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UPS posts record 1Q net
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April 20, 2000: 8:50 a.m. ET
Deliverer tops forecasts on gains in overseas, non-package business
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NEW YORK (CNNfn) - Parcel delivery leader United Parcel Service Inc. on Thursday posted record profit for the first quarter, as a better-than-expected gain beat analysts' forecasts.
The Atlanta-based company earned $674 million, or 56 cents a diluted share, excluding special items. Analysts surveyed by earnings tracker First Call forecast the company to have report 51 cents a share in the period. The company had net income of $499 million, or 44 cents a share, in the year-earlier quarter.
The company also confirmed previously announced plans to repurchase shares when the shareholders who held stock before its initial public offering get a chance to sell shares May 9. 
Those 126,000 shareholders are employees, retirees and decedents of company founders. A company tender offer for their shares went undersubscribed by almost a third earlier this year, even though it offered above-market prices. Because of that, many analysts don't see significant risks of sales when the shares unlock.
"This will be targeted at protecting the stock if there is a sell off by current owners," said Edward Wolfe, analyst with Bear Stearns, who does not believe there will be a sell-off. "This is not new news."
The company always intended to use IPO proceeds to repurchase shares. This general share repurchase will use $1.2 billion raised in the IPO that was not needed in its earlier tender offer to company-related shareholders.
Special items in the quarter included the sale of its truck leasing business and venture fund investments, as well as a charge for creating full-time positions due to an arbitrators' decision. Including all those items, net income for the quarter came to $813 million, or 67 cents a share.
Revenue at the world's largest transportation company increased 14 percent to $7.2 billion from the $6.3 billion a year earlier, driven by a 5.8 percent growth in average daily package volume to 13.1 million pieces.
Operating profit from U.S. package operations grew 13 percent to $893 million, while overseas package operations produced an operating profit of $64 million, up 23 percent. The ratio of operating expenses to revenue for its core U.S. business, the key measure of a carrier's financial performance, was 83.7 percent, better than expected by some analysts and among the best in the trucking industry.
Non-parcel operations, such as managing customers' supply chains, had a five-fold increase in operating profit to $126 million. That division, UPS Logistics, announced a new contract Thursday with Compaq Computer Corp. (CPQ: Research, Estimates) to manage its North American service parts network.
In addition to managing Compaq's transportation carriers and service parts inventory, the Group will provide field stocking, central warehousing and distribution, closed-loop returns and order fulfillment services. A value of that contract was not disclosed.
UPS (UPS: Research, Estimates) saw its shares fall sharply when it reported better-than-expected earnings in its first public quarter in January, with some analysts saying that the results didn't support the company's premium stock price resulting from its initial public offering in November.
Thursday's reaction was more positive, as shares gained 2-13/16, or 5 percent, to 61-7/8. 
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UPS
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