UPS Stock Surges After Beating Profit Estimates

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United Parcel Service  (UPS) – Get Report delivered better-than-expected first-quarter profit on Tuesday, posting adjusted per-share earnings that beat analysts’ forecasts, though opted to hold back on future guidance amid what it called “continued economic uncertainty.”

Shares of UPS jumped more than 10% to $194.77 at the start of trading Tuesday.

Atlanta-based UPS posted adjusted net income of $4.79 billion, or $5.47 a share, vs. an adjusted loss of $2.5 billion, or $2.87 a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting earnings of $1.72 a share.

Revenue increased 27% to $22.9 billion, above the $20.49 billion analysts were forecasting. In the U.S., adjusted operating profit came in at $1.46 billion vs. $364 million last year; internationally, adjusted operating profit was $1.09 billion vs. $551 million.

The better-than-expected numbers marked UPS’s journey into the second year of the pandemic, in which the delivery giant was forced to dramatically adjust to a surge in domestic and international demand due to the pandemic and lockdowns, and corresponding rise in reliance on shipping.

It also reflected the carrier’s ramp-up of COVID-19 vaccine deliveries through the U.S.

“During the quarter, we continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results,” CEO Carol Tome said in a statement. 

UPS’s GAAP results include a net benefit of $2.4 billion, or $2.70 a  share, comprised of an after-tax mark-to-market (MTM) pension benefit of $2.5 billion and after-tax transformation and other charges of $140 million.

The MTM benefit was primarily driven by the enactment of the American Rescue Plan Act of 2021. The ARPA, which was signed into law on March 11, protects certain multi-employer pension plans from becoming insolvent through 2051. The overall result was a reduction in the pension liability of $6.4 billion, UPS said.

“Given continued economic uncertainty, the company is not providing 2021 revenue or diluted earnings per share guidance; however, it is re-affirming its full-year capital allocation plans,” the company said in a statement. UPS has scheduled its 2021 Investor and Analyst Day for June 9, when it will share further financial details.

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