UPS (UPS) Q3 2024 earnings summary

Executive summary

• Achieved consolidated Q3 2024 revenue of $22.2B, up 5.6% year-over-year, with operating profit up 47.8% to $2.0B and adjusted EPS at $1.76, marking the first growth in two years and driven by volume increases, strategic pricing, and transformation initiatives.

• Completed divestiture of Coyote Logistics, resulting in a $152M–$156M gain, and announced the acquisition of Frigo-Trans to expand healthcare logistics in Europe.

• U.S. Domestic segment led with highest average daily volume growth in three years, supported by e-commerce and SMB customers, while International and Supply Chain Solutions also delivered revenue growth.

• Transformation strategy and cost management, including Fit to Serve and Transformation 2.0, delivered significant productivity gains and operational efficiencies.

• Fully onboarded USPS air cargo business as of October 1, supporting volume and revenue growth.

Financial highlights

• Q3 2024 consolidated operating margin was 8.9% (up 120 bps year-over-year); net income reached $1.54B, up 36.6%, and adjusted diluted EPS was $1.76, up 12.1%.

• U.S. Domestic revenue grew 5.8% to $14.5B, with operating profit up 46.5%–57.3% to $898M–$974M; International revenue rose 3.4% to $4.4B, with operating profit up 17.3%–26.7% to $792M–$798M.

• Supply Chain Solutions revenue increased 8% to $3.4B, with operating profit up 103.5% to $289M (aided by Coyote gain), though margin declined due to onboarding costs.

• Free cash flow for the first nine months was $4.04B; cash from operations was $6.8B.

• Paid $4B in dividends and completed $500M in share repurchases year-to-date.

Outlook and guidance

• Raised full-year 2024 consolidated revenue outlook to approximately $91.1B and adjusted operating margin to about 9.6%.

• U.S. Domestic Q4 revenue expected to grow 1.5%, with operating margin around 9.5%; International Q4 revenue projected to rise mid-single digits, with margin near 20%.

• Supply Chain Solutions Q4 revenue expected at $3.3B, with 9% operating margin.

• 2024 free cash flow forecasted at $5.1B; capital expenditures at $4B; dividend payments expected to be $5.4B, subject to board approval.

• Fit to Serve initiative expected to deliver $1B in cost savings for 2024.