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Strong UPS Execution Drives Positive 3Q Results

  • UPS Revenue Rises 7% on Balanced Shipment Growth and Yield Expansion
  • International Operating Profit Climbs 8.9%; Currency-Neutral Profit* up 20%
  • Daily Export Volume up 19% for 3rd Straight Quarter of Double-Digit Growth
  • U.S. Domestic Revenue up 3.9% on Higher Package Demand and Yields
  • U.S. Operating Profit of $1.2B, Including $50M of Negative Hurricane Impact
  • Supply Chain & Freight Boosts Revenue more than 13%; Profits up 9.7%
  • Company Lifts Bottom of Guidance Range; Expects Full-Year 2017 Adjusted Earnings Per Share of $5.85 to $6.10

ATLANTA, Oct. 26, 2017 (GLOBE NEWSWIRE) -- UPS (NYSE:UPS) today announced earnings per share of $1.45 for the third quarter. All three major business units executed well during the quarter. The company converted accelerating global demand for UPS solutions into solid financial results, despite one less operating day in 3Q 2017.

Consolidated Results3Q 20173Q 2016
Revenue$15,978 M $14,928 M
Operating profit$2,035 M$2,034 M
Currency-neutral operating profit*$2,097 M
Diluted earnings per share$1.45$1.44

“UPS produced another solid quarter of financial performance, despite the impact of several natural disasters that slowed regional economic activity and damaged infrastructure,” said David Abney, UPS chairman and CEO. “Our business segments adapted quickly to changing conditions this quarter, taking advantage of market opportunities while minimizing cost and service disruptions from recent events.”

For the total company in 3Q 2017:

  • Revenue increased 7.0%, and currency-neutral revenue* was up 7.1%.
  • Revenue increased in all segments and major product categories, as expanded customer demand spread across the company’s broad product portfolio.
  • Operating profit was $2.0 billion, driven by strong performance in the International and Supply Chain and Freight segments.
  • Year-to-date capital expenditures were $3.7 billion, supporting our investment strategies.
  • This year UPS has paid dividends of nearly $2.1 billion, an increase of 6.4% per share over the prior year, rewarding shareowners with continued strong dividend yield.
  • So far this year the company has repurchased 12.3 million shares for approximately $1.4 billion, reaffirming its commitment to return cash to shareowners.

* See attached reconciliation of non-GAAP currency-neutral revenue and operating profit

U.S. Domestic Segment

The Domestic segment continues to benefit from online retail customer demand for both UPS Next Day Air and Ground services, which drove a 3.9% increase in revenue over 3Q 2016. The U.S. consumer increasingly prefers to shop online and UPS is benefiting from this trend through its unique portfolio of convenient and economical delivery solutions.

3Q 20173Q 2016
Revenue$9,649 M $9,289 M
Operating profit$1,182 M$1,252 M

For the U.S. Domestic segment in 3Q 2017:

  • Revenue increased $360 million or 3.9% over 3Q 2016, driven by Next Day Air and Ground product growth.
  • Next Day Air daily shipments were up 8.0%, as customers continued to select UPS’s reliable, day-definite delivery solutions.
  • Deferred Air daily shipments were down slightly when compared to the strong prior-year growth of more than 10%.
  • Revenue per piece was up 2.0%, while base-rate pricing and higher fuel surcharges offset changes in customer and product mix.
  • Operating profit includes negative impacts from one less operating day, about $50 million from natural disasters, and ongoing initiatives including facility construction and deployment of Saturday operations of nearly $40 million.

International Segment

“Our International segment continued its track record as a growth engine, generating strong top-line and operating-profit growth driven by robust demand for UPS solutions,” said Abney. “Export shipments grew across all regions as customers took advantage of UPS’s expanded portfolio and enhanced network.”

3Q 20173Q 2016
Revenue$3,364 M $3,024 M
Operating profit$627 M$576 M
Currency-neutral operating profit*$689 M

For the International segment in 3Q 2017:

  • International produced record 3Q operating profit of $627 million, up 8.9%, as the result of broad, accelerated growth combined with expanded yields.
  • Currency-neutral operating profit* increased 20%.
  • The segment reported revenue growth of 11% driven by premium products.
  • Robust Export shipment growth surged 19% per day. All regions of the world contributed to the expansion.
  • International Domestic daily shipments increased 5.7%, led by double-digit growth across several European countries.
  • Operating margin continues to lead the industry at 18.6%.
  • Also highlighted in the quarter was the regulatory approval of UPS joint venture with SF Express, a small-package carrier in China.

* See attached reconciliation of non-GAAP currency-neutral revenue and operating profit

Supply Chain and Freight Segment

The Supply Chain and Freight segment produced record third quarter results with double-digit revenue growth and near double-digit operating profit expansion. Performance results were driven by revenue-quality improvements combined with structural cost-reduction programs.

3Q 20173Q 2016
Revenue$2,965 M $2,615 M
Operating profit$226 M$206 M

For the Supply Chain and Freight segment in 3Q 2017:

  • Revenue increased 13% over 3Q 2016, the result of deeper alignment with preferred customers, strengthened revenue management initiatives and improved market conditions.
  • Tonnage gains in Freight Forwarding, UPS Freight and Coyote Logistics contributed to improved top-line results.
  • UPS Freight increased LTL (less-than-truckload) revenue by 9.3% on tonnage growth of 5.5% and LTL revenue per hundredweight gains of 3.6%.
  • Increased customer demand from the retail and aerospace sectors drove the Distribution unit’s revenue and operating profit higher.
  • Total segment operating profit improved 9.7% to $226 million.

Outlook

The company provides guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension mark-to-market adjustments, which would be included in reported (GAAP) results and could be material.

“UPS third-quarter results highlight the flexibility of our business” said Richard Peretz, UPS chief financial officer. “Our recent performance gives us confidence moving forward as we adapt to evolving, global ecommerce strategies with increased seasonality. We are executing well on our plans, have a positive outlook for peak and as a result, we are moving higher in our original guidance range.”

The company’s full-year 2017 adjusted earnings per share guidance includes the following:

  • Momentum in the business will continue, led by the International segment.
  • Focus remains on delivering a successful peak season for customers and investors.
  • Operating penalties for ongoing facility investments and Saturday deployment will be approximately $60 million in the fourth quarter.
  • Currency headwinds will continue to weigh on year-over-year comparisons.
  • The tax rate is expected to be 35% for the 4Q 2017 and excludes 4Q 2016 tax savings of approximately $0.05 per share.

UPS moves 2017 adjusted diluted EPS guidance range to between $5.85 and $6.10, which includes about $400 million, or $0.30 per share of pre-tax currency headwinds.

Conference Call Information

UPS CEO David Abney and CFO Richard Peretz will discuss third-quarter results with investors and analysts during a conference call at 8:30 a.m. ET, October 26, 2017. That call is open to others through a live Webcast. To access the call, go to www.investors.ups.com and click on “Earnings Webcast.”

About UPS

UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the web at ups.com or pressroom.ups.com and its corporate blog can be found at longitudes.ups.com. To get UPS news direct, follow @UPS_News on Twitter.

Forward-Looking Statements

Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties.

Reconciliation of GAAP and non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally accepted accounting principles ("GAAP") with certain non-GAAP financial measures, including, as applicable, "as adjusted" operating profit, operating margin, pre-tax income, net income and earnings per share. The equivalent measures determined in accordance with GAAP are also referred to as "reported" or "unadjusted.” Additionally, we periodically disclose free cash flow as well as currency-neutral revenue, revenue per piece and operating profit.

We believe that these non-GAAP measures provide additional meaningful information to assist users of our financial statements in understanding our financial results and assessing our ongoing performance because they exclude items that may not be indicative of, or are unrelated to, our underlying operations and may provide a useful baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions. We also use certain of these measures for the determination of incentive compensation award results.

Non-GAAP financial measures should be considered in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial information may not be comparable to similarly titled measures reported by other companies.

Currency-Neutral Revenue, Revenue per Piece and Operating Profit

We supplement the reporting of our revenue, revenue per piece and operating profit with similar non-GAAP measures that exclude the period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral revenue, revenue per piece and operating profit information allows users of our financial statements to understand growth trends in our products and results. We evaluate the performance of our International Package and Supply Chain and Freight businesses on a currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S. dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current period local currency revenue, revenue per piece and operating profit. The derived current period local currency revenue, revenue per piece and operating profit are then multiplied by the average foreign exchange rates used to translate the comparable results for each month in the prior year period (including the period over period impact of foreign currency revenue hedging activities). The difference between the current period reported U.S. dollar revenue, revenue per piece and operating profit and the derived current period U.S. dollar revenue, revenue per piece and operating profit is the period over period impact of currency fluctuations.


Reconciliation of GAAP and non-GAAP Revenue, Revenue Per Piece and Operating Profit
(in millions, except Per Piece amounts):
Three Months Ended September 30
2017 As-
Reported
(GAAP)
2016 As-
Reported
(GAAP)
% Change
(GAAP)
Currency
Impact
2017
Currency-
Neutral
(non-
GAAP)
% Change
(non-
GAAP)
Average Revenue Per Piece:
International Package:
Domestic$6.27$5.906.3% $(0.27) $6.001.7%
Export 29.00 30.35-4.4% 0.47 29.47-2.9%
Total International Package$16.52$16.211.9% $0.06 $16.582.3%
Consolidated$10.77$10.492.7% $0.01 $10.782.8%
Revenue:
U.S. Domestic Package $9,649 $9,2893.9% $- $9,6493.9%
International Package 3,364 3,02411.2% 12 3,37611.6%
Supply Chain & Freight 2,965 2,61513.4% (9) 2,95613.0%
Total revenue$15,978$14,9287.0% $3 $15,9817.1%
Operating Profit:
U.S. Domestic Package$1,182$1,252-5.6% $- $1,182-5.6%
International Package 627 5768.9% 62 68919.6%
Supply Chain & Freight 226 2069.7% - 2269.7%
Total operating profit$2,035$2,0340.0% $62 $2,0973.1%


Nine Months Ended September 30
2017 As-
Reported
(GAAP)
2016 As-
Reported
(GAAP)
% Change
(GAAP)
Currency
Impact
2017
Currency-
Neutral
(non-
GAAP)
% Change
(non-
GAAP)
Average Revenue Per Piece:
International Package:
Domestic $5.99 $5.960.5% $0.12 $6.112.5%
Export 28.79 30.72-6.3% 1.23 30.02-2.3%
Total International Package$16.10$16.43-2.0% $0.61$16.711.7%
Consolidated$10.68$10.481.9% $0.09$10.772.8%
Revenue:
U.S. Domestic Package$28,929$27,3885.6% $-$28,9295.6%
International Package 9,585 9,0156.3% 352 9,93710.2%
Supply Chain & Freight 8,529 7,57212.6% 15 8,54412.8%
Total revenue$47,043$43,9757.0% $367$47,4107.8%
Operating Profit:
U.S. Domestic Package$3,653$3,5871.8% $-$3,6531.8%
International Package 1,739 1,763-1.4% 295 2,03415.4%
Supply Chain & Freight 643 54518.0% 1 64418.2%
Total operating profit$6,035$5,8952.4% $296$6,3317.4%


United Parcel Service, Inc.
Selected Financial Data - Second Quarter
(unaudited)
Three Months Ended
September 30
2017 2016 Change % Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package$ 9,649 $ 9,289 $ 360 3.9%
International Package 3,364 3,024 340 11.2%
Supply Chain & Freight 2,965 2,615 350 13.4%
Total revenue 15,978 14,928 1,050 7.0%
Operating expenses:
Compensation and benefits 8,221 7,857 364 4.6%
Other 5,722 5,037 685 13.6%
Total operating expenses 13,943 12,894 1,049 8.1%
Operating profit:
U.S. Domestic Package 1,182 1,252 (70) -5.6%
International Package 627 576 51 8.9%
Supply Chain & Freight 226 206 20 9.7%
Total operating profit 2,035 2,034 1 0.0%
Other income (expense):
Investment income and other 20 13 7 53.8%
Interest expense (111) (94) (17) 18.1%
Total other income (expense) (91) (81) (10) 12.3%
Income before income taxes 1,944 1,953 (9) -0.5%
Income tax expense 680 683 (3) -0.4%
Net income $ 1,264 $ 1,270 $ (6) -0.5%
Net income as a percentage of revenue 7.9% 8.5%
Per share amounts:
Basic earnings per share$ 1.45 $ 1.44 $ 0.01 0.7%
Diluted earnings per share$ 1.45 $ 1.44 $ 0.01 0.7%
Weighted-average shares outstanding:
Basic 869 880 (11) -1.3%
Diluted 874 885 (11) -1.2%

United Parcel Service, Inc.
Selected Operating Data - Second Quarter
(unaudited)
Three Months Ended
September 30
2017 2016 Change % Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air$ 1,767 $ 1,706 $ 61 3.6%
Deferred 1,002 967 35 3.6%
Ground 6,880 6,616 264 4.0%
Total U.S. Domestic Package 9,649 9,289 360 3.9%
International Package:
Domestic 673 609 64 10.5%
Export 2,556 2,284 272 11.9%
Cargo and Other 135 131 4 3.1%
Total International Package 3,364 3,024 340 11.2%
Supply Chain & Freight:
Forwarding and Logistics 1,989 1,735 254 14.6%
Freight 778 701 77 11.0%
Other 198 179 19 10.6%
Total Supply Chain & Freight 2,965 2,615 350 13.4%
Consolidated$ 15,978 $ 14,928 $ 1,050 7.0%
Consolidated volume (in millions) 1,196 1,162 34 2.9%
Operating weekdays 63 64 (1) -1.6%
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,470 1,361 109 8.0%
Deferred 1,240 1,260 (20) -1.6%
Ground 13,175 12,743 432 3.4%
Total U.S. Domestic Package 15,885 15,364 521 3.4%
International Package:
Domestic 1,704 1,612 92 5.7%
Export 1,399 1,176 223 19.0%
Total International Package 3,103 2,788 315 11.3%
Consolidated 18,988 18,152 836 4.6%
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air$ 19.08 $ 19.59 $ (0.51) -2.6%
Deferred 12.83 11.99 0.84 7.0%
Ground 8.29 8.11 0.18 2.2%
Total U.S. Domestic Package 9.64 9.45 0.19 2.0%
International Package:
Domestic 6.27 5.90 0.37 6.3%
Export 29.00 30.35 (1.35) -4.4%
Total International Package 16.52 16.21 0.31 1.9%
Consolidated$ 10.77 $ 10.49 $ 0.28 2.7%

United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
Currency Neutral Revenue Per Piece
(unaudited)
Three Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Average Revenue Per Piece:
International Package:
Domestic$ 6.27 $ 5.90 6.3% $ (0.27) $ 6.00 1.7%
Export 29.00 30.35 -4.4% 0.47 29.47 -2.9%
Total International Package$ 16.52 $ 16.21 1.9% $ 0.06 $ 16.58 2.3%
Consolidated$ 10.77 $ 10.49 2.7% $ 0.01 $ 10.78 2.8%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
Three Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Revenue (in millions):
U.S. Domestic Package$ 9,649 $ 9,289 3.9% $ - $ 9,649 3.9%
International Package 3,364 3,024 11.2% 12 3,376 11.6%
Supply Chain & Freight 2,965 2,615 13.4% (9) 2,956 13.0%
Total revenue$ 15,978 $ 14,928 7.0% $ 3 $ 15,981 7.1%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Operating Profit
(unaudited)
Three Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Operating profit (in millions):
U.S. Domestic Package$ 1,182 $ 1,252 -5.6% $ - $ 1,182 -5.6%
International Package 627 576 8.9% 62 689 19.6%
Supply Chain & Freight 226 206 9.7% - 226 9.7%
Total operating profit$ 2,035 $ 2,034 0.0% $ 62 $ 2,097 3.1%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
UPS Freight Selected Operating Data - Third Quarter
(unaudited)
Three Months Ended
September 30
2017 2016 Change % Change
LTL revenue (in millions)$ 673 $ 616 $ 57 9.3%
LTL revenue per LTL hundredweight$ 24.47 $ 23.63 $ 0.84 3.6%
LTL shipments (in thousands) 2,589 2,551 38 1.5%
LTL shipments per day (in thousands) 41.1 39.9 1.2 3.0%
LTL gross weight hauled (in millions of pounds) 2,750 2,607 143 5.5%
LTL weight per shipment (in pounds) 1,062 1,022 40 3.9%
Operating weekdays 63 64 (1) -1.6%

United Parcel Service, Inc.
Detail of Other Operating Expenses - Third Quarter
(unaudited)
(in millions)Three Months Ended
September 30
2017 2016 Change % Change
Repairs and maintenance$ 398 $ 386 $ 12 3.1%
Depreciation and amortization 572 554 18 3.2%
Purchased transportation 2,652 2,212 440 19.9%
Fuel 636 541 95 17.6%
Other occupancy 282 248 34 13.7%
Other expenses 1,182 1,096 86 7.8%
Total other operating expenses$ 5,722 $ 5,037 $ 685 13.6%
Earnings Per Share and Share Data - Third Quarter
(unaudited)
Three Months Ended
(amounts in millions, except per share data) September 30
2017 2016
Numerator:
Net income $ 1,264 $ 1,270
Denominator:
Weighted-average shares 864 876
Deferred compensation obligations 1 1
Vested portion of restricted units 4 3
Denominator for basic earnings per share 869 880
Effect of dilutive securities:
Restricted units 4 4
Stock options 1 1
Denominator for diluted earnings per share 874 885
Basic earnings per share $ 1.45 $ 1.44
Diluted earnings per share $ 1.45 $ 1.44
Detail of shares outstanding as of September 30, 2017:
Class A shares 175
Class B shares 687
Total shares outstanding 862

United Parcel Service, Inc.
Selected Financial Data - Year to Date
(unaudited)
Nine Months Ended
September 30
2017 2016 Change % Change
(amounts in millions, except per share data)
Statement of Income Data:
Revenue:
U.S. Domestic Package$ 28,929 $ 27,388 $ 1,541 5.6%
International Package 9,585 9,015 570 6.3%
Supply Chain & Freight 8,529 7,572 957 12.6%
Total revenue 47,043 43,975 3,068 7.0%
Operating expenses:
Compensation and benefits 24,457 23,448 1,009 4.3%
Other 16,551 14,632 1,919 13.1%
Total operating expenses 41,008 38,080 2,928 7.7%
Operating profit:
U.S. Domestic Package 3,653 3,587 66 1.8%
International Package 1,739 1,763 (24) -1.4%
Supply Chain & Freight 643 545 98 18.0%
Total operating profit 6,035 5,895 140 2.4%
Other income (expense):
Investment income and other 49 38 11 28.9%
Interest expense (324) (281) (43) 15.3%
Total other income (expense) (275) (243) (32) 13.2%
Income before income taxes 5,760 5,652 108 1.9%
Income tax expense 1,954 1,982 (28) -1.4%
Net income$ 3,806 $ 3,670 $ 136 3.7%
Net income as a percentage of revenue 8.1% 8.3%
Per share amounts:
Basic earnings per share$ 4.36 $ 4.15 $ 0.21 5.1%
Diluted earnings per share$ 4.34 $ 4.13 $ 0.21 5.1%
Weighted-average shares outstanding:
Basic 872 885 (13) -1.5%
Diluted 876 889 (13) -1.5%

United Parcel Service, Inc.
Selected Operating Data - Year to Date
(unaudited)
Nine Months Ended
September 30
2017 2016 Change % Change
Revenue (in millions):
U.S. Domestic Package:
Next Day Air$ 5,183 $ 4,918 $ 265 5.4%
Deferred 2,992 2,781 211 7.6%
Ground 20,754 19,689 1,065 5.4%
Total U.S. Domestic Package 28,929 27,388 1,541 5.6%
International Package:
Domestic 1,906 1,804 102 5.7%
Export 7,298 6,813 485 7.1%
Cargo and Other 381 398 (17) -4.3%
Total International Package 9,585 9,015 570 6.3%
Supply Chain & Freight:
Forwarding and Logistics 5,709 4,980 729 14.6%
Freight 2,240 2,050 190 9.3%
Other 580 542 38 7.0%
Total Supply Chain & Freight 8,529 7,572 957 12.6%
Consolidated$ 47,043 $ 43,975 $ 3,068 7.0%
Consolidated volume (in millions) 3,572 3,435 137 4.0%
Operating weekdays 191 192 (1) -0.5%
Average Daily Package Volume (in thousands):
U.S. Domestic Package:
Next Day Air 1,393 1,313 80 6.1%
Deferred 1,246 1,195 51 4.3%
Ground 13,069 12,652 417 3.3%
Total U.S. Domestic Package 15,708 15,160 548 3.6%
International Package:
Domestic 1,667 1,576 91 5.8%
Export 1,327 1,155 172 14.9%
Total International Package 2,994 2,731 263 9.6%
Consolidated 18,702 17,891 811 4.5%
Average Revenue Per Piece:
U.S. Domestic Package:
Next Day Air$ 19.48 $ 19.51 $ (0.03) -0.2%
Deferred 12.57 12.12 0.45 3.7%
Ground 8.31 8.11 0.20 2.5%
Total U.S. Domestic Package 9.64 9.41 0.23 2.4%
International Package:
Domestic 5.99 5.96 0.03 0.5%
Export 28.79 30.72 (1.93) -6.3%
Total International Package 16.10 16.43 (0.33) -2.0%
Consolidated$ 10.68 $ 10.48 $ 0.20 1.9%

United Parcel Service, Inc.
Supplemental Analysis of Currency and UPS Freight
Currency Neutral Revenue Per Piece
(unaudited)
Nine Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Average Revenue Per Piece:
International Package:
Domestic$ 5.99 $ 5.96 0.5% $ 0.12 $ 6.11 2.5%
Export 28.79 30.72 -6.3% 1.23 30.02 -2.3%
Total International Package$ 16.10 $ 16.43 -2.0% $ 0.61 $ 16.71 1.7%
Consolidated$ 10.68 $ 10.48 1.9% $ 0.09 $ 10.77 2.8%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Revenue
(unaudited)
Nine Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Revenue (in millions):
U.S. Domestic Package$ 28,929 $ 27,388 5.6% $ - $ 28,929 5.6%
International Package 9,585 9,015 6.3% 352 9,937 10.2%
Supply Chain & Freight 8,529 7,572 12.6% 15 8,544 12.8%
Total revenue$ 47,043 $ 43,975 7.0% $ 367 $ 47,410 7.8%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
Currency Neutral Operating Profit
(unaudited)
Nine Months Ended Currency
September 30 Neutral
2017 2016 % Change Currency 2017* % Change
Operating profit (in millions):
U.S. Domestic Package$ 3,653 $ 3,587 1.8% $ - $ 3,653 1.8%
International Package 1,739 1,763 -1.4% 295 2,034 15.4%
Supply Chain & Freight 643 545 18.0% 1 644 18.2%
Total operating profit$ 6,035 $ 5,895 2.4% $ 296 $ 6,331 7.4%
* Amounts adjusted for period over period foreign currency exchange rate and hedging differences
UPS Freight Selected Operating Data - Year to Date
(unaudited)
Nine Months Ended
September 30
2017 2016 Change % Change
LTL revenue (in millions)$ 1,943 $ 1,780 $ 163 9.2%
LTL revenue per LTL hundredweight$ 23.90 $ 23.46 $ 0.44 1.9%
LTL shipments (in thousands) 7,739 7,507 232 3.1%
LTL shipments per day (in thousands) 40.5 39.1 1.4 3.6%
LTL gross weight hauled (in millions of pounds) 8,131 7,589 542 7.1%
LTL weight per shipment (in pounds) 1,051 1,011 40 4.0%
Operating weekdays 191 192 (1) -0.5%

United Parcel Service, Inc.
Detail of Other Operating Expenses - Year to Date
(unaudited)
(in millions)Nine Months Ended
September 30
2017 2016 Change % Change
Repairs and Maintenance$ 1,180 $ 1,150 $ 30 2.6%
Depreciation and Amortization 1,688 1,661 27 1.6%
Purchased Transportation 7,461 6,306 1,155 18.3%
Fuel 1,873 1,480 393 26.6%
Other Occupancy 845 762 83 10.9%
Other Expenses 3,504 3,273 231 7.1%
Total Other Operating Expenses$ 16,551 $ 14,632 $ 1,919 13.1%
Earnings Per Share and Share Data - Year to Date
(unaudited)
Nine Months Ended
(amounts in millions, except per share data) September 30
2017 2016
Numerator:
Net income $ 3,806 $ 3,670
Denominator:
Weighted-average shares 867 880
Deferred compensation obligations 1 1
Vested portion of restricted units 4 4
Denominator for basic earnings per share 872 885
Effect of dilutive securities:
Restricted units 3 3
Stock options 1 1
Denominator for diluted earnings per share 876 889
Basic earnings per share $ 4.36 $ 4.15
Diluted earnings per share $ 4.34 $ 4.13

United Parcel Service, Inc.
Consolidated Balance Sheets - September 30, 2017 and December 31, 2016
(unaudited)
(amounts in millions) September 30, December 31,
2017 2016
ASSETS
Current Assets:
Cash and marketable securities $ 4,461 $ 4,567
Other current assets 8,449 9,282
Total Current Assets 12,910 13,849
Property, Plant and Equipment 47,204 43,674
Less accumulated depreciation and amortization 26,216 24,874
20,988 18,800
Other Assets 7,458 7,728
$ 41,356 $ 40,377
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities $ 12,167 $ 11,730
Long-Term Debt 14,355 12,394
Pension and Postretirement Benefit Obligations 10,075 12,694
Deferred Taxes, Credits and Other Liabilities 3,220 3,130
Shareowners' Equity 1,539 429
$ 41,356 $ 40,377
Amounts are subject to reclassification.

United Parcel Service, Inc.
Selected Cash Flow Data
(unaudited)
Net Increase (Decrease) in Cash and Cash Equivalents
Preliminary
Year-to-Date
(amounts in millions) September 30
Cash flows from operating activities $ 4,418
Cash flows used in investing activities (3,618)
Cash flows used in financing activities (914)
Effect of exchange rate changes on cash and cash equivalents 56
Net (decrease) in cash and cash equivalents $ (58)
Reconciliation of Free Cash Flow (non-GAAP measure)
Preliminary
Year-to-Date
(amounts in millions) September 30
Cash flows from operating activities $ 4,418
Capital expenditures (3,708)
Proceeds from disposals of PP&E 18
Net change in finance receivables (1)
Other investing activities 20
Free cash flow (non-GAAP measure) $ 747
Amounts are subject to reclassification.

United Parcel Service, Inc.
Aircraft Fleet - As of September 30, 2017
(unaudited)
Owned andLeases & Charters
DescriptionCapital Leasesfrom OthersOn OrderUnder Option
Operating:
Boeing 757-200 75 - - -
Boeing 767-300 59 - - -
Boeing 767-300BCF 2 - 1 -
Airbus A300-600 52 - - -
Boeing MD-11 37 - - -
Boeing 747-400F 11 - - -
Boeing 747-400BCF 2 - - -
Boeing 747-8F 1 - 13 14
Other - 297 - -
Total 239 297 14 14

Contacts:Steve Gaut, Public Relations
404-828-8787
Scott Childress, Investor Relations
404-828-7957



Source: UPS