On July 23, 2024, United Parcel Service Inc (UPS, Financial) released its 8-K filing for the second quarter of 2024. As the world's largest parcel delivery company, UPS manages a massive fleet of more than 500 planes and 100,000 vehicles, along with many hundreds of sorting facilities, to deliver an average of about 22 million packages per day to residences and businesses across the globe. UPS' domestic US package operations generate around 64% of total revenue while international package makes up 20%. Air and ocean freight forwarding, truckload brokerage, and contract logistics make up the remainder. UPS is currently pursuing "strategic alternatives" for its truck brokerage unit, Coyote, which it acquired in 2015.
Performance Overview
United Parcel Service Inc (UPS, Financial) reported consolidated revenues of $21.8 billion for Q2 2024, a 1.1% decrease from the same period last year. This figure fell short of the analyst estimate of $22.18 billion. The company's consolidated operating profit was $1.9 billion, down 30.1% compared to Q2 2023. Diluted earnings per share (EPS) were $1.65, with an adjusted EPS of $1.79, both significantly below the analyst estimate of $1.98 and last year's EPS of $2.54.
Segment Analysis
In the U.S. Domestic segment, revenue decreased by 1.9% to $14.1 billion, driven by a 2.6% decrease in revenue per piece due to changes in product mix. The operating profit for this segment was $989 million, with an adjusted operating margin of 7.1%.
The International segment saw a revenue decline of 1.0% to $4.37 billion, primarily due to a 2.9% decrease in average daily volume. The operating profit for this segment was $718 million, with an adjusted operating margin of 18.9%.
The Supply Chain Solutions segment experienced a revenue increase of 2.6% to $3.33 billion, driven by growth in logistics, including healthcare. The operating profit for this segment was $237 million, with an adjusted operating margin of 7.3%.
Financial Achievements and Challenges
Despite the revenue decline, UPS restarted its share repurchase program, targeting $1 billion annually. The company also updated its full-year 2024 financial guidance, expecting consolidated revenue of approximately $93.0 billion and an adjusted operating margin of around 9.4%.
"I want to thank all UPSers for their hard work and efforts in the second quarter," said Carol Tomé, UPS chief executive officer. "This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters. As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth."
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $21.8B | $22.1B |
| Operating Profit | $1.9B | $2.7B |
| Diluted EPS | $1.65 | $2.54 |
| Adjusted EPS | $1.79 | $2.54 |
Analysis
United Parcel Service Inc (UPS, Financial) faced several challenges in Q2 2024, including a decrease in revenue per piece and average daily volume. However, the company managed to achieve growth in its Supply Chain Solutions segment, particularly in logistics and healthcare. The restart of the share repurchase program and updated financial guidance indicate a strategic focus on long-term growth and shareholder value.
For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from United Parcel Service Inc for further details.
