UPS Posts Stellar Q3 Results, Raises Full-Year Margin Outlook

UPS Inc. posted on Tuesday strong third-quarter results and raised its full-year operating margin outlook, sending its shares up sharply in premarket trading.

Earnings per share, on an adjusted and diluted basis, hit $2.71, up nearly 19% compared to the prior-year quarter, the Atlanta-based company UPS reported. Analysts' consensus on Barchart was $2.52 a share. Adjusted operating profit of $2.97 billion was up 23.4% year-over-year. Revenue of $23.2 billion increased 9.2% from the prior year period. Cash from operations rose 26.7% year-over-year, while free cash flow jumped 52.3%, UPS said.

UPS said it raised its 2021 adjusted operating margin target to 13% from prior guidance of 12%. The announcement put a big tailwind in the stock in early-morning trading. As of 7:30 a.m., shares were up $9.23, a 4.5% gain.

The company's domestic U.S. segment, which accounts for roughly half of total revenue, posted an adjusted operating profit of $1.41 billion, up 7.4% from the 2020 quarter. Revenue rose to $14.2 billion from $13.2 billion, led by a 12% gain in revenue for each package shipped. Adjusted operating margin was flat year-over-year at $9.9%.  

The international segment again was a star performer, with revenue of 15.5% and an adjusted operating profit of $1.1 billion, up from $972 million. Adjusted margin came in at 22.3%. UPS said the segment experienced strong growth across all its regions.

The supply chain and solutions segment, which includes all non package business, posted an 8.4% revenue increase, led by the freight forwarding and logistics businesses, which grew a combined 35.4% year-over-year. Adjusted operating profit soared to $448 million from $302 million. Adjusted margins came in at 10.5%.

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