UPS Beats on Q4 Earnings, Stock Down on Lackluster 2025 Revenue View

Core Viewpoint - United Parcel Service (UPS) reported fourth-quarter 2024 earnings of $2.75 per share, exceeding the Zacks Consensus Estimate of $2.52 and reflecting an 11.3% year-over-year improvement. However, the stock declined in pre-market trading due to disappointing revenue guidance for 2025 [1]. Financial Performance - UPS's total revenues for Q4 2024 were $25.3 billion, slightly below the Zacks Consensus Estimate of $25.33 billion, but up 1.5% year over year [3]. - U.S. Domestic Package revenues reached $17.3 billion, a 2.2% year-over-year increase, driven by a 2.4% rise in revenue per piece and growth in air cargo. The segment's operating profit grew 10.8% year over year to $1.75 billion, with an adjusted operating margin of 10.1% [4]. - International Package revenues totaled $4.9 billion, marking a 6.9% year-over-year increase, attributed to an 8.8% rise in average daily volumes. The segment's operating profit increased 18.1% year over year to $1.06 billion, with an adjusted operating margin of 21.6% [5]. - Supply Chain Solutions revenues were $3.06 billion, down 9.1% year over year due to the divestiture of Coyote. The adjusted operating profit fell 7.7% to $284 million, with an adjusted operating margin of 9.3% [6]. 2025 Outlook - For full-year 2025, UPS anticipates revenues of $89 billion, significantly below the Zacks Consensus Estimate of $94.6 billion. The company plans to reduce its exposure to its largest customer by cutting business volume by over 50% by the second half of 2026 [2]. - The adjusted operating margin for 2025 is expected to be 10.8%. Capital expenditures are projected at approximately $3.5 billion, with dividend payments around $5.5 billion and share buybacks worth $1 billion planned for the year. The effective tax rate is expected to be 23.5% [7].