January financials: rate increase brings in big bucks
The USPS had a 10.3% increase in January revenues compared with the prior year, thanks to the rate increase implemented on January 8. Unfortunately for the USPS, the money being brought in by the increase is still earmarked for the congressionally mandated escrow fund, not for paying expenses. And while January looked good, for the fiscal year to date, revenue is up by just $343 million or 1.4% over SPLY. Expenses, on the other hand, are up by $918 million or 4.0% above SPLY.
Priority and Express continue to show healthy growth, with Priority volumes up 7.5% year to date, and Express up by 5.5%.
The full report in is available at the USPS Financials web page, in either Excel or Adobe format. The USPS analysis notes appear after the break:
Here are the notes from the end of the report:
Analysis of the Financial and Operating Statements
Revenue – Pages 1, 2, 3, 4, 5 and 6
For January, Total Revenue was $137 million or 2.2% over plan, and $596 million or 10.3% over same period last year (SPLY). Commercial Revenue was under plan by $63 million or 1.3% and Retail Revenue was over plan $193 million or 13.2%. In January, Total Commercial Revenue and Retail Revenue combined were $566 million more than SPLY. The bulk of the increase to SPLY for total revenue was reflected in Stamps and Stamped Paper, Permit Revenue, Presort First and Package Services/Permit Imprint and Metered Postage. Contributing to this performance was the new postage rate structure implemented on January 8, 2006, which provided a 5.4% revenue increase in order to fulfill the requirement of Public Law (PL) 108-18, The Postal Civil Service Retirement System Act, enacted in 2003. This law requires the Postal Service to place $3.1 billion in an escrow account by October 1, 2006.
Year-to-date (YTD), Total Revenue is $23 million or 0.1% under plan with the largest contributor being Other Commercial Accounts Revenue at $511 million or 6.8% less than plan. YTD, Total Revenue is $343 miillion or 1.4% over SPLY. Most of the revenue increase to SPLY, $397 million, exists in Permit Revenue.
Expenses – Pages 1, 2, 4, 7, 8 and 9
For January, Total Expenses were $7 million or 0.1% below plan. Personnel costs were $12 million or 0.3% above plan, but non-personnel costs were below plan by $19 million or 1.4%. Transportation costs exceeded plan by $47 million or 9.4%, but were basically countered by combined plan savings of $89 million, in Supplies and Services, Travel and Relocation and Miscellaneous. This month’s Total Expenses were above SPLY by $244 million or 4.3% primarily due to increases in deliveries, fuel prices, health benefits and COLA costs.
Year-to-date, Total Expenses are $8 million below plan. Personnel costs are $117 million or 0.6% above plan, while non-personnel expenses are $125 million or 2.4% below plan. Supplies and Services YTD at $75 million or 9.2% below plan is a major contributor to the non-personnel plan underrun. YTD, Total Expenses are $918 million or 4.0% above SPLY.
Mail Volume and Revenue – Page 3
Year-to-date, Total Mail Volume is 22 million pieces more than SPLY. The most significant mail volume increase over SPLY for YTD is in the lower revenue-per-piece Standard Mail category, which increased 526 million pieces or 1.5%. YTD, First-Class Mail volume is 562 million pieces or 1.6% less than SPLY generating $109 million less revenue than SPLY.
Capital Investments – Pages 1 and 13
The Fiscal Year 2006 Capital Commitments YTD through January 2006 are $304 million compared to a plan of $324 million. This represents a plan underrun of $19 million or 6.0%.
The Cash Outlays YTD are $697 million versus a plan of $728 million, representing a $31 million underrun to plan.
Workhours – Pages 1, 14 and 15
Total Workhours for January 2006 were 2.6 million hours or 2.2% above plan, and 0.7 million hours or 0.6% above January 2005. Together, Mail Processing, Delivery Services and Customer Services increased 0.7 million hours over SPLY. This month’s increase in workhours above SPLY was a reflection of the increase in workload.
Total Workhours for January 2006 YTD are 8.7 million hours or 1.8% above plan and 0.3 million hours below SPLY or 0.1%. The most significant plan overruns exist in Mail Processing by 5.1 million hours, Delivery Services by 2.8 million hours, and Customer Services by 2.3 million hours. These overruns in workhours are a reflection of growth in mail volume above plan and continued growth in delivery points. YTD, major contributors to the workhours decrease to SPLY are City Delivery and Mail Processing workhours. Combined, these operations workhours are 1.3 million hours below SPLY.
