UPS(US:UPS)2024-05-03 20:48Financial Performance - Revenue for Q1 2024 was $21,706 million, a decrease of 5.3% from $22,925 million in Q1 2023[189] - Operating profit fell to $1,613 million, down 36.5% from $2,541 million in the same quarter last year[189] - Net income decreased to $1,113 million, representing a 41.3% decline compared to $1,895 million in Q1 2023[189] - Total revenue declined by 5.0% to $14,234 million from $14,987 million year-over-year[211] - Operating profit decreased by 43.7% to $825 million, with operating margin dropping to 5.8% from 9.8%[211][223] - Total operating profit decreased by $115 million, with operating margin decreasing 320 basis points to 4.1%[248] Volume and Revenue Trends - Average daily package volume decreased by 3.6% to 21,199 thousand packages, down from 21,989 thousand packages in Q1 2023[189] - Average daily package volume decreased by 3.2% to 18,075 thousand packages compared to 18,672 thousand packages in the same period last year[211] - Business-to-consumer volume declined by 1.5%, while business-to-business volume decreased by 5.5% due to challenging macroeconomic conditions[215] - International package average daily volume decreased by 5.8% to 3,124 thousand packages, with domestic volume down by 8.1%[226] - Domestic volume declined in the quarter, with the largest declines in Germany, Canada, and the United Kingdom due to challenging economic conditions[231] Cost and Expenses - Operating expenses decreased by 1.4% to $20,093 million, down from $20,384 million in Q1 2023[189] - Total operating expenses decreased by $291 million, or 1.4%, to $20,093 million compared to the previous year[250] - Adjusted total operating expenses decreased by $414 million, or 2.0%, to $19,959 million[250] - Compensation and benefits increased by $175 million, or 1.5%, primarily due to direct labor costs rising by $199 million[250] - Total cost per piece increased by 4.2%, driven by higher pickup and delivery costs and increased compensation expenses[222] Strategic Initiatives - The company opened a new facility at its global air hub for complex healthcare shipments, enhancing its healthcare strategy[184] - UPS entered into an agreement with the U.S. Postal Service to become its primary air cargo provider, expected to impact air network expenses starting Q2 2024[184][203] - The acquisition of MNX Global Logistics in Q4 2023 contributed to increased revenue in logistics, despite overall declines in freight forwarding[185] Cash Flow and Capital Expenditures - Net cash from operating activities increased to $3,316 million, up from $2,357 million in the previous year[275] - Total capital expenditures for the quarter were $1.035 billion, representing 4.8% of revenue, an increase from 2.7% in the same quarter of the previous year[278] - Cash proceeds from the sale of marketable securities amounted to $2.6 billion, providing additional resources for short-term and strategic operating needs[279] - Net cash used in financing activities was $(3.666) billion, with no share repurchases in the first quarter of 2024 compared to $750 million for 4.1 million shares repurchased in the same quarter of 2023[284] Debt and Financial Position - Total debt outstanding at the end of the quarter was $20.013 billion, down from $22.188 billion in the previous year[284] - The company had $4.5 billion in cash, cash equivalents, and marketable securities as of March 31, 2024[274] - The company anticipates capital expenditures of approximately $4.5 billion in 2024, with about 50% allocated to network enhancement projects and technology initiatives[278] Tax and Investment Income - Income tax expense decreased by $204 million, or 32.5%, to $423 million[271] - Investment income decreased by $51 million, or 30.2%, primarily due to a reduction in invested balances[265] Risk Management and Controls - The company does not engage in speculative trading activities, managing market risks through various financial instruments[297] - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended March 31, 2024[304] - The effectiveness of disclosure controls and procedures was confirmed by the Principal Executive Officer and Principal Financial and Accounting Officer as of the end of the reporting period[303]