UPS releases 2Q 2019 Earnings
- 2Q19 EPS of $1.94; 2Q19 Adjusted* EPS of $1.96
- U.S. Daily Volume Grew Over 7%; Next Day Air Volume Soared Over 30%
- U.S. Operating Profit Increased Nearly 29%; Up 8% on an Adjusted Basis
- International Boosts Operating Margins to 18.9%; Adjusted Margins of 19%
- Supply Chain and Freight Operating Profit Increased Nearly 26%; Adjusted Operating Profit Up More Than 10%
- Cash from Operations of $4.2B; Adjusted Free Cash Flow Near $2.2B
- UPS reaffirms adjusted full-year diluted EPS in the range of $7.45 to $7.75
Consolidated Results | Adjusted | Adjusted | ||
2Q 2019 | 2Q 2019 | 2Q 2018 | 2Q 2018 | |
Revenue | $18,048 M | $17,456 M | ||
Net Income | $1,685 M | $1,702 M | $1,485 M | $1,685M |
Diluted Earnings Per Share | $1.94 | $1.96 | $1.71 | $1.94 |
- Consolidated revenue increased 3.4% to $18 billion, driven by gains in average daily volume in the U.S. and higher-quality, currency-neutral revenue in the International segment.
- Total operating profit grew nearly 21%, and 6.3% on an adjusted basis, with growth in all segments.
- Total operating margin expanded 170 basis points; adjusted operating margin expanded 30 basis points.
- Capital expenditures for the year are approximately $2.9 billion to support network enhancements.
- Year-to-date dividends per share increased 5.5% and the company repurchased 4.8 million shares for approximately $500 million.
Adjusted | Adjusted | |||
2Q 2019 | 2Q 2019 | 2Q 2018 | 2Q 2018 | |
Revenue | $11,150 M | $10,354 M | ||
Operating profit | $1,208 M | $1,226 M | $939 M | $1,135 M |
- Revenue increased $796 million or 7.7% over 2Q 2018, led by increased demand for air services from customers in healthcare and retail.
- Operating profit increased by 28.6%, or 8% on an adjusted basis.
- Operating margins were 10.8%, and 11% on an adjusted basis.
- Network efficiencies continued to reduce the growth in cost per piece, with a steady decline in unit cost growth for the third straight quarter.
Adjusted | Adjusted | |||
2Q 2019 | 2Q 2019 | 2Q 2018 | 2Q 2018 | |
Revenue | $3,505 M | $3,602 M | ||
Operating profit | $663 M | $665 M | $618 M | $654M |
- International volume slightly declined due to global macroeconomic pressure and tough year-over-year comparisons, as 2Q 2018 exports grew 9.5%.
- Total revenue per piece fell less than 1%, but grew nearly 2% when adjusting for currency.
- International domestic revenue per piece rose 0.3%, an increase of 5.6% on a currency-neutral basis.
- Operating profit increased more than 7%, or by 1.7% on an adjusted basis.
Adjusted | Adjusted | |||
2Q 2019 | 2Q 2019 | 2Q 2018 | 2Q 2018 | |
Revenue | $3,393M | $3,500 M | ||
Operating profit | $272 M | $273 M | $216 M | $247M |
- Operating margins expanded to 8% on an adjusted and unadjusted basis, due to strong execution, disciplined cost management and strategic initiatives that focus on delivering excellent service levels and growing high-quality revenue from the SMB market.
- International Air Freight achieved robust profit growth on a decline in tonnage, driven by expanded buy/sell spreads.
- Coyote and Marken made significant contributions to operating profit.
- UPS Freight achieved a 3.9% increase in revenue per LTL (less-than-truckload) hundredweight as the unit focused on revenue quality.
- The company’s full-year adjusted diluted EPS will be in the range of $7.45 to $7.75.
- Adjusted free cash flow for the year is projected to be between $3.5 and $4 billion with potential additional upside from the working capital initiatives.
- The effective tax rate for the full-year 2019 is estimated to be between 22% and 24%.
- Third-quarter adjusted EPS is expected to benefit from numerous items including one additional operating day and year-over-year International benefits from 2018 commodities headwinds that should not repeat.
- Transformation charges and pension MTM are not included in the adjusted guidance.
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