International package delivery carrier United Parcel Service (NYSE: UPS – $98.82) announced second quarter earnings per share of $1.35, a 12% increase over the $1.21 results for the same period last year and eight cents ahead of Street views. Revenues totaled $14.1 billion, down 1.2% from $14.3 billion last year and shy of the mean estimate of $14.5 billion. Some highlights of the report include:
- All Operating Segments Improve Profitability and Expand Margins
- International Operating Profit Jumped 17%
- Export Shipments up 5.5% with Strong Intra-Europe Growth
- Supply Chain and Freight Operating Profit Climbs 18%
Pricing initiatives continue to drive base rates higher and UPS said shipments increased 2.1% over the second quarter last year to 1.1 billion packages, led by U.S. Deferred Air products and International Export shipments. Given these results, the company expects to reach the higher-end of the 2015 guidance range for per share earnings of $5.05 to $5.30, a 6% to 12% increase over adjusted 2014 results. The Street consensus is $5.18 per share. UPS is giving capital back to shareholders. It recently increased the dividend payout by 9%, to $0.73 and currently yields 3.1%. This, combined with share repurchases, should bring its total contribution to shareholders above 100% of net income this year. Long-term price appreciation potential is worthwhile if UPS can maintain its operating performance and avoid fourth quarter slip-ups during its busy holiday delivery season.