UPS - Earnings call transcript Q2 2024 | United Parcel Service, Inc.

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Operator

Good morning. My name is Stephen, and I will be your facilitator today. I would like to welcome everyone to the UPS Investor Relations Second Quarter 2024 Earnings Conference Call.

[Operator Instructions]

It is now my pleasure to turn the floor over to your host, Mr. Officer. Relations Investor Guido, PJ Sir, the is yours. floor

PJ Guido

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

Joining are members new CFO; leadership me Dykes, and Brian today team. a Carol Tome, few additional of executive CEO; our our our

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

refers Unless adjusted to results. stated discussion our otherwise, today

second For to per results of $X.XX after-tax an or payment other the available $XX charges million onetime comprised is reconciliation GAAP webcast A to quarter, $XXX regulatory of in matter, GAAP a website an international today's of share, charge million. also $XX results diluted the include of settle of call. and Investor available the financial and UPS on transformation Relations and million

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

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

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

Carol Tomé

morning. good and PJ, you, Thank

multinational deep with over UPS' strategic leadership new to financial XX our Welcome, the Dykes company, Let me years Financial Chief as brings begin Officer. Brian. by and team. executive experience Brian Brian With experience of welcoming

significant would the X for to a first return XXXX and volume work assumptions. results. we to States, point for company second United of like in quarters. key their we growth turning the was I thank beginning in our as year, and efforts on performance hard the the At quarter Our for these planning in recognize UPS-ers based outlook X delivering our shared time

The would earnings which financial front-loading reflect with the our returning associated performance labor growth. believed a XX% acknowledged earnings half we planning as of first with our to cause contracts, back-up down to new XXXX first assumption and as much half second effect costs

XX% In the of first year, scenario. line our half were down with earnings the in the

while the second would which volume May. of that Further, down assumption growth in growth in X.X% did the quarter second month we to return International growth, U.S. the markets. we we was certain volume during The in saw year-over-year, was

billion management assumption $X on to based this track deliver planning Fit and roughly to by we year. initiative the end on to savings structure, third of the was rightsize initiative Serve The our with our are in

Finally, carrying we RXO leading we did, to Coyote, a our said than value. to would we explore cell considerably and more strategic at for pending alternatives

and the distinction, mix to customer in terms segmentation. are that's and key we build plan product assumptions U.S. our volume one of holding So both use with

volume shippers over characteristics product During shift a a the there SurePost ground products, in air with experienced value quarter, surge we notable in also was network. with toward lightweight, shift a and into ground. And over short our choosing moving

shifts We impact moments. in a of these will discuss full the few year

forth provider, down few provider Consolidated healthcare the last #X declarations profit highlight the In logistics our Day, $XX.X of premium in then complex our XX.X%, year. consolidated billion, logistics strategy. Investor our provide second and a package become At small on $X.X billion, the our revenue results versus first updates But quarter X.X% a operating second was consolidated the quarter, orchestrator margin longer-term let operating was March was premium world. set decline the X.X%. and to we me and

To that and opportunities, end, have. inorganic we would certain we pursue we said

services we a and package connecting the customers. United acquire we combining of we've win have our the end-to-end to to distribution plans and a customers domestic greatly network, already our leading it for in orchestration win will announced small UPS is to for shifting manufacturing with you've provider integrated By capabilities just and big for is Estafeta in As our our closer Mexico States. reach global enhance are seen, Estafeta, logistics a Mexico. big the that This

close We of by the this year. acquisition this to end are targeting

a products. size in complex biopharma XX,XXX in strategic the our facility first products. healthcare Netherlands, starting updates, foot facility Customer the opened a capabilities Ireland. healthcare, square just now And provides share and feet, other fulfillment me few pharmaceutical facility range Let our for expanded support This Roermond we ultra-cold square Dublin, of we healthcare more growing of increased of than dedicated storage flagship in with First. including and market storage In to XXX,XXX to the complex

we access add provide SMBs, to our to well additional program continue our services. at over generated pickup than billion. X competitors months on the offering service way XXXX service, our we markets. this who and weekend in the are. or will X With expanded to to of achieving we target earlier of DAP where this year, billion day are be first we don't And $X.X revenue deliveries customers, because $X our digital businesses offer to small meeting our always speed revenue X U.S., weekend Looking important DAP DAP, In partners they in

on and In the both Saturday delivery private residential as general are provides a that fact, we offering. U.S.-based only carrier commercial service services and pickup

support to customers the the our for our continuing they balance need to U.S., speed with are cost. we portfolio as enhance Outside of

we launched to is for enhancements This in economy worldwide e-commerce record shipments. example, time, globally. cross-border nonurgent For service our solution an

into created we making solution, receiver. true the baked a service simpler shipper fees and clearance customs the delivery the door-to-door for Here, and experience with the

series a X Europe destination export network a we've we've several and shippers their Taiwan, late capacity to their In automotive X for enhancements, enable high-tech by enhancements made with in XX% expanded serve in manufacturing Because being quarters, European latest days. of Asia, top over as is our as reaching the and the Taiwan. to pickups customers midnight. destination by better just business our extended including These customers, last

we industry. operations hub all region's chain even warehouse supply expanded supply Frankfurt adding facility in now our we've greater In Europe, is more Central at Airport transportation This flexibility solutions, this And XX% SCS to space. our chain it growing healthcare and provide gateway where a by major nearly technology roads. the expansion, can connects for

with onboarding well, business USPS before plans company. and SCS, has The margin-accretive fully gone in also new are be the continue onboarding to be to importantly, implemented expect And we we peak. to cargo the air business, for this

progress And of on an the to and XXXX, operational half the continuing X year. we operational with we automate second Now our we of plan let's to turn closing this of to Future. completed complete XX Simultaneously, additional operational are more first the included Innovation buildings. Network In in of closures closures, tax. Driven are X which half

Phase For staffing example, to dispatch in reduce the car the theater We U.S. half. packaged project. we are dispatch and of the X deployed our process by automating drivers for

far so XX%. this we year, And by staffing reduced

expect we deployment, we reduction by As achieve to target XXXX. continue our

of Serve Fit are outside the these of part a reminder, actions are and to of Network Future. As

which our Lastly, RFID solution. is Package Facility, touching on Smart Smart

sensing scanning are network. We a network a to from moving

we've packaged upstream. But there. We're not discussed, we're to As cars. our readers we're RFID stopping adding moving

we RFID themselves. to enabling customers First, are print labels

advantage significant are This This competitive for loaded installing solution at to door. customers. visibility we a pickup. immediate readers at our provides Second, customer our and to as enable will trailers are us

more details, a Moving share to few provide our but will let Brian financial highlights. outlook. me

First, transaction earnings our is into an retaining consummated. while until we the to entered business, sell are our have we revenue Coyote outlook agreement and in Coyote

low first just Second, provided, end. revenue the with while line guidance half earnings our end of the of short low in in our came were we the

experiencing Given for we to volume our business, are profit, guidance, taking we midpoint operating of and the the half the momentum current guide. of now revenue original our revenue year. But the we us resetting our to look are back in

the expect the as mix volume had which of in same characteristics half the U.S., the growth. we In year, compresses revenue-per-piece we first

an the through operating year margin as back projected will operating nature of the high we we the profit effect reflect full back-up in solid of as growth expect year. the guidance be beginning not the rate earnings' the our While at network. growth half flowing year, adjusting still volume Accordingly, to with the our are we U.S. of

operating expect As approximately a margin of $XX and result, revenue consolidated a X.X%. approximately now we billion consolidated of

U.S. XX%. expect to of XX%, which exit a drive of a Importantly, we as longer-term the operating month business we footing margin XXXX U.S. to a with of creates margin solid operating the target final

the it business to believe balanced before is to disciplined to for I first capital approach the hand allocation back last repurchases. any being capital and going our to comment over then uses have the call to We Brian. with excess share and of used cash dividend a and important pay One

fine-tuned we than expect originally have anticipated. we for less requirements our of As spend Network Future, to capital we

free pending the Coyote, original cash in with we Further, that sale of up not our to guidance expect was plan.

of XXXX. shares restarting As $X the million billion with annually, repurchasing in a share are about repurchase we roughly result, of intent program including our $XXX

Brian. let call thank And So to with the that, you turn over listening. for me

Brian Dykes

and everyone. morning, Thank you, Carol, good

set. global with leadership finance team achieve thankful First, work for targets lead I'm we've entire to to very the the the opportunity organization the and

lot hit meet particularly We front to few have over right goals. opportunity to weeks. eager team investors also of in as the the our road a our and us next the of I'm achieve I

update This our detail morning, an outlook. and, on lastly, XXXX I'll financial results, allocation review additional second provide capital quarter our provide for

First, our results.

business. quarter pockets more volume high we contract. turning second each with demand the profitable the Outside important in point in our the rate growth it of export an U.S., represented new region The Teamsters inflected associated U.S., last growth many the saw In our the first positively was improved year driving full of lanes. and our wage for of of quarter

Additionally, first track Serve savings savings positions, Carol by to said, to we through as by $XXX the our in XX,XXX deliver billion has roughly $X half of XXXX. the of in year. into workforce are approximately million our reduced And translated initiative, which the on we over Fit end for

$X.X of the reduction of the from operating compared billion, and was was a our was $XXX quarter consolidated to Consolidated $X.XX, margin revenue at share $XX.X down operating quarter, consolidated billion, Diluted per In second was of XX.X%, second down quarter earnings XXXX. performance. Looking profit the second XXXX. X.X%. XX.X% million

business average And first increased sequentially, expected to volume the quarter a points. the of to X At volume year. when the what of consistent since our year-over-year marks positive U.S. average in beginning daily and at quarter growth things In we XXXX. growth fourth the time look quarter, This had by let's XXXX, the we first the X.X% Now in to see growth, for the increased year-over-year. return basis second segment. compared volume experienced daily BXC XXX to growth year, quarter: last the mix of second relatively product volume rate

it strong mix. saw product different led volume quarter we While in by came with a the growth second BXC,

BXC year-over-year several quarter, and growth volume of was volume network. of our a up volume, X.X%. year-over-year. from This spot XXX ago. our that BXB finished average the part X.X% by bright basis X% customers year down For remained driven daily increased increased Returns increase an made new and e-commerce a entered XX.X% points large in

we between saw product perspective, a trade down services. From customers

SurePost. saw from ground from and ground to shift customers we air to Specifically,

ground due packages the shippers X.X%. product volume product while matching enhancing As in volume our X.X%, increased we ground, daily percentage negotiations. during and total delivery. trade volume driven average contract saw algorithm, down daily by increase SurePost XX% average last redirected year's a downs our result, volume in choices, new average air comparisons to to Within for grew UPS easier daily SurePost By of decline an was

XXXX a result, returning Redirect to SurePost As increase level.

saw the it XX.X% in with SMB first trend down quarter. terms SMBs continue up the until quarter We the in positive. volume SMBs. flipped when of June from to volume, second And made Turning total total

piece was U.S. quarter, compared last down year. X.X% the billion, year-over-year. Revenue generated $XX.X down revenue per to of For domestic X.X%

per components the per growth zones revenue of combination The Base per of the by and increased decline per mix, rate shorter points. the customer remaining mix growth down decline. of combination points. fuel. the product in rates growth XXX point by rate changes to piece the point basis revenue was piece rate decreased break the lighter me Let piece revenue XX revenue basis piece weights and due -- in The basis

and took last and expense August Total increased actions Domestic of reduce XX.X%, rates the while that X.X%, planning productivity costs. to quarter. tools year. rate. driven the Union in increase effect in by X.X% to We operational grew total Turning the volume by on X.X%. went into executed total contractual network several plan U.S. increased second team The increase in initiatives hours to compensation leveraged partially service offset wage

recorded the Through total we permanently the and in years, year. better more our We bringing through lowered volume operational XX.X% to results XX by versus closed UPS. closures our Future, because for automated And picture Network second block we XX. safety buildings auto driving XX in long-term our quarter, cost this X our of so better for routing last a hours outcome far and people year, best we've facilities, a had we're year-to-date

cost The seen increased XX%. lowest and operating per operating XX.X% in quarter, piece margin million together, second actions rate quarter we Putting the even the union Domestic down nearly cost X.X% compared wages due the piece growth to growth the only we've is took This to held rate all it X the to more delivered segment second XXXX of we than profit, was $XXX per years. U.S. in in X.X%. as the

Moving segment. International to our

business second for as well. a our quarter The turning was point International

Europe. time continue in volume XX daily shift the quarter. average Asia to grew our in of year-over-year of export top the revenue XX At level, the first see in daily average several key nearshoring. growth, volume XX in demonstrated signs we countries region including the For And solid Americas regions, the in and quarters, markets

total the the X.X%, down we year-over-year, down second of the average volume daily driven quarter saw of average this Europe. year. the second at decline was X.X% in half Looking was lower volume decline primarily is quarter International which X/X About from by first in in quarter, the daily volume, domestic which came

On average the volume export X.X% year-over-year. side, daily declined

XXX sequential However, improved the export basis basis from daily quarter, points. first volume on a average

within largest Germany, growth which average is the lane. volume on grew increased volume to was increased of While volume This was our U.S. in X%, is the China increased down on daily Asia, at XX.X%. overall this Asia, market, Americas volume export X.X%. consecutive region, average In export the in third outbound looking quarter the X%. Europe, And And daily export average export lane trade profitable daily sixth which quarter of consecutive our volume most lane, growth. export

of Mexico. in Estafeta to further As take hold, we announced see end-to-end nearshore in enhance our the our continue shift will services acquisition

revenue due was increased to billion, In primarily from mix. of and in volume. the per pricing decline region impact the year, base down second quarter, X% International X.X%, product the Revenue $X.X positive last and piece driven by strong

quarter, second relatively International the In expense was total flat year-over-year.

leverage the was down million, down segment block year. the to in hours manage quarter last in $XX International second of we the our network Operating profit Operating compared agility margin to integrated million XX.X%. $XXX Here, was year-over-year. X.X%

year-over-year. billion, Supply into a was and to quarter, up we Moving the second Solutions. growth. In X.X% the of revenue leaned Chain $X.X remained agile face areas In dynamic market, of

freight, as key Looking in revenue. outbound market China demand, drove increase capacity, at an demand in an in volume resulting drivers. strong rates lifted and in the Within particularly increase international e-commerce outpaced air

On the down total ocean volume was side, year-over-year. revenue and

end quarter, the demand on market outbound toward and the Asia higher. lanes However, improved drove rates of

by Our down. truckload business, driven healthcare. And known face continued then which grew as MNX revenue pressures, brokerage of logistics and impact Coyote, revenue the drove market to

Solutions market down Chain income $XXX the expense. X.X%. conditions. generated interest Supply we operating million, In through the quarter, million was rest of the had Walking year-over-year, $XX million of reflecting second $XXX of statement, margin profit Operating

tax was $XX quarter was the effective And for Our other pension XX.X%. rate income million. our second

allocation. cash with of the cash refinance flow We retirees. of quarter issued benefit successfully of order billion. and from cash the shore generated that outstanding be billion maturities would Now liquidity core and in no operations Year-to-date, expertise on billion portion current finished that our acquisition will we've will free May, adding liquidity $X.X to focus we our in let's $X.X additional management to UPS pension and in paper. $X.X and in commercial billion which $X.X capital we to And our strong oversight announced and up turn In outsourcing quarter, debt squarely plan support while business, more strategy. the asset we

XXXX grow year, Global this the to year U.S. brings our of full growth is outlook expected us billion X.X%. forecast remained far for half dividends, UPS to paid and expected so which the XXXX. economic X.X% the second Lastly, global S&P has $X.X in GDP unchanged of in XXXX. half relatively is to According grow to back GDP for Global,

less package by we small Additionally, still X%. grow U.S. the to discussed, as excluding than we've Amazon market expect

business our XXXX, finished to on expectations best in and profit end about guidance. the at through and product operating we characteristics now consolidated business. estimate year, consolidated performance moving in of we moving different of our the revenue approximately continue our first expect low the and will the at a margin shift provided our XXXX, the operating what within our originally that of approximately billion, we our the parts with of we XX%. below was includes range the a because of it experienced Looking half are expect Based U.S. many have anticipated, in our point rest of half $XX was first represents the This the to X.X%. down combined We we revenue now updated because volume the from be view expectation

profit is guidance mentioned, savings until Our Coyote Serve. Carol guidance transaction Fit and will from And revenue billion the includes operating our remains in executed. and roughly to as $X in

strong by volume the of In back growth. X%, XXXX anticipate half Domestic, U.S. at we segments. driven around Looking growth revenue

Domestic, things keep you there to a mind. in for few As U.S. update are models your

grow average to volume digits. expect mid-single First, by daily we

on the of first Second, we X. will the August anniversary contract Teamsters year

to revenue piece. expected continue pressure is mix to per product Next,

However, inflation, and to XX%. lastly, slowing driven through double expect by And expense we grow and U.S. and by operating margin a operating demand third exit strong management the we surcharges. quarter of labor with peak a digits year volume profit growth expect

we with second segment, full year and International consistent beginning the the what provided our of outlook Within remains the half year. at

in half the of positively digits. we to margin International growth in the will anticipated half revenue For the year approximately volume inflect XX%. anticipate be growth mid-single the be Operating the in rates second of to and second XXXX, is segment the

from XXXX, in single operating of billion Solutions, won Chain digits. over we the high in the margin and newly revenue be second in half Supply in $X guidance And Included the to an air by expect our is the tax business the approximately third end quarter. cargo rate to expect XX% we will USPS, of the the fully onboarded be which for remainder the be the year. And of lastly,

allocation. capital to Turning

around billion. For expect contribution. any we We've around about to before And had approximately of in expect flow $X.X out $X now plan Board approval. $X.X plan capital to $XXX strong billion shares, given this to to in shares repurchase liquidity, billion now not be we tightened while to our to spend the XXXX, million our forecast full dividends, year. subject We originally year planned pension we and pay expenditure repurchase cash free

that, for questions. the please With open lines operator,

Operator

conduct answer the now will session. We question and

the Tom first line will come question of Wadewitz Our UBS. from of

Thomas Wadewitz

with excluding package like SurePost, offer ground, so thoughts volume decline see to if and wanted more I I you you effect. it look saw a some looks domestic the If core what's at sequentially. the mix on could happening

I XX.X say, a exclude if SurePost. day million XX.X XQ let's to So in million pieces

competitive what think improve And kind domestic we what's look on do second So at maybe volume. Or key could offer to mix that in of as performance wanted half? just happening more see market -- levers thoughts you are that package if -- why see is is weaker? then So you just performance? to that

Brian Dykes

the Thanks, question. Tom, for

domestic going our performance second I the think across the from quarter driving from ground, and was air we was two of and customers at within quarter, when customers. so One more And economical that is the were to broad from look there see change. ground, going did you really ground impacts SurePost. favoring the to second that then volume base the in forward, big products,

new our product. of than frankly, We also and a into coming entrants, saw market highly an leveraging our e-commerce that quite are customers the SurePost that were are, different model traditional new running acceleration customers

of So we acceleration an SurePost. saw

as the The rate that you because what about last think the in second customers also growth quarter is year early. happened diverted type complicated of of of

it rate. the were growth also we As contract, does the Teamster approaching skew

do and we -- the As as forward to products the got see we our towards expect mix working through year. as the and move line to actively we in we can the second you you going of to And of see our that forecast and in end within sight of are pull balance pipeline half. it guide, the of move into those that we've that mix rationalize kind

Carol Tomé

just And couple of comments maybe a other volume. the about

business moderated As you decline year-on-year, rate our commercial down saw, of greatly. the although has was

of we the to As look we expect that year, the half back to improve.

Our pipeline is robust. quite

expect see we movement in So that to space. good

Operator

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

Jordan Alliger

a what Just on better? it on quicker And economic timing to side products, would customer which the equation need your to I sort you step-up on back? what from you under economy? in things think BXB go a premium that changes down inventory, look is end? products And the are the of from to trade a the of simply with more focus is of guess thoughts behavior time move then pressure? could anticipate just And more when Do that still again

Carol Tomé

pipeline to network. us is opportunity it as long-term an locked robust. poolers, that business service already them that during Part going us not to returned. provide. some within loved discussed, year-on-year. We've of recently the for opportunity like It's the of And themselves companies that of out which the win the have within also into left down was to yet us overnight, us, we commercial flow. into occur they BXB accounts contracts our they front, space back I because excellent customers mentioned, On dynamics as seen returned. have an we negotiation back starting That just was and not the who BXB of that bring They gives contract gives business

year. that So half the expect back the we to of improve in dramatically

On it's RPP, it's certainly And interesting. flowing exploded. the United into the volume, into e-commerce anticipated than We've their we these entrants had It new network. was really States. well, our more

is forever? saw the a can know. will the on the phenomenon that And Brian, more of on our what like It demand RPP of market focus be. back some depends you year. the pressure we on RPP of on service going this in color in I question, that the your and second end-to-end maybe don't we to little value the consumer But quarter expect will the parts a we're look see to what bit So really think moderate. give half to the

Brian Dykes

Yes.

had we mentioned business. we that the start uptake to that as year. to pieces the Carol of get our as And actually, bright builds as Happy kind towards our the into to the the pipeline BXB moderate we is that X%. expect breakeven to And BXB within spot growth through, piece. from approach with that we portfolio. the that of back I RPP of of see say Returns almost BXB are we end the pull at Carol So seeing And the addition as couple improved and do of yes, accelerate returns, that. there's And mentioned, in move X.X% half. negative continues would a we're

get ground the integration as with is UPS the then process is and allows their what we the thing become product happens up, pipeline set in, through And new have products. get I do expand SurePost the portfolio resi pickup a we but customers us get we say We of it to they into would allows strong that. leveraging The that the that you other systems, of go cycles. to part

Carol Tomé

solution that about maybe steady like question one do may the It be, And actually the like because for us. you product. product. provides We other SurePost comment a

XX%. We the And also, through percentage the can packages matching network. we redirect in fact, the back was ground redirect our algorithm, into

to we COVID. back that's returning So saw during the levels

Operator

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

Ken Hoexter

guess, just through XXX you third spread flow points of that talk think want understand GRI? the maybe the seasonality want a pullback. basis I of fraction points as to I or should So quarter? of just impact Brian, kind see of I in see pure guess pricing. that can we I you kind reaction the margins, there. we then we the about Has get mentioned typically, And should shifted margin that expect XX year. well? of the basis to Is I

Carol Tomé

maybe the RPP the and talk I'll So can talk you margin. about about then

on are base many on there pricing. the base So the pricing, dynamics

tough around we from And negotiation. you'll quarter Why? that second comparisons a was were noise the declined States ago. very against the up Well, related United by to XX%. First, year in the labor recall volume this our in almost contract

low-GRI If you customers. frame, look at are who who declined during that time it was dual-sourcers predominantly

the just was So bit mix change. inflated artificially it's last year's a base because pricing

pricing year, new to looking tough time. a the like roll you rate this because first what now see have GRI well, starting to is, the on comparisons year-on-year as they're that who zoom is XX%. forward the GRI? customers you entrants don't have looking as in you a If okay, rate base And well with us for finally, the out keep what's keep and about those say, The then if ship

frame So it rates talk in dramatically compare, an base the into the about from as -- you the can maybe half. we think this margins. improve why get we easier past in and time was can second get And our that's where

Brian Dykes

pull how able shaping little to we to the the give half do you second for is going I'll go we're think because through Ken, bit And of Yes. margin. we have going to a be confidence how in

And expect negative about we quarter, as we U.S. XX% the negative op get going QX expect in do third QX, expect to in decline margin. kind you in kind profit as And fourth will we mid-single around from Carol see be we in double get about, in And a hit digit. X.X% up before, RPP X% demand QX. to We the quarter. surcharges, if the to then First, up mentioned better. to that we're December, think talked just so as about to we of even operating the moderate, and we peak, to the ADV holiday growth be -- of digits

In International, QX digits ADV second in half. to RPP QX year-over-year is the kind and slightly of of the mid-single flat with X% positive to up X% growth year-over-year,

QX. op high and teens is over in QX to then the getting Our margin in XX%

So second and QX continuing a stronger International. the in growth revenue that QX half XX%. strong SCS expect and profit momentum And then with we mid-teens year-over-year up in in growth about

confidence sight has been the deliver the that we the the offset got I helps and some is shown volume we've line of a One We've second the building. couple volume. to got forecast to the that can line for a top look, in got half think RPP we've a see We've reasons. momentum growth, line, of can pull volume that you sight of and lot need that we And of to the of through guide.

On the Serve is cost side, Fit to track. on

as the sight pipeline us improvements we have line we profitability also XX% We well that XX,XXX to the get of And going reduced the anticipated. to that second got half. help resources as are had that we've then revenue or into drive of better in are

in point confident the of the feel profit to absolutely we growth, that and So expansion margin growth back back to revenue U.S. we're

Carol Tomé

just on other August don't piece one X. contract we're labor our that forget And of color, anniversarying

dramatically back So associated the with the moderates that half. in pressure contract

Brian Dykes

That's right.

Operator

Stanley. Morgan of from Shanker will next of come question Our line Ravi the

Ravi Shanker

I Two-parter, may, please. if

Given not -- new Will is, please? also returns not job us you revenue, in pretty size of being largest managing meter kind you you've in And or bigger e-commerce of be size. as of help to mean, if of terms question the in customer looking better, terms from these your the of part growth a helpful? second either customers I good of dimension your operation is volume mix can done the

Carol Tomé

So quarter ago. first, it of customer, as and total of the the in revenue, we very for year continuing customer, to good relationship we terms that have we revenue optimizing relationship the was largest to forward customer. about XX.X% so with And was with at that same our had a look the a

are we really come continue that network, focused do new will the on and serving to e-commerce have that. the In the our network, terms end-to-end segments our of of entrants opportunities respect into we that

One reason digital access leaning SMBs. so year-on-year. the hard so enough comment the particularly where XX SMB on reason another that? why say We why program the on in couldn't goodness now you hard we're program, revenue about have business, Brian, I Returns, X.X healthcare, into that to and into around world leaning And our want we're partners do over X.X% grew million shippers program. our

Brian Dykes

Yes.

give. Look, time to returns is return footprint, business. not BXB we've commercial product parts pressures a other -- in. that returns unique portfolio offering. UPS one in up enable don't a in be and that which for of integrate that and to we also process, also of ground only to our have we've to into we customers store very continued Ravi, growth us even the So the had with kind And capabilities allows returns UPS we had that it leader rolls when into piece long leverages a single add and are but technology It's has their that a the breakout BXB continue to see

when you provides do add Now to Happy BXB. unique growth returns, able in to a consolidated we're becomes portfolio that that, really it

Carol Tomé

how Maybe, you Happy here. integration going is Guffey Matt and going. And want on that's Returns comment is -- to the Matt,

Matthew Guffey

Absolutely.

that it's capabilities, shipper. Brian's just to drive important. about Returns in all on that scale. turned which that digital Happy we about We matter just acquisition also a footprint consumer but with Remember, also but last the integration weeks, point, the made not So and you X,XXX not gives experience physical us X can great And has it's November. of for this, been the stores extremely the

also to Returns So portfolio as see returns Happy and growth piece the to the single well. complementary -- but from we continue

So as single piece. and we think label also about doing no box, no we're no label no box, the consolidation,

it and the rules on So back on how and get want to them. to the shippers -- they returns benefit allows consumers managing come the to

Operator

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

Scott Group

that mean clarify, you EBIT double you're of rate then is us that to going U.S. can double Are you digits be package saying and XX% growth a just pointing obviously digits. Brian, lot. -- up that So just towards because around will sort

right you really power coming peak negative magnitude It Analyst And doesn't talked we're lot at are now. seeing surcharges Day, about oversupply, Carol, then of were of in yields. there's bigger-picture, that pricing the big. industry like And a -- surprised feel season your them. the the we by But context,

are an question guess at is think my you I we you can like So aggressively? inflection point where price start pushing more

Is in we're understand, and to seeing with seem point. turning peak quarter right a with the to we're to what And a And turn? want understand go unique a is in surcharges now. yield want a just contrast I underlying if price I at this compressed just this just peak?

Carol Tomé

then Well, the margin about let's first, talk and about talk we'll peak.

Brian Dykes

Yes.

little domestic think of you I -- The And EBIT in the yes, QX about to out. Scott, then And XX% then what moderate be we shaping QX a I QX. will bit comp want was in package moderate up Carol, to... was to in to the for expect range. XX% the bit. QX, levels little and will it do a as the So growth talking And

Carol Tomé

I'll talk be happy peak. to about

which So are it condensed has projections most since peak expecting day, between There It's are is volume our at Christmas. the Thanksgiving we is ever a December the And XX our and days XXXX. we condensed for only on the highest XX, network. look peak in as volume peak, peak.

lease so people that network, you charge and have you them because so hire on and when vehicles, delivery service Now volume and to to of flowing forth. to have your kind have actually to you well aircraft

to are So environment of stick what is us going that we from demand a think because the telling perspective. prices the

peaked, easy you the comparison last we up well, they're candidly, was recall, as network. say declining year. very also would Because, in volume against I

this fact peak pricing you tools being we the the we through us So of an from that price of new the to comparisons have moving been is -- confidence. to that talking tight have also year-over-year That opportunity about. gives to the pricing said, and the art science

maybe use a over our a for for in -- creates plus on future value that opportunity opportunities back to Matt, are been the run That deal price. for us, of I'll we turn ourselves. value has to at which manager, and for the for price modifiers architecture past. the more we it comment than gives discounts you Pricing us to customers less as as And deals winning huge home have well

Matthew Guffey

Yes.

in we're a mediums. rational first And the point, environment think pricing she Carol's segments, think hit So I off, one some we X today. to competing on about it in of

if just talked where think about could, you all is tomorrow. across give also of the the technology way context, segments dynamic to gets to digital customer to I pricing about We access we architecture And our ability the leverage have and the technology, the all program, channels.

deal access So the digital manager. Carol to program, we've leveraged highlighted in it win

for through How you the cost forward, think to modifiers providing I that align exciting also really customers. customers our value ability now have our our we while priced to best better which dynamically serve us highlighted, she now price enterprise think is to about the for to our moving is the across

Carol Tomé

So hopefully, that's helpful, Scott.

Operator

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

David Vernon

the over you here down comps volume. a are through the Carol, volume But we of seems what chasing on Like volume. value changed away in was investors -- this what really easy should from focus again? for a there something focus on like back sort take company? growth in, lower-value Has when So towards your came pivot to lot guiding of half

Carol Tomé

Yes.

accepted we're just us. on chasing much that We're It's not up our We had new So chasing not higher volume. their into than we network of customers blew was expectations anticipated. actually demand certain volume it.

market And through the the has end-to-end We'll not we will We managing and so it. value not gone through away. to we need our of through be segments network. focusing be this. on Better it are bigger manage managing that laser-focused,

whose come serve this best any on-time And able were customers we volume blew we service in to that up. of So don't the read had anything into new with other than to carrier. network our

Brian Dykes

And add while important point reinforce same rides I more network, packages the all of helped think Carol, because value hubs lot this And and is important. also one productivity. volume incremental SurePost do same just very the drive it us a I the the theaters is that other the and had the if can thing in shippers to we that in it

the up network. Our in feeder was key utilization

up. was productivity hub Our

preload was Our up. productivity

was at And when to look in piece able to with what cost rate. in does cost per you hold per rate of the face the that compensation X.X% XX% a growth U.S. increase piece, a business

-- forward. top have you delivery improvements and ability on is driving have generates that Then volume the the that productivity So the the network, It's now we layer of move entire side impact with alone manage density. the throughout to on huge. can we as really redirect it the stop-and-route

David Vernon

your a productivity about base, growth. that. gave that's the So dropping just to cost looking for think investors line. I piece it I guidance to But appreciate doesn't mean, off XX% you guess, really you seem are when being to XX% necessarily just I or what it's low And the capitalize like not earnings, XQ bottom per

Carol Tomé

the this can actions number to the address we that guidance Yes. it most our It future of No, is But do. that half today. back year. this. take the the a that. It's company. doesn't was we thought There provide are to appreciate mean that of important realistic We we of view of

exit change where operating That's as XX% we been. the a In we have mentioned, fact, margin. from U.S. will we with a significant

Operator

of Wetherbee Our line Chris next from question the Wells come Fargo. will of

Christian Wetherbee

takeout, to ability right level at changes? your Serve, What the touching Is Fit seeing just network forward how some that changes guess other to the profitability low do we're is that last of of are you I product do Carol. we're the running response, it changes that network seeing? can pull to that and now? cost to things that you some the Maybe structure as on adjust mix fix

Carol Tomé

from And in we're you opportunity in the that? think weeks would there's on X Network to back half I is that on additional Nando, of Future. the review to while I committed X every way accelerate like an one to year, team do get closures the comment to what regard, this So doing we of more. a

Nando Cesarone

engineers there is additional there's I is. the tiptop are you, operators opportunity. the Yes, to right and will just actual matching But sure would And say network now. the in look, is activity our occurring. I tell that And shape

automation half. we've also, year, this our into XX -- operations online in starting operational that As the is to additional drive we're XX projects going got closed we've new efficiency. But additional second

versus see there's up And we XXX so making versus matching block every the hours. efficiency discussion to points, volume, that the we're in of course, basis And air the other a network you operational product with our our to reduce about start of our unfold, hours we're SurePost, costs. sure as about volume talked lot package

continue of sure we're we worth, very And pleasing as network it's of customers. to is, the making that all find So those pressing one, for and we value our opportunities, efficient, what forward. very safe

Carol Tomé

same the States. outside the Kate, United And is of true

So what focused you down are on? activities cost

Kathleen Gutmann

Yes.

that both from actually from second flattening important -- the the to the start do we well think see are at it up a half, year out the the We decision-making. I how made move that the eliminated we and our customer of great we're as in from the is And course, the structure. people. is of on Carol, customer playing and we of we can So throughout speed world you whole in the focused feedback the getting layer our as margins,

time manager, over of XX% off structures. that, get Every what we SMBs, of as talked arena do cost or it international internationally. International very in we're off of different also have X deal well. weeks countries be To Matt seeing is into turn shaved actually and bid complex. is X-day able about an to for playing why time different SMB that's mix that example One pricing and our the now less down with

sides of the both So equation. profit

Carol Tomé

a cycle is UPS. virtuous Productivity here at

that. that will drive continue do cost can to out, we've think I and shown we we

Operator

Our Bruce Stifel. the of of next question will from Chan come line

J. Bruce Chan

the bit on saw a moving deterioration, bit give half. the color we a deterioration have if little could more I'm maybe those sight you ask about talked third so you line little a back And maybe wondering volumes where bit been yield in of think of us far. RPP into And I on I the metrics. this on a or trends a surprise because quarter Brian,

expected. seems that it not quarter, like Last was

have of continue kind just trade confident surprised that us deteriorate? you to curious, that and so I'm mix issues of down stabilized won't the makes kind So issues what and here

talk been maybe domestic what would just about And is customer? worth without possible that it then growth have here, shot volume e-commerce to a but

Brian Dykes

see do around I you second the So big growth remember, at when certainly, to have on rate, QX, comp first And rate think second did take QX expect growth moderate. quite negative the to quarter. the growth to shift you we we -- rate go QX. point QX the quarter, we look is RPP issue the the in a a from a and into And the do moderate as sorry, to

that. So go to be we customers in third have in negative quarter, it mix to also, levels entrants that on and what of are the the the customers are so the to of are those on the to we're we as volume look will And we into And have. half the kind fourth the half. There's that normalize better new come have things going new One market, through going the quarter, X.X% we those of X.X% line continue sight wave sight of of a that of seen improve about that on line working stabilized. have absolutely in with coming and couple back volume like negative these improve back to that is there. will forecasts we

question, into we these your invited Related second to customers our network.

really there, efficient very growing weren't are Because matter, of market look, way make they would our that of found volume I think if look a within network. places the they to what the the this faster. idea grow And like We it right? to in we'll continue there. are they doesn't

Carol Tomé

the cardboard we've we've we ], ballbag but may on should sharp getting just the of visibility comes actually when really -- gotten -- as And holding question, makes the accountable everyone the when package tightened well, package account our wasn't to have now. we it not it [ network. to will it package win visibility And versus as into cardboard, line that on up the car. a be may it much car. a better onto the are And there sight we say be I been, an as but for

past terms than of So the on much several I candidly, years, over I visibility better have onboarding. feel in our

Operator

come of from Brian the will question next of Ossenbeck Our JPMorgan. line

Brian Ossenbeck

the on pipeline. up following Carol,

up. on You several a surprises comment, of given there. Maybe and can far, any big update large 'XX the it's confidence times on mentioned updated coming e-commerce guide? And last how how customer not the elaborate visibility, that that an separately, going contributor in of upside through one can contract, or volumes and you the us the terms the just you customer whether so types then USPS the that that was surprised or blew customers, to give

Carol Tomé

Yes.

States network. came perfectly new X So explosive. are can shippers you are. there quite who were And has These United clear, to volume been imagine e-commerce whose be they our customers e-commerce in the that new into

We relationships we are as speak. those working through

As comment it relates you on how the to to like that's would going? USPS, Nando,

Nando Cesarone

Sure.

XX.X place network the on officially teams the XX% UPS ], the I the -- come be implemented X actually both We'll planning UPS. will And think and change. because pushing see forward. to are volume with regard terms the of to to serve the USPS, USPS and [ fully close September face-to-face all in really far executing starts where over continue so of in to we'll contract of

regard, So there's of far, in for systemic. recognition this some bumps but in getting time nothing parties together been first two the

doing really sides, UPS, out working really and there. professionals it's USPS on good both So some the from well work

Operator

come line Melius Conor of will Cunningham from Our next question the of Research.

Conor Cunningham

revenue portfolio? contribution landscape and the you're then then M&A bigger-picture, you have maybe acquiring I viewing are for How that just just you Are Estafeta up provide right of how color holding could now? the some happy now? businesses was hoping returns are with you paid. And price on the the or

Carol Tomé

hard So Together, we're through by year. work announcement. and to hope UPS super team easy. conditions. closed excited the acquisition The Estafeta get and very a We of to about companies be the the us $X point, will this the has closing worked billion-plus have to isn't the we'll Estafeta Mexico in Acquiring all end business.

to couldn't second Do part take firmly of want about in cements we position the be North our the excited you it. more question? leadership America, So this and

Brian Dykes

I then, it. of population Yes, the to XX% about broader But certainly. Mexico give the covers you a Estafeta, think talk little Kate, in it to piece of want maybe of facilities. with just And bit XXX you context,

XXX,XXX this a business. is So day. about a does fairly pieces It large

it fits near-shoring gives anything very And you into do within on context So firmly it fits strategy. add want that? you where portfolio. to it of our the And Kate,

Kathleen Gutmann

Yes, absolutely.

of and what They So XXX,XXX all, that cross-border it. that solution is that in has the pieces, network That's think small about, those we to all give a transporter, a shippers. quality first need package the U.S. access best

packages. additional the So it's

that I'll record our question the other part answer with of track acquisitions. the on

is Bomi, to If of both side them MNX, again meeting premium as also as well look back does the at end-to-end business up it equation. onto cases these what cost are the synergy revenue opportunity all opens you of their on their Marken, customers. Because and this

of we chain expect shift We are into the Mexico. thing ahead supply same the

chain supply up Our business cross-border digit. is double

well. as that help only So with this will

Carol Tomé

not for the we about hint. business. in that won't the debt capital know markets purchase the raised typically asked you Brian $X.X debt some We price, billion price. spending I billion. but I quarter and growth. you said a We're And about on disclose second accessed capital It's can the purchase $X.X additional the give

So that to gives purchase the going sense you is be. a of price where

Brian Dykes

That's right.

Carol Tomé

strategic we the And in alternatives Coyote. for assets terms of at portfolio have, that looked of we

that on delighted XXx. over to with and higher an value, multiple carrying at are sell was the a agreement than to business our Coyote RFO value, EBITDA reach great We to

transaction. monetize. the So there that or assets, received always I was with we of things close really we we portfolio optimize looking the we're that value pleased are other will or receive And that can when at

So to be about that we're But today. large never would nothing talked need done. there's

Operator

the will of of question Bascome Susquehanna. from line Our Majors come final

Bascome Majors

through is the yield package you moves talk little high a domestic If longer cost better bit be in that it what's trade-down that level term, back if nuance the package? of extending better how there just discussion to to different network little what go that business with matches you higher SurePost the lower fit? changes that business the mix the would to your expected about And bit can And need you'd SurePost, make a than with about network? that the further, a a that of for

Carol Tomé

a Well, great SurePost in ways. many is product

able As I matching volume. for solution is we it redirect to us, our mentioned, Sunday and algorithm, with a are,

more our in network. does give ground delivered a little work? how Maybe, to bit you color that it's want So Nando,

Nando Cesarone

we on is looking Yes, I earlier, ahead even through regular sure. What to can our working And than those to more very day we're feeders, mean, as Brian regular sortation. SurePost more and SurePost shipments. flow solving mentioned of so is match network, close X hubs, going

So one right so a as each that look now, if actually that will, before, matching forward that package that to The package can at we particular close And for more, to is is up if shows that to profitability a we're you providing delivery, X% I morning, will than we shipment the further option last match very year. that a total, In lot or destination, other we're with moving that offsetting one additional and day. to said about more cost out. and for opportunities, location. look solution matching deliveries

Carol Tomé

basis more us. creates dollars. million of a unlock delivery in about then a for is XX improvement value big capability density, matching hundred every that points past, of the which couple So talked is We've

over an more us to initiative is this make important this attractive even time. product So to

Operator

back Mr. turn host, conference to like go to Please the now our would I Guido. ahead. over

PJ Guido

you a Thank day. you, Stephen. for joining, and our have good This Thank call. concludes

United Parcel Service (UPS) 23 Jul 242024 Q2 Earnings call transcript