Before I start, I want to point out the expanded disclosure in our web schedules. UPS Q2 results benefit from higher residential delivery volumes, thanks to coronavirus confining people to their homes, rise in healthcare shipments and solid outbound demand from Asia. In fact, B2C volume jumped 65.2% year over year, which is 5.8 million additional pieces per day, and B2C represented 69% of total volume. This may be a longer-winded answer than you're looking for, but I'll go ahead and take the opportunity to share with you what I mean by that and what we mean by that. How are you managing and competitively positioning to try and be well-positioned as, hopefully, that comes back? It's not enough. Share. There's 100 weight in commercial, so that's more industrial. It's all about becoming better, not bigger. So any thoughts on capital efficiency would be great. We're not done. We have initiatives under way. Mr. Scott Childress, investor relations officer. 30-Days of MarketBeat All Access for $1.00 (New Year's Sale! With an emphasis on optimizing our existing network and the investments we've made. Hey, good morning. And with that, I'll turn the call over to Brian. Supporting Materials. Q2 2020 United Parcel Service, Inc. Earnings Conference Call. Instead, we saw just the opposite. We have taken measures to ensure the safety of our people while delivering critical shipments and everyday essentials, where and when they are needed. It's really about optimizing the network and leaning into the customer segments that value the end-to-end network that we offer. I would like to welcome everyone to the UPS Investor Relations second-quarter 2020 earnings conference call. Compare your portfolio performance to leading indices and get personalized stock ideas based on your portfolio. Then you have to have salespeople who sell those products. View which stocks are hot on social media with MarketBeat's trending stocks report. Carol, just interested in your perspective on the multiyear transformation efforts. Our next question comes from the line of Scott Schneeberger of Oppenheimer. I know there's a lot there, but any perspective would be great. It's great. I'll start with the domestic piece in terms of the back half. First, we are an engineering-driven company. Allison Poliniak of Wells Fargo. First, we remain unable to predict the extent of the business impact or the duration of the coronavirus pandemic or reasonably estimate UPS 2020 revenue and diluted earnings per share. I asked the team, well, what's getting in the way? So as we think about our small and medium businesses, we're seeing those June trends of growth continue into July in the high teens range. FedEx easily topped fiscal Q2 forecasts late Thursday, and predicted.more earnings growth for the rest of the fiscal year.But FedEx stock fell late. Conversely, given the downturn in the industrial sector, B2B volume declined 21.9% or 1.8 million pieces per day from the same period last year. Do the numbers hold clues to what lies ahead for the stock? UPS to Report Q2 Earnings: What's in Store for the Stock? We're very excited about that because that's one of our top 10 growth markets. So the last few years, it's been volume outpacing revenue and margins falling. There are capacity constraints in the United States, which gives the opportunity to manage through with pricing. U.S. domestic average daily volume growth is expected to be lower than what we saw in the second quarter. ET. And as we look forward, it's about rightsizing, optimizing the investments that we had before we think about continued investments in capital. Historical Financials 78.5 KB. Thank you. But if I look at our top 20 customers who are retailers, who are predominantly store-based retailers, who, when they're stores closed and demand shifted online -- well, for those customers, they had triple-digit growth in the second quarter. I know the visibility is not great, but specifically in B2B, U.S. and, frankly, everywhere, just how did you see that evolve through the quarter? And if you look at our population of UPSers, actually, we're down in supply chain and freight, as you would expect, because the demand softened up there. And you do that through effective capital allocation. The thing that I've observed that haven't quite cracked and we're quite good at, we want to get that have absolutely no leverage in our custom. And we will now have leading capabilities in Mexico, both inside Mexico and exporting out. So first, if you can just clarify the second-half margin comment, is that lower than the second quarter or lower than the full first half? International supply chain and freight will continue to adapt to market dynamics. And how fast can you adjust the cost structure given the size and scope of UPS? From a TSR, we're very focused on the cash returns and looking at the annual payback and how long the payback is. Zacks Equity Research. Kind of what are your thoughts on that? There's also a benefit catch up in terms of expense. And then just, Carol, just bigger picture. We didn't have to fly as many planes, so we had an opportunity to buy more of those 747s because they're coming out of production. We're down in the low 20s right now. U.S. domestic operating profit includes the following expense items. Revenue per piece was down 3.9% and included a decline of 480 basis points from fuel and 100 basis points from currency. That's on a cumulative basis. We love our air fleet. If you can address those points, please? Our expenses also include several items that we did not have last year, which I'll cover in a moment. So it stepped down from Q2 to Q3 by about 50%. We're approaching $1. And that's a big deal because 46% of our SMB customers or potential customers tell us time in transit is the No. United Parcel Service’s UPS shares rose in early trading following better-than-expected second-quarter 2020 results. 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I just looked at our ground business, and we break our ground business into four segments. It's an asset-light, outside-service-provider model. We have five core UPS principles that underpin our actions. Financials 70.5 KB. Scott Childress -- Investor Relations Officer. You would expect us to be. The charges resulted from transformation-related activities in the international and U.S. domestic segments. Learn everything you need to know about successful options trading with this three-part video course. And you heard Brian talk about the growth that we saw in that space in the second quarter, up 11%. In our 113-year history, UPS has become a trusted global logistics leader, but what got us where we are today will not get us to where we need to go in the future. If you've got money invested in the stock market, but are confused as to what to do next...This is the can't miss interview of 2020. Moving to the last leg of our strategic platform. And I will say that we have not gotten the returns that we should have delivered on some of the capital investments that we made. Please go ahead. Yes. [Operator instructions] Our first question will come from the line of David Ross of Stifel. 4 min read. Good morning, everyone. 4 min read United Parcel Service ’s UPS shares rose in early trading following better-than-expected second-quarter 2020 results. As we think about optimizing the network, to your specific question on volume, it's about being better, not bigger. But I've been diving in, and believe me, when you get to dive deeper, this company is even more impressive than I imagined. Revenue … What we have done in the past is built capacity or bought capacity in the hope that demand would follow. While we would expect continued strong B2C demand, it's hard to know how our B2B demand will unfold. We have Orion 3.0 out. A few other items on the income statement include other pension income, which was $327 million, driven by last year's 17.5% return on pension assets and lower discount rates. What are you seeing into this quarter? I think the more exciting focus now is Transformation 2.0 and 3.0, how do we really change the game on a profit per piece, linking back to the productivity. The surge created some network constraints and some regional dips in service levels. As the leadership team, we've agreed we are going to have an outstanding peak season. If this sounds like it's PSR for UPS, which may be the case, just in that context, I was hoping you can expand on the commentary of excess costs that can be removed. We will now conduct the question-and-answer session. Lot of uncertainty in the marketplace, of course, but we thought it was helpful for Brian to kick out some of the expense-related items that we're pretty sure will happen because we're not terribly sure about the demand side. Until this year, believe it or not, we only had two IT releases a year. We have 25 systems or applications in the cloud, another 20 in flight, and more to do. We also had $183 million of interest expense, and lastly, our effective tax rate came in at 25% compared to 23.5% in the second quarter of last year and is higher mainly due to unfavorable changes in our uncertain tax positions. UPS Releases 3Q 2020 Earnings. But if you look through 2020 into '21 and beyond, you should expect the margin to start to go in the right direction. Cost per piece was down 2.7% year over year and decreased sequentially 8.4%, driven by lower fuel costs and our ability to scale and flex the network as volume surged. Thanks, operator. Innovation-driven will be measured by the value we create for our shareowners. All earnings call transcripts on United Parcel Service, Inc. (UPS) stock. Global real GDP and global industrial production are estimated to be down 9.3% and 14.6%, respectively. And we view that as a competitive opportunity for us, candidly. And they said, money. We expect demand for residential packages will continue in the U.S. and around the world. Good morning, everybody. But as maybe you think about longer-term and what could be the requirements of the business or that technology or something else feeding up the network. [Operator instructions] It is now my pleasure to turn the floor over to your host. Carol, anything to add on domestic and international? And that resulted in a lot of overhead, doing a lot of reports, looking through the rearview mirror to drive the company. But that's why I provided the caution on the back half of the year. So I just wanted to kind of get a sense of what are the sort of steps that you need to take to be able to get that profit to grow in line with the revenue at least closer. We've talked to you in the past about Orion. Just had one on capacity in U.S. domestic. And in the second half of 2020, U.S. domestic will face difficult year-over-year comps, including the impact of our new hires anticipated to receive full benefits, time in transit, and weekend operations expense preceding the full run rate of revenue and other gains from last year that will not repeat. We will leverage our technology and portfolio of services to drive greater cash generation and higher returns on invested capital. Thank you. Well, Allison, maybe I'll start that. And finally, our healthcare expertise and global portfolio of services enabled us to meet the urgent need for PPE and COVID-19 testing supplies and provide support for vaccine and treatment studies, all of which contributed to our results in each of our three segments. 2Q20 Earnings Presentation 1.6 MB. Tweet. Excluding SurePost and the fuel surcharge, revenue per piece was higher than last year and was also a sequential improvement from the first quarter. Hey, great. Historical Financials 78.5 KB. As I look at our small and medium-size customer base, we divide it into four big segments, D1 through D4. Our values include integrity, safety, teamwork, and service and are the core of who we are and what we do. You have to have auditors who audit for those products. And then digging into the second-half domestic margins. We used to code everything ourselves, and every application running on a mainframe. So we're going to rationalize our product offering to make it simpler for our customers and reduce expense here. You had mentioned or talked about a little bit about the mix between B2B and B2C. You mentioned, just really quickly, you mentioned the weaker domestic in the second half. What's getting the way of going faster? [Operator instructions] Please ask only one question so that we may allow as many as possible to participate. In terms of how we're seeing it play out in the next quarter that we're holding at about the June levels, down nine-ish in the month of July as we think about the B2B business. Scott Schneeberger -- Oppenheimer and Company Inc. -- Analyst. Jordan Alliger of Goldman Sachs. But we said, no, we're going to pull that forward, and we're going to invest through the crisis. Now IT will help with that, and it certainly has helped, but we need to double down on how we can automate the inside of our facilities to drive more productivity. To what degree is this potentially a headwind to profitability and margins internationally, as we sort of look forward as we sort of see e-commerce and B2C grow there? And in fact, about 11% of our air fleet are wide-body planes, these are 747 planes, and we took advantage of those wide-bodies in the second quarter. And as a leadership team, this is what we talk about as we get together on a weekly, hourly basis. I came to UPS for a few reasons: one, because I love this company; two, because I want to make an impact on the people; and three, I want to get the stock price moving. Revenue per piece declined 4.4% or 440 basis points, driven by two significant factors: lower fuel prices, which were a negative impact of 180 basis points; and the magnitude of SurePost growth pulled revenue per piece down 410 basis points. I'm honored to be hosting my first UPS earnings call. I don't like anything unless it starts with a B because it's just not worth our time. The easy way to think about profit growth is, of course, with pricing increases. We are paying close attention to the consumer financial health, unemployment levels, and the continuation of fiscal stimulus programs. So we are bringing a different lens. One, invest through the crisis. In support of this effort, we have accelerated our plans to improve time in transit, making the U.S. ground network faster in thousands of the most important lanes by the end of this year. SurePost increased 96.6% and represented 53% of our total U.S. domestic volume growth. Our customers are changing, our competitors are changing, and the rate of change is accelerating. That suggests lower capital intensity going forward. UPS (NYSE:UPS) today announced second-quarter 2020 consolidated revenue increased to $20.5 billion, a 13.4% increase from the second quarter of 2019. Operating margin declined 170 basis points year over year. ), Access our premier research platform that includes MarketBeat Daily Premium, portfolio monitoring tools, stock screeners, research tools, a real-time news feed, email and SMS alerts, the MarketBeat Idea Engine, proprietary brokerage rankings, extended data export tools and much more. And, operator, please open the lines. Thanks for the question on peak. I really wanted to kind of make sure I understood sort of how that answer pertains to sort of profit growth on the domestic side. Today, I will discuss our quarterly performance and current trends in our business, which the teams are navigating well. Good morning. Good morning. Financials 75.9 KB. What you may or may not change, what you like or don't like about what's been undertaken to date? These statements are subject to risks and uncertainties, which are described in detail in our 2019 Form 10-K, subsequently filed Form 10-Qs and other reports we file with the Securities and Exchange Commission. Highlights of Q2 Earnings UPS’ earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of … UPS stock leapt. For all whole kinds of reasons, and it's not -- we don't need to look back for those reasons. International may have had its strongest margin quarter ever. With this type of volume, essentially, at the same holiday peak because a couple of years ago, how close is the U.S. network to maxing out capacity? The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been stable at $1.06 per share over the past 60 days. I'm curious. And so we're now reaching 85% in the U.S. system, so we feel pretty good about our ability to manage that volume. Without exception, all industry sectors grew the residential volume. Our largest customers did not have triple-digit growth. Does that meaningfully change? A big believer in investing in people to help them get to their highest potential whatever it may be. But for the people who are left behind, we are investing in them because it creates loyalty and better experience and better service for our customers. And we would take demand at any cost or any price, if you will, not necessarily nutritive demand. So let me give you an example of a change that we've just launched this year. Excluding items, the company earned $2.13 per share, beating estimates of $1.07 per share. If you tax effect that and you see outstanding shares, it's about $0.95 of EPS on a cumulative basis. Yes, Carol alluded to the investments in time in transit, and we think that's a critical investment to continue to invest to drive the service for our customers and speed up time in transit. Atlanta-based UPS said net income rose 4.7% to $1.77 billion in the quarter ended June 30. The transportation company reported $2.28 EPS for the quarter, beating the consensus estimate of $1.86 by $0.42. I'd like to take a moment to congratulate our entire international team for delivering a very strong quarter despite a tough operating environment. Because when you think about it, if you have between 400 and 500 products, you have to build systems and technology to support those products. Before our 2020 peak season, nearly 75% of the U.S. population will get Saturday ground residential service. 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