United Parcel Service, Inc. · NYSE:UPS
United Parcel Service — Q3 2021 Earnings Presentation
29 slides from United Parcel Service's earnings presentation, Oct 26, 2021
Slide 1: 3Q21 Earnings Call
5Q21 Earnings Call October 26, 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 © 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 3Q21 3Q20 $4.00 $4.00 $3.00 $0.06 $3.00 $2.65 $2.71* $2.24 $0.04 $2.28* $2.00 $2.00 $1.00 $1.00 $0.00 $0.00 3Q21 EPS Transformation & Other 3Q21 Adj. EPS* 3Q20 EPS Transformation & Other 3Q20 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: Customer First, People Led, Innovation Driven
Customer First, People Led, Innovation Driven Through a better not bigger framework Key Focus Areas • Improve revenue quality, including Customer growing SMB volume First Net Promoter Score • Reduce our cost to serve through productivity and cost take-out initiatives People Innovation Led • Effectiv
Slide 9: Consolidated Results
Consolidated Results GAAP Adjusted In $ Millions % In $ Millions % 3Q21 3Q20 3Q21 3Q20 (except per share) Change (except per share) Change Revenue $23,184 $21,238 9.2% Revenue $23,184 $21,238 9.2% Operating Profit $2,896 $2,363 22.6% Operating Profit* $2,970 $2,407 23.4% Operating Margin 12.5% 11.1%
Slide 10: Better Not Bigger Strategic Framework
Better Not Bigger Strategic Framework Three focus areas Weekend expansion will be completed later this week; in 3Q21 U.S. Domestic SMB ADV Improve Revenue Quality grew 10.9% and International SMB ADV up 3.9% U.S. Domestic improved pieces per hour by Reduce Cost to Serve 2.5%; on track to eliminate $
Slide 11: We are Ready for Peak
We are Ready for Peak • Collaborating with our customers to match their needs to our available capacity • Leveraging proven tools to ensure network flexibility and control • Digitized our job application process, enabling qualified candidates to receive a job offer within 30 minutes © 2021 United Pa
Slide 12: Brian Newman, Chief Financial Officer
Brian Newman Chief Financial Officer 12
Slide 13: Macro Environment
Macro Environment Global economic environment remains strong Strong growth in global Demand for UPS services Fourth-quarter global GDP economy in 3Q21 despite: remains high and the pricing expected to finish up 3.8%; • COVID-19 environment in the industry was U.S. GDP is expected to grow firm in the
Slide 14: Consolidated Results
Consolidated Results GAAP Adjusted In $ Millions % In $ Millions % 3Q21 3Q20 3Q21 3Q20 (except per share) Change (except per share) Change Revenue $23,184 $21,238 9.2% Revenue $23,184 $21,238 9.2% Operating Profit $2,896 $2,363 22.6% Operating Profit* $2,970 $2,407 23.4% Operating Margin 12.5% 11.1%
Slide 15: U.S. Domestic: Unique YoY Comparisons Visible in Volume Mix
U.S. Domestic Unique YoY Comparisons Visible in Volume Mix B2B volume continued to recover 3Q21 Monthly B2C ADV (Y/Y) • B2C down 8.6% 80% • Split was 58% B2C -2.7% vs. Last Year 40% 21,000 +34 -156 -418 0% 20,375 19,835 -40% In Thousands Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 19,000 2021 20
Slide 16: U.S. Domestic Revenue Increased 7.4% to $14.2B
U.S. Domestic Revenue Increased 7.4% to $14.2B Driven by 12% increase in revenue per piece U.S. Revenue Per Piece (Y/Y) 15% +7.4% vs. Last Year 10% 5% $14.5 0% +$1.5B $14.2B $13.5 -5% 3Q20 4Q20 1Q21 2Q21 3Q21 -$0.5B In Billions $13.2B $12.5 Fuel drove 270 basis points of the $11.5 revenue per piec
Slide 17: U.S. Domestic Operating Profit and Margin Increased YoY
U.S. Domestic U.S. Domestic Operating Profit and Margin Increased YoY Revenue growth above expense growth Operating Profit (In Millions) $309 $1,407 Productivity improvements, led by inside GAAP $1,098 sort operations and on-road, helped offset 3Q20 Operating Performance 3Q21 Operating market rate
Slide 18: International Average Daily Volume Up 1.9%
International Average Daily Volume Up 1.9%; Up 14% on a 2-year Stack B2B ADV grew 3.8% Asia Monthly ADV (Y/Y) Europe Monthly ADV (Y/Y) 70% 30% 40% 10% 10% -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 Monthly AD
Slide 19: International Generated $1.1B in Operating Profit
International International Generated $1.1B in Operating Profit Fourth consecutive quarter of operating profit over $1B Operating Profit (In Millions) +$85 $1,051 Revenue up 15.5% to $4.7B $966 GAAP Revenue per piece increased 14.0% 3Q20 Operating Profit Performance 3Q21 Operating Profit Inclu
Slide 20: Supply Chain Solutions Record Third-Quarter Results
Supply Chain Solutions Delivered Record Third-Quarter Top- and Bottom-Line Results Operating Profit (In Millions) All major business categories contributed to profit growth, led by Forwarding and GAAP +$139 $438 $299 Logistics 3Q20 Operating Profit Performance 3Q21 Operating Profit Operating Margi
Slide 21: Cash Flow and Debt Maturities
Cash Flow and Debt Maturities 3Q21 YTD Cash from Operations of $11.8B; Debt Maturities YTD Free Cash Flow* of $9.3B Total Debt* $22B $14.0 Weighted Avg Maturity 13.2 yrs $3.5 Weighted Avg Coupon 3.1% $12.0 Ratings (S&P/Moody’s) A-/A-2 $10.0 $3.0 In Billions $8.0 $2.5 $6.0 In Billions $2.0 $4.0 $1.5
Slide 22: 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 1Q21, 2Q21 and 3Q21 dividends declared per share. As announced in June, UPS’s dividend policy will target a payout ratio of ~50% of prior ye
Slide 23: Raising Full-year 2021 Outlook
Raising Full-year 2021 Outlook Paying close attention to: Full-year 2021 Outlook COVID-19 Consolidated: Inflationary pressures Revenue growth ~13.8% Inventory and labor shortages Adjusted operating margin* ~13% Free cash flow* ~$10.5B Consumer demand is expected to be Adjusted Re
Slide 24: 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. 24
Slide 25: Appendix
Appendix 25 © 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 26: Reconciliation of GAAP and Non-GAAP Financial Measures
Reconciliation of GAAP and Non-GAAP Financial Measures Non-GAAP Financial Measures; Reconciliations From time to time we supplement the reporting of our financial information determined under generally Mark-To-Market Pension and Postretirement Adjustments accepted accounting principles ("GAAP") with
Slide 27: 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 September 30, 2021 Three Months Ended September 30, 2020 As-Repor
Slide 28: Reconciliations
Reconciliations Reconciliation of Currency Adjusted Revenue, Revenue Per Piece, and Adjusted Operating Profit (in millions, except per piece amounts): Three Months Ended September 30, 2021 2021 2020 Currency- As-Reported As-Reported % Change Currency Neutral % Change (GAAP) (GAAP) (GAAP) Impact (Non
Slide 29: 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 Cash flows from operating activities $ 2,550 $ 5,947 $ 9,283 $ 10,459 $ 4,531 $ 8,454 $ 11,761 Capital expenditures (933) (2,065) (3,219) (5,412) (834) (1,670
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