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United Parcel Service, Inc. (NYSE: UPS) reported its second-quarter earnings for 2024, revealing a mixed performance. The company posted consolidated revenues of $21.8 billion, reflecting a slight decline of 1.1% from the previous year’s $22.1 billion. The consolidated operating profit for the quarter stood at $1.9 billion, marking a significant 30.1% drop compared to the same period in 2023. On an adjusted basis, the operating profit saw a 29.3% decline.

Diluted earnings per share (EPS) came in at $1.65, while the adjusted diluted EPS was $1.79, a decrease of 29.5% from the previous year’s adjusted EPS of $2.54.

The U.S. Domestic Segment, a major revenue driver for UPS, saw a 1.9% decline in revenue to $14.1 billion from $14.4 billion in Q2 2023. This segment’s operating profit also fell to $989 million from $1.6 billion, translating to an adjusted operating margin of 7.1%.

The International Segment reported a 1.0% decrease in revenue, amounting to $4.37 billion, and an operating profit of $718 million, down from $883 million in the same quarter last year. Meanwhile, the Supply Chain Solutions segment bucked the trend with a 2.6% increase in revenue to $3.3 billion, driven primarily by growth in logistics, including healthcare. However, its operating profit also saw a decline from $295 million to $237 million.
 

UPS Fails to Meet EPS and Revenue Expectations in Q2

When comparing the actual performance to market expectations, UPS fell short on both revenue and earnings per share. Analysts had projected an EPS of $2.00, but the actual adjusted EPS was $1.79, missing the mark by $0.21. Similarly, the anticipated revenue was $22.17 billion, but the actual revenue reported was $21.8 billion, falling short by approximately $370 million.

This shortfall in meeting expectations underscores the challenges UPS faced during the quarter, including a one-time payment of $94 million to settle an international regulatory matter and additional transformation and other charges amounting to $26 million.

Despite these setbacks, CEO Carol Tomé highlighted a significant milestone for the company, noting a return to volume growth in the U.S. for the first time in nine quarters. This growth, however, was not enough to offset the overall decline in operating profit and revenue.

The company’s operating margin also took a hit, with the consolidated operating margin at 8.9% and the adjusted operating margin at 9.5%, both lower than previous periods.
 

UPS Restarts Share Repurchase Program Targeting $1 Billion Anually

Looking ahead, UPS has updated its full-year 2024 financial guidance. The company now expects consolidated revenue to be approximately $93.0 billion and an adjusted operating margin of around 9.4%.

Capital expenditures are projected to be around $4.0 billion, and UPS plans to target approximately $500 million in share repurchases. This guidance reflects a cautious optimism as the company aims to navigate through the challenges and return to operating profit growth in the latter half of the year.

In addition to the financial targets, UPS has also restarted its share repurchase program, targeting $1 billion annually. This move indicates the company’s commitment to returning value to its shareholders despite the current financial challenges. The decision to restart the share repurchase program and the updated guidance suggest that UPS is taking strategic steps to stabilize and enhance its financial performance in the coming quarters.

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