Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - UNITED PARCEL SERVICE INC | form8-kq42016earningsrelea.htm |
Contacts: | Steve Gaut, Public Relations |
404-828-8787 | |
Scott Childress, Investor Relations | |
404-828-7957 | |
UPS REVENUE ACCELERATES IN 4Q AND PRODUCES RECORD $61 BILLION FOR 2016
• | US Domestic 4Q Revenue Climbs 6.3%, Driven by Ecommerce |
• | International Export Shipments Soar 8.4%, Led by Asia and Europe Regions |
• | 4Q EPS of -$0.27, due to Mark-to-Market Pension Charge |
• | Adjusted 4Q EPS of $1.63, Driven by International Segment |
• | 2016 EPS of $3.87; Adjusted 2016 EPS of $5.75 |
• | Company Produces $6.5 Billion in Cash from Operations in 2016 |
• | Announces Full-Year 2017 Adjusted EPS Guidance |
ATLANTA, Jan. 31, 2017 - UPS (NYSE:UPS) today announced fourth-quarter 2016 operating results. “Revenue and volume growth accelerated for UPS during the holiday season and we provided high service levels for our customers,” said David Abney, UPS chairman and CEO. “The International segment delivered another extraordinary performance, while the U.S. managed through considerable changes in product mix. Our strategies and initiatives are creating long-term value for both UPS customers and shareowners.”
Consolidated Results | 4Q 2016 | Adjusted 4Q 2016 | 4Q 2015 | Adjusted 4Q 2015 |
Revenue | $16,931 M | $16,054 M | ||
Operating profit (loss) | $(428) M | $2,223 M | $2,051 M | $2,169 M |
Diluted earnings (loss) per share | $(0.27) | $1.63 | $1.48 | $1.57 |
Full-year and fourth-quarter 2016 results include a non-cash, after-tax, mark-to-market pension charge of $1.90 per diluted share. In the prior-year period, the company reported non-cash, after-tax charges of $0.09 per diluted share related to pension mark-to-market charges.
• | 4Q 2016 diluted EPS of -$0.27; adjusted diluted EPS of $1.63. |
• | Adjusted diluted EPS excludes the impact of non-cash, mark-to-market pension charge. |
• | During the quarter, the company delivered 1.4 billion packages, up 7.1% over last year. |
U.S. Domestic Segment | 4Q 2016 | Adjusted 4Q 2016 | 4Q 2015 | Adjusted 4Q 2015 |
Revenue | $10,913 M | $10,265 M | ||
Operating profit (loss) | $(570) M | $1,338 M | $1,284 M | $1,346 M |
• | Revenue increased $648 million to $10.9 billion, a 6.3% increase over 4Q15. |
• | Average daily shipments increased 5.0% to 19.6 million. |
• | 4Q 2016 operating loss of $570 million; adjusted operating profit was $1.3 billion. |
• | Adjusted operating profit excludes the mark-to-market pension charge. |
• | Benefits from ORION and automation initiatives offset most of the impact from the faster pace of residential and SurePost growth. |
International Segment | 4Q 2016 | Adjusted 4Q 2016 | 4Q 2015 | Adjusted 4Q 2015 |
Revenue | $3,335 M | $3,175 M | ||
Operating profit | $281 M | $706 M | $580 M | $624 M |
• | International segment produced strong volume growth across all major products. |
• | Revenue increased 5.0%, driven by an 8.4% jump in daily Export shipments. |
• | Currency-neutral revenue increased 6.2% over the prior year. |
• | 4Q 2016 operating profit was $281 million; adjusted operating profit was $706 million. |
• | Adjusted operating profit excludes the mark-to-market pension charge. |
Supply Chain & Freight | 4Q 2016 | Adjusted 4Q 2016 | 4Q 2015 | Adjusted 4Q 2015 |
Revenue | $2,683 M | $2,614 M | ||
Operating profit (loss) | $(139) M | $179M | $187 M | $199 M |
• | Revenue increased 2.6% over 4Q15, to $2.7 billion. |
• | 4Q 2016 operating loss of $139 million; adjusted operating profit was $179 million. |
• | Adjusted operating profit excludes the mark-to-market pension charge. |
Full-year 2016 Consolidated Results
• | Full-year 2016 diluted EPS of $3.87; adjusted diluted EPS was $5.75. |
• | Adjusted diluted EPS excludes the impact of non-cash, mark-to-market pension charge. |
• | Generated $6.5 billion in cash from operations. |
• | Company made capital expenditures of nearly $3.0 billion during the year. |
• | Paid dividends of $2.8 billion, an increase of 6.8% per share over the prior year. |
• | Repurchased 25.5 million shares for approximately $2.7 billion |
Outlook
The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.
“The investments in ORION and automation provided benefits during the quarter,” said Richard Peretz, UPS chief financial officer. “However, bottom-line results were challenged by a shift in product mix and the continued softness in industrial production. Strong growth, combined with our network investments, provide UPS with great opportunities for many years to come.”
• | UPS expects 2017 adjusted diluted EPS to be $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds. |
-- Further, the currency drag lowers the adjusted diluted EPS by $0.30 in 2017, and decreases the EPS growth rates by approximately 500 basis points.
Conference Call Information
UPS CEO David Abney and CFO Richard Peretz will discuss fourth-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, January 31, 2017. That call is open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.”
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at ups.com® and its corporate blog can be found at Longitudes.ups.com. To get UPS news directly, visit pressroom.ups.com/RSS.
Forward-Looking Statements
Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties.
Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations, our competitive environment, negotiation and ratification of labor contracts, strikes, work stoppages and slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.
Reconciliation of GAAP and non-GAAP Financial Measures
We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, pre-tax income, net income and earnings per share. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we disclose free cash flow as well as currency-neutral revenue and revenue per piece.
We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.
Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.
Mark-To-Market Pension and Post-Retirement Adjustments
We recognize changes in the fair value of plan assets and net actuarial gains and losses in excess of a 10% corridor for company-sponsored pension and post-retirement liabilities immediately as part of net periodic benefit cost. We supplement the presentation of our operating profit, operating margin, pre-tax income, net income and earnings per share with similar non-GAAP measures that exclude the impact of the portion of net periodic benefit cost represented by the gains and losses recognized in excess of the 10% corridor and the related income tax effects.
This adjusted net periodic benefit cost is comparable to the accounting for our defined benefit plans in our quarterly reporting under U.S. GAAP, and reflects assumptions utilizing the expected return on plan assets ($2,580 million in 2016 and $2,567 million in 2015) and the discount rate used for determining net periodic benefit cost (the non-adjusted net periodic benefit cost reflects the actual return on plan assets ($1,846 million in 2016 and $110 million in 2015) and the discount rate used for measuring the projected benefit obligation). We believe this adjusted net periodic benefit cost provides important supplemental information that reflects the anticipated long-term cost of our defined benefit plans, and provides a benchmark for historical defined benefit cost trends that may provide useful comparison of year-to-year financial performance without considering the short-term impact of changes in market interest rates, equity prices, and similar factors.
The deferred income tax effects of these mark-to-market pension and postretirement adjustments are calculated by multiplying the statutory tax rates applicable in each tax jurisdiction, including the U.S. federal jurisdiction and various U.S. state and non-U.S. jurisdictions, by the adjustments. The blended average of the applicable statutory tax rates in 2016 and 2015 were 36.9% and 33.1%, respectively.
Weighted-Average Shares Outstanding and Diluted Earnings per Share
The computation of weighted-average shares outstanding and diluted earnings per share for the fourth quarter of 2016 excludes the effect of certain incentive compensation awards because they were anti-dilutive in consideration of our reported net loss. Adjusted diluted earnings per share for this period includes the dilutive effect of these same shares because we are reporting adjusted net income after excluding the mark-to-market pension and postretirement adjustment.
Currency-Neutral Revenue and Revenue per Piece
We supplement the reporting of our revenue and revenue per piece with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue and revenue per piece information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package business on a currency-neutral basis.
Currency-neutral revenue and revenue per piece are calculated by multiplying prior period reported U.S. dollar revenue and revenue per piece by the prior period average exchange rates to derive prior period local currency revenue and revenue per piece. The derived prior period local currency revenue and revenue per piece are then divided by the average foreign currency exchange rates used to translate the company's financial statements in the comparable current year. The difference between the prior period reported U.S. dollar revenue and revenue per piece and the derived prior period U.S. dollar revenue and revenue per piece (including the impact of current period foreign currency hedging activities)
is added to the current period reported U.S. dollar revenue and revenue per piece to derive current period currency-neutral U.S. dollar revenue and revenue per piece.
Free Cash Flow
We supplement the reporting of cash flows from operating activities with free cash flow, a non-GAAP liquidity measure. We believe free cash flow is an important indicator of how much cash is generated by regular business operations and we use it as a measure of incremental cash available to invest in our business, meet our debt obligations and return cash to shareowners. We calculate free cash flow as cash flows from operating activities less capital expenditures, proceeds from disposals of property, plant and equipment, and plus or minus the net changes in finance receivables and other investing activities.
Reconciliation of GAAP and non-GAAP Income Statement Data (in millions, except EPS amounts):
Three Months Ended December 31, 2016 | |||||||||
As- Reported (GAAP Measure) | Defined Benefit Plans MTM Charges | As-Adjusted (non-GAAP Measure) | |||||||
Operating profit: | |||||||||
U.S. Domestic Package | $ | (570 | ) | $ | 1,908 | $ | 1,338 | ||
International Package | 281 | 425 | 706 | ||||||
Supply Chain & Freight | (139 | ) | 318 | 179 | |||||
Total operating profit (loss) | $ | (428 | ) | $ | 2,651 | $ | 2,223 | ||
Income Taxes | $ | (277 | ) | $ | 978 | $ | 701 | ||
Net income (loss) | $ | (239 | ) | $ | 1,673 | $ | 1,434 | ||
Diluted weighted avg. shares | 876 | 5 | 881 | ||||||
Diluted earnings per share | $ | (0.27 | ) | $ | 1.90 | $ | 1.63 | ||
Three Months Ended December 31, 2015 | |||||||||
As- Reported (GAAP Measure) | Defined Benefit Plans MTM Charges | As-Adjusted (non-GAAP Measure) | |||||||
Operating profit: | |||||||||
U.S. Domestic Package | $ | 1,284 | $ | 62 | $ | 1,346 | |||
International Package | 580 | 44 | 624 | ||||||
Supply Chain & Freight | 187 | 12 | 199 | ||||||
Total operating profit | $ | 2,051 | $ | 118 | $ | 2,169 | |||
Income Taxes | $ | 638 | $ | 39 | $ | 677 | |||
Net income | $ | 1,331 | $ | 79 | $ | 1,410 | |||
Diluted earnings per share | $ | 1.48 | $ | 0.09 | $ | 1.57 | |||
Note: Certain amounts may not compute due to rounding
Reconciliation of GAAP and non-GAAP Income Statement Data (in millions, except EPS amounts)
Twelve Months Ended December 31, 2016 | |||||||||
As- Reported (GAAP Measure) | Defined Benefit Plans MTM Charges | As-Adjusted (non-GAAP Measure) | |||||||
Operating profit: | |||||||||
U.S. Domestic Package | $ | 3,017 | $ | 1,908 | $ | 4,925 | |||
International Package | 2,044 | 425 | 2,469 | ||||||
Supply Chain & Freight | 406 | 318 | 724 | ||||||
Total operating profit | $ | 5,467 | $ | 2,651 | $ | 8,118 | |||
Income Taxes | $ | 1,705 | $ | 978 | $ | 2,683 | |||
Net income | $ | 3,431 | $ | 1,673 | $ | 5,104 | |||
Diluted earnings per share | $ | 3.87 | $ | 1.88 | $ | 5.75 | |||
Twelve Months Ended December 31, 2015 | |||||||||
As- Reported (GAAP Measure) | Defined Benefit Plans MTM Charges | As-Adjusted (non-GAAP Measure) | |||||||
Operating profit: | |||||||||
U.S. Domestic Package | $ | 4,767 | $ | 62 | $ | 4,829 | |||
International Package | 2,137 | 44 | 2,181 | ||||||
Supply Chain & Freight | 764 | 12 | 776 | ||||||
Total operating profit | $ | 7,668 | $ | 118 | $ | 7,786 | |||
Income Taxes | $ | 2,498 | $ | 39 | $ | 2,537 | |||
Net income | $ | 4,844 | $ | 79 | $ | 4,923 | |||
Diluted earnings per share | $ | 5.35 | $ | 0.08 | $ | 5.43 | |||
Note: Certain amounts may not compute due to rounding
Reconciliation of GAAP and non-GAAP Revenue and Revenue per Piece (in millions, except per piece amounts):
Three Months Ended December 31 | |||||||||||||||||
2016 As- Reported (GAAP) | 2015 As- Reported (GAAP) | % Change (GAAP) | Currency Impact | 2016 Currency Neutral (non-GAAP) | % Change (non-GAAP) | ||||||||||||
Revenue: | |||||||||||||||||
U.S. Domestic Package | $ | 10,913 | $ | 10,265 | 6.3 | % | $ | — | $ | 10,913 | 6.3 | % | |||||
International Package | 3,335 | 3,175 | 5.0 | % | 38 | 3,373 | 6.2 | % | |||||||||
Supply Chain & Freight | 2,683 | 2,614 | 2.6 | % | 16 | 2,699 | 3.3 | % | |||||||||
Total revenue | $ | 16,931 | $ | 16,054 | 5.5 | % | $ | 54 | $ | 16,985 | 5.8 | % | |||||
Average Revenue Per Piece: | |||||||||||||||||
International Package: | |||||||||||||||||
Domestic | $ | 5.57 | $ | 5.93 | (6.1 | )% | $ | 0.25 | $ | 5.82 | (1.9 | )% | |||||
Export | 29.50 | 30.38 | (2.9 | )% | 0.10 | 29.60 | (2.6 | )% | |||||||||
Total International Package | $ | 15.90 | $ | 16.37 | (2.9 | )% | $ | 0.19 | $ | 16.09 | (1.7 | )% | |||||
Consolidated | $ | 9.85 | $ | 9.93 | (0.8 | )% | $ | 0.02 | $ | 9.87 | (0.6 | )% | |||||
Twelve Months Ended December 31 | |||||||||||||||||
2016 As- Reported (GAAP) | 2015 As- Reported (GAAP) | % Change (GAAP) | Currency Impact | 2016 Currency Neutral (non-GAAP) | % Change (non-GAAP) | ||||||||||||
Revenue: | |||||||||||||||||
U.S. Domestic Package | $ | 38,301 | $ | 36,747 | 4.2 | % | $ | — | $ | 38,301 | 4.2 | % | |||||
International Package | 12,350 | 12,149 | 1.7 | % | 138 | 12,488 | 2.8 | % | |||||||||
Supply Chain & Freight | 10,255 | 9,467 | 8.3 | % | 56 | 10,311 | 8.9 | % | |||||||||
Total revenue | $ | 60,906 | $ | 58,363 | 4.4 | % | $ | 194 | $ | 61,100 | 4.7 | % | |||||
Average Revenue Per Piece: | |||||||||||||||||
International Package: | |||||||||||||||||
Domestic | $ | 5.85 | $ | 6.06 | (3.5 | )% | $ | 0.23 | $ | 6.08 | 0.3 | % | |||||
Export | 30.38 | 31.10 | (2.3 | )% | 0.15 | 30.53 | (1.8 | )% | |||||||||
Total International Package | $ | 16.29 | $ | 16.63 | (2.0 | )% | $ | 0.19 | $ | 16.48 | (0.9 | )% | |||||
Consolidated | $ | 10.30 | $ | 10.37 | (0.7 | )% | $ | 0.02 | $ | 10.32 | (0.5 | )% | |||||
Note: Certain amounts may not compute due to rounding.
Reconciliation of GAAP and non-GAAP Liquidity Measures (in millions)
Year Ended December 31 | ||||
Net Increase (Decrease) in Cash and Cash Equivalents | ||||
2016 | ||||
Cash flows from operating activities | $ | 6,473 | ||
Cash flows from investing activities | (2,566 | ) | ||
Cash flows from financing activities | (3,140 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (21 | ) | ||
Net increase in cash and cash equivalents | $ | 746 | ||
Reconciliation of Free Cash Flow (non-GAAP measure) | ||||
2016 | ||||
Cash flows from operating activities (GAAP) | $ | 6,473 | ||
Capital expenditures | (2,965 | ) | ||
Proceeds from disposals of PP&E | 88 | |||
Net change in finance receivables | 9 | |||
Other investing activities | (59 | ) | ||
Free cash flow (non-GAAP measure) | $ | 3,546 | ||
United Parcel Service, Inc.
Selected Financial Data - Fourth Quarter
(unaudited)
Three Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
(amounts in millions, except per share data) | |||||||||||
Statement of Income Data: | |||||||||||
Revenue: | |||||||||||
U.S. Domestic Package | $ | 10,913 | $ | 10,265 | $ | 648 | 6.3 | % | |||
International Package | 3,335 | 3,175 | 160 | 5.0 | % | ||||||
Supply Chain & Freight | 2,683 | 2,614 | 69 | 2.6 | % | ||||||
Total revenue | 16,931 | 16,054 | 877 | 5.5 | % | ||||||
Operating expenses: | |||||||||||
Compensation and benefits | 11,322 | 8,504 | 2,818 | 33.1 | % | ||||||
Other | 6,037 | 5,499 | 538 | 9.8 | % | ||||||
Total operating expenses | 17,359 | 14,003 | 3,356 | 24.0 | % | ||||||
Operating profit (loss): | |||||||||||
U.S. Domestic Package | (570 | ) | 1,284 | (1,854 | ) | NA | |||||
International Package | 281 | 580 | (299 | ) | (51.6 | )% | |||||
Supply Chain & Freight | (139 | ) | 187 | (326 | ) | NA | |||||
Total operating profit (loss) | (428 | ) | 2,051 | (2,479 | ) | NA | |||||
Other income (expense): | |||||||||||
Investment income and other | 12 | 3 | 9 | NA | |||||||
Interest expense | (100 | ) | (85 | ) | (15 | ) | 17.6 | % | |||
Total other income (expense) | (88 | ) | (82 | ) | (6 | ) | 7.3 | % | |||
Income (loss) before income taxes | (516 | ) | 1,969 | (2,485 | ) | NA | |||||
Income tax expense (benefit) | (277 | ) | 638 | (915 | ) | NA | |||||
Net income (loss) | $ | (239 | ) | $ | 1,331 | $ | (1,570 | ) | NA | ||
Net income (loss) as a percentage of revenue | (1.4 | )% | 8.3 | % | |||||||
Per share amounts: | |||||||||||
Basic earnings (loss) per share | $ | (0.27 | ) | $ | 1.49 | $ | (1.76 | ) | NA | ||
Diluted earnings (loss) per share | $ | (0.27 | ) | $ | 1.48 | $ | (1.75 | ) | NA | ||
Weighted-average shares outstanding: | |||||||||||
Basic | 876 | 893 | (17 | ) | (1.9 | )% | |||||
Diluted | 876 | 898 | (22 | ) | (2.4 | )% | |||||
As adjusted income data: | |||||||||||
Operating profit: | |||||||||||
U.S. Domestic Package (1) | $ | 1,338 | $ | 1,346 | $ | (8 | ) | (0.6 | )% | ||
International Package (1) | 706 | 624 | 82 | 13.1 | % | ||||||
Supply Chain & Freight (1) | 179 | 199 | (20 | ) | (10.1 | )% | |||||
Total operating profit (1) | 2,223 | 2,169 | 54 | 2.5 | % | ||||||
Income before income taxes (1) | $ | 2,135 | $ | 2,087 | $ | 48 | 2.3 | % | |||
Net income (2) | $ | 1,434 | $ | 1,410 | $ | 24 | 1.7 | % | |||
Basic earnings per share (2) | $ | 1.64 | $ | 1.58 | $ | 0.06 | 3.8 | % | |||
Diluted earnings per share (2) | $ | 1.63 | $ | 1.57 | $ | 0.06 | 3.8 | % | |||
(1) 2016 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.651 billion, allocated between the U.S. Domestic Package segment ($1.908 billion), International Package segment ($425 million), and Supply Chain & Freight segment ($318 million).
2015 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $118 million, allocated between the U.S. Domestic Package segment ($62 million), International Package segment ($44 million), and Supply Chain & Freight segment ($12 million).
(2) 2016 net income and earnings per share amounts exclude the after-tax impact of the adjustments described in (1), which decreased net income by $1.673 billion. 2016 diluted earnings per share is based on weighted-average shares outstanding of 881 million, which includes the effect of 5 million dilutive shares and share equivalents.
2015 net income and earnings per share amounts excluded the after-tax impact of the adjustments in (1), which decreased net income by $79 million.
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Selected Operating Data - Fourth Quarter
(unaudited)
Three Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
Revenue (in millions): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 1,834 | $ | 1,760 | $ | 74 | 4.2 | % | |||
Deferred | 1,301 | 1,246 | 55 | 4.4 | % | ||||||
Ground | 7,778 | 7,259 | 519 | 7.1 | % | ||||||
Total U.S. Domestic Package | 10,913 | 10,265 | 648 | 6.3 | % | ||||||
International Package: | |||||||||||
Domestic | 637 | 626 | 11 | 1.8 | % | ||||||
Export | 2,561 | 2,394 | 167 | 7.0 | % | ||||||
Cargo and Other | 137 | 155 | (18 | ) | (11.6 | )% | |||||
Total International Package | 3,335 | 3,175 | 160 | 5.0 | % | ||||||
Supply Chain & Freight: | |||||||||||
Forwarding and Logistics | 1,813 | 1,751 | 62 | 3.5 | % | ||||||
Freight | 686 | 679 | 7 | 1.0 | % | ||||||
Other | 184 | 184 | — | — | % | ||||||
Total Supply Chain & Freight | 2,683 | 2,614 | 69 | 2.6 | % | ||||||
Consolidated | $ | 16,931 | $ | 16,054 | $ | 877 | 5.5 | % | |||
Consolidated volume (in millions) | 1,433 | 1,338 | 95 | 7.1 | % | ||||||
Operating weekdays | 63 | 62 | 1 | 1.6 | % | ||||||
Average Daily Package Volume (in thousands): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | 1,582 | 1,515 | 67 | 4.4 | % | ||||||
Deferred | 1,827 | 1,778 | 49 | 2.8 | % | ||||||
Ground | 16,142 | 15,321 | 821 | 5.4 | % | ||||||
Total U.S. Domestic Package | 19,551 | 18,614 | 937 | 5.0 | % | ||||||
International Package: | |||||||||||
Domestic | 1,815 | 1,704 | 111 | 6.5 | % | ||||||
Export | 1,378 | 1,271 | 107 | 8.4 | % | ||||||
Total International Package | 3,193 | 2,975 | 218 | 7.3 | % | ||||||
Consolidated | 22,744 | 21,589 | 1,155 | 5.3 | % | ||||||
Average Revenue Per Piece: | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 18.40 | $ | 18.74 | $ | (0.34 | ) | (1.8 | )% | ||
Deferred | 11.30 | 11.30 | — | — | % | ||||||
Ground | 7.65 | 7.64 | 0.01 | 0.1 | % | ||||||
Total U.S. Domestic Package | 8.86 | 8.89 | (0.03 | ) | (0.3 | )% | |||||
International Package: | |||||||||||
Domestic | 5.57 | 5.93 | (0.36 | ) | (6.1 | )% | |||||
Export | 29.50 | 30.38 | (0.88 | ) | (2.9 | )% | |||||
Total International Package | 15.90 | 16.37 | (0.47 | ) | (2.9 | )% | |||||
Consolidated | $ | 9.85 | $ | 9.93 | $ | (0.08 | ) | (0.8 | )% | ||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight - Fourth Quarter
(unaudited)
Currency Neutral Revenue Per Piece | |||||||||||||||||
Three Months Ended | Currency | ||||||||||||||||
December 31 | Neutral | ||||||||||||||||
2016 | 2015 | % Change | Currency | 2016* | % Change | ||||||||||||
Average Revenue Per Piece: | |||||||||||||||||
International Package: | |||||||||||||||||
Domestic | $ | 5.57 | $ | 5.93 | (6.1 | )% | $ | 0.25 | $ | 5.82 | (1.9 | )% | |||||
Export | 29.50 | 30.38 | (2.9 | )% | 0.10 | 29.60 | (2.6 | )% | |||||||||
Total International Package | $ | 15.90 | $ | 16.37 | (2.9 | )% | $ | 0.19 | $ | 16.09 | (1.7 | )% | |||||
Consolidated | $ | 9.85 | $ | 9.93 | (0.8 | )% | $ | 0.02 | $ | 9.87 | (0.6 | )% | |||||
* Adjusted amounts reflect impacts for currency exchange rate differences | |||||||||||||||||
Currency Neutral Revenue | |||||||||||||||||
Three Months Ended | Currency | ||||||||||||||||
December 31 | Neutral | ||||||||||||||||
2016 | 2015 | % Change | Currency | 2016* | % Change | ||||||||||||
Revenue (in millions): | |||||||||||||||||
U.S. Domestic Package | $ | 10,913 | $ | 10,265 | 6.3 | % | $ | — | $ | 10,913 | 6.3 | % | |||||
International Package | 3,335 | 3,175 | 5.0 | % | 38 | 3,373 | 6.2 | % | |||||||||
Supply Chain & Freight | 2,683 | 2,614 | 2.6 | % | 16 | 2,699 | 3.3 | % | |||||||||
Total revenue | $ | 16,931 | $ | 16,054 | 5.5 | % | $ | 54 | $ | 16,985 | 5.8 | % | |||||
* Adjusted amounts reflect impacts for currency exchange rate differences | |||||||||||||||||
Freight Selected Operating Data- Fourth Quarter
(unaudited)
Three Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
LTL revenue (in millions) | $ | 604 | $ | 592 | $ | 12 | 2.0 | % | |||
LTL revenue per LTL hundredweight | $ | 23.42 | $ | 23.44 | $ | (0.02 | ) | (0.1 | )% | ||
LTL shipments (in thousands) | 2,447 | 2,439 | 8 | 0.3 | % | ||||||
LTL shipments per day (in thousands) | 40.1 | 39.3 | 0.8 | 2.0 | % | ||||||
LTL gross weight hauled (in millions of pounds) | 2,578 | 2,526 | 52 | 2.1 | % | ||||||
LTL weight per shipment (in pounds) | 1,054 | 1,036 | 18 | 1.7 | % | ||||||
Operating weekdays | 61 | 62 | (1 | ) | (1.6 | )% | |||||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Detail of Other Operating Expenses - Fourth Quarter
(unaudited)
Three Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
(amounts in millions) | |||||||||||
Repairs and Maintenance | $ | 388 | $ | 331 | $ | 57 | 17.2 | % | |||
Depreciation and Amortization | 563 | 541 | 22 | 4.1 | % | ||||||
Purchased Transportation | 2,823 | 2,486 | 337 | 13.6 | % | ||||||
Fuel | 638 | 582 | 56 | 9.6 | % | ||||||
Other Occupancy | 275 | 257 | 18 | 7.0 | % | ||||||
Other Expenses | 1,350 | 1,302 | 48 | 3.7 | % | ||||||
Total Other Operating Expenses | $ | 6,037 | $ | 5,499 | $ | 538 | 9.8 | % | |||
Earnings (Loss) Per Share and Share Data - Fourth Quarter
(unaudited)
Three Months Ended | ||||||
December 31 | ||||||
2016 | 2015 | |||||
(amounts in millions, except per share data) | ||||||
Numerator: | ||||||
Net income | $ | (239 | ) | $ | 1,331 | |
Denominator: | ||||||
Weighted-average shares outstanding | 870 | 888 | ||||
Deferred compensation arrangements | 1 | 1 | ||||
Vested portion of restricted shares | 5 | 4 | ||||
Denominator for basic earnings per share | 876 | 893 | ||||
Effect of dilutive securities: | ||||||
Restricted shares | — | 4 | ||||
Stock options | — | 1 | ||||
Denominator for diluted earnings per share | 876 | 898 | ||||
Basic earnings per share | $ | (0.27 | ) | $ | 1.49 | |
Diluted earnings per share | $ | (0.27 | ) | $ | 1.48 | |
Detail of shares outstanding as of December 31, 2016: | ||||||
Class A shares | 179 | |||||
Class B shares | 689 | |||||
Total shares outstanding | 868 | |||||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
Twelve Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
(amounts in millions, except per share data) | |||||||||||
Statement of Income Data: | |||||||||||
Revenue: | |||||||||||
U.S. Domestic Package | $ | 38,301 | $ | 36,747 | $ | 1,554 | 4.2 | % | |||
International Package | 12,350 | 12,149 | 201 | 1.7 | % | ||||||
Supply Chain & Freight | 10,255 | 9,467 | 788 | 8.3 | % | ||||||
Total revenue | 60,906 | 58,363 | 2,543 | 4.4 | % | ||||||
Operating expenses: | |||||||||||
Compensation and benefits | 34,770 | 31,028 | 3,742 | 12.1 | % | ||||||
Other | 20,669 | 19,667 | 1,002 | 5.1 | % | ||||||
Total operating expenses | 55,439 | 50,695 | 4,744 | 9.4 | % | ||||||
Operating profit: | |||||||||||
U.S. Domestic Package | 3,017 | 4,767 | (1,750 | ) | (36.7 | )% | |||||
International Package | 2,044 | 2,137 | (93 | ) | (4.4 | )% | |||||
Supply Chain & Freight | 406 | 764 | (358 | ) | (46.9 | )% | |||||
Total operating profit | 5,467 | 7,668 | (2,201 | ) | (28.7 | )% | |||||
Other income (expense): | |||||||||||
Investment income and other | 50 | 15 | 35 | NA | |||||||
Interest expense | (381 | ) | (341 | ) | (40 | ) | 11.7 | % | |||
Total other income (expense) | (331 | ) | (326 | ) | (5 | ) | 1.5 | % | |||
Income before income taxes | 5,136 | 7,342 | (2,206 | ) | (30.0 | )% | |||||
Income tax expense | 1,705 | 2,498 | (793 | ) | (31.7 | )% | |||||
Net income | $ | 3,431 | $ | 4,844 | $ | (1,413 | ) | (29.2 | )% | ||
Net income as a percentage of revenue | 5.6 | % | 8.3 | % | |||||||
Per share amounts | |||||||||||
Basic earnings per share | $ | 3.89 | $ | 5.38 | $ | (1.49 | ) | (27.7 | )% | ||
Diluted earnings per share | $ | 3.87 | $ | 5.35 | $ | (1.48 | ) | (27.7 | )% | ||
Weighted-average shares outstanding | |||||||||||
Basic | 883 | 901 | (18 | ) | (2.0 | )% | |||||
Diluted | 887 | 906 | (19 | ) | (2.1 | )% | |||||
As adjusted income data: | |||||||||||
Operating profit: | |||||||||||
U.S. Domestic Package (1) | $ | 4,925 | $ | 4,829 | $ | 96 | 2.0 | % | |||
International Package (1) | 2,469 | 2,181 | 288 | 13.2 | % | ||||||
Supply Chain & Freight (1) | 724 | 776 | (52 | ) | (6.7 | )% | |||||
Total operating profit (1) | 8,118 | 7,786 | 332 | 4.3 | % | ||||||
Income before income taxes (1) | $ | 7,787 | $ | 7,460 | $ | 327 | 4.4 | % | |||
Net income (2) | $ | 5,104 | $ | 4,923 | $ | 181 | 3.7 | % | |||
Basic earnings per share (2) | $ | 5.78 | $ | 5.46 | $ | 0.32 | 5.9 | % | |||
Diluted earnings per share (2) | $ | 5.75 | $ | 5.43 | $ | 0.32 | 5.9 | % | |||
(1) 2016 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $2.651 billion, allocated between the U.S. Domestic Package segment ($1.908 billion), International Package segment ($425 million), and Supply Chain & Freight segment ($318 million).
2015 operating profit and consolidated income before income taxes exclude the impact of an increase in pension expense due to a mark-to-market loss recognized outside of a 10% corridor of $118 million, allocated between the U.S. Domestic Package segment ($62 million), International Package segment ($44 million), and Supply Chain & Freight segment ($12 million).
(2) 2016 and 2015 net income and earnings amounts exclude the impact of the pension mark-to-market adjustment described in (1), which decreased net income by $1.673 billion and $79 million, respectively.
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
Twelve Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
Revenue (in millions): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 6,752 | $ | 6,570 | $ | 182 | 2.8 | % | |||
Deferred | 4,082 | 3,903 | 179 | 4.6 | % | ||||||
Ground | 27,467 | 26,274 | 1,193 | 4.5 | % | ||||||
Total U.S. Domestic Package | 38,301 | 36,747 | 1,554 | 4.2 | % | ||||||
International Package: | |||||||||||
Domestic | 2,441 | 2,425 | 16 | 0.7 | % | ||||||
Export | 9,374 | 9,092 | 282 | 3.1 | % | ||||||
Cargo and Other | 535 | 632 | (97 | ) | (15.3 | )% | |||||
Total International Package | 12,350 | 12,149 | 201 | 1.7 | % | ||||||
Supply Chain & Freight: | |||||||||||
Forwarding and Logistics | 6,793 | 5,900 | 893 | 15.1 | % | ||||||
Freight | 2,736 | 2,881 | (145 | ) | (5.0 | )% | |||||
Other | 726 | 686 | 40 | 5.8 | % | ||||||
Total Supply Chain & Freight | 10,255 | 9,467 | 788 | 8.3 | % | ||||||
Consolidated | $ | 60,906 | $ | 58,363 | $ | 2,543 | 4.4 | % | |||
Consolidated volume (in millions) | 4,868 | 4,654 | 214 | 4.6 | % | ||||||
Operating weekdays | 255 | 254 | 1 | 0.4 | % | ||||||
Average Daily Package Volume (in thousands): | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | 1,379 | 1,316 | 63 | 4.8 | % | ||||||
Deferred | 1,351 | 1,313 | 38 | 2.9 | % | ||||||
Ground | 13,515 | 12,969 | 546 | 4.2 | % | ||||||
Total U.S. Domestic Package | 16,245 | 15,598 | 647 | 4.1 | % | ||||||
International Package: | |||||||||||
Domestic | 1,635 | 1,575 | 60 | 3.8 | % | ||||||
Export | 1,210 | 1,151 | 59 | 5.1 | % | ||||||
Total International Package | 2,845 | 2,726 | 119 | 4.4 | % | ||||||
Consolidated | 19,090 | 18,324 | 766 | 4.2 | % | ||||||
Average Revenue Per Piece: | |||||||||||
U.S. Domestic Package: | |||||||||||
Next Day Air | $ | 19.20 | $ | 19.66 | $ | (0.46 | ) | (2.3 | )% | ||
Deferred | 11.85 | 11.70 | 0.15 | 1.3 | % | ||||||
Ground | 7.97 | 7.98 | (0.01 | ) | (0.1 | )% | |||||
Total U.S. Domestic Package | 9.25 | 9.28 | (0.03 | ) | (0.3 | )% | |||||
International Package: | |||||||||||
Domestic | 5.85 | 6.06 | (0.21 | ) | (3.5 | )% | |||||
Export | 30.38 | 31.10 | (0.72 | ) | (2.3 | )% | |||||
Total International Package | 16.29 | 16.63 | (0.34 | ) | (2.0 | )% | |||||
Consolidated | $ | 10.30 | $ | 10.37 | $ | (0.07 | ) | (0.7 | )% | ||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight - Year to Date
(unaudited)
Currency Neutral Revenue Per Piece | |||||||||||||||||
Twelve Months Ended | Currency | ||||||||||||||||
December 31 | Neutral | ||||||||||||||||
2016 | 2015 | % Change | Currency | 2016* | % Change | ||||||||||||
Average Revenue Per Piece: | |||||||||||||||||
International Package: | |||||||||||||||||
Domestic | $ | 5.85 | $ | 6.06 | (3.5 | )% | $ | 0.23 | $ | 6.08 | 0.3 | % | |||||
Export | 30.38 | 31.10 | (2.3 | )% | 0.15 | 30.53 | (1.8 | )% | |||||||||
Total International Package | $ | 16.29 | $ | 16.63 | (2.0 | )% | $ | 0.19 | $ | 16.48 | (0.9 | )% | |||||
Consolidated | $ | 10.30 | $ | 10.37 | (0.7 | )% | $ | 0.02 | $ | 10.32 | (0.5 | )% | |||||
* Adjusted amounts reflect impacts for currency exchange rate differences | |||||||||||||||||
Currency Neutral Revenue | |||||||||||||||||
Twelve Months Ended | Currency | ||||||||||||||||
December 31 | Neutral | ||||||||||||||||
2016 | 2015 | % Change | Currency | 2016* | % Change | ||||||||||||
Revenue (in millions): | |||||||||||||||||
U.S. Domestic Package | $ | 38,301 | $ | 36,747 | 4.2 | % | $ | — | $ | 38,301 | 4.2 | % | |||||
International Package | 12,350 | 12,149 | 1.7 | % | 138 | 12,488 | 2.8 | % | |||||||||
Supply Chain & Freight | 10,255 | 9,467 | 8.3 | % | 56 | 10,311 | 8.9 | % | |||||||||
Total revenue | $ | 60,906 | $ | 58,363 | 4.4 | % | $ | 194 | $ | 61,100 | 4.7 | % | |||||
* Adjusted amounts reflect impacts for currency exchange rate differences | |||||||||||||||||
Freight Selected Operating Data- Year to Date
(unaudited)
Twelve Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
LTL revenue (in millions) | $ | 2,384 | $ | 2,479 | $ | (95 | ) | (3.8 | )% | ||
LTL revenue per LTL hundredweight | $ | 23.44 | $ | 22.94 | $ | 0.50 | 2.2 | % | |||
LTL shipments (in thousands) | 9,954 | 10,433 | (479 | ) | (4.6 | )% | |||||
LTL shipments per day (in thousands) | 39.3 | 41.2 | (1.9 | ) | (4.6 | )% | |||||
LTL gross weight hauled (in millions of pounds) | 10,167 | 10,808 | (641 | ) | (5.9 | )% | |||||
LTL weight per shipment (in pounds) | 1,021 | 1,036 | (15 | ) | (1.4 | )% | |||||
Operating weekdays | $ | 253 | $ | 253 | — | — | % | ||||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)
Twelve Months Ended | |||||||||||
December 31 | |||||||||||
2016 | 2015 | Change | % Change | ||||||||
(amounts in millions) | |||||||||||
Repairs and Maintenance | $ | 1,538 | $ | 1,400 | $ | 138 | 9.9 | % | |||
Depreciation and Amortization | 2,224 | 2,084 | 140 | 6.7 | % | ||||||
Purchased Transportation | 9,129 | 8,043 | 1,086 | 13.5 | % | ||||||
Fuel | 2,118 | 2,482 | (364 | ) | (14.7 | )% | |||||
Other Occupancy | 1,037 | 1,022 | 15 | 1.5 | % | ||||||
Other Expenses | 4,623 | 4,636 | (13 | ) | (0.3 | )% | |||||
Total Other Operating Expenses | $ | 20,669 | $ | 19,667 | $ | 1,002 | 5.1 | % | |||
Earnings Per Share and Share Data - Year to Date
(unaudited)
Twelve Months Ended | ||||||
December 31 | ||||||
2016 | 2015 | |||||
(amounts in millions, except per share data) | ||||||
Numerator: | ||||||
Net income | $ | 3,431 | $ | 4,844 | ||
Denominator: | ||||||
Weighted-average shares outstanding | 878 | 896 | ||||
Deferred compensation arrangements | 1 | 1 | ||||
Vested portion of restricted shares | 4 | 4 | ||||
Denominator for basic earnings per share | 883 | 901 | ||||
Effect of dilutive securities: | ||||||
Restricted shares | 3 | 4 | ||||
Stock options | 1 | 1 | ||||
Denominator for diluted earnings per share | 887 | 906 | ||||
Basic earnings per share | $ | 3.89 | $ | 5.38 | ||
Diluted earnings per share | $ | 3.87 | $ | 5.35 | ||
Certain prior year amounts have been reclassified to conform to the current year presentation.
United Parcel Services, Inc.
Consolidated Balance Sheets - December 31, 2016 and December 31, 2015
(unaudited)
December 31, 2016 | December 31, 2015 | ||||||
(amounts in millions) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and marketable securities | $ | 4,567 | $ | 4,726 | |||
Other current assets | 8,821 | 8,482 | |||||
Total Current Assets | 13,388 | 13,208 | |||||
Property, Plant and Equipment | 43,674 | 41,918 | |||||
Less accumulated depreciation and amortization | 24,874 | 23,566 | |||||
18,800 | 18,352 | ||||||
Other Assets | 8,213 | 6,751 | |||||
$ | 40,401 | $ | 38,311 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY | |||||||
Current Liabilities | 11,855 | 10,696 | |||||
Long-Term Debt | 12,394 | 11,316 | |||||
Pension and Postretirement Benefit Obligations | 12,694 | 10,638 | |||||
Deferred Taxes, Credits and Other Liabilities | 3,029 | 3,170 | |||||
Shareowners' Equity | 429 | 2,491 | |||||
40,401 | 38,311 | ||||||
United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
Net Increase (Decrease) in Cash and Cash Equivalents | ||||
Preliminary | ||||
Year-to-Date | ||||
(amounts in millions) | December 31 | |||
Cash flows from operating activities | $ | 6,473 | ||
Cash flows from investing activities | (2,566 | ) | ||
Cash flows from financing activities | (3,140 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (21 | ) | ||
Net increase in cash and cash equivalents | $ | 746 | ||
Reconciliation of Free Cash Flow (non-GAAP measure) | ||||
Preliminary | ||||
Year-to-Date | ||||
(amounts in millions) | December 31 | |||
Cash flows from operating activities | $ | 6,473 | ||
Capital expenditures | (2,965 | ) | ||
Proceeds from disposals of PP&E | 88 | |||
Net change in finance receivables | 9 | |||
Other investing activities | (59 | ) | ||
Free cash flow (non-GAAP measure) | $ | 3,546 | ||
Amounts are subject to reclassification.
United Parcel Services, Inc.
Aircraft Fleet - as of December 31, 2016
(unaudited)
Description | Owned and Capital Lease | Leases & Charters from Others | On Order | Under Option | ||||
Operating: | ||||||||
Boeing 757-200 | 75 | — | — | — | ||||
Boeing 767-300 | 59 | — | — | — | ||||
Airbus A300-600 | 52 | — | — | — | ||||
Boeing MD-11* | 38 | — | — | — | ||||
Boeing 747-400F | 11 | — | — | — | ||||
Boeing 747-400BCF | 2 | — | — | — | ||||
Boeing 747-8F | — | — | 14 | 14 | ||||
Other | — | 420 | — | — | ||||
Total | 237 | 420 | 14 | 14 | ||||
* One Boeing MD-11 not in operation pending disposal | ||||||||