United Parcel Service, Inc. (NYSE:UPS) Q4 2022 Earnings Call Transcript

Brian Newman : Happy to, Brian. So on the pension front, look, we’ve been on a path to derisk the pension. And we actually feel good about the glide path there. We’re up in the high-90s, about 98% funded level, which is great for our employees. From a liability perspective, we’ve taken that down from about $16 billion a couple of years ago to $4 billion, $4.8 billion now. So overall, the glide path has been good. The challenge we have is that we’ve seen historic rise in interest rates. And so that $900 million plus number that I gave you below the line, that is a non-cash number, but it moves up and down with the market. So we try to give you the transparency. We do tend to look through that as it’s a non-cash number when we think about our capital allocation vis-a-vis the dividend, et cetera.

So net-net, I think we’re doing the right thing for the company. Given the volatility in the interest rates, it is a challenging environment and will move up and down on a relative basis.

Carol Tome : The way I think about productivity, it’s a virtuous cycle here at UPS, and I couldn’t be more proud of what our team has done quarter after quarter after quarter to drive productivity. And Nando, maybe you could share a few of the action items in 2023 to continue that flywheel.

Nando Cesarone : Sure. Just if you look at the shape of the volume, especially in the fourth quarter and quarters before that, we’ve shown tremendous agility making sure we’re matching the hours and the activity in our operations to the actual volume and the revenue. That will continue. And quite frankly, our people are masters of efficiency. So as we rollout the second iteration of our total service plan, which kicks off on March 3, we’re learning a lot about our network. And there’s cost to be had in not just on-road activity or inside our facilities, but across the entire network. And we’re laser-focused on those initiatives. And whatever volume and how it comes into us in different shapes and sizes, we’ll make sure that we’re prepared to handle it effectively. And hopefully, we’re building up a little bit of a track record to show that, that’s exactly what we have been doing. So I appreciate it.

Ken Cook: Excellent. I want to thank everybody for joining the call this morning. We look forward to talking to you next quarter, and that concludes our call.