United Parcel Service's ($UPS) third-quarter results have shown impressive year-on-year growth, surpassing market expectations. However, the package delivery giant has adjusted its full-year revenue outlook following the divestiture of its Coyote Logistics freight brokerage business. The company reported adjusted earnings of $1.76 per share for the September quarter, rising from $1.57 in the previous year and exceeding the consensus estimate of $1.62 from Capital IQ polls.
Revenue climbed 5.6% year-over-year to $22.25 billion, exceeding the market prediction of $22.13 billion. This marked a significant milestone for UPS, as it was the first occasion in over a year that the company outperformed analysts' revenue expectations, according to data from CapIQ. Following this announcement, the stock experienced an impressive 8% spike in pre-market trading.
Chief Executive Carol Tome expressed optimism, stating, “After a challenging 18-month period, our company returned to revenue and profit growth. Peak season is nearly upon us, and we are ready to deliver another successful holiday season and continue the progress we demonstrated in the third quarter.” The revenue for the US domestic segment also saw a commendable rise, advancing to $14.45 billion from $13.66 billion in the same quarter last year, supported by a 6.5% increase in average daily volume.
International revenue increased 3.4% to $4.41 billion, aided by a 2.5% boost in revenue per package. Moreover, UPS’s supply chain solutions segment reported a solid revenue growth of 8%, bringing in $3.38 billion. The adjusted operating margin showed favorable results at 8.9%, a rise from 7.7% a year earlier.
Total operating expenses saw an increase, widening to $20.26 billion from $19.72 billion on an annual basis, as noted by UPS. Looking ahead to the full year of 2024, UPS projects revenue to be approximately $91.1 billion, which is a downward revision from its previous forecast of $93 billion. Analysts are anticipating a revenue of $91.87 billion.
This revised outlook is reflective of the company's third-quarter performance and the repercussions of selling Coyote Logistics. Earlier in June, UPS finalized a deal to sell Coyote Logistics to RXO (RXO) for $1.03 billion as part of its strategy to optimize operations and concentrate on its primary business efforts.
This transaction was successfully completed in September. Additionally, the company anticipates an adjusted operating margin for the current year to be approximately 9.6%, compared to its earlier estimate of roughly 9.4%. Price: $142.48, Change: +$11.07, Percent Change: +8.42..