UPS publishes financial results for Q4 2023

• Consolidated sales revenue of 24.9 billion USD, compared to 27.0 billion USD last year
• Operating margin on a consolidated basis and adjusted* operating margin on a consolidated basis of 9.9% and 11.2%, respectively
• Diluted earnings per share of 1.87 USD; adjusted diluted earnings per share of 2.47 USD, compared to 3.62 USD last year
• Declaration of a quarterly dividend of 1.63 USD, an increase of 0.01 USD per share

UPS company (NYSE: UPS) published data on consolidated revenues for the fourth quarter of 2023, which amounted to 24.9 billion USD and were 7.8% lower compared to the same period last year. The consolidated operating profit was 2.5 billion USD, which means a decrease of 22.5% (27.1% on an adjusted basis) compared to the fourth quarter of 2022. The diluted earnings per share in the discussed quarter was 1.87 USD (2.47 USD on an adjusted basis) and was 31.8% lower than in the same period of 2022.

The results for the fourth quarter of 2023, determined in accordance with GAAP accounting standards, include costs totaling 512 million USD, i.e. 0.60 USD per diluted share, composed of: a non-cash write-off for updating the valuation of pension benefit programs to fair market value after taxation of 274 million USD. Costs of transformation processes and other tax costs amounting to 154 million USD and a write-off for the loss of value after taxation related to the Coyote trade name in the road transport brokerage segment in the amount of 84 million USD.

“- I would like to thank UPS employees for ensuring that our company is the industry leader in terms of service quality and timeliness of deliveries for the sixth year in a row,” says Carol Tomé, CEO of UPS. “- The year 2023 was exceptional and extremely difficult for us, but throughout this time we focused on controlling those aspects that we could influence, we consistently followed our strategy and strengthened the foundations for future growth.”

Domestic parcel segment in the United States

• Domestic parcel segment revenues fell by 7.3% due to a 7.4% drop in average daily volume.
• The operating margin was 8.5%, and the adjusted operating margin was 9.3%.

International parcel segment

• International parcel segment revenues fell by 6.9% due to a 8.3% decline in average daily volume, largely due to weaker performance in Europe.
• The operating margin was 19.3%, and the adjusted operating margin was 19.5%.

Supply Chain Solutions¹

¹ This category includes the results of business segments that do not meet the segment reporting criteria set out in ASC Topic 280 – Segment Reporting.

• Segment revenue fell by 11.4% mainly due to lower market rates and excess freight capacity available on the market.
• The operating margin was 4.4%, and the adjusted operating margin was 9.4%.

Consolidated results for 2023

• Consolidated sales revenue amounted to 91.0 billion USD, a decrease of 9.3%.
• The operating profit reached the level of 9.1 billion USD, and the adjusted operating profit – 9.9 billion USD, a decrease of 28.7%.
• The operating margin was 10.0%, while the adjusted operating margin was 10.9%.
• Diluted earnings per share was 7.80 USD, and adjusted diluted earnings per share – 8.78 USD.
• Adjusted return on invested capital reached 21.9%.
• Cash flows from operating activities amounted to 10.2 billion USD, and free cash flows reached 5.3 billion USD.

In addition, the company returned 7.6 billion USD to its shareholders in the form of dividends and payments for shares repurchased under its own share buyback program.

Dividend payment declaration

Last year was the fifteenth consecutive year in which the UPS Board of Directors approved an increase in the amount of the quarterly dividend paid to the company’s shareholders. Thus, for the first quarter of 2024, UPS will pay a dividend of 1.63 USD per share for all Class A and Class B shares issued. The dividend payment date is March 8, 2024, and the list of shareholders entitled to receive it will be determined on February 20, 2024 (dividend day).

Outlook for 2024

The company presents a forecast of selected results in adjusted values, based on standards other than US Generally Accepted Accounting Principles (GAAP), as the impact of future updating of the valuation of pension benefits programs, as well as other unforeseen events that would be included in the results reported under US accounting standards and could constitute a significant position, cannot be predicted or presented.

UPS forecasts that the company’s revenues for the full year 2024 will range between 92.0 billion USD and 94.5 billion USD, and the adjusted operating margin on a consolidated basis will be around 10.0%-10.6%.

The company plans to make investment expenditures of around 4.5 billion USD and pay a dividend of nearly 5.4 billion USD, providing the Board of Directors approves this amount. The forecast effective tax rate will be around 23.5%.

* “Adjusted” amounts are financial indicators that are not calculated in accordance with GAAP accounting standards. More information on financial indicators calculated in accordance with accounting standards other than GAAP, including the reconciliation to the most closely correlated GAAP indicator, is provided in the attachment to this announcement.