U.S. Postal Service Reports Second Quarter Fiscal Year 2023 Results
The U.S. Postal Service announced its financial results for the second quarter of fiscal year 2023 (Jan. 1, 2023 - Mar. 31, 2023). On a generally accepted accounting principles (GAAP) basis net loss for the quarter totaled $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:
Click to enlarge.
Selected Second 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 Postal Service Retiree Health Benefits Fund (PSRHBF), 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. Furthermore, as indicated in the recent report from the USPS Office of Inspector General, Historical Analysis of USPS Retirement Fund Returns, the Postal Service’s lack of legal authority to control the investments in the retirement funds has resulted in a lack of diversification resulting in lower investment returns and an increase in the Postal Service’s expenses.
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 in more fully understanding the financial results and assessing 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 March 31, 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 In-plant Impressions. The views expressed within do not directly reflect the thoughts or opinions of the staff of In-plant Impressions.
