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United Parcel (UPS) Q4 Earnings Beat Estimates, Revenues Lag
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United Parcel Service, Inc. (UPS - Free Report) reported mixed fourth-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Quarterly earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
The overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter.
United Parcel Service, Inc. Price, Consensus and EPS Surprise
UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Segmental Details
U.S. Domestic Package revenues increased 3.1% year over year to $18,252 million in the fourth quarter, driven by a 7.2% increase in revenue per piece. Segmental operating profit (adjusted) jumped 7.5% year over year to $2,328 million in the quarter. The adjusted operating margin for the segment was 12.8% in the fourth quarter.
Revenues at the International Package division summed $4,950 million, down 8.3% year over year. The downfall was due to an 8.6% reduction in average daily volume (owing to lower domestic volume and softness in China trade lanes). Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, down 18% year over year. The adjusted operating margin for the segment was 22% in the fourth quarter.
Supply Chain and Freight revenues declined 18.1% to $3,831 million due to volume and market rate declines in air and ocean freight forwarding, partially offset by growth in the company’s healthcare business. Operating profit (on an adjusted basis) fell 11.6% to $403 million in the fourth quarter. The adjusted operating margin for the segment was 10.5% in the fourth quarter.
Shareholder-Friendly Move
UPS’ board of directors has raised its quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marks the 14th consecutive year of a dividend increase. The raised dividend will be paid out on Mar 10, 2023, to all its shareholders of record as of Feb 21, 2023.
Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
2023 Outlook
For 2023, United Parcel anticipates revenues between $97.0 billion and $99.4 billion. The Zacks Consensus Estimate of $99.01 billion lies within the guidance.
The consolidated adjusted operating margin is expected to be between 12.8% and 13.6%. Capital expenditure is anticipated to be $5.3 billion. UPS expects making dividend payments of $5.4 billion and share repurchases of $3 billion. The effective tax rate is likely to be 23.5%.
United Airlines’ (UAL - Free Report) fourth-quarter 2022 earnings of $2.46 per share beat the Zacks Consensus Estimate of $2.07. In the year-ago quarter, UAL incurred a loss of $1.60 per share when air-travel demand was not as buoyant as in the current scenario. The fourth quarter of 2022 was the third consecutive profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,400 million beat the Zacks Consensus Estimate of $12,230 million. UAL’s revenues increased 51.37% year over year due to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.9% from the fourth-quarter 2019 (pre-coronavirus) level.
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2022 earnings (excluding 19 cents from non-recurring items) of $1.48 per share beat the Zacks Consensus Estimate of $1.29 per share. DAL reported earnings of 22 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 $13,435 million, which surpassed the Zacks Consensus Estimate of $13,030.3 million. Driven by the high air-travel demand, total revenues increased more than 41.87% on a year-over-year basis.
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2022 earnings of $1.92 per share missed the Zacks Consensus Estimate of $2.45 and declined 16% year over year.
JBHT’s total operating revenues of $3,649.62 million lagged the Zacks Consensus Estimate of $3,796.8 million. The top line jumped 4.4% year over year. Total operating revenues, excluding fuel surcharges, fell 2.9% year over year.
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United Parcel (UPS) Q4 Earnings Beat Estimates, Revenues Lag
United Parcel Service, Inc. (UPS - Free Report) reported mixed fourth-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Quarterly earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
The overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter.
United Parcel Service, Inc. Price, Consensus and EPS Surprise
United Parcel Service, Inc. price-consensus-eps-surprise-chart | United Parcel Service, Inc. Quote
UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Segmental Details
U.S. Domestic Package revenues increased 3.1% year over year to $18,252 million in the fourth quarter, driven by a 7.2% increase in revenue per piece. Segmental operating profit (adjusted) jumped 7.5% year over year to $2,328 million in the quarter. The adjusted operating margin for the segment was 12.8% in the fourth quarter.
Revenues at the International Package division summed $4,950 million, down 8.3% year over year. The downfall was due to an 8.6% reduction in average daily volume (owing to lower domestic volume and softness in China trade lanes). Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, down 18% year over year. The adjusted operating margin for the segment was 22% in the fourth quarter.
Supply Chain and Freight revenues declined 18.1% to $3,831 million due to volume and market rate declines in air and ocean freight forwarding, partially offset by growth in the company’s healthcare business. Operating profit (on an adjusted basis) fell 11.6% to $403 million in the fourth quarter. The adjusted operating margin for the segment was 10.5% in the fourth quarter.
Shareholder-Friendly Move
UPS’ board of directors has raised its quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marks the 14th consecutive year of a dividend increase. The raised dividend will be paid out on Mar 10, 2023, to all its shareholders of record as of Feb 21, 2023.
Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
2023 Outlook
For 2023, United Parcel anticipates revenues between $97.0 billion and $99.4 billion. The Zacks Consensus Estimate of $99.01 billion lies within the guidance.
The consolidated adjusted operating margin is expected to be between 12.8% and 13.6%. Capital expenditure is anticipated to be $5.3 billion. UPS expects making dividend payments of $5.4 billion and share repurchases of $3 billion. The effective tax rate is likely to be 23.5%.
Currently, United Parcel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Transportation Companies
United Airlines’ (UAL - Free Report) fourth-quarter 2022 earnings of $2.46 per share beat the Zacks Consensus Estimate of $2.07. In the year-ago quarter, UAL incurred a loss of $1.60 per share when air-travel demand was not as buoyant as in the current scenario. The fourth quarter of 2022 was the third consecutive profitable quarter at UAL since the onset of the pandemic.
Operating revenues of $12,400 million beat the Zacks Consensus Estimate of $12,230 million. UAL’s revenues increased 51.37% year over year due to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.9% from the fourth-quarter 2019 (pre-coronavirus) level.
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2022 earnings (excluding 19 cents from non-recurring items) of $1.48 per share beat the Zacks Consensus Estimate of $1.29 per share. DAL reported earnings of 22 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 $13,435 million, which surpassed the Zacks Consensus Estimate of $13,030.3 million. Driven by the high air-travel demand, total revenues increased more than 41.87% on a year-over-year basis.
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2022 earnings of $1.92 per share missed the Zacks Consensus Estimate of $2.45 and declined 16% year over year.
JBHT’s total operating revenues of $3,649.62 million lagged the Zacks Consensus Estimate of $3,796.8 million. The top line jumped 4.4% year over year. Total operating revenues, excluding fuel surcharges, fell 2.9% year over year.