UPS reported strong quarterly earnings fuelled by pandemic demand. The logistics bellwether’s consolidated revenue stood at $22.9 billion, a 27 percent increase over the first quarter of 2020. Consolidated average daily volume increased 14.3 percent year over year. Consolidated operating profit was $2.8 billion, up 158 percent compared to the first quarter of 2020, and up 164 percent on an adjusted basis. Diluted earnings per share were $5.47 for the quarter, 393 percent above the same period in 2020, and up 141 percent on an adjusted basis.
For the first quarter of 2021, GAAP results include a net benefit of $2.4 billion, or $2.70 per diluted 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 (ARPA). The ARPA, which was signed into law on March 11, 2021, protects certain multi-employer pension plans from becoming insolvent through 2051, thereby eliminating the Company’s liability for potential coordinating benefits related to the Central States Pension Fund. The enactment of the ARPA required the company to remeasure its UPS IBT Pension plan at current discount rates, which have increased since the previous measurement date. The overall result was a reduction in the pension liability of $6.4 billion.
“I want to thank all UPSers for delivering what matters, including Covid-19 vaccines,” said Carol Tomé, UPS chief executive officer. “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.”
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Given the continued economic uncertainty, the company stated that it is not providing 2021 revenue or diluted earnings per share guidance. However, it reaffirmed its full-year capital allocation plans which included the sale of UPS Freight, which is expected to close in the second quarter, plans of capital expenditures of about $4 billion, long-term debt repayments, including $1.5 billion repaid in the first quarter of 2021, totalling $2.5 billion and the effective tax rate for the remainder of the year is expected to be around 23.5 percent.
