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UPS Earnings Surpass Estimates in Q3 on Favorable Pricing
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United Parcel Service (UPS - Free Report) reported third-quarter 2022 earnings (excluding 3 cents from non-recurring items) of $2.99 per share, beating the Zacks Consensus Estimate of $2.84. The earnings beat was primarily owing to higher delivery prices. Favorable pricing more than offset the downside caused by declining shipping volumes. The bottom line increased 10.33% year over year.
Quarterly revenues of $24,161 million, however, fell short of the Zacks Consensus Estimate of $24,319.8 million. The top line increased 4.2% year over year, driven by the uptick in revenue per piece shipped.
Shipping volumes declined 2.1% year over year to 22.9 million. The decline in the volume of packages shipped indicates weakening demand due to the economic slowdown.
Overall adjusted operating profit rose 8.6% year over year to $3,224 million in the third quarter, boosted by growth in the adjusted operating profit in the U.S. domestic package segment. In the first nine months of 2022, UPS generated a free cash flow of $8,472 million compared with $9,265 million in the first nine months of 2021. UPS’ capital expenditures were $2,278 million in the first nine months of 2022.
Segmental Details
U.S. Domestic Package revenues increased 8.2% year over year to $15,374 million in the third quarter, driven by a 9.8% increase in revenue per piece. Segmental operating profit (adjusted) jumped 19.2% year over year to $1,686 million in the quarter. Adjusted operating margin for the segment was 11% in the September quarter. Average daily volume in the segment declined 1.5% year over year in the reported quarter.
Revenues at the International Package division summed $4,799 million, up 1.7% year over year. The segment’s performance was driven by a 6.4% increase in revenue per piece. Segmental operating profit (adjusted) totaled $1,004 million in the reported quarter, down 2% year over year. Consolidated average daily volume in the segment declined 5.2% year over year in the reported quarter. On the domestic front, average daily volume fell 9.4%. Average daily volume (export) was down 0.6%
Supply Chain and Freight revenues declined 6.3% to $3,988 million due to softness in the air and ocean freight forwarding operations. Operating profit (on an adjusted basis) inched up 0.9% to $459 million in the September quarter.
2022 Outlook
UPS, currently carrying a Zacks Rank #3 (Hold), still expects consolidated revenues of about $102 billion, an adjusted operating margin of 13.7% and an adjusted return on invested capital to be above 30%. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $101.67 billion.
UPS expects capital expenditures to be around $5 billion. Dividends are retained at $5.2 billion. The guidance for share buyback is at least $3 billion.
Performance of Other Transportation Companies
Delta Air Lines’ (DAL - Free Report) third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.
DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by high air-travel demand, total revenues increased more than 52% on a year-over-year basis.
United Airlines’ (UAL - Free Report) third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. Upbeat air-travel demand aided results.
In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an uptick in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate. JBHT’s quarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.
JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.
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UPS Earnings Surpass Estimates in Q3 on Favorable Pricing
United Parcel Service (UPS - Free Report) reported third-quarter 2022 earnings (excluding 3 cents from non-recurring items) of $2.99 per share, beating the Zacks Consensus Estimate of $2.84. The earnings beat was primarily owing to higher delivery prices. Favorable pricing more than offset the downside caused by declining shipping volumes. The bottom line increased 10.33% year over year.
Quarterly revenues of $24,161 million, however, fell short of the Zacks Consensus Estimate of $24,319.8 million. The top line increased 4.2% year over year, driven by the uptick in revenue per piece shipped.
Shipping volumes declined 2.1% year over year to 22.9 million. The decline in the volume of packages shipped indicates weakening demand due to the economic slowdown.
Overall adjusted operating profit rose 8.6% year over year to $3,224 million in the third quarter, boosted by growth in the adjusted operating profit in the U.S. domestic package segment. In the first nine months of 2022, UPS generated a free cash flow of $8,472 million compared with $9,265 million in the first nine months of 2021. UPS’ capital expenditures were $2,278 million in the first nine months of 2022.
Segmental Details
U.S. Domestic Package revenues increased 8.2% year over year to $15,374 million in the third quarter, driven by a 9.8% increase in revenue per piece. Segmental operating profit (adjusted) jumped 19.2% year over year to $1,686 million in the quarter. Adjusted operating margin for the segment was 11% in the September quarter. Average daily volume in the segment declined 1.5% year over year in the reported quarter.
Revenues at the International Package division summed $4,799 million, up 1.7% year over year. The segment’s performance was driven by a 6.4% increase in revenue per piece. Segmental operating profit (adjusted) totaled $1,004 million in the reported quarter, down 2% year over year. Consolidated average daily volume in the segment declined 5.2% year over year in the reported quarter. On the domestic front, average daily volume fell 9.4%. Average daily volume (export) was down 0.6%
Supply Chain and Freight revenues declined 6.3% to $3,988 million due to softness in the air and ocean freight forwarding operations. Operating profit (on an adjusted basis) inched up 0.9% to $459 million in the September quarter.
2022 Outlook
UPS, currently carrying a Zacks Rank #3 (Hold), still expects consolidated revenues of about $102 billion, an adjusted operating margin of 13.7% and an adjusted return on invested capital to be above 30%. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $101.67 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UPS expects capital expenditures to be around $5 billion. Dividends are retained at $5.2 billion. The guidance for share buyback is at least $3 billion.
Performance of Other Transportation Companies
Delta Air Lines’ (DAL - Free Report) third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.
DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by high air-travel demand, total revenues increased more than 52% on a year-over-year basis.
United Airlines’ (UAL - Free Report) third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. Upbeat air-travel demand aided results.
In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an uptick in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate. JBHT’s quarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.
JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.