UPS Q3 Earnings Beat Estimates, Lifts FY21 Adjusted Operating Margin Target

United Parcel Service, Inc UPS reported third-quarter FY21 revenue growth of 9.2% year-over-year to $23.18 billion, beating the consensus of $22.56 billion.
U.S. Domestic Segment revenue increased by 7.4% Y/Y to $14.21 billion, driven by a 12% increase in revenue per piece. Adjusted operating margin was 10%, up by 140 bps.
International Segment revenue increased by 15.5% Y/Y to $4.72 billion, and the adjusted operating margin was 23.5%, a decline of 30 bps.
Supply Chain Solutions Segment revenue increased by 8.4% Y/Y to $4.26 billion, led by Forwarding and Logistics, which combined grew 35.4%; and adjusted operating margin expanded by 283 bps to 10.5%.
Adjusted EPS improved by 18.9% Y/Y to $2.71, beating the consensus of $2.54.
UPS generated cash from operating activities year-to-date of $11.76 billion, up 26.7% Y/Y, and Free cash flow of $9.27 billion.
FY21 Outlook: UPS expects a consolidated adjusted operating margin of ~13% (prior expectation ~12.7%) and expects an adjusted return on invested capital of ~29% (prior 28%).
It currently expects the Capital expenditures to be ~$4.2 billion and the effective tax rate of ~22.5%.
Price Action: UPS shares are trading higher by 4.18% at $212.43 during the premarket session on Tuesday.