UPS Stock Surges Post Q4 Earnings Beat, Solid FY22 Outlook

United Parcel Service, Inc. UPS reported fourth-quarter FY21 revenue growth of 11.5% year-over-year to $27.77 billion, beating the consensus of $27.06 billion.

• U.S. Domestic Segment revenue increased by 12.4% Y/Y to $17.7 billion, driven by a 10.5% increase in revenue per piece. Adjusted operating margin was 12.2%, up by 350 bps.
• International Segment revenue increased by 13.1% Y/Y to $5.4 billion, driven by a 16.4% increase in revenue per piece. The adjusted operating margin was 24.7%, up by 35 bps.
• Supply Chain Solutions Segment revenue increased by 6.7% Y/Y to $4.68 billion, led by Forwarding and Logistics combined growth of 28%; and adjusted operating margin expanded by 220 bps to 9.7%
• Adjusted EPS improved by 35% Y/Y to $3.59, beating the consensus of $3.10.
• Consolidated operating profit increased by 91% Y/Y to $3.9 billion and was up 37.7% on an adjusted basis.
• UPS generated cash from operating activities for FY21 of $15 billion and Free cash flow of $10.9 billion.
• Return on invested capital was 30.8%, exceeding the company’s 2023 target.
• Dividend: UPS declared a first-quarter 2022 dividend of $1.52 per share (prior dividend $1.02) on all outstanding Class A and Class B shares, payable March 10, 2022, to shareowners of record on February 22, 2022.
• FY22 Outlook: UPS expects consolidated revenue of about $102 billion vs. consensus of $100.01 billion, an adjusted operating margin of ~13.7%, and an adjusted return on invested capital to be above 30%.
• UPS expects to deliver its 2023 consolidated revenue and operating margin targets one year early. 
• Capital expenditures are expected to be 5.4% of revenue or ~$5.5 billion, dividend payments to be around $5.2 billion, and share repurchases to be at least $1.0 billion.
• Price Action: UPS shares are trading higher by 7.30% at $216.98 during the premarket session on Tuesday.