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UPS Posts $3B Loss but Adjusted Earnings Top Estimates

UPS posts adjusted fourth-quarter earnings well above Wall Street forecasts as the pandemic continues to drive consumers and businesses to rely on Big Brown.

United Parcel Service  (UPS)  posted a $3 billion fourth-quarter loss but adjusted earnings were well above Wall Street forecasts as the pandemic continued to drive consumers and businesses to rely on Big Brown, particularly during the holidays.

Atlanta-based UPS posted adjusted earnings of $2.66 a share vs. $2.11 in the comparable year-ago quarter. Analysts polled by FactSet had been expecting earnings of $2.14 a share. 

Including $5.6 billion in charges related to pension adjustment costs and other factors including taxes and the sale of UPS Freight, the company lost $3.3 billion, or $3.75 a share, vs. a loss of 12 cents in the same quarter last year.

Revenue increased 21% to $24.9 billion, a full $2 billion above the $22.9 billion analysts were forecasting. In the U.S., adjusted operating profit came in at $1.38 billion vs. $1.21 billion last year; internationally, adjusted operating profit was $1.16 billion million vs. $809 million.

UPS's fourth-quarter financial performance "exceeded our expectations," CEO Carol Tome said in a statement. "As we look past 2020 into the new year, we are optimistic."

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The better-than-expected numbers capped one of the more tumultuous years in UPS’s history as the delivery giant was forced to dramatically adjust to a surge in domestic and international demand due to the coronavirus pandemic and lockdowns, and corresponding rise in reliance on shipping.

U.S. package revenue rang in at $15.75 billion, an increase of 17.4% year over year, while international package revenue was $4.77 billion, up 23.3% from a year ago. Average daily volume increased 10.6%, UPS said.

Cash from operations over the full year totaled $10.45 billion, while adjusted free cash flow came in at $5.1 billion.

Given continued economic uncertainty due to the global pandemic, UPS said it wasn't providing revenue or diluted earnings per share guidance, though did provide full-year guidance for capital allocation, which it expects to be around $4 billion. UPS said it has no plans to repurchase shares or access the debt capital markets in 2021.

Shares of UPS were up 2.91% at $161 in trading on Tuesday.

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