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Looking at product mix, and in line with recent trends, we continue to see a shift from air to ground as customers prioritize cost savings over transit times by taking advantage of our ground services.
Compared to the first quarter of 2023, total air average daily volume was down 8.3%, ground declined 2.3%. And within ground, SurePost volume grew 10.8%
shift to low cost services
Transcript
2024 Q1
24 Apr 24
And in terms of health care revenue, in the first quarter, revenue from our health care portfolio reached $2.6 billion.
Outside the United States, we're continuing to enhance our network to grow our premium international business.
health care revenue at 2.6bn
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2024 Q1
24 Apr 24
Under this contract, we will move most of the USPS air cargo within the United States. The USPS air cargo business fits beautifully with our strategy to grow our B2B business. To win, we put together an innovative and differentiated solution that leverages our integrated network and existing assets
usps air cargo contract
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2024 Q1
24 Apr 24
There were 2 elements that contributed to beating that 40%. One, on the top line, we did see positive volume momentum going into the end of the quarter.
In fact, the last couple of weeks were basically breakeven from a volume perspective.
I think the last week was about 0% thereabout.
So sequentially, we were seeing improved volume. But the bigger component was just some cost trading between April and March, things like occupancy and maintenance cost shift in terms of when they hit the P&L between March and April.
So no change from a guide perspective, still down 20% to 30%, some cost timing at the end of the quarter there, but the positive was the trajectory of volume momentum.
why the beat the down 40% guide on investor day
Transcript
2024 Q1
23 Apr 24
Looking at cash flow and capital spending.
For the full year in 2024, we still expect capital expenditures to be within our target of around 5% of revenue or $4.5 billion. We're reviewing certain aspects of our pension strategy, and so we expect free cash flow to be within a range of approximately $5.9 billion to $6.7 billion before reflecting any pension contributions.
fcf guide 5.9 to 6.7
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2024 Q1
23 Apr 24
We are reaffirming our previously announced 2024 consolidated financial goals. In 2024, we expect to generate consolidated revenue ranging from approximately $92 billion to $94.5 billion and a consolidated operating margin ranging from approximately 10% to 10.6%. Versus last year, we still expect first half earnings to decline and second half earnings to grow as we lap the first year of the Teamsters contract, and we still expect to exit the year with the U.S. operating margin of 10%.
As we move forward, we are staying on strategy and under our better and bolder approach, we are pursuing our declaration to become the premium small package provider and logistics partner in the world.
With that, thank you for listening. And now I'll turn the call over to Brian.
maintained FY outlook
Transcript
2024 Q1
23 Apr 24
As we laid out at our Investor Day, our long-term target is to grow our U.S. SMB volume penetration to 40%. DAP, our digital access program is 1 of the tools we will use to reach this target. Recently, we enhanced our DAP pricing capabilities by launching a solution we call fast lane. With fast lane, we can optimize rates and target attractive volume growth whether it be by partner, by product or by customer segment, all of which can drive revenue per piece growth.
We can even target volume growth by geography to drive density. Prior to fast lane, rate and other adjustments in depth could take months.
Now we can make them in a matter of days or even hours.
In terms of results, in the first quarter, DAP revenue grew by 3% year-over-year. And in 2024, we expect to generate over $3 billion in global DAP revenue.
3bn in DAP target for 2024
Transcript
2024 Q1
23 Apr 24
Our operating profit performance was a bit better than we expected due to higher productivity.
op profit better than expected
Transcript
2024 Q1
23 Apr 24
The first quarter turned out as we expected, starting with a decline in average daily volume.
U.S. average daily volume, or ADV, declined year-over-year, but the rate of decline slowed as the quarter progressed, ending with March down less than 1%. And on a sequential basis, the ADV decline rate in the first quarter showed marked improvement compared to the fourth quarter of 2023. This improving performance is primarily due to the efforts of our sales team to win and pull through new volume into our network. Outside of the U.S., the ADV decline rate also improved sequentially compared to the fourth quarter of last year and we saw pockets of export growth in certain markets in lane.
us adv declindd kess thrigh the Q,ended down 1% in March
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2024 Q1
23 Apr 24
To date, we've won back roughly $600,000 ADV of diverted volume, and we are working to win back all diverted volumes by the end of the year.
won back 600k of diverted volume
Transcript
2023 Q3
5 Dec 23
As we discussed on our last call, we ended the second quarter with average daily volume in June, down 12.2%.
As contract negotiations became later and louder, we saw more volume diverse than we anticipated. August represented the low watermark when average daily volume was down 15.2% year-over-year. Post ratification, we exited the third quarter at half that rate, and we are continuing to see our week-over-week volume levels improve despite a challenging retail backdrop.
In the U.S., in the third quarter, average daily volume was down 11.5%. And we estimate the impact of volume diversion reduced our volume by approximately 1.5 million packages per day.
colour on vol declines by month
Transcript
2023 Q3
30 Oct 23
f you go back to 2019, our volume is about the same as the third quarter as it was back in 2019. But our SMB mix has moved from 23% to 29%, and our net revenue per piece has moved from $9.99 a to $12.54.
So we've been laser-focused on improving the revenue quality in our business. And we will continue to do that. Value is defined by what the customer is willing to pay for, and we are improving our experience every day. A good example of that is delivery photo. We're now 92% of all of our residential drops or photograph, which creating a better experience for our recipients, for our customers and for us candidate, and is like.
We're leaning into simplifying the experience of how it is to work with us so we talk to you about the widgets that we have with DAP or the improvements that we've made in our claim process. We see our Net Promoter Score now in the high 40s.
So we are need of that experience because it helps grow the revenue quality, and we're going to continue to do that.
Q3 vol similar to Q3 volume in 2019 bur rev per piece much higher. smb share helps
Transcript
2023 Q3
28 Oct 23
Our health care business will be $10 billion this year against an addressable market that's over $100 billion. We're going to grow that market. It's got double-digit margins. We're going to grow it because we need to grow it. It's important for the world. It's important for humanity. And we are the best in the world at this.
So that doesn't require any consumer spending. That's just leading into a market share capture with the capabilities that we are investing in, be it cold chain capabilities and more.
healthcare growth
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2023 Q3
28 Oct 23
So as we look at the small package volume in the United States, what we're seeing is basically a reversion to the mean.
So we're at pre-pandemic levels. And I think our learning, all of our learnings as the [indiscernible] volume spikes because of the event, things are going to revert back to the mean.
If you look at the growth rates projected for the small package market in the United States, it's low single digits for the next couple of years.
mean reversion-- lsd growth in small pacjages for next couple of years
Transcript
2023 Q3
28 Oct 23
I guess maybe just a very simple question, I guess, is when do we return to margin expansion in domestic. I mean RPP, CPP spread was really negatively wide in the third quarter. I assume it's still negative, albeit less so in the fourth quarter. Can we get to a situation where we get back to year-on-year margin expansion in early next year? Or do we have to wait until August when the labor really inflation really steps down?
Carol Tomé
Well, maybe just an observation on the U.S. margin in the third quarter. Recall that we had $500 million of expense related to our Teamster contract in the third quarter. We backed that out, the U.S. margin would have been 8.5%. 8.5% on volume down 11% is not a bad margin.
So we've got a bit of pressure on the margin that we shared with you because of our new contract. The contract is front-end loaded.
We're bearing the pain of up front-end load for a 5-year contract that's very attractive. The compounded annual growth rate on the 5 year is 3.3%.
So once we get through this first front-end load, with 46% of the cost in the first year, once we get through that, the margin is going to grow. It's going to grow in a big way.
So hopefully, that's helpful.
margin expabsion in domestic again? 46% of the cost in the first year
Transcript
2023 Q3
28 Oct 23
while consumer spending has been resilient in 2023, headwinds are mounting for the consumer in the fourth quarter. And looking at estimates for holiday retail sales this year, increases range from over 4% to 12%.
cons spending headwinds
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2023 Q3
28 Oct 23
As a result, we've lowered our full year guidance and have provided a range to reflect the uncertainty in the market. We now expect consolidated revenue to be between $91.3 billion and $92.3 billion and consolidated operating margin to be between 10.8% and 11.3%.
guidance
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2023 Q3
28 Oct 23
Supply Chain Solutions.
supply chain solutions
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2023 Q3
28 Oct 23
And lastly, we incurred higher labor costs associated with the new contract and added headcount earlier than normal to ramp up for peak so that we can ensure we maintain our industry-leading service levels.
higher labour costs ad peak costs
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2023 Q3
28 Oct 23
International segment
international segment
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2023 Q3
28 Oct 23