United Parcel Service (UPS 2.18%) might have chosen not to give any guidance for 2021 when it released its first-quarter numbers on April 27 given the economic uncertainty. But the package delivery giant announced financial goals through 2023 this morning during its investor and analyst day conference. UPS also quantified its addressable markets and outlined environmental, social, and governance (ESG) goals, all of which are important for shareholders to know.
UPS' 2023 financial targets include:
- Revenue between $98 billion and $102 billion.
- Adjusted operating margin of 12.7% to 13.7%.
- Adjusted return on invested capital of 26% to 29%.
Because the last two are adjusted measures and exclude the impact of potential restructuring, legal, and pension plan charges -- among other things -- investors may want to focus on UPS' revenue goal.
The company generated revenue of $84.6 billion in 2020, which means it expects its top line to grow nearly 18% at the midpoint by 2023. It foresees growth across all verticals, notably in its global small-package market. The outlook there calls for a compound annual growth rate of 10% through 2023 in the total global market and double-digit growth in UPS' average daily volumes. UPS collectively refers to its key and largest segments -- U.S. domestic packages and international packages -- as global small package operations.
Also, it expects cumulative capital expenditures of $13.5 billion to $14.5 billion between 2021 and 2023. For perspective, the company projects 2021 capital expenditures of about $4 billion, so it'll likely spend more in the next two years to meet its goal.
UPS is also upping the ante on ESG targets. Its environmental goals through 2035 include:
- 100% renewable electricity across its facilities.
- 30% of the fuel used by its air fleet to be sustainable aviation fuel.
- 50% reduction in carbon-dioxide emissions per package in global small-package operations.
UPS' focus on value over volume and reaffirmation of a strong dividend, balance sheet, and credit rating among its core principles are pretty much in line with CEO Carol Tome's "better, not bigger" strategy.