UPS rallies after setting solid holiday quarter guidance; FedEx also higher

[UPS Semi Leads Traffic On A Hot Tennessee Summer Day]
WendellandCarolyn

United Parcel Service (NYSE:UPS [https://seekingalpha.com/symbol/UPS]) shot up in early action Tuesday after the delivery company issued a better-than-anticipated earnings report. Revenue was 3.6% lower than a year ago during the quarter at $21.4 billion, and adjusted EPS came in at $1.74 vs. $1.30 consensus.

Revenue in the U.S. domestic segment was down 2.6% year-over-year to $14.2 billion vs. $13.7 billion consensus, primarily driven by an expected decline in volume, partially offset by higher revenue per piece and air cargo revenue.

International package segment revenue was up 5.9% to $4.7 billion vs. $4.4 billion, driven by a 4.8% increase in average daily volume.

Supply chain solutions revenue fell 22.1% to $2.52 billion vs. the $2.7 billion consensus. The revenue decline was primarily due to the impact from the third quarter 2024 divestiture of Coyote.

UPS' (NYSE:UPS [https://seekingalpha.com/symbol/UPS]) reported a consolidated non-GAAP adjusted operating margin of 10.0% of sales for the quarter. Notably, UPS (UPS [https://seekingalpha.com/symbol/UPS]) said it has realized ~$2.2 billion of savings due to its restructuring as of the end of the quarter.

CEO update: "We are executing the most significant strategic shift in our company’s history, and the changes we are implementing are designed to deliver long-term value for all stakeholders. With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year."

For the full year, UPS (UPS [https://seekingalpha.com/symbol/UPS]) sees capital expenditures of approximately $3.5 billion, dividend payments to be around $5.5 billion, and $1.4 billion in pension contributions (of which $1.3 billion have been made). Q4 revenue of $24 billion is anticipated vs. the $23.9 billion consensus.

Shares of UPS (UPS [https://seekingalpha.com/symbol/UPS]) rallied 13.4% in premarket trading, while FedEx (FDX [https://seekingalpha.com/symbol/FDX]) was up 3.6%.

MORE ON UPS

* UPS Is A Classic Value Trap [https://seekingalpha.com/article/4832875-ups-is-a-classic-value-trap]
* United Parcel Service: Improved Earnings Ahead, But Dividend Sustainability Concerns Persist [https://seekingalpha.com/article/4830163-united-parcel-service-improved-earnings-ahead-but-dividend-sustainability-concerns]
* UPS: Shrinking To Greatness? [https://seekingalpha.com/article/4825883-ups-shrinking-to-greatness]
* UPS Non-GAAP EPS of $1.74 beats by $0.44, revenue of $21.4B beats by $560M [https://seekingalpha.com/news/4509126-ups-non-gaap-eps-of-1_74-beats-by-0_44-revenue-of-21_4b-beats-by-560m]
* UPS Q3 Earnings Preview: volume and cost reduction plan in focus [https://seekingalpha.com/news/4508792-ups-q3-earnings-preview-volume-and-cost-reduction-plan-in-focus]