Shares of United Parcel Service Inc. were gaining around 9 percent in the pre-market activity on Tuesday after the logistics major issued fourth-quarter outlook for revenues above market estimates, after the third-quarter adjusted earnings and top line beat the Street. On a reported basis, third-quarter earnings were down mainly as revenues were hit by weak results in U.S. Domestic and Supply Chain Solutions segments.
Carol Tomé, UPS chief executive officer, said, "We are executing the most significant strategic shift in our company's history, and the changes we are implementing are designed to deliver long-term value for all stakeholders. With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year."
Looking ahead, for the fourth quarter, the company projects consolidated revenue to be approximately $24.0 billion and adjusted operating margin of approximately 11.0 percent - 11.5 percent.
The Wall Street analysts on average expect the company to record revenues of $23.83 billion for the quarter. Analysts' estimates typically exclude special items.
Further, for fiscal 2025, the company continues to expect dividend payments to be around $5.5 billion, subject to Board approval, and capital expenditures of approximately $3.5 billion.
In the third quarter, UPS' bottom line came in at $1.311 billion or $1.55 per share, compared with $1.539 billion or $1.80 per share last year.
The latest results mainly included a net charge of $164 million or $0.19 per share, comprised of after-tax transformation strategy costs of $250 million, partially offset by an $86 million benefit from the reversal of an income tax valuation allowance.
In addition, a sale-leaseback transaction related to five properties resulted in a $330 million pre-tax gain on sale within Supply Chain Solutions, contributing $0.30 to earnings per share.
Adjusted earnings were $1.475 billion or $1.74 per share for the period, compared to $1.76 per share last year. Analysts had expected the company to earn $1.30 per share.
The company's revenue for the period fell 3.7 percent to $21.415 billion from $22.245 billion last year. The Street was looking for revenues of $20.84 billion for the quarter.
In the quarter, U.S. Domestic Segment revenue declined 2.6 percent year-over-year to $14.22 billion, primarily driven by an expected decline in volume, partially offset by higher revenue per piece and air cargo revenue.
Supply Chain Solutions revenue also declined 22.1 percent from last year to $2.52 billion, primarily due to the impact from the third quarter 2024 divestiture of Coyote.
International Segment revenue, however, grew 5.9 percent to $4.67 billion, driven by a 4.8 percent increase in average daily volume.
In the pre-market activity, UPS shares were trading at $96.74, up 8.47%.
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