United Parcel Service reported third-quarter results that exceeded Wall Street expectations and raised its full-year revenue guidance for the second consecutive quarter.
United Parcel Service (UPS) reported third-quarter results on Tuesday that beat Wall Street expectations for both earnings and revenue. The company also raised its full-year guidance, marking the second consecutive quarter it has increased its outlook.
For the quarter ended Sept. 30, UPS reported adjusted earnings per share of $1.69, surpassing the LSEG survey expectation of $1.63. Revenue rose 6.7% to $22.9 billion, exceeding the expected $22.29 billion. Net income was $1.16 billion, or $1.37 per share, down from $1.31 billion, or $1.55 per share, in the same period the previous year.
According to StockStory, the company’s non-GAAP profit of $1.69 per share was 4% above analysts’ consensus estimates. Revenue growth was reported as 6.9% year on year by StockStory, compared to the 6.7% figure cited by CNBC. The operating margin stood at 7.6%, in line with the same quarter last year, while the free cash flow margin increased to 11.6% from 7.1% in the prior year period.
UPS reported a 4.5% increase in revenue for its domestic segment and a 7.1% rise in its international segment. The supply chain solutions business saw an 18.2% revenue increase, which UPS stated was primarily driven by growth in forwarding and logistics, including healthcare. CEO Carol Tomé noted on a call with analysts that healthcare revenue exceeded $3 billion for the third consecutive quarter.
The company has been undergoing a turnaround aimed at creating a leaner business model and leveraging automation. Tomé stated on the call, "We’re driving more premium growth, improving revenue quality and mix, and creating greater operating leverage through a more efficient network." She added that nearly 70% of all packages will flow through an automated process during the upcoming holiday season.
UPS raised its full-year consolidated revenue projection to approximately $92.6 billion, up from the previous expectation of $91.2 billion. The company also projected fourth-quarter revenue of $25.7 billion. StockStory reported that this guidance was 1.1% above analysts’ consensus estimates. Management also slightly raised its full-year adjusted EPS guidance to $7.28 at the midpoint.
Despite the positive outlook, fourth-quarter domestic average daily volume is expected to fall due to a reduction in volume from Amazon. Tomé said the consumer remains resilient and that growth in average daily volume between the third and fourth quarters will be consistent with last year.
The results indicate that UPS’s strategy to streamline operations and increase automation is yielding financial improvements, particularly in revenue quality and cash flow. The raise in full-year guidance suggests management sees continued strength in the business fundamentals as it enters the peak holiday shipping season, despite challenges such as declining domestic volume from major clients like Amazon.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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