UPS Posts Best Quarter Ever, Plans Share Repurchase Program
The package delivery company also said it plans to use proceeds from its initial public offering to repurchase up to $1.2 billion in Class A and Class B common shares.
Boosted by strong growth in its share of the high-margin international package shipping market, UPS earned $813 million or 67 cents a share, compared to $499 million or 44 cents a diluted share, a year ago.
The results reflected a net gain of $139 million from several nonrecurring items, including gains from venture fund investments and the sale of a truck leasing unit along with a charge for retroactively creating certain full-time hourly jobs. Excluding the nonrecurring items, UPS said net income rose 35.1 percent to $674 million, or 56 cents a diluted share, making it the best quarter in the company's history.
"Our continued superior financial performance demonstrates the strength of the core package delivery business and our global competitive position. It also reflects the promise of new opportunities," said Jim Kelly, UPS chairman and CEO. "Around the world, traditional and dot-com companies alike are searching for ways to make fulfillment and supply chain management more efficient and that plays directly to UPS' strength."
In addition, for the third consecutive quarter, average daily package volume around the world rose 5.8 percent, including the 23-percent growth in international export volume. The consolidated domestic and international volume climbed to an average 13.1 million pieces a day, up from the 12.4 million a day reported for the first quarter of 1999. UPS operates on a calendar year.
The company grew its U.S. package revenues by 11.7 percent to $5.8 billion, including a 14.3-percent gain in Next Day Air revenues, a 13.6-percent increase in deferred two- and three-day air revenues and a 10.4-percent increase in ground revenues. Operating profit for U.S. operations rose 13.2 percent to $893 million. On the international front, revenues increased 15.6 percent, compared to the prior-year period, to $1.02 billion, thanks to a 19.3-percent jump in international export revenue.
The nonpackage segment, which includes the UPS Logistics Group and other subsidiaries pursuing new strategic initiatives, reported the largest percentage gains with revenues climbing 65.6 percent to $356 million. The company attributed the increase to growth in the Logistics Group and inclusion of its excess value insurance business which was not part of the segment a year ago. Operating profits rose from $25 million during the 1999 period to $126 million, including the gain from the sale of the truck leasing unit. Highlights for the quarter included progress with two key logistics initiatives along with e-commerce and financial services developments.
Also, UPS' Logistics Group said Thursday that Compaq, Houston, has selected it to manage its North American service parts network. In addition to managing Compaq's transportation carriers and service parts inventory, the group will provide field stocking, central warehousing and distribution, closed-loop returns and order fulfillment services.