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United Parcel Service CEO Discusses Q3 Results - Earnings Call Transcript

United Parcel Service CEO Discusses Q3 Results - Earnings Call transcript

United Parcel Service Inc

Q3 2010 Earnings Conference Call

October 21, 2010 08:30 am EST


Andy Dolny – Vice President of Investor Relations

Kurt Kuehn – Chief Financial Officer

D. Scott Davis – Chairman and Chief Executive Officer


Justin Yagerman – Deutsche Bank

Scott Malat – Goldman Sachs

Nate Brochmann – William Blair & Company

Garrett Chase – Barclays Capital

Chris Ceraso – Credit Suisse

William Greene – Morgan Stanley

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Ken Hoexter – Merrill Lynch

Edward Wolfe – Wolfe Research

Thomas Wadewitz – JPMorgan

Robin Byde – HSBC

Jon Langenfeld – Robert W. Baird

David Ross – Stifel Nicolaus

Jeff Kauffman – Stern, Agee & Leach

Matthew Brooklier – Piper Jaffray

David Campbell – Thompson, Davis, & Co

Art Hatfield – Morgan Keegan



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» United Parcel Service, Inc. Q3 2009 Earnings Call Transcript

At this time, I would like to welcome everyone to the UPS Investor Relations Third Quarter 2010 Earnings Conference Call. All lines have been placed on mute to prevent any background noise and after the speakers’ remarks there will be a question-and-answer period. Please note we will take one question and one follow-up question from each participant. Thank you.

Now, it is now my pleasure to turn the floor over to your host, Mr. Andy Dolny, Vice President of Investor Relations. Sir, the floor is yours.

Andy Dolny

Good morning, everyone. Thanks for joining us today. In a moment, Scott Davis, our CEO and Kurt Kuehn, our CFO, will discuss third quarter results and expectations going forward.

Before they begin, however, I want to review the Safe Harbor language. Some of the comments we’ll make today are forward-looking statements that address our expectations for the future performance or results of operations of the company. These anticipated results are subject to risks and uncertainties, which are described in detail in our 2009 Form 10-K and 2010 10-Q reports. These reports are available on the UPS Investor Relations website or from the Securities and Exchange Commission. Today’s call is being webcast and will also be available on the UPS Investor Relations website.

In our earnings announcement today, you will notice that we recognized the gain of $109 million on the sale of real estate. This provided an after-tax benefit of $61 million or $0.06 per share. Excluding this transaction, diluted earnings per share for the third quarter were $0.93.

In their remarks today, Scott and Kurt will refer to UPS's third quarter 2010 results excluding the impact of this gain. Additionally, all 2010 full year references and comparisons to 2009 will refer to adjusted results. We believe this is the most accurate picture of the company's performance.

Reconciliations to comparable GAAP measures and free cash flow which is a non-GAAP financial measure are explained in the schedules that accompanied our earnings news release. The schedules are also available on the UPS Investor Relations website in the financial section.

To begin our review, I’ll turn the program over to Scott.


Scott Davis

Thanks, Andy and good morning everyone. The results that UPS announced today are another step in getting to peak earnings and historical margins. Considering the slow growth economic environment that exists, I find it extremely encouraging to see our three segments hitting on all cylinders. UPSes were on top of their game generating significant operating profit improvement. This validates our comprehensive supply chain strategy. As for the economy, over the past few months experts have reduced expectations for fourth quarter economic output, including their outlook for U.S. GDP where modest growth is still expected.

When it comes to inventory levels, there's a lot of debate. Some inventory building has occurred this year but due to a low inventory to sales ratios in other indices, it appears there may still be room for additional restocking. During the quarter, we announced a new global communications platform. Given the complexities of today's marketplace, we designed our advertising campaign to spotlight the power of logistics.

Our experience and worldwide capabilities make UPS uniquely qualified to provide solutions to our customers throughout their supply chain. We don’t just talk about global trade, we make it happen. UPS provides new tools to customers that help them expand their business like UPS Import Control, a solution that allow them to better manage inbound shipments.

In addition, we continue to enhance our paperless invoice technology. UPS introduced this to the market more than two years ahead of the competition. This tool now provides expedite customs clearance in 92 countries more than any competitor. Not only have we added tools to help businesses compete on a global basis, but we are growing our footprint so they can grow theirs.

UPS continues to expand in important emerging markets announcing a joint venture in Indonesia with JNE this quarter, and that’s on the heels of the alliances announced earlier this year in Malaysia and Vietnam.

In the U.S. to help our customers better manage returns, we now offer UPS Returns Flexible Access, a low cost high quality service that provides unmatched alternatives to customers. As you can see, UPS is never standing still. In fact just this month, we opened our first Olympic logistic center in London. This gives UPS an excellent opportunity to showcase our capabilities to the world. As the official logistics provider for the 2012 Olympics, UPS will ensure the world’s largest logistics event goes off without a hitch.

Now, I would like to take a moment to talk about the UPS team. During the quarter, we suffered the loss of two UPSers in a tragic plane crash. On behalf of UPS employees around the world, I wish to extend our deepest sympathy to their families. I also want to personally thank UPS employees for providing the best service in the industry, going the extra mile to ensure our customers continue to trust UPS with their business.

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