UPS - Earnings call transcript Q3 2024 | United Parcel Service, Inc.

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Operator

Good morning. My name is Greg Alexander, and I will be your facilitator today. I would like to welcome everyone to the UPS Third Quarter 2024 Earnings Conference Call. [Operator Instructions]. And after the speakers' remarks, there will be a question-and-answer period. now host, to Mr. is over the It your to Instructions] my turn pleasure floor [Operator PJ Investor Guido, Relations Officer. Sir, the floor is yours.

PJ Guido

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

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

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

of business, included million gain third $X.XX our comprised $XXX a the $XX an transformation of per the diluted consisted GAAP million after-tax divestiture serve or costs to million. Transformation of gain strategy quarter [indiscernible] $XXX $XX our to million of program program. cost our fit $XX related strategy from related of million and For costs net share after-tax to of XXXX, results X.X of Transformation

initiatives well also financial a the as will as and Investor on reconciliation adjusted costs material. These transformation available is website. results GAAP UPS our in amounts available non-GAAP on to detail today's Additional be Relations materials of webcast

we allow Instructions]. teleconference. to possible question joining we as us Following one many from the may questions as that only ask remarks, those our prepared so Please [Operator will take participate. via

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

Carol Tomé

service in would that deliver morning. growth activity third U.S., quarter, for would we we worse hard was allowed to a revenue and than second performance our than results. In that and we we macro the ensuring on P.J., expected. last driving growing Their that quarter, only you, sales the profit. these good prevent was didn't to to manufacturing service us and would also not our efforts. but certain profit turning for lower environment while us return their the production we environment slowed call, as in quarter and third point see was [indiscernible] on which a did. I weigh continue the the UPS we we manufacturing slowdown and lower work revenue from outside volume activity of productivity said Thank focus earnings true industrial be customer faced On the excellent anticipated. like In online This U.S. bottom, and the in to slightly thank and geographies. But recognize relentless

revenue momentum average flattish year. quarter and our up was XX.X% As parts revenue growth And last initiatives. In quarter of we drove ocean we the the $X expense operating that from this finished consolidated was the first growth into $XX.X highest increase leverage productivity our profit leaned the X.X%. end-to-end year. we've the forwarding [ strong of market billion, and year-over-year X.X% was year growth was since since ongoing operating consolidated volume rate third it and daily to growth. second the volume quarter daily quarter, consecutive this of seen average U.S., FCS], contributed the first an the XXXX. In In Consolidated network, and of ADV versus continue value billion, and international, in upward through air of margin last was our

the at Looking U.S.

last year. focused and BXB X% grew business certain volume compared commercial the by on nearly growing During of to we quarter, pockets

One of retail the areas of was BXB. commercial focus

retail. in are roots BXB Our

over replenishment to across with a provides to serve merchandise the daily delivery deliver number solution of customers, X-hour provide country. inventory replenishment offer XX,XXX that we these retailers a delivered. scheduled within windows be we packages fact, To retail the to store window. Within we outlets In solution, visibility also this

reduce our new Our their with is store efficiently RFID This replenishment technology, just example along enabling enables solution, and retailers volume. are us outs stock customer-focused our how one to of to operations. receiving more run win capabilities commercial

flowing segments attention volume heightened with to that network, is Now into have the market our a want focus to we revenue serve. of our U.S. quality we the back on

You pricing we business. Further, tomorrow or we responded optimizing the our AOT quarter, an In to our the flow we our pricing saw our on packages this operating zone, quality into focus the quarter, surge e-commerce by will recall our second adjusting the we a service plans through the strategically our power of that third this lightweight network. of pricing in attributes increased We unexpected of matching provide. of and leveraging on architecture short pricing science did and of portion technology.

piece from improved per the third what rate Our continue. this we we revenue quarter, trend quarter second the in to growth reported expect in and

side, excellent cost job managing On of our expenses did an the board. team across the

like management with relates update And full initiatives, this buildings to including customer X we far first. are shut structure have completed customer-first cost-out X you to deliver starting we've our with continuing results. give our was serve, is year, strategy, on of innovation-driven Future, down. I'd to and Network slightly to operational solid optimize people-led been it a of the closures, forecast. to so that As rightsize designed XX which brief ahead Fit major our

in agreement care we the enhance inorganic opportunities end, pursue we certain that discussed, to Frigo-Trans every we degrees cryopreservation, entered #X said Celsius forwarding into we health logistics goal temperature-controlled ambient, is Europe Last and XX% health Europe. Today, that our transportation. as from time-critical Celsius. require has month, about Plus minus tele in XX capabilities and we care pan-European offers have. which to As chain an a XXX capabilities. transportation [ with temperature-sensitive to would Frigo-Trans, we have across To well move become Frigo-Trans provider end-to-end capabilities temperature-controlled which controls the cold pharmaceuticals world. is acquire a of will warehousing degrees as ] freight temperature complex

We capabilities Healthcare invest acquisition quarter Logistics year. Complex are business us Frigo-Trans continuing to needed growing the for in to close to accelerate is a in first targeting we're of the and next growth.

care full largest in We $X.X DAP year, billion continues expected sped across X we Asia holiday have months to our over generated handling health both the XX the in meet which charge. our to up our And of This made access and the year's countries countries without Europe to flights on touching now we Saturday and we a to digital provide for In and revenue customers' in speed in additional first $X.X deliver third the enhancement residential season, customers peak we strong $X international. visibility Premier generated segments. September, our quarter, and SMB this several BXC over superior expect growth consolidated deliver revenue In In dedicated delivery U.S. Quickly and East. care the Europe DAP program. an across need through holidays, for year. meets billion facilities time Africa expanded revenue product. In segments. Shifting enhancements. global the contributed Asia, provide Middle in we've the the to we specialized to added for BXB in health deliveries GAAP all to revenue billion for to connecting we offering. Further, growth X and DAP, demand to this UPS XX we X service and XXX over markets

our onboarding air Postal have been new the we As you know, States United business with cargo Service.

worked with smoothly team During network the and did. closely transition the third ensure our the USPS to planning quarter, it progressed

contracted And consistent expect margin. business revenue air business at an deliver strong, cargo to As been of October fully X, all onboarded. this USPS we has attractive

people by tools, driving work to a our in we've founding, we've seen Moving and improvement had dramatic and culture the Since accidents. using number a injuries And new led. practices. of safe of technology

like of driver is to recognizes with an training nearly of the example, through results enables For without year, safety Honor This drivers. driver XX,XXX XX Circle on in had years advances our XX our in our Integrad driver of years. in training, Honor focus The schools. driving accident. [indiscernible] we've achievements Circle were this our and safety or auto more best education drivers achieved like innovative U.S., which safety Today,

season. let's innovation driven to year's between days turn holiday holiday for shipping has XX Now Eve. This season which only and peak [indiscernible] Christmas all about Friday the is Black

a We timing haven't a X that better will seen service, customers on [indiscernible]. To [indiscernible] of such we're industry-leading expectations our with collaborating do the and promotions. we've since of than We row And execution XXXX. peak confident and been plans anyone. in our years make prepare, their compressed with peak

volume comes X we'll our are how their operate efficiently do second, to will many any network did and This our expectations. volume of are improvements sum to December To packages facilities. and network over have holiday planning which expect customers year it be successful selling to than we're the to the more peak to we'll good to efficiency how on we've inside as in; our to first In rate. million shippers will flow third, but day, our still be use While made experienced UPSers deliver which Recently, higher automated talking ready year we to tempered more it and drivers, possible a the on season, proven the deliver possible. And XX. our work part-time years day efficiency, the a other peak. case, we expecting facilities; deliver due U.S., and technologies seasonal to peak leverage tools another who ready as support is last adjust up, of how this about productivity at control In volume

financial our outlook. to Moving

bigger the not recent of USPS examples. bold of We approach, business Air our divestiture The by addition the Cargo and continue enhanced some Coyote, better, moves. are

highly volatile and we business is brokerage a air positive. truckload With margin these that predictable moves, volume eliminated and cargo added

our our will we into Looking on a quarter. emphasis the In guide increased which quality, outlook. volume, certain we third the of in revenue resulting consolidated at fourth expect down continue revenue quarter,

adjusting approximately quarter consolidated impact third will year target are revenue details. of of $X.X]. now and approximately [ volume our our to consolidated We expect provide Brian Coyote expectations latest for the peak Given the results, and $XX.X the our more decision. operating billion for margin lifting

turn Brian. that, to So for And the over I'll thank with call now you listening.

Brian Dykes

This providing everyone. our morning, fourth X and Thank to our results, full in growth additional time I then I'll good In returned revenue capital quarter year the wrap up our morning, detail the quarter, first with for year, you, the allocation and will our quarter we third profit outlook. Starting third and review and years. Carol, for results. financial cover by

of our in business consolidated of billion generated compared an an our performance. X.X%, XX.X% third XXXX the increase XXXX. of was the last third delivering quarter was third points $XX.X up In revenue, margin compared earnings was operating basis of quarter growth. Consolidated segments $X.XX, quarter third share of Diluted all at year, an with Looking billion, quarter, the X.X% the $X increase we revenue increase the X last XX.X% versus third per profit year. operating XXX to of quarter and from consolidated of to of

look in at In the was year-over-year U.S. than the X.X% let's factors: cost volume of Domestic increased daily in was third third average resulted quarter quarter per highest XXXX. the X.X%. The of ADV first the performance segment. business our X our rate And to Now excellent in second in more cost more decrease growth X segment, we've U.S. seen was by which growth strong driven years. [indiscernible] compared management, piece a

volume total at volume X.X% air third was the average down Looking mix daily Ground increased quarter, daily average product X.X%. in and

We rightly customers levels SurePost air shifting ground, continue ground down quarter, and digital volume some SurePost. Within driven ground compared growth see shifting from is in to to our access second program. the volume down to to by

algorithm, volume to a While into more enhancements per at redirect to driving density. delivery the revenue our made matching piece, we were we've SurePost network, given SurePost able packages comes lower our

X.X average made XX.X% [indiscernible] daily SMBs, in X Growth and daily an which up the volume increasing average by years. was shift increase of up slight second quarter. time [indiscernible] downward our BXC For had the XX% year-over-year volume from average quarter, volume a increased driven daily from BXB in was BXB volume, of X.X% year-over-year,

ADV growth made In and terms volume the customers. third SMB U.S. XX.X% in quarter. total of SMBs mix, we saw enterprise of both from up customer

last generated quarter, strong to compared the domestic For revenue $XX.X of volume by X.X% growth. up billion, year, driven U.S.

quarter, second third showed expected, was year-over-year revenue components. declined piece revenue basis domestic a the As the point U.S. piece X.X% XX year-over-year. In per quarter. Breaking improvement down sequential down from per but the

revenue rate. points. In rates quality increased higher base took per XXX First, we which basis the the to actions piece growth translated quarter, address by base into revenue rate

zones growth the mix combination in piece the finally, mix, the due customer weights by And in of growth Second, lighter experienced per basis combination we basis shorter XX rate revenue points. the per point of XXX a decline rate piece and decreased fuel. revenue and changes product to

Turning to costs.

front-end recall, you As the was will loaded. of cost contract new labor our

actions As year-over-year. Productivity the year and of at first and quarter, third in our for to is end improvement operational of initiative, hour. pieces X% the the this cycle the Network X.X% took workforce we we've an of the we UPS, rate closures, completed productivity. quarter, for union [indiscernible], lapped Future to the in growth virtuous several drive slowed wage a year, of Through contributing to XX contract

safety to the the improvements, $XXX of a delivered including and in big points. The U.S. union of a increase, that service operating performance, XXX translated like lower see efficiency increase and operating positive of a quarter to of million into offset continue hours. Production increase we the XX wage plan, was gain an number, expense. seem XX% million to total compared profit basis trends X.X%, our contributed not might year-over-year segment Domestic X% XXXX, While in third which XX.X% margin

third XX.X% International and International XX revenue export operating performance its time from for about our was in driven international piece last revenue base driven by all flat X.X%, international trend of of and product Touching the margin In mix. sequential relatively to was ongoing and $X.X first network in year-over-year, volume with positive quarter, points X international was Total This the regions $XXX per year, our strong basis expense million, from second our our an was optimizing by quarter, the costs. year-over-year. and operating strength XX the growth XXX years. International margin achieved our of and on business which year. In revenue segment region year flat and growing the revenue expanded segment. third efforts. Operating to Total X.X% ago. was increased billion, in Moving quarter quarter profit a top was in nearly by third increase in impact exports pricing grew the ending management up continued improvement daily cost the International Operating average last year-over-year. from countries. XX%, was profit

$X.X X% billion, In year-over-year. third Solutions. quarter, Moving to Supply revenue the Chain was up

Coyote, mid-September. our and business Air Supply the Chain $XX primarily profit network USPS of forwarding the contributed quarter, by by drivers. the the demand Looking at brokerage at the delivered driven was market driven revenue million in as air year-over-year, sale the Asia. our growth, revenue Logistics Cargo driven and was revenue offsetting key these Air by configure of out ocean operating and Air weaker impact up primarily completion strong million, XX.X% third $XXX generated growth in Cargo onboarding truckload of to In efforts SCS. Partially our the gains onboarded of business. MNX performance to we acquisition of down Solutions USPS

to expect consistent expect volume, revenue we Now a we fully we this have basis. generate on margin it an onboarded and attractive consolidated that

the of of income operating SCS, was margin statement. the third For expense. X.X%. through in had interest quarter million rest $XXX the We Walking

income Our XX%. and other third effective rate was $XX our for quarter pension approximately was tax million, the

turn let's capital to allocation. Now cash and

billion, including refinanced and commercial year-to-date, $X.X quarter current billion our the $X cash of strong and contribution billion. flow of far we $X.X generated pension and this in liquidity outstanding operations in cash We free So with we $X.X from year, paper. no finished maturities annual billion

our program economic the targets outlook. In UPS year, share in the full we our and us our July, $XXX of And to this targeted repurchase in which dividends. global paid third brings an $X the on in completed billion to quarter, year update based performance provided first million financial year. far has we've So our lastly, forecast half

Now full looking things. have to the reflect at year, our outlook ahead updated X we

with and on lifting sale align expectation these of volume our new now approximately network operating finally, First, the second, to revenue expectations. level, revenue and customers. At full with manage we of consolidated and volume revenue consolidated billion. our the our efficiency we approximately year peak forecast $XX.X and ability to of Coyote from margin the integrated expect to Due to are our our a results coupled costs, quality, third focus focus X.X% on quality; revenue our new softer quarter

Now looking at the segments in quarter. with the Starting fourth U.S. domestic.

We volume expect and revenue growth both in fourth the by of the revenue piece X.X% quarter. combination per to increase

we of X.X% a than expect XX%. margin generate to expect and the We margin operating operating approximately fourth in quarter slightly semi now higher

that Supply growth experienced expect mid-single With fourth XX% billion, of expect around we've an Looking we year-over-year, revenue expect we the $X.X fourth mind, still we in consideration continue. momentum volume disposition will margin quarter be revenue operating digits the we at fourth the the in in around operating generate international, Chain up we of and the year takes and quarter. In into throughout approximately which positive of X%. to a Solutions, quarter to expect Coyote, margin expect

allocation. Turning to capital

that, in For dividends, between for the operator, $X.X plan billion full the are free we and expenditures year We the the lastly, expected about costs. to tax $X.X we please open full made Capital pay Board around billion rate cash expect for year we contribution subject $X.X in be the billion. to fund approval, expect XXXX, to to XX% to lines billion and to be questions. annual XX.X%. With $X around after pension flow be service

Operator

conduct We will a now question-and-answer session.

Bernstein. of the from question first from Our David Vernon line comes

David Vernon

you walk you of when into profit bump the drivers taking we sort from profitability hold, maybe XQ. the how makes XQ ramp into carry can XX% that And a So drivers guidance XQ, of realistic? to us XXXX? some close from operating through suggests affect here does think as about sort then XQ Brian, the of think of shape those we that of as look about the what to

Brian Dykes

us quality we drive and QX acceleration with David, from increase as really, things. made to we're through those, it's on give the QX early well. appreciate productivity revenue [indiscernible] actually confident on Fit to policy you, this the that revenue side. and Serve both in we as fourth and Thank focus the over quarter we I the come have mentioned, them Sure. Network incremental seeing question. our driven from we're and cost seeing Future through And feel you seasonality. We of just start the and to revenue third to yes, well quarter the in of take the the a we've and an on very feel moves on coupled of performance, that side. bump initiatives see couple One, and the And very NOS both by sticking the is do the the rates can pricing in of as to that Serve Fit And normal profit

David Vernon

And affect sort how that into could of XXXX?

Brian Dykes

yes. Yes,

margin. guided than to And close we expect you than we And see now XX% before. We'll we higher around higher expect so roll we X.X%. first. slightly to be exit get 'XX, on to but the to 'XX, through to the our do we raised year as we've domestic can peak that come you that peak do the through back want as We margin the consolidated

Operator

question next Brian from JPMorgan. Your line Ossenbeck the from comes of

Brian Ossenbeck

their volume? the at downs on within type maybe of sort or seeing themes seeing expectations maybe pushback point? bit you're that, you're into down and peak softness this hearing as Maybe more What if thinking on trade that on and dialed they can surcharges the a more getting season? concerns a customers the broader And from of you're you on more comment the pricing expand little

Carol Tomé

feedback. customer XX% volume I'll customers surge. over of little Well, peak XXX our who of but network, with a the We in of the represent work our XX% start the with

So and we develop customers, these plans for months. these have in operating plans each been now of for process

driven forecast just they progressed, have October up been their their it's of forecasts X. And tighten forecast, has couple by their and year factors. the on we last As continue to received tempered believe a and we

have forecast in. the for external First, holiday season come

year, fourth is it the forecast the Early had about about quarter ESMO in X%. now been for fact, in In X%. the

at that all at forecast shipping XX%, high by peak store the period. candidly, the but look Christmas. days shops of some part a of shape customers just and peak season, during we go of the we And our because Global complete Thanksgiving XX many think in board, you SMB this, the compressed dynamics holiday has between There X% If season. actually season the what of about some and their be are to been of of influenced over will forecasters is pretty holiday a is there'll peak believe, X.X%. Part the are tightness saying consumer the good The purchases. low and from of the consumer to is how only customers are shipping tight in a into

So still good be it peak. a will

surcharge. we're prepared were of deliver rate handle pricing surcharge. our good at out more here, seeing In the beginning happens, people It'll the perhaps holiday, on year. dynamic pricing And called volume. And fact, packages million then than X is the not in maybe thought the comment that be want real We say. holiday to take peak, charge our Matt, Matt Whatever but as peak for prepared still should remarks, just we'll the on last I year. on Guffey did good you day, the the a we as to

Matthew Guffey

absolutely. Yes,

the off, we've working extremely in that our season. a process good to and the -- place first Carol So we've got we worked just talked closely a work with the they customers. in us the creating manage at can deliver to with to bring through a all holiday at it's peakiness about important of flexibility are our continuing season. Look, due with where which lot as customers. during the collaboration we're the and level, -- value them have really again, about XXX, structure peak But of end our we go surcharge it, demand drive we to peak. more and customer a great all top

[indiscernible]. but them forecast, with demand close working for also the on on this very So holiday we're closely staying

Carol Tomé

And seeing keep on [ good ] -- a rate we're

Matthew Guffey

rate, seen. probably of good Very, Yes. keep one the best keep rates very we've

Brian Dykes

add And Brian, our plan. that would on we're I just

the there drives remember, peak the some of year-over-year And right? peak you surcharge set of larger compressed incremental seeing. the outperformance demand opened the -- holiday If were that's that to what changes a that of you're because volume

Operator

the Wells Your of Chris Fargo. line from Wetherbee from next question comes

Christian Wetherbee

bit drill maybe it pieces to basis a think in bigger you're as a headcount. potential a down bit wanted question. the a some fourth X guess and about as initiatives XXXX? for. what managing little do How the little on as were on the cost progress the that quarter X maybe out looking than about into How widening trend in on move down the we I then with of improvement per-piece we so working maybe was better that -- this -- to about we the footprint domestic, I do can you think picture well

Carol Tomé

for don't quarter thoughts. turn and why Nando you So take we'll to question, some the fourth

Unknown Executive

right? I it's yes, you. performance great a the there's question going third of that a And was the dynamics cost outstanding, on. are Thank in Yes. think because quarter And Great. couple

to about it we get the are of As lapped the the that more more wage down now contract as outperforming X.X%. remarks, we of as see in as right? of you'll future So wage to we the inflation now level in XX% discussion from will clean being normalized inflation we at quarter our network that see our in QX. But start exited a serve we now full also and And we've said and -- that buildings. the end well stores second closed we a quarter high earlier you July, to mentioned, forecast closed coming we've talked at as we're

the in we're forward So pulling helps performance. that cost

expect into do a and little to reprice As growth be it. cost more up you a QX, looking normal we'll than probably the we're rate, maintain less so network positive We'll you to our it we is X% be future have forward? through strong which about go going still will bit in bit about carry piece we performance. little do but want as to spread, Nando, talk be per a

Nando Cesarone

look, And how have Yes. you and that closures Thanks, Brian. X [ we've asking operational we closed. to XX buildings are able be ] may

moving and much excellent indices that a comes and lot facilities. way also sure year. be hours helped are about The perform. through down compared the we hours XX production shrink are job are it expect doing legacy performing more automated about volume the last people, And the teams of course, allowing the our more were the making us day, We productive. Safety, at -- an million we of them our end to we're down network to to and X% to really and

So really thing that excellent nothing an we're would there's And just job is around. I say all the last overlooking.

finding prepared our and So there. wash to are of business cost every all piece automated scrutinizing good improvements we of car and dispatching for some from it looking and all that of

Carol Tomé

pretty an just which hubs, into up good. our in right? of levels, UPS. put X hubs our All That's automated that is the volumes outstanding in of #X automated the from year And X% volume percentage is perspective, points service talking mentioned XX% And to through we for number now the process job some maintaining ago. Nando way. sort a while about That's

Nando Cesarone

projects XX Absolutely. active quarter. we've here And look, in got this

we're You would would to that think and improvements. that's accelerating it's very we have year, projects provide of can good the that productivity in next then going pulling Why peak that number And season. XXXX. we in full execute take We confidence undertaking?

Operator

from comes line Wadewitz Your of UBS. Tom from question the next

Thomas Wadewitz

bit ask I about Carol, strong about started you the the a -- think you on wanted Congratulations to Yes. call, some commented I results. industrial weakness. economy

your improvement of and network you well. think margin improvement things future, revenue margin XXXX, things about clearly as see How it that is would to do much how you are of macro, don't go to You're we if going piece in And some those control? translate improvement doing reasonable expansion? idiosyncratic be per into in in the

Carol Tomé

in I our think of done And saw the about we over team environment business several States, has this think quarter improvement our job Well, year. choppy outside every actually. past the United a years, as very masterful managing a we

the our fact, export just down and third was in In domestic quarter slightly. grew business

about want industrial So outside if States how business maybe manage you Kate, the you the United remains softish. talk production would to the

Kathleen Gutmann

Yes, margin a posting revenue same of expanded the continue to was good that. indicators intend I yet those think to have profit run example And business but in X% margin. an international quarter We and absolutely. come we've The and down, plays. macro the the

the on me just our into indicated the market. Let And as [ on sim our house, the goes had that's XX% hubs. air side when automated of a we align all for revenue international go we of and on continue domestic domestic then And volume large demand. with through that especially ] assets. quality few to Nando of the and matters, side. you show transporter volume of

had we [indiscernible]. So strong

For we so operating CPP the would flat delivered and continue that cost leverage. to We do our held into next international, year.

Carol Tomé

to gain increasing And that. our share soft actually and your in gain capability. of but price, you you example win, one by are by share dropping markets that delivery And is Saturday

in only it. Saturday no performance Kate? charge markets. these isn't it, And that's and carrier delivery are We driving X offers nice the standard some started that We

Kathleen Gutmann

premium the and and is spaces, share customer expectations Canada of too. wallet really in in of Europe more It the unlocking exceeding

well and the with the expansion a the as growing. lanes We're service growth that by as Asia. made So cross-border our of of record result, as with Europe Intra premium way, out and Asia to seeing throughout fees trade. faster unlock We've

equation, the we'll definitely and feel good it. we continue about So

Thomas Wadewitz

I asked in the thinking little well. don't I about of was bit terms the a margin. question domestic actually think I

Carol Tomé

that our Nando side, not Everything domestic to? expectations. to drive virtuous out, we So under right? that's I want and think there's under productivity continue is the productivity And cycle you pointed in here. Brian, anything exceeds review, review, a as nothing

Brian Dykes

Yes. locked that virtuous to we have look, contract want take cost 'XX. with as you saw growing we into action so revenue remember, to, got third ability a win quarter, known that XX% grow I starting domestic if have for a with of to Carol ability would as and commercial known SMB we've do cost commercial next on really ] ourselves you continue as, say, [ again. drive as just win the structure quality in like said, up the the retrofit where structure think and -- we and productive We new cycle years to more a cost one, well focus to, the our and with to we go X for our places

Carol Tomé

we And win to that quarter associated one business. dense got commercial third with for it's per a our that our RFID We and can come had new We -- packages And customer way with into delivery. the more a like in labels. other delivery network commercial this factor more determining big in is words win capabilities. metric for the we

capability So have that didn't we that's new a before.

Operator

Check Your the of mute next Research. question comes from your line Melius Cunningham button. from open. line your is Conor Cunningham, Conor

on. We'll We'll Okay. Goldman from Sachs. the move go Alliger to of Jordan line

Jordan Alliger

you. for Question

are few more know it's the bit So going experience, to share if on a the forward? going profit upfront going operations talk thoughts contribute I if had that's costs, a perhaps levels about? onboarding, little in, U.S. how about Maybe around on any just the had the postal you there? it I how Is still And could as weeks general you you some but that the could. step-up talked of delivering

Carol Tomé

Well, a as to that around bit of And quarter, did onboard the with out, X wait Jordan, a expired because we October corner. didn't volume to point want the their third transition is contract have the until October previous USPS peak carrier you right X. in we

they it September. with volume. service wait agreed actually, operationalize we So was time, the time, get that to onboarded until didn't over And we much we this would USPS while their them, over

So between the now volume. the all volume and a But there in. operational is our was model mismatch

[indiscernible] different quarter performance quarter from lot did. us just And you the perspective, the and said. he look third with met tell a a to So Nando than fourth going the General what is so

Nando Cesarone

Sure.

So planning. purpose as peak the yesterday, early as we meet face-to-face. And yesterday, was

Postmaster positive. are have resources with when professionals So both USPS. contract we're And both from been And business sides plan accepted General we've really what executed on difficult have see we and we in face-to-face the negotiated himself the very, that working we look has made applied modeled very it was very line DC. a with teams had in the well. simple. Feedback and the the that

for things ahead contract. good So that

Carol Tomé

be quarter, had lift the we in fact, the overemphasize can't million to cubic over the it that here. fourth. obviously And into feet more there'll just was and our third I And heavy in XX take network in

as done team USPS the by job So working well with our and well.

Operator

of Your the Susquehanna. line next Majors question comes from Bascome from

Bascome Majors

some post Sunday follow to what negotiating with in Just And of packages what us in up challenges but enables your relationship. on push where agreement on Can that renegotiate delivery with more business seeking might are or of another to the and service maybe delivery to a that? that into either service postal to opportunities world trucks create more you contracts? also the piece their effort those the for own that, to about deliver upstream delivery create along office SurePost you customers talk is the and retain does Sunday where that serve operations, in marketplace

Carol Tomé

Matt, why And question. question. the you for thanks on this take don't Well,

Matthew Guffey

Yes.

point, opportunity PMG agreeable So mutually off, to order. in this to to very done, an More find very, are have we UPS. close we'll be we We And a but moving to and agreement short a first for we very so continually Nando's -- yesterday. the to work had hopefully, meet both work quickly. with USPS

Carol Tomé

challenges it's and question And some. what think and opportunities, to what some your about I

this some those through what contract work And to, you we so and once we we'll we're ] sum but agreed confident get this. can [ show are,

Bascome Majors

can what roughly you and you've hear believe be? confirm go-forward on more year-end, relationship that at should I it's before the will exploration, the we said when In

Carol Tomé

hear in should it our earnings. quarter about something you fourth Yes,

Unknown Executive

back earnings it Yes. We'll No quarter with when in you fourth January. come we impact more the in about the tell fourth quarter.

Operator

comes from from Your line Ari next the Rosa Citigroup. of question

Ariel Rosa

sense us of How in do and in network also and of the terms think capacity now? resources was you Just you're some -- outlook I weakness customer lower do thinking volume understand kind a if the to now? and matching in you're how you right think the of that how you both given much industrial of right wondering to trying you see excess give production of about the kind macro. could about demand resources planning carrying weaker excess

Carol Tomé

capacity has out think market. taking of done job So the excellent I our team of an

ADV capacity Clearly, XX X of -- of the peak rationalization about the other capacity XX million of the it's and per day out fact million we've that happening as it's see parts closures, In we taken well. operational in market market, time.

is So but we're all adding resources the to capacity handle in the coming in. holiday, surge

Operator

question of next the Your Scott line from Group from Wolfe comes Research.

Scott Group

margins the if And slightly positive, -- contract. allocation? are Yields quarter in margin, the much, don't U.S. picture, in peak now good lapped now U.S. just how contract surcharges. positive. I just now any, the We've -- to Carol, You're helped cost then are big going new turning be season QX be So Teamster right? they'll USPS with the does [ fourth saying ] the that's

picture, start Does right see that time? away big we do 'XX or more take in when to meaningful Just improvement? that start does more margin some

Carol Tomé

will of part [indiscernible] first the address question. the

Unknown Executive

Sure. Sure.

you So Scott, for the thank question.

the quarter the SCS So we'll X.X%. that The in on and the we And [ in put from associated costs up -- all impact USPS the impacted incremental domestic. contract, X% fourth There's that place. go start-up impact cost to [indiscernible] contract. -- so the of the no plan. domestic to the about stood with getting cost we USPS that SES network quarter, in ] was fourth around back to that doesn't see Carol was referred a domestic part to It was

us that's there. going think don't I impact So to

Carol Tomé

then and see quarter meaningful our going And for through of give outlook the No. margin us we're in more then get fourth to expansion, XXXX. you let terms when

Operator

next comes the of question from Stephanie from line Your Moore Jefferies.

Stephanie Benjamin Moore

hoping bit means about Good this as domestic bit XQ you. trends the what could throughout Thank your thoughts quarter. little you a how a trended have and progressed into if RPP really for those. and you morning. little months if I the Maybe our was could about you talk XXXX, Great. talk they

Brian Dykes

your Sure. Thanks question, Yes. Stephanie. for

So going domestic positive QX we piece. rev and [ saw QX from per momentum to ]

second in quarter, rate mentioned added in my jumped rev In ]. about the earlier to base about when points remarks, I of happened XXX As that to the improvement what per the in piece. think rate really, XX base third basis you [ quarter,

inflect to we're enabled leveraging per [ of expect drive to sensitive Now things. translate in ]. the customers our AOP actually architecture the the adjustments U.S. into the piece talked we driven rev around create by take have going help were been demand more tomorrow we're that actions per work piece as those fourth in we've order rev and been SAS in Look, specific that's that really quarter, positive channels. the about most that to a And to by couple And of doing to and we and we made make modifiers.

The the GRI. on in other doing the thing is what surcharging we're

So we go as will we fourth quarter continue 'XX. lift through into the to see and

been a strategy. year look, an trajectory So our it's focus rev we positive and Plus of as move on piece, X our area per X it's to from

Carol Tomé

trade modifiers us [indiscernible]. element pricing and reduced elasticity. has happened to discount had a by third is We've will or the just and from modifiers help what And that allow the the this that renegotiated. 'XX be only beyond. RPP quarter provide use we the third our by really the customers them In of real-life adjusted in quarter understand. XX one of of architecture And our We one of increased it's quarter, in a that this or it's not test of pricing and you which to basically a we reopened that increase fourth give modifier the price. And are I'll the the that science to elements we the modifiers to example by steps tomorrow to modifier, architecture just just not you in adjusted pricing. we but contract reduced because volume of moving a XX%. We of -- that discount XX% the liked And discounts tomorrow art use is can

Operator

from comes question next Your of Stephens. Daniel the from Imbro line

Unknown Analyst

for Daniel. on Enderlin Joe is This

one wanted another ask Just revenue actually per on to piece.

One in the market. of your noted price competition increased peers

do seeing down that then we you pressures trade any peak And are today? Just you of felt yet? think

Brian Dykes

We RFID bid know pressure. price rational. product. that's you to the sit we've to rational, to product as you It add to Look, have in win to industry, we then and I we very enterprise us think that. bid service -- win price out want And very we on customer add. is do start we every competitive I'll deliver we on commercial got to where like starts it. It a those. pointed it's With when we wins capabilities, but look with through it's So for mentioned, continue had service where every and very Carol capabilities to day, win really with big incremental and And right?

things year the time We grow been Commercial contract, more then sorts also for growing have And areas competitive now that we the win X.X%. Those to as a in help the rev this commercial first nearly for very SMB us big that's allow price X% and allow catch win have that to seen new point. those growth the of we specifically, environment. momentum capabilities -- piece from a despite started that really drive

Operator

Your the next of from comes question Oglenski Barclays. line Brandon from

Brandon Oglenski

about enterprise see. to time think know you for And a Carol, Congrats first years here. glide about in on down. I mentioned in the Good of the I growth couple past, something talked you customers.

to can just Serve, but incrementally to quarter? get just head into deliver quickly didn't it, then context going that XXXX? fourth as And I is the very that So on in you in you Fit put

Carol Tomé

customer, the So [ our glide first largest and be largest we our as you have, continue with customer. down, to ] know, on been down glide customer they a in arrangement

drive we say reduction that I seen our lot to air of the in volume. think have a it's fair them

third In about quarter I in the XXX% is at down largest fact, decline was to if attributable performance, look volume X.X%, the of it customers. air the

creates a we're us But to little network. to many then for and in that from And other own they, it with areas. air down ground grow opportunity So in ahead? case, looking up to because their of their trading like bit [indiscernible] ground

Brian Dykes

in quarter. And Serve [indiscernible] we've to Fit $XX seen the $XXX expect about fourth on then And program. go to progress do point, to -- million yes, great incremental to the so we that Yes. a with million about

Operator

the comes next Ken Hoexter Your from of America. Bank of question line from

Unknown Analyst

on Hoexter. This [indiscernible] is for Ken

any on XX,XXX in initiative, expand that the came you has thoughts just you potentially serve expand -- reduction you which of of and would there a means? noted just on are scope there. you to target the And that that about this [indiscernible] release what for how what would position. accelerated previously the fit You scope Could quarter? Is

Carol Tomé

just for status a asking update you're to Fit Serve. So on

Brian Dykes

opportunities. we Fit Sure. forward have said, as served, savings we pulled incremental Yes. On

We full are we -- run rate hit expected. we the that

have we wrap some it fourth as as planned. quarter, will incremental We but with into benefit the continuing we're

Carol Tomé

you do question, additional have opportunities. your to And

and you are we're a opportunity-rich better And actually as company. customer We higher an opportunities heard experience Nando, drive from to all for at our productivity. looking

Brian Dykes

[ Greg], we have time for question. one more

Operator

Okay.

Stanley. question final Morgan of from comes from Ravi Your the Shanker line

Ravi Shanker

holiday a So on maybe side. the just follow-up

I I And logic pretty need how bogey experience there for think announced kind beyond years. minimum the many on guys season. you volumes you in time like think extra costs? first that? But bit put know of our you expectations of a step-up surcharge peak [indiscernible] a a what's reduction earnings here, big in to seeing in if a the squaring it's your little customer do compressed hiring that of a you're is

Carol Tomé

ABB our we [ be ADB positive. season, that were we So and we're for ] XXX,XXX that announced declined XXX,XXX our will hiring hiring the X.X%. announced last holiday year, year, ] [ and This we peak

what So realm did should not year the of that you need reason [indiscernible] it's But to this is of out we this than we people last hire year. more know.

ends actually overhire going We up, peak of will volume peak. for to for not hire regardless need the what we where we're

amazing a we've minutes, than Ravi, this the out resend job few just We within a get an actually done we [indiscernible] or can what where And a job. off few over what we've will is just added we hour, time, can capability -- we hire need. less

flex can to And up or the would we like we So Nando, to. flex you need anything? way add down

Nando Cesarone

number I employee Yes. just also would includes say mix. favorable a the

helper our -- number. going year, XX%. drivers teams by not adding this we're about So we're to increase with a That's our small

got and to will amped time, can up make optimized volume by Carol our a helpers going that deliver delivered and we've -- had that of the percentage number, helpers, seasonal big season. is sure great and as and we've every deliver position we're peak Christmas at that be that So said,

Brian Dykes

you all Thank call. a our concludes This have Greg. and joining, great day. you, Thank for

Operator

this for you Thank participation AT&T gentlemen, for conference Ladies using and your teleconference. and for today. concludes your

You may now disconnect.

United Parcel Service (UPS) 24 Oct 242024 Q3 Earnings call transcript