Fly Intel: What to watch in UPS earnings report

UPS (UPS) is scheduled to report results of its fiscal third quarter before the market open on Tuesday, October 22, with a conference call scheduled for 8:30 am ET. What to watch for: 1. GUIDANCE: When UPS reported its second quarter results on July 24, the company reaffirmed its fiscal 2019 adjusted earnings per share guidance of $7.45-$7.75 against analyst estimates of $7.45, at that time. UPS also announced that it sees adjusted free cash flow of $3.5B-$4B. Richard Peretz, UPS's CFO, said, "UPS grew profits across all business segments," said Richard Peretz, UPS's CFO. "Our performance was driven by the efficiencies created by investments in our network, the success of ongoing initiatives and our ability to execute in an ever-changing environment. We expect to carry this momentum through the upcoming quarters." 2. UPS FLIGHT FORWARD: On October 1, UPS subsidiary UPS Flight Forward announced it has received "the U.S. government's first full Part 135 Standard certification" to operate a drone airline. The company will initially expand its drone delivery service further to support hospital campuses around the country, and to provide solutions for customers beyond those in the healthcare industry. UPS Flight Forward plans in the future to transport a variety of items for customers in many industries, and regularly fly drones beyond the operators' visual line of sight. The U.S. Federal Aviation Administration awarded UPS Flight Forward a Part 135 Standard certification on Friday. The UPS subsidiary immediately launched the first drone delivery flight by any company under Part 135 Standard at WakeMed's hospital campus in Raleigh, N.C. under a government exemption allowing for a "beyond visual line of sight," or BVLOS operation, also "a first in the U.S. for a regular revenue-generating delivery," the company said. 3. FEDEX RESULTS: On September 17, FedEx (FDX) reported Q1 adjusted EPS of $3.05 and revenue of $17.05B against analyst expectations of $3.16 and $17.06B, respectively. Additionally, FedEx announced that it is unable to provide guidance for FY20. The company issued this statement regarding its guidance, "FedEx is unable to forecast the FY20 year-end mark-to-market retirement plan accounting adjustment. As a result, the company is unable to provide a FY20 EPS or effective tax rate outlook on a GAAP basis. FedEx is lowering its FY20 earnings forecast as the company's revenue outlook has been reduced due to increased trade tensions and additional weakening of global economic conditions since the company's initial FY20 forecast in June. The company's revised outlook also reflects increased FedEx Ground costs and August's loss of FedEx Ground business from a large customer. In addition, the FedEx ETR is now expected to be 24% to 26% before the year-end MTM retirement plan accounting adjustment, due to lower-than-expected earnings in certain non-U.S. jurisdictions. FedEx now forecasts earnings of $10.00 to $12.00 per diluted share before the year-end MTM retirement plan accounting adjustment, and earnings of $11.00 to $13.00 per diluted share before the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses. The capital spending forecast remains $5.9B." FedEx also announced that it will implement more cost-cutting to mitigate the effects of macroeconomic uncertainty, including post-peak reductions to the global FedEx Express air network to better match capacity with demand.