U.S. Postal Service Reports $2.3B Q3 Net Loss; Marketing Mail, Periodicals Decline
The U.S. Postal Service (USPS) reported total revenue of $17.1 billion for the third quarter of fiscal 2019 (April 1, 2019 - June 30, 2019), an increase of $16 million, which is essentially flat compared to the same quarter last year.
First-Class Mail revenue declined by $98 million, or 1.6 percent, on a volume decline of 361 million pieces, or 2.7 percent, compared to the same quarter last year. Marketing Mail revenue declined by $121 million, or 3.0 percent, on a volume decline of 878 million pieces, or 4.7 percent, compared to the same quarter last year. Periodicals revenue declined by $38 million, or 11.2 percent, on a volume decline of 173 million pieces, compared to the same quarter last year. Meanwhile, Shipping and Packages revenue increased by $250 million, or 4.8 percent, despite a volume decline of 47 million pieces, or 3.2 percent, compared to the same quarter last year.
Total operating expenses were $19.3 billion for the quarter, an increase of $797 million, or 4.3 percent, compared to the same quarter last year. Excluding costs resulting from actuarial revaluation, discount rate changes, and amortization of unfunded liabilities, which are outside of management's control, expenses increased by $218 million, or 1.2 percent, compared to the same quarter last year.
“We continue to face imbalances in our business model that must be fixed through legislative and regulatory change,” said Postmaster General and CEO Megan J. Brennan. “As we work to effectuate that change, we continue our ongoing aggressive management actions, and remain focused on delivering for the American public, and meeting their evolving business and residential needs. We are actively adapting to changes throughout the mailing and shipping landscape, providing customers with new solutions that add value for their investment, improve the service we provide, and drive internal efficiencies."
Brennan added that the Postal Service’s largely fixed and mandated costs continue to rise at a faster rate than the revenues that can be generated within a constrained business model, which is ill-suited to ensure the long-term sustainability of the Postal Service.
The net loss for the quarter totaled nearly $2.3 billion, an increase of $767 million, compared to a net loss of nearly $1.5 billion for the same quarter last year. Controllable loss for the quarter was nearly $1.1 billion, compared to a controllable loss of $889 million for the same quarter last year.
“We continue to focus on maximizing productivity,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “While many of our network costs are fixed to meet our universal service obligations, we reduced work hours by approximately 1.7 million relative to the same quarter last year.”
Third Quarter Fiscal 2019 Operating Revenue and Volume by Service Category Compared to Prior Year
The following table presents revenue and volume by category for the three months ended June 30, 2019, and 2018:
This news release references controllable loss, which is not calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). Controllable loss is defined as net loss adjusted for items outside of management’s control and non-recurring items. These adjustments include workers’ compensation expenses caused by actuarial revaluation and discount rate changes, and the amortization of Postal Service Retiree Health Benefits Fund (PSRHBF), Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) unfunded liabilities.
The following table presents selected results of operations and reconciles GAAP net loss to controllable loss and illustrates the loss from ongoing business activities without the impact of non-controllable items for the three months ended June 30, 2019, and 2018:
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