit $2,212 $2,143 3.2% Operating Profit* $2,324 $2,1
Slide 9: 5 Core UPS Principles Underpin Our Actions
5 Core UPS Principles Underpin Our Actions • Our values • UPS dividend • Strong investment grade credit rating • Brand relevance • Employee ownership Everything else is under review…. © 2020 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the color dark brown tone are trademarks o
Slide 10: We Have The Right Strategy In Place
We Have The Right Strategy In Place Over time we will share our actions and metrics so you can measure our progress Customer First Net Promoter Score Innovation People Driven Led Likelihood to Value Creation Recommend © 2020 United Parcel Service of America, Inc. UPS, the UPS brandmark, and the colo
Slide 11: Recovery Is Difficult To Predict
Recovery Is Difficult To Predict • Continued uncertainty from COVID-19 • We will control what we can control • UPS is making the right decisions to pivot toward opportunity • We are focused on enabling success for all UPSers and creating value for our shareowners © 2020 United Parcel Service of Amer
Slide 12: Brian Newman
Brian Newman Chief Financial Officer © 2020 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. 12
Slide 13: UPS Leaned Into Changes In Demand
UPS Leaned Into Changes In Demand • Responded to strong demand out of Asia • Added about 635 flights • Supported surge of e-commerce through the UPS Digital Access Program • 120,000 new SMB customer accounts • Met the urgent need for PPE and testing supplies • UPS moved over 11 million kilos of PPE
Slide 14: B2C Demand Surged, Increasing Average Daily Volume 22.8%
U.S. Domestic B2C Demand Surged, Increasing Average Daily Volume 22.8% SurePost represented 53% of total U.S. Domestic volume growth 2Q20 Monthly B2C Deliveries (Y/Y) • B2C grew 65.2% • Split is 69% B2C 80% +22.8% vs. Last Year 60% 40% +3,588 21,000 20% 0% 19,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 J
Slide 15: Revenue Increased 17.3%, Driven Primarily By Ground Products
U.S. Domestic Revenue Increased 17.3%, Driven Primarily By Ground Products +17.3% vs. Last Year +$2.5 -$0.6 Total ground revenue increased by $13.0 over $1.9 billion $12.0 In Billions $1, $13.1 Revenue per piece declined 4.4% due 208 to two main factors: $11.0 Lower fuel prices (-180 bps) $11.
Slide 16: Operating Margin Declined Y/Y; Sequential Margins Improved
U.S. Domestic Operating Margin Declined Y/Y; Sequential Margins Improved Operating Profit (In Millions) • Cost per piece improved Y/Y and -$26 sequentially GAAP • Network scale and lower $1,208 fuel prices offset other cost $1,182 pressures 2Q19 Operating Profit Performance 2Q20 Operating Profit Ope
Slide 17: Total Volume Up 9.8%, Peaking In May And Moderating In June
International Total Volume Up 9.8%, Peaking In May And Moderating In June Export Volume Grew 11.4%; Domestic Volume Up 8.5% Asia Monthly Volume (Y/Y) Europe Monthly Volume (Y/Y) 20% 60% 10% 20% 0% -20% -10% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Americas
Slide 18: Operating Profit Grew And Margin Expanded vs. LY
International Operating Profit Grew And Margin Expanded vs. LY Operating Profit (In Millions) +$108 GAAP $771 Asia flexed the network to meet strong $663 demand 2Q19 Operating Profit Performance 2Q20 Operating Profit Outbound volume +46.8% Operating Margin: Provided 335 additional flights 18.9
Slide 19: Revenue Increased 8.5%; Operating Profit Declined
Supply Chain and Freight Revenue Increased 8.5%; Operating Profit Declined Revenue growth driven by high air freight forwarding demand out of Asia Operating Profit (In Millions) -$13 GAAP $272 $259 Air freight led the segment due to the surge in market rates out of Asia 2Q19 Operating Profit Perfo
Slide 20: UPS Cash Flow Remains Strong
UPS Cash Flow Remains Strong Cumulative Cash from Operations of $5.9B and Adjusted Free Cash Flow* of $3.9B Capital Expenditures $10.0 $8.0 (In Billions) 1H20A 2H20E* 2020E* Buildings & Facilities $1.0 $1.7 $2.7 In Billions $6.0 Aircraft & Parts $0.5 $0.8 $1.3 Vehicles $0.2 $0.6 $0.8 $4.0 IT $0.4 $0
Slide 21: The UPS Dividend Is a Hallmark Of Our Financial Strength
The UPS Dividend Is a Hallmark Of Our Financial Strength $4.04 $4.00 $3.84 $3.64 $3.50 $3.32 $3.12 $3.00 $2.92 $2.68 $2.48 $2.50 $2.00 $1.50 2013 2014 2015 2016 2017 2018 2019 2020E* *Estimated based on 1Q20 and 2Q20 dividends declared per share and are subject to Board approval. © 2020 United Parce
Slide 22: Questions & Answers
Questions & Answers © 2020 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. 22
Slide 23: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Reconciliation of GAAP and non-GAAP Financial Measures We supplement the reporting of our financial information determined under generally accepted accounting principles Pension discount rate-neutral operating profit is calculated by discounting
Slide 24: Reconciliations
Reconciliations Reconciliation of GAAP and Non-GAAP Income Statement Data Reconciliation of GAAP and Non-GAAP Income Statement Data (in millions, except per share amounts): (in millions, except per share amounts): Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Transformation As-Re
Slide 25: Reconciliations
Reconciliations Reconciliation of GAAP and Non-GAAP Revenue, Revenue Per Piece, and Adjusted Operating Profit (in millions, except per piece amounts): Three Months Ended June 30 2020 2020 2019 Currency As-Reported As-Reported % Change Currency Neutral % Change (GAAP) (GAAP) (GAAP) Impact (Non-GAAP)(
Slide 26: Reconciliations
Reconciliations Reconciliation of Non-GAAP Pension Discount Rate Neutral Operating Profit and Margin (in millions): Three Months Ended June 30 2020 As-Adjusted 2020 2019 Pension Discount As-Adjusted As-Adjusted % Change Rate Neutral % Change (Non-GAAP)(1) (Non-GAAP)(1) (Non-GAAP) Pension (Non-GAAP)(
Slide 27: Reconciliations
Reconciliations Reconciliation of Adjusted Capital Expenditures and Free Cash Flow (Non-GAAP measures) (in millions): 2019 2020 Q1 YTD Q2 YTD Q3 YTD Q4 YTD Q1 YTD Q2 YTD Cash flows from operating activities $ 2,277 $ 4,207 $ 5,693 $ 8,639 $ 2,550 $ 5,947 Capital expenditures (1,514) (2,861) (4,336)
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