UPS ( UPS) shares dipped 1.5% before the start of trading Thursday after the company topped Wall Street estimates by a penny and issued mixed guidance. UPS announced second-quarter net income of $818 million, or 72 cents a share, topping the 71-cent Wall Street estimate and 18.2% higher than the $692 million, or 61 cents a share, it announced a year ago. UPS, however, said the year-ago quarter was impacted by the sale of its Mail Technologies unit, and excluding its impact, the company said earnings would have come in at 60 cents a share a year ago. In reaction, shares of UPS dropped $1.09 to $71.97. Total revenue came in at $8.87 billion, up 7.8% year over year, but a shade under the Wall Street estimate of $8.9 billion. The company said its worldwide average daily package volume rose to 13.6 million, a gain of 550,000 packages from the year-ago quarter. U.S. ground volume increased about 5%, but international operations continue to drive growth with double-digit percentage increases in every region of the world outside of the U.S. "Our global small package business is vibrant and growing," said UPS CFO Scott Davis. "This strong growth is being fueled by our integrated customer technologies, expanded supply chain capabilities and superior service and reliability." U.S. package revenue still accounts for the lion's share of UPS' business, with domestic revenue coming in at $6.48 billion. Operating margins for the segment came in at 13.8%, a gain of 20 basis points and the highest mark in two years. The overall revenue per piece rose 2%. International package revenue came in at $1.61 billion, up nearly 18% year over year, driven by 70% average daily package volume in China. Revenue from UPS' non-package segment came in at $778 million, up 6.4%, driven by a 7.2% gain in revenue in its supply chain solutions business.
Going forward, UPS said that it expects the growth to continue, issuing guidance between 69 and 72 cents a share, compared to current expectations of 72 cents a share. For the full fiscal year, the company expects EPS to grow by nearly 20% annually, which implies earnings of $2.93 a share, slightly above the current estimate of $2.91 a share.