Saturday, November 04, 2017
UPS earned $1.26 billion during the period ended Sept. 30, compared with $1.27 billion the year before. On a per-share basis, income rose a penny to $1.45 because there were as much as 12 million fewer shares outstanding than a year ago due to company buybacks.
Revenue grew 7% to $16 billion, surpassing a $15.6 billion forecast.
“Our e-commerce and cross-border solutions helped UPS deliver strong revenue growth of 7% on a 4.6% increase in daily shipments. In the U.S., increasing demand for UPS Next Day Air and Ground products drove revenue growth,” said David Abney, UPS chairman and CEO.
“Focus on fundamentals, combined with the benefits of recent investments produced good results, especially when you consider the unexpected headwinds we faced,” he said.
Atlanta-based UPS ranks No. 1 on the Transport Topics list of the top 100 for-hire carriers in North America.
UPS announced that it would raise rates 4.9% on UPS Ground, UPS Air, UPS Air Freight and international services, effective Dec. 24, matching similar announcements from leading less-than-truckload carriers such as Old Dominion Freight Lines.
UPS also plans to hire 95,000 seasonal employees for the holidays and highlighted that over the last three years about 35% of those workers get offered permanent jobs.
In the UPS Domestic Package segment, revenue grew 3.9% to $9.6 billion, but operating income slipped 5.6% to $1.2 billion. The division, which includes UPS Next Day Air, UPS Ground and UPS Deferred, saw a 3.4% increase in volume to 15.9 million packages and a 2% price increase to $9.64. The company blamed lower profits on a $50 million financial hit from natural disasters and $40 million for construction of new buildings and “deployment of Saturday operations.”
UPS Chief Financial Officer Richard Peretz attributed the $50 million to the recent hurricanes in Texas and Florida and the wildfires in California.
The UPS International Package division, which has fueled growth in recent quarters, continued to record a strong performance this time around, too. Revenue climbed 11% to $3.4 billion and operating income expanded 8.9% to $627 million. Exports generated the best results in the international division with a 12% hike in revenue to $2.6 billion on a 19% increase in volume to 1.4 million packages. International Domestic daily shipments increased 5.7%, led by double-digit growth across several European countries.
UPS also highlighted a joint venture with SF Express, a small-package carrier in China. Regulators in China recently approved the partnership, opening up the large population to the UPS International network.
“We were excited that we did get approval in a timely fashion. It’s so important because there are so many opportunities between China and the United States,” Abney said.
UPS also received two Boeing 747-8 aircrafts in October with a third scheduled to be delivered in late November, planes that will be used for Trans-Pacific shipments.
The UPS Supply Chain Solutions and UPS Freight segment also produced significant growth during the quarter, outpacing all other divisions on a percentage basis. Revenue grew 13% to $3 billion and operating income climbed 9.7% to $22 million.
The segment encompasses the third-party logistics operations, including freight broker Coyote Logistics, and the less-than-truckload business.
UPS Supply Chain Solutions grew revenue 15% year-over-year to $2 billion and UPS Freight revenue improved 11% to $778 million.
Within UPS Freight, less-than-truckload revenue increased 9.3% to $673 million and total shipments rose 1.5% to 2.6 million. Weight per LTL shipment also grew 3.9% to 1,062 pounds and revenue per 100 pounds of freight rose 3.6% to $24.47.
UPS slightly raised full 2017 earnings per growth forecasts a nickel on the low end to $5.85 to $6.10.
Abney made a brief mention of the ongoing talks with the International Brotherhood of Teamsters on a new contract covering package and freight employees. The current five-year collective bargaining agreement expires July 31, 2018. Formal negotiations will officially begin in January.
“We’ve worked with the Teamsters for more than 80 years with the objective of providing industry-leading service to our customers, so we can create new jobs and reward employees for contributing to the company’s success. We expect the negotiations to move forward in a constructive matter,” Abney said.
Every new Class 8 tractor purchased by UPS since 2015 has been outfitted with the technology, which features blind spot alerts, lane departure alerts, electronic stability control and automatic brake application with forward collision warnings.
The company announced that it would expand its use of advanced collision mitigation technology to an additional 5,700 existing tractors. When the expansion is complete, UPS will have more than 11,000 Class 8 tractors outfitted with the technology.
“UPS has some of the safest drivers on the road, and some of our best drivers have told us that collision mitigation systems help make them even better drivers,” Carlton Rose, the president of global fleet maintenance and engineering at UPS, said. “This investment is indicative of UPS’s commitment to the safety of our employees, their families, our customers and the motoring public.”
The collision mitigation technology package will supplement pre-existing safety features on the vehicles like adaptive cruise control that slows the vehicles to help avoid collisions and promote fuel economy.
“As truck drivers, we all know the right side of our vehicle is our largest blind spot,” John McKown, a UPS Freight driver and captain of American Trucking Association’s America’s Road Team, said.
“Now we have technology that watches this every second of the day. Initially, I thought the blind spot alarms would be an annoyance, but now that I’ve driven with this technology I’ve become a believer."
"Words can’t describe how much I appreciate UPS’s commitment to safety and investing in this technology.”
Increased revenue and profit in Asset-Based services positively impacted by improved pricing
Third quarter Asset-Light revenue increase and operating income improvement impacted by positive Expedite trends
ArcBest reported third quarter 2017 revenue of $744.3 million compared to third quarter 2016 revenue of $713.9 million. Third quarter 2017 operating income was $24.3 million compared to operating income of $20.4 million last year. Net income of $14.8 million, or $0.56 per diluted share, compared to third quarter 2016 net income of $12.9 million, or $0.49 per diluted share.
Excluding certain items in both periods as identified in the attached reconciliation tables, non-GAAP net income was $15.5 million, or $0.59 per diluted share, in third quarter 2017 compared to third quarter 2016 net income of $12.6 million, or $0.48 per diluted share. On a non-GAAP basis, operating income was $27.0 million in third quarter 2017 compared to third quarter 2016 operating income of $21.7 million. Cost controls resulting from the enhanced market approach implemented at the beginning of the year continue to be in-line with expectations.
“Our enhanced market approach, tighter capacity and a generally favorable pricing environment all contributed to improved third quarter results,” said ArcBest Chairman, President and CEO Judy R. McReynolds. “Our expedited business was particularly strong, and on the asset-based side, we continue to make progress on the implementation of our space-based pricing initiative, which took effect August 1. While we experienced some negative effects in our asset-based business from hurricanes in the southern U.S. and Puerto Rico, customers seeking total logistics solutions and guaranteed capacity are increasingly looking to ArcBest to fulfill their supply chain needs.”
Full Third Quarter Results.......................
Despite the plunge in net income during the quarter, YRC Worldwide’s consolidated operating revenues ticked up 2.4 percent year-over-year to $1.25 billion, with revenues growth in both YRC Freight and the company’s regional segment.
At YRC Freight, tonnage per day rose 0.7 percent from the third quarter of 2016, while revenue per hundredweight rose 3.4 percent, and revenue per shipment rose 3.8 percent.
Meanwhile, YRC Worldwide’s regional segment saw tonnage per day rise 4 percent from last year’s third quarter, while revenue per hundredweight inched up 1.3 percent and revenue per shipment increased 4.1 percent.
As of Sept. 30, YRC Worldwide’s outstanding debt totaled $962.4 million, down from $1.06 billion for the third quarter of 2016.
“This month, YRC Freight is implementing a significant change of operations that includes transitioning eight terminals to regional distribution centers, which is expected to help strengthen customer service and reliability while adding capacity and reducing cost within its network,” YRC Worldwide CEO James Welch said.
Looking ahead, Welch said, “We believe YRC Freight, Reddaway, Holland and New Penn will be positioned for tighter capacity due to the recovery and restoration efforts from the hurricanes and the ELD mandate.”
Full Third Quarter Results....................
Monday, October 30, 2017
The Company is also providing preliminary financial results for third quarter 2017.
The primary factors contributing to the update include:
The occurrence of significant weather during the third quarter 2017;
A shortage of revenue equipment;
Higher than expected purchased transportation expense;
Higher than anticipated maintenance expense;
Higher than expected employee overtime; and
Underperformance by one of the Regional operating companies.
"We are updating the financial projections now that we have a preliminary view of our third quarter 2017 results," said James Welch, chief executive officer of YRC Worldwide. "Hurricanes Harvey and Irma impacted operations at YRC Freight and Holland during the third quarter leading to the temporary closing or limited operations at 28 terminals. The hurricanes also had a cascading effect on the networks that delayed the delivery of shipments and unfavorably impacted productivity over roughly a five-week period. Additionally, we incurred costs associated with relocating revenue equipment to the impacted facilities as well as incurring employee overtime in order to properly initiate recovery efforts in response to these extraordinary weather events. While it is difficult to fully quantify the lost revenue and incremental costs associated with these natural disasters, they have had an unfavorable impact on our results. As we move into 2018, we expect the recovery and restoration efforts to contribute to an already positive economic environment.
"We have also been adversely impacted by higher than expected purchased transportation expense in the third quarter primarily attributable to a shortage of revenue equipment. The impact has been more acute as capacity has tightened more quickly than anticipated across the trucking sector. The shortage of revenue equipment has led to higher than expected local purchased transportation and short-term rental expense and an increase in maintenance expense on the existing fleet. The onboarding of new revenue equipment in 2017 has been weighted towards later in the year as the Company focused on successfully amending and extending the term loan. We expect to take delivery of more than 800 new tractors and 2,400 new trailers in fourth quarter 2017 and first quarter 2018 which we anticipate to help mitigate the increase in purchased transportation and maintenance expense.
"Finally, we recently named Howard Moshier as President of New Penn. He most recently served as Senior Vice President of Operations at YRC Freight and we look forward to working with him in his new capacity. We continue to believe in the strength of New Penn and in its reputation for exemplary customer service," concluded Welch.
For the three months ended September 30, 2017, the Company expects to report consolidated operating revenue of approximately $1.25 billion and consolidated operating income of approximately $40 million. The Company also expects to report Adjusted EBITDA of approximately $81 million.
For full-year 2017, the Company continues to project consolidated operating revenue of approximately $4.8 billion to $5.0 billion. The projected full-year 2017 consolidated projected operating income has been lowered from approximately $150 million to $170 million to approximately $100 million to $120 million. The Company also lowered the projected Adjusted EBITDA from approximately $320 million to $340 million to approximately $280 million to $300 million. Investment in capital expenditures and new operating leases for revenue equipment continues to be projected to equal 6% to 8% of operating revenue in 2017.
At a park in the Bahama Village neighborhood of Key West, the fact that it’s 90 degrees and humid isn’t discouraging Teamster members and their community partners from unloading a packed freight truck. Time is of the essence, and nobody can wait for the sun to go down.
“When people see a trailer coming in here, you see a look of surprise and pure happiness on people’s faces,” said Stefan McLane, a member of Local 769 in Miami who drove down the truck from Port Everglades. “We are happy to have such a great relationship with these communities, so we don’t mind sharing. Teamsters are hardworking and grateful people. Whatever we can do when the times call for it, let’s go out and do it, because that’s what being a Teamster is all about—helping each other out, building each other up, and being stronger together.”
The bustle of activity seems of out of place in the otherwise placid atmosphere of the South Florida island chain following Hurricane Irma. While it seems oddly quiet, there are vulnerable people on Key West, and they are in desperate need of supplies.
Zack McCart is a Local 769 Shop Steward at UPS, and a Key West resident. The Florida Keys were evacuated before the hurricane hit, and he’s been taking a lead on helping his coworkers re-adjust to life on the island since they’ve returned.
“When we came back, it was just pure devastation,” McCart said. “Some houses just weren’t there anymore. There were trailers blown over, trees blown over, boats blown over, it was crazy. This is the worst it’s been in a long time.”
David Renshaw, Business Agent for Local 769, led a team of volunteers in a housing complex a few blocks from the park. They canvassed the apartments, delivering hot meals, water, and toiletries to the elderly residents.
“The Keys will rebound and rebuild, but right now we’re looking to give people here a quick stepping stone to be headed in the right direction,” Renshaw said. “We’ve had all sorts of people come out to assist, even some of retirees are out here delivering these supplies. I know that this will only bring people closer together with the continued involvement of our labor union.”
John Bellera has been a Key West resident for over 30 years, and he was thrilled that the Teamsters were in his community handing out food, water, and other items at a time when he otherwise would be unable to get them.
“All the local greenery is gone, and things here look like the dark side of the moon now, but the people here are wonderful,” Bellera said. “I was a union member before I retired, and they took care of me. They paid for my kids to go to the doctor, they paid for us to go to the dentist, and they paid for us when we got sick. It’s the best thing that ever happened to this country.”
In a big victory against “right to work for less,” 100 percent of the ABF Freight System bargaining unit members at the Memphis, Tennessee terminal have signed up as members of Teamsters Local 667.
“The last worker had been holding out but thanks to the efforts of his coworkers he is now a member, making the unit of about 90 drivers, dockworkers and office staff 100-percent Teamsters,” said James Jones III, President of Local 667 in Memphis. “I am proud of all our ABF Teamsters. This is a great feat in our union’s fight against ‘right to work for less.’”
The victory at ABF in Tennessee, a “right to work” state, comes as the workers prepare for negotiations for the ABF National Master Freight Agreement (NMFA) and regional supplemental agreements.
“By being 100 percent Teamsters, this gives all our ABF workers a stronger voice on the job,” Jones said. “With all the anti-worker, anti-union forces we are up against, we need to organize and build Teamster power.”
In the wake of the victory at ABF, Local 667 is launching a campaign to fully organize other work locations. The effort is called “The race to 100.”
“To many workers, the benefits of being members may not immediately be obvious, but we plan to educate our members about the importance of joining the union and building worker power,” Jones said. “This is all about fighting for a more secure future for our members and their families.”
"I am proud of my coworkers for all being united and strong here at ABF," said Bob Watkins, chief steward. "Together, we can work as one group and have a stronger voice to address the issues that matter to all of us."