UPS Financial Analysis

Analysis Date: 1/31/2025

Business Model

UPS generates revenue primarily through domestic and international package delivery services, along with supply chain solutions

Revenue Sources

• U.S. Domestic Package ($17.3B in Q4 2024, 68.4% of revenue)
• International Package ($4.9B in Q4 2024, 19.4% of revenue)
• Supply Chain Solutions ($3.1B in Q4 2024, 12.2% of revenue)

Revenue Distribution by Channel

• B2B represents 35.3% of U.S. Domestic volume
• SMBs represent 28.9% of U.S. Domestic volume

Income Statement Analysis

• Revenue increased 1.5% YoY driven by growth in U.S. Domestic and International segments
• Adjusted operating profit grew 11.2% YoY with margin expansion of 110 basis points

Balance Sheet Analysis

• Maintained strong balance sheet with debt/EBITDA ratio of 2.25x

Cash Flow Analysis

• Generated $10.1B in cash from operations
• CapEx of $3.9B focused on network automation and efficiency

Capital Allocation

Balanced capital allocation with $5.4B in dividends paid, $500M in share repurchases, and $3.9B in capital expenditures during 2024. Planning $3.5B in CapEx and $5.5B in dividends for 2025.

Management Commentary

Taking strategic actions to accelerate volume reduction from largest customer by over 50%

Launching efficiency initiatives expected to deliver $1B in cost savings

Overall Sentiment: Cautiously optimistic while undertaking significant strategic changes to improve profitability

Recommendation

Rating: Hold

Reason for Rating: Significant strategic changes create near-term uncertainty but potential for margin expansion longer-term

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 7:42:21 AM