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United Parcel Service (UPS - Free Report) reported second-quarter 2022 earnings (excluding 4 cents from non-recurring items) of $3.29 per share, beating the Zacks Consensus Estimate of $3.14. The bottom line increased 7.5% year over year with strong performances across all segments.
Quarterly revenues of $24,766 million also outperformed the Zacks Consensus Estimate of $24.730.3 million. The top line increased 5.7% year over year, driven by higher fuel surcharges and shipping rates.
Despite the earnings and revenue beat, UPS shares lost value in early trading due to a decline in shipping volumes (consolidated average daily volumes declined 4.8% year over year to 23.1 million). The decline was mainly due to the shift in the spending pattern of consumers from goods to services.
Overall adjusted operating profit rose 9.3% year over year to $3,576 million in the second quarter, boosted by growth in the adjusted operating profit across all segments. In first-half 2022, UPS generated a free cash flow of $6,895 million compared with $6,804 million in first-half 2021. UPS’ capital expenditures were $1,388 million in the first six months of 2022.
Moreover, UPS’ board of directors decided to increase its current-year share buyback target to $3 billion from $2 billion.
Segmental Details
U.S. Domestic Package revenues increased 7.3% year over year to $15,459 million in the second quarter, driven by an 11.9% increase in revenue per piece owing to robust improvement in all products. Segmental operating profit (adjusted) jumped 10.7% year over year to $1,855 million in the quarter. Adjusted operating margin in the June quarter for the segment was 12%. Average daily volume in the segment declined 4% year over year in the reported quarter.
Revenues at the International Package division summed $5,073 million, up 5.3% year over year. The segment’s performance was driven by a 14.8% increase in revenue per piece. Segmental operating profit (adjusted) totaled $1,204 million in the reported quarter, up 1.2% year over year. Consolidated average daily volume in the segment declined 9.2% year over year in the reported quarter. On the domestic front, average daily volume fell 13.4%. Average daily volume (export) was down 4.4%
Supply Chain and Freight revenues inched up 0.7% to $4,234 million. Operating profit (on an adjusted basis) rose 26.7% to $507 million in the June quarter.
2022 Outlook
UPS, currently carrying a Zacks Rank #3 (Hold), still expects consolidated revenues of about $102 billion, an adjusted operating margin of 13.7% and an adjusted return on invested capital to be above 30%. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $102.15 billion.
J.B. Hunt reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year. Total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. Total operating revenues, excluding fuel surcharges, rose 21.2% year over year.
Quarterly operating income (on a reported basis) climbed 46.2% to $353.08 million on higher volumes, customer rate and cost recovery efforts. Operating expenses escalated 30.6% to $3.48 billion.
CSX reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
Total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $3,642.2 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. Overall revenues per unit increased 27%.
United Airlines’ second-quarter 2022 earnings (excluding 43 cents from non-recurring items) of $1.43 per share fell short of the Zacks Consensus Estimate of $1.86. Escalated operating expenses induced the earnings miss. UAL incurred a loss of $3.91 per share when air-travel demand was not as buoyant as in the current scenario.
The second quarter of 2022 was the first profitable period at UAL since the onset of the pandemic. Operating revenues at United Airlines came in at $12,112 million, beating the Zacks Consensus Estimate of $12,033.7 million.
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Why UPS Stock Declined Despite Q2 Earnings & Revenue Beat
United Parcel Service (UPS - Free Report) reported second-quarter 2022 earnings (excluding 4 cents from non-recurring items) of $3.29 per share, beating the Zacks Consensus Estimate of $3.14. The bottom line increased 7.5% year over year with strong performances across all segments.
Quarterly revenues of $24,766 million also outperformed the Zacks Consensus Estimate of $24.730.3 million. The top line increased 5.7% year over year, driven by higher fuel surcharges and shipping rates.
Despite the earnings and revenue beat, UPS shares lost value in early trading due to a decline in shipping volumes (consolidated average daily volumes declined 4.8% year over year to 23.1 million). The decline was mainly due to the shift in the spending pattern of consumers from goods to services.
Overall adjusted operating profit rose 9.3% year over year to $3,576 million in the second quarter, boosted by growth in the adjusted operating profit across all segments. In first-half 2022, UPS generated a free cash flow of $6,895 million compared with $6,804 million in first-half 2021. UPS’ capital expenditures were $1,388 million in the first six months of 2022.
Moreover, UPS’ board of directors decided to increase its current-year share buyback target to $3 billion from $2 billion.
Segmental Details
U.S. Domestic Package revenues increased 7.3% year over year to $15,459 million in the second quarter, driven by an 11.9% increase in revenue per piece owing to robust improvement in all products. Segmental operating profit (adjusted) jumped 10.7% year over year to $1,855 million in the quarter. Adjusted operating margin in the June quarter for the segment was 12%. Average daily volume in the segment declined 4% year over year in the reported quarter.
Revenues at the International Package division summed $5,073 million, up 5.3% year over year. The segment’s performance was driven by a 14.8% increase in revenue per piece. Segmental operating profit (adjusted) totaled $1,204 million in the reported quarter, up 1.2% year over year. Consolidated average daily volume in the segment declined 9.2% year over year in the reported quarter. On the domestic front, average daily volume fell 13.4%. Average daily volume (export) was down 4.4%
Supply Chain and Freight revenues inched up 0.7% to $4,234 million. Operating profit (on an adjusted basis) rose 26.7% to $507 million in the June quarter.
2022 Outlook
UPS, currently carrying a Zacks Rank #3 (Hold), still expects consolidated revenues of about $102 billion, an adjusted operating margin of 13.7% and an adjusted return on invested capital to be above 30%. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $102.15 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UPS reiterates capital expenditures at 5.4% of revenues ($5.5 billion). Dividends are retained at $5.2 billion.
Earnings Snapshots
Within the broader Transportation sector, J.B. Hunt Transport Services (JBHT - Free Report) , CSX Corporation (CSX - Free Report) and United Airlines (UAL - Free Report) recently reported second-quarter 2022 results.
J.B. Hunt reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year. Total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. Total operating revenues, excluding fuel surcharges, rose 21.2% year over year.
Quarterly operating income (on a reported basis) climbed 46.2% to $353.08 million on higher volumes, customer rate and cost recovery efforts. Operating expenses escalated 30.6% to $3.48 billion.
CSX reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.
Quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
Total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $3,642.2 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. Overall revenues per unit increased 27%.
United Airlines’ second-quarter 2022 earnings (excluding 43 cents from non-recurring items) of $1.43 per share fell short of the Zacks Consensus Estimate of $1.86. Escalated operating expenses induced the earnings miss. UAL incurred a loss of $3.91 per share when air-travel demand was not as buoyant as in the current scenario.
The second quarter of 2022 was the first profitable period at UAL since the onset of the pandemic. Operating revenues at United Airlines came in at $12,112 million, beating the Zacks Consensus Estimate of $12,033.7 million.