UPS sees Q4 revenues grow by 21%

UPS has announced fourth-quarter 2020 consolidated revenue of $24.9 billion, a 21 per cent increase over the fourth quarter of 2019. Consolidated average daily volume increased 10.6 per cent year over year. Operating profit was $2.2 billion, up 1.6 per cent compared to last year’s fourth quarter, or 26 per cent on an adjusted basis. Net loss was $3.3 billion for the quarter; adjusted net income was $2.3 billion or 26.4 per cent above the same period last year.

In the fourth quarter, diluted loss per share was $3.75, compared to a diluted loss per share of $0.12 in the fourth quarter of 2019. Adjusted diluted earnings per share (EPS) increased 26.1 per cent to $2.66, compared to $2.11 from the same period last year.

For the fourth-quarter of 2020, GAAP results include a total charge of $5.6 billion, or $6.38 per diluted share, comprised of a non-cash, after-tax mark-to-market (MTM) pension charge of $4.9 billion, an after-tax transformation charge of $114 million and an after-tax impairment charge of $545 million associated with the company’s decision to sell UPS Freight. The company’s fourth-quarter 2019 GAAP results included a total charge of $1.9 billion, or $2.23 per diluted share, comprised of a non-cash, after-tax MTM pension charge of $1.8 billion, an after-tax transformation charge of $39 million and a US Domestic after-tax legal reserve charge of $91 million.

“Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays,” said Carol Tomé, UPS chief executive officer. “I’d also like to thank our customers who worked with us during this challenging year. As we look past 2020 into the new year, we are optimistic. During the fourth quarter, we began transporting Covid-19 vaccines and we stand ready to deliver hope and health to people around the world.”

US Domestic Segment
Revenue increased 17.4 per cent, led by growth from small and medium-sized businesses. Revenue per piece increased 7.8 per cent, driven by Ground residential. Operating margin was 7.9 per cent; adjusted operating margin was 8.8 per cent.

International Segment
Average daily volume grew 21.9 per cent, with export growth from all regions. Revenue increased by 26.8 per cent, led by Asia and Europe. Operating margin was 24.1 per cent; adjusted operating margin was 24.3 per cent.

Supply Chain and Freight Segment
Revenue increased 29 per cent, with strong market demand in nearly all businesses including freight forwarding out of Asia and UPS Healthcare. Operating margin was -5.2 per cent; adjusted operating margin was 7.6 per cent.

Full-Year 2020 Consolidated Results
Revenue increased 14.2% to $84.6 billion. Operating profit was $7.8 billion; adjusted operating profit was $8.7 billion, up 7 per cent. Diluted EPS totaled $1.64; adjusted diluted EPS was $8.23. Capital expenditures were $5.4 billion, or on an adjusted basis $5.6 billion. Annual free cash flow was $5.1 billion, including $3.1 billion in pension contributions. Dividends paid were $3.6 billion, a per-share increase of 5.2 per cent over the prior year.

Outlook
Given continued economic uncertainty due to the global pandemic, the company is not providing revenue or diluted earnings per share guidance. It is providing full-year guidance for capital allocation.

Full-Year 2021 Capital Allocation
Capital expenditures are planned to be about $4 billion. Dividends are expected to grow, subject to Board approval. Long-term debt maturities of $2.5 billion will be repaid when they come due. Effective tax rate is expected to be approximately 23.5 per cent. The company has no plans to repurchase shares or access the debt capital markets in 2021.