UPS - Earnings call transcript Q1 2022 | United Parcel Service, Inc.

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

Operator

Good morning. My name is Steven, and I will be your conference facilitator today. I would like to welcome everyone to the UPS Investor Relations First Quarter 2022 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. now host, to Mr. is over the It our to instructions] my turn pleasure floor [Operator Ken Investor Cook, Relations Officer. Sir, the floor is yours.

Ken Cook

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

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

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

first charge net from after-tax share, other of For in by million include XXXX, per of benefits the of offset $XX of charges after-tax the stated with results diluted million plan. or non-GAAP resulting transformation measures, of refer charges. a Relations and Investor transformation is webcast on other to $XX call, pension adjustments otherwise, $X.XX which of $XX Unless our comprised and and GAAP comments a curtailment quarter of gain million Canadian The today's the UPS of adjusted the retirement reconciliation results, along will exclude available financial website. an

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

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

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

Carol Tome

of Brexit by company, team resiliency the our by I so is during and faced trying from UPSers world forward and Ken, my thank you, unrest, the to eighth now their customers the of needs our it efforts all to pandemic, other serving UPS. commitment each at for earnings work be a impressed morning. continue matters. moving most Since I the what Through these to a social delivering I communities our fallout joined and political war. times. hard This call and unrest, our their we good Thank want in and

I discuss Before I'd address Ukraine. to our results, situation our like in

of Our Ukraine, firsthand. the people who of feeling hearts effects with are this are the tragedy

where Putting safety relief aside, our We supporting have suspended environment we Ukraine, the we the people. commercial macro it discussed are and all and Belarus in dynamic Russia, to be of in – our efforts Eastern was. issues operations expected the February, on is humanitarian we we in Europe and can focus as

year. short our on we our detail, to revenue average rose operating and And what points can plan was above year operating XX.X%, grew focused to Our control. Brian were with Consolidated daily Consolidated from which we of fell remain XX several $XX.X due last pleased results. XX.X% that first year margin billion. last last but will profit factors at to $X.X expanded X.X% looking the basis external from volume billion we to controlling quarter,

with All our businesses profit and note operating Of of Solutions operating generated forwarding driven of segments a Chain strength $XXX record profit in by business our Supply of delivered operating margin million growth. XX% record healthcare.

two toward over the We've last opportunity. tremendous pivot years. We made continue to progress

the innovation-driven that our successfully customers the strategy. accounts. BXB to we've the How framework, winning data Bigger are large of the know gained parts and power share. we to comes not most end winning are enterprise investing like of capabilities Under more to matter healthcare, in our our and become network are our the Winning because to market customer-first, we We down market agile. in that leveraging value we we much our people-led, do end SMBs, are executing Better

customer this creating frictionless a about at is Looking customer-first, experience.

enhancements significant onboarding it us. two the made we've with to experience, SMBs digitize Here making to easier ship for

our now just share three the The our pricing. days go in customers. U.S., is an ups.com, get first instead get of that they minutes, answer This where they can them to at smallest to for online questions contract XX process two wait In a to enables under old begin change average shipping I'll includes and of started. had

enhancement second SMBs. larger for The is

deployed customers platform enhance manual manager. to that our slow our deal from Here we a platform, customer This We've new of be the experience with science process this the data price sales call the month, and are right our we digital people. operationalizes end U.S. people sales pricing and leveraging SMB all to best-in-class time. present a the technology for to pricing fully moved will which first to by the applies

submit longer For to quote. this to need our a customers, sample they cumbersome means no data get just

to spot, up it them making selling. more the For freeing pricing. because It's a analytics, efficient our use smarter we platform they advanced the the can them building it, on And key dynamic and more close toward sales uses spend more this becomes. time people, deals block

That's U.S. originated what's Program, began DAP, shipping growth the number another accounts end more more new than created of the first quarter is near Access important created or first more of we the driver. outside than XXX,XXX that the year, DAP SMB last quarter, quarter new first customer of the three of DAP packages Digital In Our the in accounts. times we

our DAP around first making the in to today, are DAP $X countries available volume In including rate enhancements our customers. the growth the us we with DAP XX of SMB to resonating world As quarter, enterprise U.S. platforms SMB continuing are The and the rate. add in growth revenue way outpaced we putting on billion partners, daily average is are target volume XXXX. achieving well

In our total SMBs points of up year U.S. fact, in ago. XXX made volume, basis first quarter, the XX.X% one from up

within segments, by In tough ongoing environment. this of demand way, year-over-year was challenging demand but quarters disruptions many international small solutions more flexibility matter same for continue the to supply our came a time network heightened kept delivering our chain our dynamic to us businesses, ways, of international and with our was and levels. package faced our Looking the at our negatively we comparisons business allowed our one what the scurried forwarding to as customers outstanding no at pandemic, in and keep due up we impacted healthcare with service delivering

executive previously as leadership we the people-led, realigned to Moving team. our in announced, quarter

helping shareowners. leading Cesarone, market go our one since to to better closer assumed enabling First, has to change gets as Nando and who our U.S. even of This us UPS customer, to customers responsibility move value engineering. even for U.S. and XXXX our teams parts additional sales us and our unlock operations faster been the for

assumed our revenue our to new allows of and and and global the Second, segments with better a international Kate services our chain role both opportunity cost. customers solution us supply in serve in addition leading full Gutmann business. This healthcare provides to range both synergies for

Finally, from the This us for we candidates I'm is that our Chief Technology higher about external fill an returns the role which new to for hope soon, Officer. and Digital delighted to have innovation brings this and position underway driven. we search have deploy. surfaced capital driving with the

to agility. revenue efforts laser basis a in focus other global our network with made facilities investments leverage technologies the we optimize network. quality network continuing margin tools, year-over-year. technology to our Here we U.S. planning with automated to power to the These and point leveraged we've logistics greater smart Throughout are contributed it coupled XX run improvement a and quarter, operating the on

we've discussed, productivity we've virtuous at turned As UPS. cycle into a

smart with automated small We also begin rollout induction, XXXX. completing of have technology to robotic XXX the we This increased sort package all bagging, that automated this intense the application, of and year, of call started label drive productivity. the our centers we implementation in RFID will

by our we As being down an XXXX. the of toward path innovation driven marching company, goal carbon-neutral are

the to centers Here some global needed run example, homes drive our two year. the of equivalent centers electricity are X,XXX used by context, centers power is is data XXX% we one give renewable data to sources These data one the you run these have now network. energy powered to integrated for two that

very ahead, business. we our many inside look environment dynamic, macro we As think will be but positives we see the

high levels. We continue service to deliver

We are share. gaining market

what agile return end we we on be I controlling by achieve targets onboarded margin invested XXXX consolidated financial XXXX, expect about the to expect consolidated can the we've outlook, XX.X%. our revenue, are than generate me details to regarding and reaffirming financial our we what are capital control in laid let $XXX today XX%. but goals. we And share will focused approximately on than greater of In operating to We more Brian out. billion

We in our and confident condition. our are financial outlook

year. the over repurchases share target we the billion a the for And turn for $X XXXX, result, our to up taking now As to call are Brian. I'll increasing

Brian Newman

comments, results. macro I'll with good quarter cover my areas, environment, and Carol Thanks starting four morning. first then In our the

And cash cover financial update and I'll on our an I'll outlook XXXX. Next, for returns. shareowner provide lastly,

Omicron a sales operating retail volumes. $XX.X XX environment As strategy first and and revenue XX.X% Early impact Asia quarter was and consolidated year. energy results factors pressured Consolidated In Then external Carol Despite adjusting our higher quickly billion. match positive. resulted COVID-XX impacted slightly in combination rates February negative. operating volume XX.X%, consolidated in Consolidated $X.X margin in and the these January, lockdowns of with network the external than volume our geopolitical by negatively points factors, continuing resulted above the record turned X.X% first totaled in capacity profit challenging of and subsided to Omicron inflation, agile the we expanded a execute high mentioned, growth to quarter. last last strong uncertainty The growth to quarter, our in in turning year. to billion, prices, surge our customers. in of late remain the which first basis increased operating needs delivered quarter,

earnings up per first $X.XX last was share from the diluted period year. quarter, For same the XX.X%

U.S. our business quarter strong Now let's look domestic first results. delivered segments, at

by packages quarter by enterprise did costs. projections on daily driven leveraging volume than continued a gap in And volume U.S. first average largest down in XXX,XXX few we success agility be of quality the residential We day volume lower control revenue planned. or to slightly decline for the quarter, X% versus network volume other fill year, with conditions gains the to our volume, our was to this planned a expected first customers, from Total but was not of Our had and volume. driven our last of X.X% in market down was in by based per the support.

both up first deliveries Looking quarter, back of to decline represented to year-over-year was in XX% XX% this reduction The customer enterprise SMB was at strategy XX.X% an the U.S. in offset decrease the year. packages Even March The year. environment, residential in of a mix. with current was of XXX BXB made U.S. volume platforms increase SMB is day. XXXX, stimulus difficult volume from in daily from In over In residential households the which our quarter and volume of to BXB within X.X% XXXX. of X.X% the XXX,XXX up continuing comps per execution many daily and about points in including contributed volume, the first checks and a increase partially included SMBs customers. last growth average first volume, in quarter, arrived average of volume, domestic first up quarter our the SurePost improvement basis of by drive in

per mix of revenue additional offsetting For revenue rest quarter. base which fuel generated the volume contributing the X%, first in increased operating of $XX.X basis X.X% rates piece up one points of more the than decline the quarter, drove the piece Together, XXX per included the with and of growth. billion, surcharges domestic the Revenue improvement benefit day. U.S.

all piece Additionally, piece products segments revenue grew per ground customer with revenue up X.X%. across and per

in our rate increase. to including basis expense depreciation. total factors, basis expansion fuel total XXX in multiple points and growth to increase rate profit, the by and growth points trailer the expense increase first expanded increase of made coupled X,XXX The day, leverage rate than delivered billion was market points contributed period of improvement Turning payroll XXXX. to more quarter. with compared X.X%, investments operating in the to margin the $XXX basis driven The facilities which or segment to of costs, remaining the million which eliminate benefits, The per XX.X%. $X.X automated us operating operating of and quarter domestic drove XX.X% compared we've the same drove last XXX weaken productivity included XX an grew our adjustments And U.S. enabled year, initiatives loads expense to positive

to exposure XXXX, to by impact start me let is financial our Belarus, from Ukraine, these less on U.S., in than information of not countries the consolidated providing X% revenue of while the outside some our three and Looking direct our business. direct Revenue Russia. represented material

monitoring broader across are We the closely global economy. impacts the

domestic up performance leveraging global COVID-XX the we for network XX.X%. serve or representing XXX,XXX segment volume international was needed planned was COVID-XX international contrast inflation, average well In daily export combination international average X.X% our looking the a to our was where on down quality, the moving increases globally. XX% in it and in nearly first tough customers first volume of two international to agility per performance at due U.S., the basis, the in grow in daily volume. down and the When ago. due quarter XX.X%, decrease our it to by quarter In executed global one year in Total volume XXXX factors, not. on and international of at focusing to able adjusted same challenging Moving volume time a the lockdowns international average year X.X% total a through daily to was stack day to volume disruptions. global of to in was operations the capacity in quarter. Part declined of revenue network of decline In and first shifted were Total daily packages comps war a from our the including did Asia market, we Asia. response, keep average and navigating

XX% basis Revenue to XX.X%. the grew In average U.S. an offset a revenue billion. basis point including operating international stronger mix, piece X.X% revenue basis XXX a daily benefit point billion, quality by and X.X% U.S. the a lane from fuel on margin increase increased was points first impact XXX quarter, XXX $X.X Europe $X.X increased example, point profit per volume basis XX.X%, a XX of to benefit down Operating was from dollar. due For negative and year-over-year. and to

at Solutions delivered Revenue Solutions. quarter Supply dynamic a Freight, looking revenue billion X%, profit XXXX. quarter, segment increased for despite Chain of Supply divestiture of in Chain Now million which first the in the of $XXX UPS In the accounted first operating record to $X.X up environment. the

Looking at performance the key drivers.

market Forwarding revenue demand and doubled XX% by to the more outpace supply. up while operating continued managing than profit was spreads, buy-sell global

lower last truckload effective lab operating income tax challenging record delivered first by lastly, Healthcare year manage XX.X% trials XX%, pension of quarter the driven business led an our initiatives. delivered to And interest revenue of at unit first delivered Within growth did income and revenue $XXX the operating strong and to through first and flat market. helping Solutions operating teams operating profit and above Walking discrete results in year. our items. million XXX job Our clinical outstanding million last million. $XXX quarter had profit Chain of the quality In basis by statement. customers profit through an rate in the customers. margin Supply pharma, planned a came And this than our of forwarding, rest brokerage our quarter the $XXX We Other points was record in expense. due generated

For the rate XXXX, around our we and expect effective year XX%. full to tax be

Now to shareowner returns. cash and let’s turn

Free quarter, first $X.X cash in In the are focus outlook dividends the flow year us full UPS Global period lowered expected forecasts. to U.S. been the in IHS, previous remainder bottom was buybacks, GDP is for grow XXXX. now to quarter We increase and cash billion the And from billion, our strong X.X% $XXX generate is from X.X% disciplined for the of to share have XXXX. cash in flow the GDP and remainder we and on bumpy the for allocation be grow expected capital brings to expectations line to billion According $X.X in expected is first year-over-year. our which continuing $X.X GDP results. and of macroenvironment million from distributed X% a to for completed generated operations.

pressures momentum of be elements, above expected revenues which geopolitical quarter. chain Consolidated seeing capital financial our divestiture approximately we $XXX return second operating the continuing first and we driven be account by UPS and Despite We XX%. and our supply XX.X% are XXXX close constraints, Freight. are reaffirming and the takes this quarter is inflationary targets pay environment. to to are to to results margin billion, are inventory for is upstream the including in the about anticipated consolidated attention macro into the in invested COVID-XX, Consolidated be to expected backdrop, on

in than achieve shared to path financial you February. different targets we will these our expect with We be

in We ability us piece have of is per adapt many have than to to X.X% confidence and a in revenue to levers proven growing we pull not volume. anticipate give our targets. Domestic, our revenue growth achieve our with We In that changing. guidance dynamic environment ability U.S. faster our around revenue

and the In in is value volume we on of based negative volume, the the we remain provide is be second half in the The year. price than originally terms will to Pricing and year half we volume continue growth lower we our expect rate to of customers. first improve to expected the expected. to rates growth it will firm however, to anticipate be of expected

Supply by Chain our $XX pricing offer is value be around billion our at segment anticipated for revenue Solutions, and guidance Domestic, we portfolio unchanged volume anticipate expect driven forwarding. U.S. to by to expectation is healthcare expect customers, our anticipated approximately remain is about revenue to growth Revenue quality In International, We revenue in margin margin we be year Operating and points unchanged. In Lastly, International in the the originally be firm. will expand in lower planned XXXX. the driven given to is operating initiatives. XX around X.X% full XX.X%. we basis than our

expected We rates expect margin be to X.X%. XXXX ocean below moderate Operating levels. peak to is about

of end we will Freight of As sale at April. a the the reminder, UPS lap

Turning to capital allocation.

For expect be billion, we free the alternative our technology fuel two which includes contributions. automated XXX-X flow revenue more additional still aircraft, full billion, year $X.X than investments. still are of hubs, expected vehicles Capital to annual pension and around to about $X including XXXX, and cash be two X.X% expenditures or X,XXX

in carbon All dividends, our in billion to of to and integrated network path which to us $X.X goal. out neutral enable And subject in efficiency pay further XXXX approval. down we our will around the Board are greater move achieving planning XXXX,

Regarding our in debt debt to repayment, repay maturity as of is $X year. today, billion this plan at

of XXXX, in Lastly, doubling capital amount allocation, repurchases to billion plan are the in further shareowners. share to cash terms allocate rewarding our we of we $X

We will and executing the are our we we navigate to as strategy agile, macroenvironment. continue remain dynamic

our We revenue outlook cost and control, focused open please the operator, disciplined confident are lines. and are allocation. on to And financial you. Thank what reducing condition. quality, controlling improving we our laser in our And capital can serve by we

Operator

you. Thank

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

Amit Mehrotra

with SMB talk like was fuel eats strategy potentially piece It seems the you of what into base the Amazon recent RPP plus Buy Thanks. the fuel you Brian, I Wanted that. rates. domestic? bps did us hoping fuel about impact Prime said XXX And the into – if on strategy. isolate Hi, just know, in everyone. SMB just you eats that can I have or Carol, to initiative. see give can

the your for implications get well? and thoughts to relationship is with pursuing UPS that wanted also strategy Amazon Amazon on as UPS’ and Just that

Brian Newman

Amazon down for Hi, over question. piece. Happy turn I’ll break then fuel to Amit. And it the to Good Carol morning. the

continued it’s SMB the about XX% that X.X% the split rate mix by split saw think and performance half on make out. RPP then the mix the base comment. one you and would I is as approximately But in equal, driven being side. the roughly fuel and domestic about of just half of XX% it pricing You Amit, our growth as And XX%

journey, we is one component go further pricing fuel down down this think we pricing of As about our as and lever.

rate base we surcharges, GRI. have have We

that within want to approximately fuel. base was So you pricing and take between it Amazon? did split Carol,

Carol Tome

question. Amazon the Amit. take you, Thank to Happy Yes.

on our We fourth have about network the talked relationship with with into very of a at we we’ve as take about And will are that largest good agreement that packages customer. Amazon. and they reached a it’s the the the their behalf. we mutually will packages deliver our quarter, beneficial And end They Amazon relationship.

announcement, put we badge we us, just latest that but their clever website, Prime on much to doesn’t the see that to by play Amazon, risk marketing putting a relates it even as website very As believe. if a Amazon SMB exists,

Amit Mehrotra

All you very Appreciate it. right. much. Okay. Thank

Operator

the of Wadewitz ahead. UBS. go Our of next Tom line comes question from Please

Tom Wadewitz

much And offer mean, kind how comment second like? how that primarily trajectory of to you precise if in want what wanted want to did ask I just perspective, to – outlook the terms quarter? into morning. and weaker? a month What as you I’m – great, bit bit to expectation Good fits March do I month. know thought give framework. you the more a then April us a Yes. mean, guessing domestic that on. but did if what I volume on look package, kind for volume overall of But little want you and – you just I by if little look well. like what of for on international don’t I’m But does don’t asking

Carol Tome

Well, I’ll Brian, start. join and then please in.

we This like, we’re as last to Well, moment. checks stimulus we our plan slightly happened peel soft mentioned, to what because missed lot Brian there day. back our started at When could the by pieces impact if and per in the February of external this to and at We And of in Domestic January all thought the because And tough. a back last year we look of stimulus, the we found layers in but be performance understand saw proved onion we’re for positive we why? then the factors XXX,XXX that volumes you per our XX%. the about you actually drove that, XX.X%. and a declined those quarter, you the that of tell the year customers, see stimulus look than to was U.S. it And Tom, looked decline. came was more when the those was first negative by we grew of day. And again. year, and Omicron year, jump March demand. year-over-year in comp average consumers, nicely too through planned comp We XX% decline hit customers first SurePost quarter. then talking SurePost of actually of of if turned our product, the as was that facing can And hard just customers in us SurePost five So the our to that volume pieces daily variability to checks. they because fact, XXX,XXX aha

that And explains volume the happening do I comparisons in can the Why what what’s easier. about Well, going good feel forward? So quarter. look at the happens get we April. in

quality coming look right that’s volume that March network deals the then And we’ve the I cut. trending so great April the is revenue Our better we’re in volume volume, direction. at than for into at our just

from SMB next customers, well So got both months, the over enterprise business, new as we’ve into our coming as volume customers. several

about So coming our we new projections that feel very volume network. into are good the

COVID could. because really the on cancellations quarter. flight Asia. volume, international in environment. if the was lockdowns We we’d We not. the of thought did volume export in It it have had was a comment a I growth Just tough rolling We

who the people sleeping It’s there. in have still environment hub. tough sleeping are in a fact, bags In we

from and air been shift to freight, out our in business COVID would’ve Asia the lockdowns you the If quarter. some export up back

to through So we’re get going this.

this are you to We add? to would we’re what to convinced get the and like expect improve through going internationally. volume Brian,

Brian Newman

point thing and we it over XX%. agile would Asia, Europe the in to move as The in you some Carol, add I mentioned, lockdowns the did prove I up well. that to air with though, airlift COVID think to And was lane Europe. of were is as able only We international U.S. referenced. aircraft one I covered you

the very integrated volume despite well plays I think network. So the moving in equipment softness, the

Tom Wadewitz

you. Thank Great.

Operator

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

Jordan Alliger

detail. [Indiscernible] (XX:XX) bit in talk little a more

a think I you few levers productivity mentioned times.

If those to be targets. hit be to to what Thanks. fine of points you you Can how overall happens your demand. agile and the depending need network a maybe on need flex you couple get could if with on

Brian Newman

are Sure. Happy we inflation fuel and we in morning. everyone the two like But Good are to payroll Jordan. and do benefits pressures think our else obviously as and system. it. driving We there about cost biggest productivity, have out and

We’re facilities. leveraging automated

We’re bringing smart package, two automated in the and talked California year, allow cetera. about before hubs one facility. automated online will in et that leverage one applications, to Pennsylvania, label us bagging, Carol’s this smart

XXXX. We’re rolling that out in

but And so that And will mentioned, driver actually be the X% a was hours per within quarter, this it. we as further think then day we were about of productivity year down as ADV down X%.

in the outpaced to the It trucks. the volume or the leveraging reduced hour doing cube per the per out pieces of is Jordan cube than things data loads So one team decline effectively U.S., were is basically better the day flat. lastly, very then And our that utilization, it.

Carol Tome

choppy give hour now through down hours levers, volume is, But our up to per for environment is pieces operators as and as a of flat have down about very a And I just question out want in this just managing volumes to the in we to manage your a were just If actually U.S. well. managing sign quarter when take are the sustained volume cut would agility. out. we’re we’re shout that the matchable doing were But to a if and of there to not hours to and case, then it. on counting job head able be very we that. And

Jordan Alliger

you. Thank

Brian Newman

Jordan. Thanks,

Operator

Please KeyBanc go question Markets. of line Our from come next Capital Todd will the Fowler of ahead.

Todd Fowler

morning. Hey, great. Thanks and good

U.S. wanted margins throughout I ask to on cadence the Domestic year. of So the

what change for of cadence If previously reducing Thanks. kind about the second on throughout half. we year? the in out Domestic with like expectations I some volumes a the front. the steady I’m Or think that past? the you’ve of curious you’re half you seeing had of versus pricing going to given And some and with in Brian seasonality, how pushes are in talked first just the U.S. see guidance volume more that kind of we be trend state kind of

Brian Newman

Thanks, talk about to domestic Todd. Yes, margin. happy

the that half. given close previously, was first pretty the guidance which I pretty in domestically full quarter. We’re sticking with And and year. We printed an the half XX.X% had second it for was to XX.X% balanced, first the

for still half second the We’re the we think will and look half that XX.X% similar. holding to first

the So but basis the in in XX first quarter, net-net a for up first improvement XX point bps half. looking

Todd Fowler

Thank you.

Operator

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

Scott Group

just comp? second a – Thanks. more changes positive negative of I that Good maintain about said second the a half? for morning. of half longer? or Can volume volumes think sustained level to stay and that What this improvement if or then talk volumes, half if better year. would be you the in pressure, the first of ability Is you pricing are I just in margin what’s improvement the period guess, the And

Carol Tome

also So I'm love get great super important had on in they knocking for provide, that getting the there in a proud which we of sure. we very of the marketplace terms in and are they're left bringing the we of back provide. sales but the team, quality winning of candidly Scott, our service do customers, comparisons who some coming better, doors, out that's service But of are revenue too. volume the our confidence easier, because And and us

about about good we back into go moment a – DAP. network. see just what coming want And feel to have very and talk we the we I So

case forward in outside Our States quarter Europe. to that in and the very DAP now, United fire platform is to revenue grew of exciting our taking on and and it first come we're is having that DAP looking the which over XX% –

So the by that target get way to billion of we're to year. DAP well $X our on end this

In pressure price challenges, or service provide for are COVID, the are it seeing levels or is right a terms certain supply for pricing, reason and imbalance, function sustained of and whatever world, pricing around the service really any the and be still there demand a of shortages, and particularly where in We now. labor is demand the supply, geos just not we on environment pricing that there.

Operator

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

David Vernon

operator. morning. Hi, you, good Thank

half the sort you embedded the Carol, you running with kind respect we you're mix? year, what's seems the of traction, whether ground to And out know, seeing be look guide service haven't back I of don't FedEx as at the So, BXB years? of seen fact to any can talk the in network levels, in, to given probably pickup in that in XX-some-odd

Carol Tome

you Brian, more Well, to perhaps guidance? want about the talk

Brian Newman

year to was to. XX:XX mix XX%. so still and good the had think resi number. our the we spread commercial pretty was XX% guided Sure, first happy that's a of in a quarter, full and BXC Look, the We for

from saw a about mix that we business, As think XXX mix so grow changes perspective. a improved points good is basis the looking in to quarter, first actually We SMB we think we're XXX in about for the number. XXX

stands. So good the the improvement and I think Dave, is XXX you comm still probably split to a resi the – as year, about on XX:XX in SMB

Carol Tome

now our split it's commercial in grow interestingly in SMB the quarter. first business almost say, XX:XX, would saw And space, the we commercial-residential. X% I

So we're because as to that to take base. customer in to service well that opportunity every space matters win going

David Vernon

And do how to about going for, kind network in you to three say, where business it the that you want Is look like years? hold? like XX:XX like any of you what you years what have be long-term out? thoughts this to designing do three that Or mix on think are

Carol Tome

as be the We to want the best business needs of customers. that the the meets of context our

actually but should that be, – our we what mix interesting And do be. – to mix that as meeting challenge think so, about where pretty to we strategy at want declare what team haven't us declared a June for what that's

David Vernon

for guys the you Thank time. right. All

Carol Tome

you. Thank

Brian Newman

you. Thank

Operator

the will of Ossenbeck go of Please Brian next Morgan. from line J.P. ahead. Our come question

Brian Ossenbeck

question. Hi, Thanks the for good morning. taking

given and adjustments, you If update the quarters? Carol, much? So the takes for those other in think Brian, that time to to was last and price follow small when maybe you. Can you have started given Thank the look Last all that give last up the us trade make that And zone prices up long seen unfold on fuel so with all sizing in market just one. – seen I Day sensitivity going the and XXXX. we've then down puts changed Investor customers an up? how at at here rather any is run couple various dynamics short really the mid-zone? you think the the in and Has where update on in that maybe will much of you

Carol Tome

we updated June you. do, sizing certainly will with market when the So we that haven't Day. we Investor in way any material share our since And

Brian Newman

on when think, the with provide as pushback – rate. service comment, printing think I the of mentioned, sensitivity we're think Brian, from piece we fuel Also numbers no, service. probably important not because I Carol as good is the between the – I mentioned, pricing, service a price the on most delivering getting there the the just lot split, and is and we're base a that you about And

pricing managing firm we're the So is guide. the I holistically, holding probably but think

Ken Cook

quick a could jump and for limit can the queue If I reminder in Yes. opportunities. one, to questions just then give to up back you follow

Operator

the will Our go from Citi. Wetherbee ahead. of Please next Chris of question come line

Chris Wetherbee

from Thank guess BXB, Yes. likely the I'm XX of I X% maybe, you're I about finer looking for, and seeing side, sort seeing And more sort tailwind margin of you quarter. think was probably outlook about Great. residential. of any provide guessing does Carol, pickup the the XX.X? think you sort bit in we of consumer. what you're that faster the you. you're interim, BXB a BXB? in that know residential, little just the a saw And for you domestic thinking up for mix, on point then full we're from sort of year Are is BXC when in get the expecting year. more what the sort you I full than it's the decline for and tailwind when BXB that could any grow

mentioned volume. to suggest of are year you last end a the pivot from of in kind of deceleration sort consumer market? that know anything seeing But goods either else might part I curious, the on impact being stimulus that you Just services or other

Carol Tome

and from to bit probably us a that experiencing direct the So have you've all on a And hearing we're midnight. full, you're of D.C. what And been gosh don't has it to there hotels hoping if It's planes Washington, we are services. gone I in the who was vacations, goods people last customers, at are our from like was shift from behavior. insight bar are consumer to full, eat. are week, telling more going seems out the and the

we've we as to relates guidance differently spending and and feel But they are that people our good the it volume guidance laid network that the money about back So than given coming would. that's we've the into out.

Brian Newman

from to But so as commercial. Yes. up have the impacting on the standpoint that. so we the Certainly, that's And I BXB SurePost a XX%, is well. better resi, was down than point you just the density pick one remember, mix like

Operator

from question next Please come will line Our of of the Cowen. ahead. Becker go Helane

Helane Becker

Thanks for thank and very the everybody much you operator. very Hi much time.

continue about like use on [indiscernible] guidance CapEx, and automation just really so think changed of that thinking hasn't use revenue, which grow? percent robotics and cybersecurity how of information, customer that that Just the it you as of a we (X:XX:XX) within as prior your your and and to can protecting you're from about should how

Brian Newman

address Yes, the CapEx. Helane, happy to

so but that. of noise $X.X are like timing. timing was at year, it coming so off We we looked not simply in a first the bit that for the quarter, holding the little billion There's understand,

one into where to automation that as area investing, As we're double we're down putting in. that's far certainly trying – the

investments. those On CapEx are the of technology some OpEx versus side,

automation So a thing in there. to a do in from looking we – is hubs can we positive smart package, of standpoint. smart investments we of splitting going but making, the the we're at expense facilities, automated we're are so have terms certainly We're two year. type this cost large Whatever investing drive more

Carol Tome

team Yes. the me a alone for to that's year to automation I've here. count to be the customers – the the induction, they drive of Of speed to going buildings go and to do service is or capital well the activities automated is can Automation opportunity productivity. tell deliver off. get continue automated our is important have going fast bagging as X,XXX in not it asked as label our we because robotic double how of this What inside way people or next application head to underway, it's and year take sort critically

going let here. So way, to not fast. we're to We're get good perfection go enough the in going

will As budget it one touch. relates I to the cybersecurity, not that's

you but taken are a It's have system time if perspective. we leaning We invest continue to of out think the in down. of Europe, coming us, cyber. in scary we Eastern challenges about a for from cyber every Clearly, all

we a that customer protect and personal data, gives ensure spending of our attacks. of to does people advantage. we So we're pricing attacks course, lot every company of money but a that a we have our at off competitive we're that there. But risk – And information us incredible our cyber all our we job those could the no our information masterful day, awarding team on have

investing in So we're protection. on vulnerable of wood, certainly because every here, but knock is company course,

Helane Becker

That's very helpful. Thank you very much.

Carol Tome

Thank you.

Brian Newman

Thanks, Helane.

Operator

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

Ken Hoexter

Great. morning. Good

at if volumes guess I is then, negative Brian, near-term, revenue And those mix and you only a in just gains then get spent, about by push guess, in $X.X increased or same there Carol, CapEx, to see on you Is bit? clarify, more yet CapEx I to margin Just target first bigger targets billion on the follow-up the end you you the kept to maybe can a targets? there or billion. $X.X year CapEx just quarter pricing your confidence a the talk get,

Brian Newman

CapEx, related in more minute year-over-year. the I terms was timing on mentioned that ago a it Ken, of the So

first quarter. year-over-year $XXX decline about I think was the in it million

So was timing. that basically just

impact CapEx. $X.X in won't of the the year full middle year to holding the us. and back come billion re-look So as in We'll number, the that now of but

Carol Tome

go there's us UPS to the some win, it because harder a up take where out company peak. freed network allow our and was years, We so of to only in capacity like gating, much peak in network of volume during can into the couple past

availability peak with customers You more quality. capacity, we've give win buildings, our allowing because so cars, you for up some we can great doors actually but that's only have us many revenue have freed to many only so

there So country. exasperated it's is right at revenue risk. quality in view certain of a now, the still demand/supply and we imbalance, that don't parts the is remember And

are SurePost. we So because the winning of

Ken Hoexter

Great. Thank you.

Operator

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

Brandon Oglenski

that the Is tell that's that from Hey, to why fuel to any come still to looks guys back good there materially have adjusting margin I go? way the past in us morning a fuel three maybe potentially year. you part adjusted because everyone. the you to your headwind? four is the just it prices if for frequently my like here of Can surcharge, issue down And surcharge risk times come want right were question. profit better thank you or or taking fuel

Carol Tome

our So in modifier. it as that, surcharge, if our pricing of we But the weekly yes, index. and look a at algorithm is mentioned change move overall does fuel pricing the Brian part to just PPG we of off add

people this network impact to surcharge or of the just So the differently it known at the are for changes first for actions we domestic fuel PPG provide. business we price. because If pay And think demand surcharge of of a a a the or look willing came business plain quarter took the benefit perspective. in service of than the from to we from came a that from benefit alone, in XX% pricing our the index. XX%

the thoughtful We prices, of in services we course. We also provide. changes always know, published about as you discounted. are for our price Many of pricing are

our but we need you providing could, adjusting are just we sales were our or discounting, have one something you than that volume in volume lower that's of using And and volume rate will pricing the keep which frequently? is our you wins new to services our deals. manager. old call on science. the then provide analytics think And I go team bill wins had negotiating been of they about from The mentioned in our a to, just to volume for as looked also about, we and So I this price we as at too, pilots, we too as discount, they if mind trending. XX% increased XX% is tool where pricing introduced in We we think it the wins discounting fact,

pricing, comes about questions ask it for of best a when with the here overall what here equation our science providing customers. pricing, and doing ways, many about in we think really rules you to rules science So elasticity you as are lot

Brandon Oglenski

you. Thank

Operator

next Please will go Nathan Our Jairam come question line of ahead. Daiwa. of from the

Jairam Nathan

on Hi, taking little my to I thanks dig for question. international. just deeper a wanted

the think will guidance kind Jan, I of that original was Feb for did coming the first intra-Europe that we see in volumes below expectations And improve. quarter.

So what are now you thinking that? right on

Brian Newman

with we it a came there from – growth volume and had call, dislocation the been of actually perspective conflict down. intra-Europe of but a So obviously the over the for lot at as top there's Carol internationally and planned mentioned

first anticipate volume the So we to second from monitor will and from like continue we quarter somewhat quarter to European the But continue volume situation COVID to manage look a geopolitical perspective. the Asia, perspective. conflict a lockdowns in the

Jairam Nathan

would offset volume or mix you the – the to – with So plan price? lesser volume lower is

Brian Newman

I Well, were perspective. we the guide down first in I on points. for did basis full that XX XX think we margin was points think quarter, basis And the down a year

full year with you our just in guide exactly So the in quarter to what we trending line first were do said. basically

Jairam Nathan

great. Thank Okay, you.

Brian Newman

Thank you.

Operator

Our of ahead. line the go next question Schneeberger will come of from Oppenheimer. Scott Please

Scott Schneeberger

how the you a years, progressing folks year. how about in Carol, it's way now Thanks morning. presumably there an cost focus? enhanced any the I third environment, improving the big Any cube million very package time, RFIDs the know selection update is savings, on we're on $XXX Are obviously there? the and this upside inflationary on depth Good much. of opportunity more there of managing utilization Thanks. – you're and important. through little managing is bit metrics discussion there costs a a with in of that

Carol Tome

it $XXX last had going billion million we which call we related do the non-ops year. $XXX and we're year, So initially to or target cost to this in million delivered overhead we $X what again out target

where for you And about we out, laid all highest the a of we're up putting we return. get can as it really the proud manual free very resources tracking our introduce When that's technology, So that. activities. team lot of can

boy, were RFID the to and to in the were need. relates supply putting worried but we able because this about of we jams, that it chain batteries year labels we As all technology, it procure

when doesn't peak our alone. a customer get wave the manual what know just that and that's our by this pre-loaders. long-term will we So us, of it gets package scans goes sorted experience productivity, and and for actually looks year productivity. eliminate I a into will, on up a wrong sorts, miss all for hundred very do It all it miss will it powerful, done before If package a centers. will good will the the drive our and it this car, And drag it don't pretty what avoid not one

about to So long-term driving project going is network, at what Nando also take running that's really is and the excited us on is he which where for service, which calls tech. total perfection perfection. designed this was

centers, there think lots traffic pretty about just and if the of a of of you delays been for all and dollars because it's reasons, it cost of or haven't hundred leaving millions can kinds relate. that package COVID We reasons, but powerful delays

off. network will go kicked And bringing speed way is and the along. this to for just it was we initiative Nando up you this running the along So powerful designed as

Ken Cook

one for question. time have we Steven, more Hey,

Operator

Please come Shanker the Ravi line of ahead. Our final from Stanley. of Morgan question will go

Christyne McGarvey

BXC, at to commentary can from slightly Ravi. for BXB in Maybe different going sweeping but it the in for ask the earlier I'll of some McGarvey This Thanks on everyone. end. in a is Christyne way. maybe Hey I call, here me just back the

are a e-commerce Wall had curious a about not, touch reverting thoughts guys your percentage similar. be Journal And e-commerce on I overall, of think gains, kind be will you Street through as maybe kind gains, permanent you sharply. on pretty of pandemic, normalizing last article versus you if to seeing how much week line? can just retail the something least there we I'd if think saw been was that of those of at trend

Carol Tome

online of cost. store, come the come return a to stores. buy applaud store, then in we'll to get because my online to have pickup buy And store, they are their they'll if in who job doing my offering fixed to store, traffic that retail close into I store come store, stores well, a my deleverage look, Well, masterful don't

customer shift to shop. And want been how So how a packages I want their there's delivered shop still they doing, permanent inside and but preferences. when, to admire the Customers what to their might or It want want where, and at they're in at It they be point. them or where, pickup when, home at a workplace their them. store. they of might be consolidated

of that We going e-commerce also growth very customer continue but for commercial want we to customer, want during because we So see we're to kind a good grow. us. serve to will that to not sales the customer serve but COVID clearly, the experience that's

growth into the volume XX/XX So while we and mix mix, have the a going is, is will where said may go to we lean that appropriately.

Christyne McGarvey

Excellent.

Operator

Cook. the now would turn conference back host, like to our to I Ken Mr. over

Ken Cook

day. have today and joining for great a everybody Excellent. Thanks

United Parcel Service (UPS) 26 Apr 222022 Q1 Earnings call transcript