UPS - Earnings call transcript Q3 2021 | United Parcel Service, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Kelly Johnson, and I will be your facilitator today. I would like to welcome everyone to the UPS Investor Relations 3rd Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer period. pleasure the my your over now Mr. host, is to floor turn to It Relations Officer. Investor Childress, Scott Sir, is the floor yours.

Scott Childress

Good morning Call. Earnings Third Quarter and welcome to the UPS XXXX

Joining and our Carol me our Newman, CFO. CEO, today are Brian Tome,

our begin, subject the comments make federal future operating the securities performance we some within address to and of forward-looking we'll I you or today remind Before that Company. to our are of laws statements risks are These statements the want Form expectation results XXXX or our subsequently in Securities described the are which relations and reports when with uncertainties, XX-Qs, UPS Form file and reports website other on from furnished XX-K, and are These and filed the available the filed investor Exchange SEC. we Commission. to for

results GAAP along today's included or transformation comments Relations which financial Investor measures, XXXX, of and after-tax is $XX and will results, charges. charges stated quarter of reconciliation website. third per refer The the on $X.XX call, UPS otherwise, other of the million exclude available non-GAAP with other share. a of diluted Unless our adjusted transformation to For webcast

Following the our from take will teleconference. us joining prepared we those remarks, via questions

then to the so wish you allow that X your X one and a enter question, phone may to If as queue. on only possible press many ask as Please ask question participate. we to

over Carol. ask question. And additional to an now the to turn rejoin opportunity may will the the You call for queue I

Carol Tome

deliver. CEO, service that UPSers XX our morning, matter the good I've continuing customers. and Scott, like been great way, comes begin our no that thanking you, I'd to I've learned months UPSers what for Thank to by to deliver everyone. all In

Ida strategy. network effects over Customer ago, U.S. Inside out People weather Lead, one matters. we the a widespread under in through Driven integrated technology all a our Innovation three deliver framework our powers the focus flexibility main several is events, First, bigger The it a not and year framework, third to of brought little on leveraged extreme laid that UPSers the that it quarter of But what including strategic Hurricane A better, areas.

improve SMB volume. including to is revenue First growing quality,

is serve a UPSers, third customer through take-out allocate to the to And capital cost better returns initiatives. is Second create on and deploy. effectively experience, our reduce productivity to capital higher to cost and happier we

we is While is the clearly execution it early in our are our visible progress of the strategy, in results. making

at of Consolidated operating $XX.X and expense margins. segments three strong operating quality revenue Brian the profit across our UPS more by year improved months improvement, grew anticipated. Each and driven details segments. our operating over the operating XXXX, X.X% growth revenue - first XX.X% quarter, of operating profit to for X will our revenue delivered quarter year generated share year Looking from of performance has solid all any was shortly. than control. history. billion by third full Consolidated of our better - $X of our performance last we than And double-digit in driven rose another billion to profit the

SMB. will laser-focused by week. weekend new are planned is one services adding enable customers the delivery we with the our also capabilities discussed, our value improvements this This As Expanded on as completed large end network. that to that we've capabilities. of end-to-end grow U.S. in initiative These UPS benefit be of

We commercial, and both on Saturday will the deliveries. pickups residential U.S. for cover population about and of now XX%

this margin And weekend basis. best we've U.S. additional services expanding for expanded is additional year-over-year addition, we've while network delivery on deploying of customers without our that delivery. unlocked that capacity program SurePost our Saturday operating capacity part Sunday In benefits provides capital. more done The a all

the In average the value results, look that third are our up new we we see 's providing. including SMB platforms daily SMB at capabilities U.S., year-over-year. XX.X% volume was quarter As we

see growth average as to SMB DAP, opportunities to and experiences volume our quarter, s volume XX.X% was growth third year seen many In outside quarters. daily fact, volume, X.X%. ago. SMB grow the international of past customers strong roll the program We here access improve continue up In the from basis U.S., the our And of made for outside up our X XXX X SMB points out digital our digital we U.S. to we've total U.S.

were Let me ready the also were healthcare. and expertise. SMB turned world to technology, year, rolled out on last vaccines and When and late we with touch s COVID-XX UPS, capabilities, connected

in healthcare doses and by here new relevance delivery. growth brand And this track X on the customers with to is deliver just vaccines, we than vaccine profit significantly of sector. on-time end are XX.X% driving Our year, the billion SMB attracting more COVID-XX on

Moving are cost relentlessly good to our reducing on we're productivity, serve, and we focused progress. to making

productivity the I'll go the measurable While X.X%. in through highlights. call out U.S., by as details, increased hour pieces or Brian PPH a will per improvement a we drove few In

third we but June described us Additionally, as optimize year. utilization Nando XXX This Investor impactful than trailer more eliminate trailers, XX% loads jobs. our we've in through our up year-over-year. was points cube as efforts are basis ongoing quarter the our helped Day, And of creating in last to discussed more daily fewer loads previously, at versus

positions our in productivity, supervisor our positions to X,XXX XXX into we additional reduce no and Company. are full-time improved nearly converting cost part-time at So turnover operations around to

opportunity $XXX we plans to Turning on X.X our or $XXX to we costs expense, about optimize Transformation eliminate XXXX. referred this are track of year non-operating with in what non-operating to as million to additional in million

is disciplined third experience. our completed we've technology platform Promoter lend part how employee our strategy, to capital to network. delivery focus employee themselves package our packages in In for that acquisition services that enhance and customer due Roadie, the in of a also Scores the our improvement area we small provides to marked October, satisfaction capital and we've executing began seen we Net competitive allocated Finally, allocation. Since of don't

the We to Roadie are to welcome delighted team UPS.

plus capital discipline, a amount This our yield cash. significant disciplined be record practices. spending of to earnings continue We in

So on is be a invested return record last end $X.X expect we've a the XX%, of to from XXX-basis year. full-year which far this year, XXXX improvement what point cash in free capital flow. at we generated billion reported we And around

Turning is capacity, chain challenging. global There to supply concerns. the Quarter, and market is for are Fourth outlook positive. cost congestion, the our But UPS,

And shareowners. deliver be win a a we recipients, the believe capacity our we our As U.S., are on In a UPS planning shippers, peak it project ready, and tight business. package, that get robust our peak a we we to once are will forwarding we of season. delivered. Outside the get efforts, way peak, and through where freight we well we for benefits U.S.

customers me day helpful in share stay Nonetheless, calendar we've our begin Let contact market. capacity holiday last collaborating X shopping have largest during a and of we delivery peak-operating expect with, To we'll outpace weekend began is will expanded and We months few in close Further, additional year. more season. the than we sorting added details. the capacity. demand with several ago consumer with them the as

us and customer These again we Our to will daily to, actions that amount And enable our we volume the where chaos will need network. demand. allows technology costs control minimize capacity service enters of high with levels. match

through of and costs generate effectively margin but digitized When XX process, in pressure. are were quarter, up country, to and we job we labor they add are applying. the operating year, cost consolidated operating qualified parts it last we've than receive to offer job labor managing front, the applicants application In a higher year-over-year. enabling profit that our fourth simplified you the expect minutes of On record within expand

doesn't the on pressures. services release business While peak, offer December our general we of end the The we details we increase are reflecting X.X%, and this XXXX on be week, cost XXst. will value ups.com. inflation rate posted will to Later our be laser-focused The increase. U.S. will

our we and Thank amazing As execute And results continue the a driving we today future. I us strategy ahead, the positions leveraging call move Brian. smart well network, now global will to to for our financial you. will turn UPSers strong logistics over that's and by

Brian Newman

I four will starting cover In Thanks, Carol, third with areas, good the comments quarter and then macro-overview, morning. my our results. today,

wrap cash the Next, for on outlook I'll And up returns. some review year. share lastly, I'll with our and full comments owner

macro. the industry the dampening continued shortages this of inflation, demand backdrop, strong effects COVID-XX along our despite the labor. high and was economy the for global growth third with with remained its in services the start Let's the and quarter, Within environment in In inventory and pricing firm.

which continue historic IHS and is rates. expect And dynamics in to U.S. and grow forecasting the fourth grow third, in growth execute we will GDP GDP We will to fourth we strategy our capture demonstrated X.X%, GDP growth above quarter opportunities market. in global X.X%, expected the remain quarter. profitable the is as similar

driving to record generated last third performance. up Consolidated per enhance we've consolidated and above revenue margins last period quarter operating bottom-line top strong profit earnings productivity, The Consolidated results. billion, basis and year. $X.XX, achieved from Consolidated double-digit and XXX $XX.X XX.X% capital the billion. same expanded third allocate $X to Moving margin to last year. year. diluted quarter the which X.X% increased improve All to XX.X%, than operating our XX.X% operating in segments totaled higher operating is profit quarter. made share quality, points X was And progress was revenue

segments. take at look let's Now the a

gains. improvements than Principally, Our than results for we in productivity anticipated. U.S. domestic in per higher were revenue and better due piece to planned

volume. expected, in pieces the This decline daily growth packages volume XXX,XXX of day. or offset partially per average U.S. by ground we commercial XXX,XXX in due down As was SurePost X.X% a to was in decline

in Our results win parts reflect the of the strategy attractive continued market. our to most of execution the

of platforms XX.X%. the be mix customer U.S. has XX.X% SMB volume, year. up up And average fact, daily made In domestic XX.X% SMB quarter, last including as volume third in positive continued to to higher-yielding compared was

the last compared Regarding XX% third grew the our tech. to commercial all industry retail recover Nearly quarter, average sectors mix, including continued volume, BXB in XX% our and volume year. and in quarter of X.X%, third of grew daily high business delivery our representing to

of with growth U.S. revenue of by rate. the XX% quarter, increase points generated a in fuel XXX driving piece the revenue per up $XX.X X.X% basis billion driven piece For revenue domestic per

overall operations to made inside of every cost revenue on-road the summary, implemented the productivity In by increase growth an X.X% UPS labor growth, Carol in driving total quarter, which is sort our XXX $XXX domestic the operations mentioned, segment well of per expanding improvements we we And certain a of our offset by year-over-year as expense of profit, by hours which X.X%. and in measure productivity, Through rate. area And Saturday basis decrease fuel third adjustments of on last contributed above rate market $X.X as Turning led helped to was Combined, expense improvements preload, points leverage. costs, expanded focus of hour. to activities key points. X.X%. growth generated improvements these as direct led XX.X% a grew in our U.S. the The expense pieces And delivery. margin billion day nearly geographies, in in year. operating improved operating XXX positive million or basis delivered operating compared per with

Total plans we and airports. contingency Moving volume growth two-year in moderated and to BXB and out export, was year-over-year the XX%. decline average Asia than strong volume On to comparisons export to network continues daily difficult the our comps year-over-year the segment in grew implementation X.X% in had strategy. in execution international, year tough daily Export anticipated. Americas supply offset decrease a a third X.X%. average BXC ago basis was XXX X.X% Asia flights up up was COVID-XX by due was of and down to daily a generate to total volume driven out growth which at from a average we the on quarter in volume X.X%. Asia. on in plan, a basis. Europe protocols average fewer was a volume average of profit X.X% select disruptions, growth decline the stack, offset of The daily some and in response year-over-year Due volume to daily of our chain up Relative

quarter delivered continue surcharges year-over-year $X.X international was XX%, piece profit we quarter, increase Revenue the of growth match basis benefit margin $X.X up regions. fuel. as was the was and an XX.X% quality profits demand international available improved In billion per billion, all across Operating Revenue from of fourth with a XXX-basis with revenue to a quarter, to For strong on point $X to including over consecutive XX.X%. capacity. operating was XX%, billion. third its utilize up

growth increased exceptionally couple chain well Now profit delivered with X.X% looking as forwarding, drivers. profit Solutions record in demand grew of key margin led strong and drove by environment. product, top to quarter air all profit drove growth. generated our Quarter, freight and million, the the the elevated and at team market remained supply portfolio. in business logistics, and which yields in executed in Market dynamic And solutions, with bottom-line consumer constraints volume and $X.X operating record results. freight the of bottom-line and in a In $XXX major Revenue contributing Chain a XX.X%. by healthcare forwarding impressive results demand our the top third profit double segment Supply operating digits In operating capacity an to revenue categories ocean was billion Third

income through of year. full closed we on this million quarter that the expense. our business rest statement, April sale of of is Walking the on this reminder, UPS interest we a $XXX first that As given without results. the had Freight XXth

$XXX rate last changes came effective at which lastly, Our discrete than pension year favorable and income other XX.X%, tax rates tax was lower due items. in our to jurisdictional million. in was And

Now balance let's cash the turn sheet. to in

We are capital flow disciplined allocation on focus cash our generating net and in from growth income. strong

billion with have we cash $XXX of free announced repurchase and $XX.X the has a cash And we share we XXXX, quarter. flow. in billion XXXX, $X.X billion a shares billion August, In distributed in the first flow $X intent record plan generated in the repurchase months in UPS third in completed million to far dividends. operations in which of X in $X.X year, this So

remainder the the over execute few program We next the expect of years. to

Now I regarding comments a outlook. make few full-year will the

we our pay is strategic in challenges, quarter. the XXXX UPS expected several external initiatives pressures, progress year these during of and continuing increased consolidated inflationary our to the fourth be divestiture takes close are including factors, around On account our peak inventory growth revenue consumer which the out-performance and are of to plan, quarter to manage to and expect quarter attention We we shortages. and guidance. through we a combined raising season with COVID-XX, strong basis, Due full-year and making are with Despite demand third fourth labor our year-over-year, XX.X% full into Freight.

anticipate will be XXXX around full-year growth should revenue than In with XX.X% around margins operating We full XX.X%. consolidated year Additionally, U.S. growing we XXXX operating the revenue of XX%. faster U.S. domestic, margin be volume. about anticipate

couple we U.S. your get segment, update you As domestic the to quarter. things models keep for fourth into as in a there the mind are of

of quality our as implemented to we the First, in compared represent usual, addition volume a due million we to $XXX total BXC when enterprise last second, will part year. pricing early lapping surcharges peak revenue volume and than peak rest the in actions of a larger more customer year percentage And initiatives. the of as our to season are

growth As fourth expect we quarter. piece the a result, revenue moderate sequential a per rate in to

in segment, around the we anticipate we full-year And and about XX.X%. revenue margin operating of of about segment, of with Chain XX.X% international margin Supply growth operating growth XX%. the full-year to Moving expect an around of XX.X%, revenue Solution

for we about be rate full capital flow $XX.X to Additionally, XXXX, be is expect be be $X.X expected around tax are expected now And full Capital on billion, around our expenditures year and in free cash to to invested XX%. return XX.X%. year approximately the for will billion. lastly, effective the

the us and you revenue and high outlook to well XXXX up, I economic June. quality, wrap effects our the with in I way initiatives end productivity achieving shared that are As targets of putting the of our our on

commitments, strategy our our under a delivering better, and framework dynamic We bigger not are environment. the despite executing very on

quality, the people, to our to our of the Thank performance improve for disciplined remaining and our financial lines. reducing open on the revenue improving please serve, customers, allocation and on our experience capital laser-focused are operator, Company. you. and cost We An

Operator

Thank you.

[Operator Instructions] with Please comes question. We Todd will first your Fowler from the now conduct Capital line a session. go question-and-answer with of question ahead KeyBanc Our Markets.

Todd Fowler

get in It or a ahead slow it view you piece cost sounds Also, like about increase to the that as little good start to component normalized segments. the and how that bit start on out of Congratulations that or for rate in into move start a was to see ability some be your But a per wanted fuel environment. front kind forward? of morning. sounds talk in can I good of cost you like U.S. normalized per XXXX cost the piece you're Thanks. Carol, there. with in and as a we a what pressure. Thanks performance and Great. to tough seeing domestic going should

Carol Tome

with lots increasing that actually, of per more share our delivered automation at virtuous proud third you pleased look, Nano the optimize the quarter our But, There Brian cube very were the through per than outs quarter of team were doing give about people our into we'll on lower maybe revenue able what a talked with goes team in productivity little cost. of have we've of UPS, in we And that ins as want driving piece rate Brian, buildings. we a piece. you. and more with about, piece. inside as here is cost We can to. be driving third productivity in hour cost and higher utilization. Happy automation, the per facilities, cycle per that pieces XXX,XXX I'm detail at and super goes look But And 'XX and are terms to a to our the

Brian Newman

Todd. $X.XX, benefits big morning, were were in union our up wages Look, per cost piece about about and good up there $X.XX. four and and The was Carol, drivers. to, Happy the U.S.

weekend fastest Our ever XX. ground contributed initiatives

the had the in about we lap, then etc. XX.X% a of $X.XX about like the total It's from we $X.XX. perspective, CPP increase plus But other items third drive tax, saw quarter. did growth Todd, some increase. fuel excise right, You're And

that mid-single-digits You'd down expect quarter fourth in trajectory. we go about the if to the to think

Todd Fowler

you. Thank

Operator

with line Please our And go you. will of Shanker the from Stanley. ahead next question Morgan with Ravi Thank question. come your

Ravi Shanker

you Thank largest how you you. everyone. volumes us did morning, also shed give customer And regarding light in an your relationship and going. Can update customer, [indiscernible] [inaudible Good some that is the on XX:XX:XX] on XQ. you

think with that but over are also that fourth [inaudible expect to you will change relationship them working that time. for you agree said XX:XX:XX] said I you quarter,

can great. give So if that Thank you some there, be color would us you.

Carol Tome

Sure.

of of in growth SMB saw we enterprise customers, means about rest with and and out as a think called declined an SMB expected. we declared our that growth if the customers business, that increasing the the versus we customers bit So customers the the enterprise penetration we

a For of couple tough against comparisons. were we up reasons, one, year-over-year

volume every controlling we our the that anymore. package think quality. we that are used that same, the because comes to we're Secondly, network, don't think on revenue into laser-focused We was

shippers, delivering no we're okay us. some their packages For longer that's and with

part to volume where the was it's as of continue but relationship Now, grow, in supply back by our chain, really, year, chain. our X our not and we're if customer And with as we're about continue got with I'm support demand. customer, of because This trending percent volume great customer. think XXXX. we shift that at expect, impact the pleased of they it e-commerce their a at relationship for the months stands. look volume, of customer first as of supply Last surged just their would a largest largest year we've where their in largest year that to COVID-XX, customer we total And you this with the

Ravi Shanker

Thank you.

Operator

you. Thank

with next go from ahead of the question question. please Citi, of line Our come Chris Wetherbee your will

Chris Wetherbee

Good morning, Hey, guys. thanks.

domestic on at guidance, look some the particularly implied Quarter Just Fourth of taking a side. the

what perspective, standpoint, more from looking And similar seems bit fairly the So had Third even a than quarter an the it we're Quarter. than at we in profit in we growth maybe little a operating like saw Third a Quarter, margin from

maybe give us bit little a So you could of color.

about inflation, on you the through some just talk that update in mentioned actually maybe Quarter. ultimately, seen pricing inflation the how little and profit, Fourth that's managing hourly dynamic, then the because very looks about you're out here Quarter. and what Can there to You how surcharges in like good the cost we've forecast us an that the bit some think it of lapping in give Third of a you you're market feel the labor the in, like relative cost even you is

Brian Newman

your want and in focused We're maintain come looking your third into we we likely as -- so happy down I and on go into the and XX.X% but CPP in pick that The to XX% RPP Chris, CPP have between which to RPP mid-single-digit. spread to quarter up. RPP the was down would come that the single-digits in quarter, CPP. high spread, fourth

year of of as XX.X%. the it, grew lapping from surcharges about in So we think the SMB $XXX volume last fourth were year perspective, from also highlighted ADV the million you a quarter we by last

That's on there was the prepared we we down. but cost one called remarks, year-over-year-over-year. on can elements of pricing, my the out moderation per piece I So the this that reasons some pull sequential confidence have

feel of the terms be pricing quarter in fourth outlook. about good firm expect to So and the we it environment, the in

Carol Tome

And talk question the you about bit that maybe had. a little inflation cost we'll

If agreement. of States, collective by in the bargaining employee the have some we States. them you of covered base a about UPSers sort XXX,XXX think are our about XX% in United United

the is have compensation we of what through So good manage and for employees, that. those a idea we

Now rate We've with our been able rate people make to productivity. to market market with adjustments adjustments turnovers, have sometimes to those into attract we Company. cover do

that feel with through many inflation are companies really ability manage labor I So the good cost about our today. to struggling

Chris Wetherbee

Thank you.

Operator

you. Thank

Our ahead next of from Deutsche question. with of Bank. come will go your question Amit line Mehrotra the Please

Amit Mehrotra

because I But Thanks. going those up the share point competitive will last more about to union you are volumes on have on Those the the talk you allow a how made. where just plan? year guys And Company under-penetrated. Good area then respect and just that's about on than volumes, deliver just think priorities to wondering negotiations? with the you what morning. trending long-term here be DX be with can anybody then priorities your your realizes. negotiations been Carol, DX are versus the and ago, are in you talk S&P SMB the Can that the to following sooner

Carol Tome

Yes. to. Happy

we So look S&P numbers. S&P series call them to segments. on question, We a of at used the through by

all see, all actually But is medium-sized say in segments. those from have the that we happy we side. growing. names that's Now segments, growth And attached to what down the to for micro-end want platform they're to

So categories. all at we're delighted of it rather the the than growth question, those relates the end negotiation. look, day, just through at to with we And win, the win strategy of union the as win, in want to a looking of this and lens a we're

a the to we're fact, them Brian, this. It's front? next share SMB along. week, talk keep color and we've In we'll we we on want and go different have board in meeting there to any you than as is we're how approaching other apprised going about past the done you to

Brian Newman

quarter No, we last Carol. did the with I We fourth had call good growth. XX.X% growth. though, It some year, out moderated, posted the obviously, in overlaps. of

look we for growth about holding but quarter, as XX%. steady has that the So think rates, might at this lower been fourth you mix

is We're So we low get goal mile in XX% last as the think on our and into year, our to a as by the that back high up we were XXs. to XXs, to way well marker. XX

Carol Tome

not customer overall just journeys good just progress are the good on SMBs to be more the all we've SMBs, couldn't the making with customers. experience. our improving you And it's those And for we're because XX that it's We're really for journeys. shared with pleased responding

Amit Mehrotra

it. Appreciate much. very you Thank Okay.

Operator

Thank you.

of question question. Bernstein. go ahead will from come your line next David Our the of Vernon with Please

David Vernon

good and guys. Operator, Thanks, morning,

to to So bit -- level bit you of about talk a bit front? be did level a business? capital domestic Brian that more growth in range. couple when that allocating a a next little know pretty capital faster you little think to profitability of little clear I a I and see we do the about domestic think the think what and maybe been was how domestic to segment rate allocating longer-term margins Carol, ADV hoping But issue in the want of about in the you've around before X% want on into that you X% about achieve driving volume little you should at years of before

Brian Newman

the for thanks question. Dave,

So the The to is stands up that we've and 'XX. full-year domestic XX by forecast out now to XX% laid trajectory business at and the X/X. move here

on we're to well our that way journey. So

growth to network doing in a are trying capital -- We create actually but it allocating capacity to way. by very some the We're up assets, more our domestic segment, sweating weekend, the disciplined in capital etc. we're opening

capital a there's I you. will break we play come about few quarter down guide variables 'XX talk next the the you and at to on So when call here. back for the

Carol Tome

incremental that to opened And just on did important network. I ago, X customer that A our adding the packages. capital is We been would've delivered delivery just Saturday, that point, into Last called weekend network basically out up any nothing. experience. spending and capacity. add for year million how we And we that without

optimized then. more that make as before as when additional possibly going is can network be be, it optimized sure we're we we'll of So But start as capital. to investing a capacity this then as add lot possibly it can it's

Brian Newman

the for And you go domestically unpack initiatives. shifting the we'll to buildings talked we from the then more technology. package smart may And capital about

Carol as experience in. customers. making invest So our mentioned, we things for better the a Those to want the and unlock one are

David Vernon

All helpful. that's right. Thank guys, you,

Operator

you. Thank

of Our go Poliniak from line Fargo. your Please next Wells question Allison question. the of with come will ahead

Allison Poliniak

Hi. Good morning.

that reducing direct your labor the hours. on color any guess from labor there? and choke that other first, you benefits. efforts of just benefit I first, focus When the the But around start second, optimizing here? accelerate get Thanks. us. points you're utilization to any to want the key highlighted for then looking automation, to And Just to obviously a tail longer address does existing comments

Carol Tome

tags day. Smart The automation. all million women scans eliminating who of That about bagging, going the think That we're do our to what a drive men and they'll because our packaged -loaders. excited opportunities. packaged Brian, are alone ton a automation you off opportunity device. packages two RFID label putting manual Well, package about when alone delivery buildings, that that done induction projects wearable means technology a we into productivity. attack just eliminate on introduce they'll manual we've robotic there's I'm cars, loading in add? before. you our on cool will kicked scans to pre to smart here really the cars be And we have XX in else big application, automated those ways into package that. are And then drives automated want haven't to are and by for

Brian Newman

going Carol in Allison, I about and under -- we that. though our is into rate think, market already workforce certainty being and us it cost captured there. of talked cost MRAs, dynamic I about of that a a we're embedded for XX% part-timers, plan expense the a out some the forward going last environment the the increased quarter, we've talked of some Look, XX.X adjustments perspective, to that within I call from margin largest our but the gives amount doing put talked fourth and that's forecast, contract,

we we're have of we're line it. prepared for a and the good sight think to I So -- future,

Allison Poliniak

Thank Excellent. you.

Operator

Thank you.

with Nathan the Our question. your of go of line next question will Jairam Daiwa. ahead come from please

Jairam Nathan

to thanks the It Hi, connected taking is here. question. earlier for my somewhat question

the on pieces back to you see. just also reduction you you X is X, see? understand, So can us and where What how could do a of kind being years -- per was about give a hour hour of further some per talked you metric. pieces what want much about I If perspective potential

Carol Tome

go productivity of the our to third at looked productivity. have to results XXXX we quarter, that in to back see As kind you

better, to our to just the the we're quarter potential, as quarter after operating team So it's after report get of great engineers. that. we'll and going improvement a dramatic by you quarter, we driven our do and work Once

Jairam Nathan

you. Thank Okay.

Operator

you. Thank

the question Scott Our line next will of go your come Please Group question. Wolfe from of Research. with ahead

Scott Group

guidance? XXXX guys you you again within now of Thanks. Do pricing year. outlook Good talked think -- I about it's and your the from lines, know ability those about morning. that base bit talk you year? margin plus early, the maybe feel points have can next I inflation next still higher for U.S. along good maintain but the year about base improvement XXX to Just a next Carol, pricing

Carol Tome

plan, what the of Well, the fourth about quarter. tell at our XXXX touches finishing the XXXX we're putting and think you we we'll on end

environment, We've adjustments November made we X.X%. pricing, in increase see year. increase website of it As all you some this on go the that our and to fuel rate the today in then X% the other call pricing in includes in mentioned can is general goes also relates the in that those. It of to

the those priced we and products. So for associated products our services value with

Operator

go Please of We'll Thank your next ahead question. go of Oppenheimer. the you. Schneeberger with to line Scott

Scott Schneeberger

XXXX talk Thanks quarter, it's Could the above international the much. you than third morning. nicely just in and in very to On higher expected sustainability? we like it elevated trending margins, fourth. It about the guide. Good the remain going sounds it's like looks

volume the little So puts in March. just on some thoughts on color fourth Thanks. with a expect more regard -- the quarter which and should in international what bit and to takes we quarter the

Brian Newman

XX% half the a of delivered of We in year. half year, right. looking you're second -- the the do the and The margin Scott. first in Thanks, to the same internationally we're Yeah.

right be of demand will challenges in lanes fall that chains, should don't with soon. did at about some see off that as supply But some Asia. expect be tight -- the of surcharges out right experience number. full-year we anytime think So to the at the quarter we the We

pre the until to confident -pandemic feel don't Asia levels that we see of those where 'XX surcharges we the would 'XX. most And and So most. returning belly lane does remain through matter capacity

of supply both our the small things those hopefully, So and for international chain maintain for both demand package business. should

Scott Schneeberger

thanks. Okay,

Brian Newman

Thanks.

Operator

Thank you.

from Alliger of question. will Our Please question your ahead with Sachs. line go the Jordan Goldman of next come

Jordan Alliger

morning. Hi,

SMBs, quarter etc.? us mix maybe pricing. update per the terms on domestically, of -- these follow-up you think in sense of up business? Thanks. that and enterprise the -- better of of you Can underlying especially profitability maybe where you any impacted talk around actual revenue the Just re-pricing then course, XX% specifically, quick And the piece how contracts, with in

Carol Tome

to RPP? you want unpack the Do

Brian Newman

quarter in the of Sure cycle. mix. and little came Quarter, rate XXs we're to. terms the happy in this low of a so surcharges that from and we and Jordan contract the over Where are renegotiation, in balance -- in turning, the Third X/X terms in

Carol Tome

very favorably a have half re-negotiations contract that's And day gone

Brian Newman

We have indeed, yes.

Jordan Alliger

you. Thank

Operator

Thank you.

of Duane ahead Our go line Pfennigwerth next question. question come of from Evercore the will Please ISI. your with

Duane Pfennigwerth

a be. supply as wonder not it the about cargo, bit into this the little the about to air Supply think constraints could impact high perhaps if could how environment ports Thanks. talk of you chain from throughput chain ports to Good the you morning. as and specifically. is but I segment net domestic tilts urgency more

So think Thanks of net how you the tightness the elongated we an and see peak? taking for about impact could this do question.

Carol Tome

isn't surveys a that some And are be of XX% will fact, an or such shopping in panicked Cyber We will quite by by Cyber shopping reserve because chain this jams interesting [indiscernible], about completed are the consumer like holiday Monday Monday. all things it's completed news. it? over supply holiday hearing Yeah, from be

result, our we promotions forward customers were promotions. quite good, of that was last customers offering. saw As retail are volume pulling week some our a example, our that And as of actually an because

is Los everyone And Beach. shipping supply Long that to post through make holiday. ensure packages discussion be There's more think to lot in the belief season. cards which season That's to suggest think the we demand for in a I So for prior the and a ports real work what about way, should that us your than holiday others California. ports about of a holiday will means kind year this elongates for in there continue in as it good be Angeles of right now, trying the the will at sold delivered a also years, gift chain you

arrangement to ship those with a those very hubs a third-party. We containers through have ports. from We ports drop received close

there's of is containers supply say this our true truck people drivers, to when So delivering shortage those a it's third-party because hubs.

We have our we're about of containers capacity only today, of one as parks of XX containers. those getting example, -- of XX an hub’s

of it slowing packages. flow down, So is the

get Now, as get it, delivered. we it soon as

chain, doing the So jammed end-to-end our supply of it's terms well, is upstream. but in business

administration the when then the the news them take on got and So to capacity at -- ports can we get us, off the because containers. operate these going to have to dropship Biden to pull administration XX/X, that's those ships, the we're containers recently if we've efforts great said, you announced

unlock ready So anything support able we do to some and of to we're here that that jam. can

Duane Pfennigwerth

you. Thank

Carol Tome

Yes.

Operator

Thank you.

from will the question of America. line go next of come Please of Hoexter question. Our Bank Ken ahead with your

Ken Hoexter

Hey, quarter. good morning. solid a on Congrats

the the Brian, growth, like, pretty with solid looks outlook. XX.X% Just XX.X% pretty solid margin, domestic

year. to Just for I you're Carol, are guess, you shifts million there talk you can Maybe mentioned acceleration but only And cost and think you're those wanted $XXX that next Is productivity, to of that. year, year. seeing is where through walk us where what not cut? improvement or see this or some that get labor the leading thing you next or same getting

Brian Newman

So obviously expect spread the continuing. results Ken, a good top-line had quarter in we to we see third and

often We piece are pushing about hard the next and repeat There's on non-op that lever. ops, you productivity we've not talked will to that there's year.

right kick little thing to So in. a took a two-year stat. that confident of talked that. in volume. a billion direct I feel But think were optimization XX% which we terms is to productivity we'll to And the now, being think The the the our X -- relatives get trailers longer and our dollars track we down labor in over is I great side as hours about down cube utilization, about utilization, period about

go QX cube pieces and next from the about margin very maintaining watch going But in RPP the margin Quarter, expansion for And as Carol closely year. Delta we're So to per hour, to and utilization those terms track QX the feel the we'll CPP. the on those of trajectory Fourth 'XX. mentioned, we and, into as the of in about come and metrics talk good we thing, spread back

Ken Hoexter

Brian Thanks

Operator

will ahead questions. of our from line the with of question Bruce Stifel, please go come your Chan And next you. Thank

Bruce Chan

And operator. results you, quarter here. Thank for morning, Team, great everyone. Good the

what share question not strategy, how market. that well? Europe can the baseline on about market approximate And a a of that the that's in does remind that there as next expectations on export? corner dynamics better major year, affects what the us integration Got just are European competitive in international a the the Just and competitor think your turning you wondering for your side, when on is bigger apply we kind

Carol Tome

States market our the export ground in We're be the doing Europe. I Well, team is share low. to share outside prouder on in United And of grow couldn't this is taking what the business.

Operator

Thank you.

line with go come of will Oglenski from Barclays. question the of Brandon next Please Our question. ahead your

Brandon Oglenski

the for thanks question. and Hey, good morning, taking

clarification, are quick volumes largest your sounds point but So in trending customer enterprise a just line customers. your with it of like

larger guess differentiated innovative I leverage small, issue how me, guys package? a running this with someone think or I But do for about shipper that the business Brian, then is or I UPS working that's that's technology you a what for would Carol your medium-sized bigger What from much heard. business? be --

Carol Tome

the It's what end-to-end It's the technology not end-to-end network, it's an from solution. just we offer perspective.

in experience technology sure the class. on are laser-focused making we every is On side, best

out to talked you every class. other system. against system billing we've billing player past there, were worst We our about best the class. compared in in When So our we in you were not

all system attributes introduced best-in-class. that system, the with applications and of billing billing just now and are we've So a new associated

everybody with platforms the now frog much you we're to Stamps connect systems like can digital that because all fortunate really and we created hadn't APIs that So and our -- the that interact in to unique those leap we else platforms Shopify ways, customers. creates platform And sticky their that are so It's and earnings XX access those eBay a that and we invested were think those experience can other when them, with with. about we're how important new. customers link in us. we past, many down the in so well with We've with road,

add? you to well, fact, In business, over a Brian, growing. anything this way it'll be business our and want DAP year billion-dollar

Brian Newman

thinking highlight customer. to what's I just X from about We're a standpoint. technology important things

You got lost packages, claims, got you've pricing. got you've

front, technology. and some the process the up using On claims speeding simplifying we're that claims

the pricing investment On dynamic and effective in areas. the important, talked drive there more loss optimize we're is front, of RFID, make about piloting pricing which which the the And package, on packages. the to really the right then pricing, will it now, Carol tracking

So to customer employing experience just three effective. ways the are make those we're technology that more

Brandon Oglenski

Thank you.

Operator

Thank you.

Barclays. Please me, Excuse next come Tom from question. UBS. the line go Our of ahead of with question your will Wadewitz

Tom Wadewitz

a labor Is it inflation. am the morning. ask bit rate about above said you you Brian, and I talked to you've workers something thought about don't at XXX wanted know think it going that. you little that just XXX, I you XX? we And Good broader how in labor get fair then just XXX,XXX whether into think it. is just visibility didn't you market about million, from peak. maybe with to us much bit have but maybe tell that or care Thank to that go seasonal know is? UBS. you pressure Yes. ballpark market Tom XXX, I is stabilized Wadewitz an Would what And it. adjustment impacts we to to is you. a a perspective. more on further as availability labor quantify ought

Brian Newman

still you're Tom, like I UBS. good you that. and to hear

was last of were move the year, in half to got adjustments XX the had for talked about in increase XXX range, So geographies. XXX, up the to MRA in terms to increase XXX. XX spending certain I forecast, our in that second to the the the we've We've competitive s, we rate to XXX remain market of call, that to

of all within So margin that the it's domestic is say, will bumped up XX.X% I outlook. But marginally. full-year increase embedded

Carol Tome

labor lot States there the yet interesting the they're only maybe so on some And pre you color. front, than United look Is when really the dynamics, a fewer were jobs at you I'll are then today million, And there million X -pandemic. labor [indiscernible]. give X in

problem fill not to The the rushing is everybody there's So jobs. excess that is demand. up

much there rushing And opened out everyone's the jobs. has to fill as pressure see that's economy why the so up, because so you

second ahead the got year ways some XX,XXX about last we in surged, of we think it volume people if our in quarter. because you Now, when hired

of by challenges the ahead of we some got hiring last So year.

workers. into heading XXX,XXX are we Now, do seasonal where we peak hire

We are pretty sure. But several this. it's all ever at hands-on good than this past is The different deck. environment the for for years. We've been done we're

as We for hundreds that UPSers of the partners working outside [indiscernible]. that recruiters well are as of us. are we have These work with

the hiring have simplified process. We

So get now minutes, within XX an can you offer.

you're exercise And to gaming offer. get a didn't trust those clutch well. do play I through go me, to the game. [indiscernible] like that before had you Before, I going whatever games an

-- XX,XXX and we're [indiscernible] point. the deliver -- while look, of over progress onboard, a at Last to people. people, not for the customers. a it's week hired stay we simplified not We've you give to this we number been over alone, we come here. peak and it's But data until need just making I'll till get we're it's over. we've So it we'll for at great our one

Tom Wadewitz

Great. Thank you.

Operator

of Please the go Thank you. Bascome to next We'll of ahead. Majors Susquehanna. line go

Bascome Majors

for that landscape a as under wanted expands competition, on competitor. LaserShip leadership can just us today share competitive Thanks revenue being the perspective last-mile And while they extension Company? change on your in not you enough that, credible improving and fit taking quality question. of Carol, a the create to of as focus Thanks. cautious former or your help from my in shed to you nationwide just your thoughts low-cost I where the how thoughts an acquisitively CEO new any on regional give does some on

Carol Tome

is the Yeah. a the States and United about in pie. the small We've talked There's imbalance market everybody wants attractive. package piece demand-supply very of a

certainly players regional these piece of so a want And the pie.

X% That by fans that by network because They so delivering less buy which announced of the customer volume largest our acquisition, has boxes. of they're by If just way. actually Company, don't an players LaserShip they lots coastal space. coastal, you was the is end-to-end largest look the their the delivering customer, regional for combined And at that have the than our yet. way,

in about got game we've it's -- to So as the do right, have environment we and think what as experience. we I invest is it, on, competitive to customer

respect we're have I years, to going together pay and where Welcome with to that that [indiscernible], it's Company, want leader love him colleague the fun and an I experience that offer. the of to just little industry experience awesome XX that got And note. -- on for have an But our leader. competing. So a I is to we amount the worked compete. us Mark joining from come we've that's people great for to

So come. more to

Scott Childress

one Operator, please? or more one we've for would got if time call question more you

Operator

comes Please with go of line Thank Ossenbeck you. ahead question. final And your question the from our JPMorgan. of Brian

Brian Ossenbeck

for morning. Good you Thank in me here. squeezing

place, to supply the that's talked been more retailers Just little often you chain, the past. with hard the execute that Do the bit to you be from the imagine seeing in to capacity have which standpoint. those actually elaborate on benefit further synchronized challenging demand in throughout but amount can good how this and about to might to others coordination moving we're deliveries, of We you can conversation? think time that this actually utilization everybody look wanted be might I as of would Maybe are about Thank actually a but into disruption upstream a a you. ask more with long get term. trending

Carol Tome

off. have to on ship third-party a this, into do Yeah. it talk morning, orders color But if It's a about car. kicked more we We just for can multiple consolidate have move have platform time to early packaged you. shippers we'll one but see don't lot pilots and with we to some the of for upstream days pilots basket a this underway

the I think Fourth Quarter. of at the end

Brian Ossenbeck

Carol, you, Thank right. All

Carol Tome

you. Thank

Operator

to turn Scott Mr. back will host, I you. Thank now your floor the Childress.

Scott Childress

has our concludes fantastic thank that And everyone Well, call. and Thank a to today, day. want hope us joining you. we everyone for we

Operator

today. Thank that you. your you conference participation teleconferencing. for Thank Ladies and our conclude AT&T using gentlemen, does for and for

disconnect. may You now

United Parcel Service (UPS) 26 Oct 212021 Q3 Earnings call transcript