USPS Reports Q3 2023 Financial Results; Includes $1.7B Net Loss, 16% Decline in Marketing Mail
The U.S. Postal Service announced its financial results for the third quarter of fiscal year 2023 (April 1, 2023 - June 30, 2023). On a generally accepted accounting principles (GAAP) basis, net loss for the quarter totaled $1.7 billion, compared to net income of $59.7 billion for the same quarter last year, due almost exclusively to the non-cash impact of the Postal Service Reform Act (PSRA) in April 2022. On a non-GAAP basis adjusted loss was $860 million, compared to adjusted loss of $459 million for the same quarter last year.
Results under GAAP include 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, as well as the impact of the PSRA for the same quarter last year. The Postal Service reports its adjusted results excluding these costs.
“In alignment with our Delivering for America transformation plan, we are making positive strides in improving the service we provide the American public – including the introduction of new products like USPS Ground Advantage, which provide excellent value to our customers,” said Postmaster General Louis DeJoy. “Concurrently, our team is working hard to reduce our cost of performance which is helping to off-set still sizable inflationary and economic pressures. We are setting the stage for long-term financial sustainability as we continue to modernize our processing, transportation, retail and delivery networks.”
Total operating revenue was $18.6 billion for the quarter, a decrease of $168 million, or 0.9 percent, compared to the same quarter last year.
First-Class Mail revenue increased $221 million, or 4.0 percent, on a volume decline of 678 million pieces, or 5.9 percent, compared to the same quarter last year. Shipping and Packages revenue remained relatively flat while volume declined 41 million pieces, or 2.4 percent, compared to the same quarter last year. Marketing Mail revenue decreased $333 million, or 8.8 percent, on a volume decline of 2.6 billion pieces, or 16.0 percent, compared to the same quarter last year. The Marketing Mail decreases were driven by the continued decline in advertising spending due to economic pressures experienced throughout most of the fiscal year, a higher inflationary environment affecting print media production costs, and lower political and election mail revenue and volume, compared to the same quarter last year, due to the timing of elections.
Total operating expenses were $20.5 billion for the quarter, an increase of $1.8 billion, or 9.6 percent, compared to the same quarter last year. On a non-GAAP basis, adjusted operating expenses increased by $382 million, or 2.0 percent, compared to the same quarter last year.
"Continued rising costs in several areas of our business pose a challenge." said Chief Financial Officer Joseph Corbett. "We continue to manage the costs within our control, such as by reducing work hours by 6 million hours compared to the same quarter last year and by focusing on transportation and other operating costs."
Third 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 June 30, 2023 and 2022:
Click to enlarge.
Selected Third Quarter Fiscal Year 2023 Results of Operations and Non-GAAP measures
This news release includes controllable (loss) income which is not calculated and presented in accordance with GAAP. This non-GAAP measure is calculated as net loss adjusted for costs outside of management's control, including workers’ compensation expenses caused by actuarial revaluation and discount rate changes and the amortization of the CSRS, and FERS unfunded liabilities. These costs are outside of management's control as they can fluctuate significantly based on actuarial assumptions and interest rates.
This news release also includes controllable (loss) income excluding all retiree health benefits expense which is not calculated and presented in accordance with GAAP. This non-GAAP measure is calculated as controllable (loss) income adjusted for the impact of the retiree health benefits expense associated with normal costs which were eliminated by the PSRA in April 2022.
These non-GAAP measures provide meaningful information to assist users of the Postal Service's financial statements to more fully understand the financial results and assess the Postal Service's ongoing performance because they exclude items that may not be indicative of, or are unrelated to, underlying operations.
Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Postal Service's reported results prepared in accordance with GAAP. This adjusted financial information does not represent a comprehensive basis of accounting.
The following table reconciles GAAP net loss to our non-GAAP financial measures for the three months ended June 30, 2023 and 2022:
Click to enlarge.
Financial results in the Form 10-Q are available at http://about.usps.com/what/financials/.
The preceding press release was provided by a company unaffiliated with Printing Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of Printing Impressions.
