USPS: We are managing the costs within our control
The U.S. Postal Service today announced its financial results for the second quarter of fiscal year 2023 (Jan. 1, 2023 – Mar. 31, 2023), revealing an increase in net loss of $1.8 billion.
On a generally accepted accounting principles (GAAP) basis net loss for the quarter totalled $2.5 billion, an increase in net loss of $1.8 billion, compared to a net loss of $639 million for the same quarter last year. On a non-GAAP basis, adjusted loss was $498 million, compared to adjusted income of $427 million for the same quarter last year.
Results under GAAP include costs outside of management’s control of $2.0 billion for the quarter, an increase of more than $900 million, compared to the costs outside of management’s control of $1.1 billion for the same quarter last year. Costs outside of management’s control include retiree health benefits expense eliminated by the Postal Service Reform Act (PSRA) which were therefore not incurred this quarter, as well as other costs that increased this quarter when compared to the same quarter last year like retiree benefits expense for the amortization of underfunded Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) plans, and workers’ compensation expenses caused by actuarial revaluation and discount rate changes. The Postal Service reports its adjusted results excluding these costs.
“The Postal Service is making rapid progress with our 10-year transformation and modernization plan, which has already produced strong service performance and efficiency improvements and is creating a much more capable and effective operational model for the nation,” said Postmaster General and CEO Louis DeJoy. “We continue to focus on achieving break-even financial results for the 10-year period, although inflationary and economic conditions, as well as administrative hurdles, have proven difficult. The increase in the pace of change now required to achieve our financial goals will continue to be balanced with providing service performance throughout the nation.”
Total operating revenue was $19.3 billion for the quarter, a decrease of $484 million, or 2.4 percent, compared to the same quarter last year.
First-Class Mail revenue increased $33 million, or 0.5 percent, on a volume decline of 1.1 billion pieces, or 8.1 percent, compared to the same quarter last year. Marketing Mail revenue decreased $161 million, or 4.3 percent, on a volume decline of 1.7 billion pieces, or 11.0 percent, compared to the same quarter last year. Shipping and Packages revenue decreased $162 million, or 2.1 percent, on a volume decline of 89 million pieces, or 5.0 percent, compared to the same quarter last year.
Total operating expenses were $22.0 billion for the quarter, an increase of $1.6 billion, or 7.6 percent, compared to the same quarter last year. On a non-GAAP basis, adjusted operating expenses increased by $641 million, or 3.3 percent, compared to the same quarter last year.
“We continue to be challenged by declining mail volumes and rising operating costs due to inflation,” said Chief Financial Officer Joseph Corbett. “We are managing the costs within our control, such as reducing work hours by 7 million hours compared to the same quarter last year. However, price increases are necessary to try to offset declining mail volumes and inflation. Despite these increases, our prices remain among the most affordable in the world.”
Second Quarter Fiscal Year 2023 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 March 31, 2023 and 2022:
|
|
Revenue |
Volume |
|||||
|
(revenue in $ millions; volume in millions of pieces) |
2023 |
2022 |
2023 |
2022 |
|||
|
Service Category |
|||||||
|
First-Class Mail |
$ 6,295 |
$ 6,262 |
11,938 |
12,989 |
|||
|
Marketing Mail |
3,578 |
3,739 |
14,093 |
15,842 |
|||
|
Shipping and Packages |
7,622 |
7,784 |
1,684 |
1,773 |
|||
|
International |
402 |
422 |
83 |
87 |
|||
|
Periodicals |
224 |
223 |
737 |
804 |
|||
|
Other |
1,181 |
1,356 |
68 |
63 |
|||
|
Total operating revenue and volume |
$ 19,302 |
$ 19,786 |
28,603 |
31,558 |
|||
