U.S. Postal Service Reports Fiscal Year 2018 Financial Results | PostalReporter.com
t

U.S. Postal Service Reports Fiscal Year 2018 Financial Results

Posted on by postal
  • Overall volume decline of 3.2 billion pieces
  • Net loss of $3.9 billion
  • Urgent need to advance legislative and regulatory reforms, along with continued aggressive postal management actions to generate new revenue and control costs

WASHINGTON – The U.S. Postal Service reported operating revenue of $70.6 billion for fiscal year 2018 (October 1, 2017 – September 30, 2018), an increase of $1.0 billion compared to the prior year. The higher revenues were driven largely by continued growth in the Shipping and Packages business, where revenue increased $2.0 billion, or 10.1 percent, which more than offset revenue declines in First-Class and Marketing Mail as a result of declining volumes in that segment of its business.

In 2018, First-Class Mail volumes declined by approximately 2.1 billion pieces, or 3.6 percent, while package volumes grew by 394 million pieces, or 6.8 percent, continuing a multi-year trend of declining mail volumes and increasing package volumes. Although mail volume declines were partially offset by growth in package volume, overall volume for the year declined by 3.2 billion pieces.

”The secular mail volume trends continue largely due to electronic diversion and transaction alternatives. We compete for business in every product line, every day from the first mile to last mile,” said Postmaster General and CEO Megan J. Brennan. “We are aggressively managing our business and continuing to focus on serving our customers and communities. However, the flawed business model imposed by law continues to be the root cause of our financial instability. We are seeking reforms that would allow the organization to reduce costs, grow revenue, compete more effectively, and function with greater flexibility to adapt to the marketplace and to invest in our future.”

Brennan added that addressing these urgently needed reforms would then provide an opportunity to consider broader public policy issues and develop long-term solutions to continue to enable the Postal Service to best meet the needs of the American public.

During the fourth quarter of 2018, the Governors of the Postal Service made a decision to reduce the organization’s debt level to reduce interest rate costs and to better reflect actual borrowing needs. The Postal Service subsequently reduced its debt by $1.8 billion, finishing the year with $13.2 billion in debt outstanding. The organization plans to reduce its debt level by an additional $2.2 billion as existing debt matures in February and May 2019.

Operating expenses for the year were $74.4 billion, an increase of $2.2 billion, or 3.1 percent, compared to the prior year. This was driven by an increase in compensation and benefits of $896 million due to contractual wage increases and increased transportation expenses of $623 million primarily due to higher package volume, increases in fuel prices and higher highway contract rates.

Expenses for workers compensation and retiree health benefits increased by $801 million and $221 million, respectively, largely attributable to changes in actuarially determined expenses outside of management’s control.  These increases were partially offset by a $260 million reduction in expenses for the amortization of unfunded retirement benefits.

The Postal Service reported a net loss for the year of $3.9 billion, an increase in net loss of $1.2 billion compared to 2017. The controllable loss for the year was $2.0 billion, an increase of $1.1 billion.

Similar to the last several years, the Postal Service was unable to make the $6.9 billion in payments that were due to the federal government at the end of fiscal year 2018 to pre-fund pension and health benefits for postal retirees, without putting its ability to fulfill its primary mission at undue risk.

“We made the difficult decision to prioritize the maintenance of adequate liquidity to ensure the continued achievement of the Postal Service’s primary mission of providing universal postal services to the American people,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “Making the pre-funding payments in full or in part would have left the Postal Service with insufficient liquidity to ensure the continued achievement of our mission.”

Corbett added that the inability to make these payments does not affect the continued receipt or accrual of these benefits by retirees and employees.

FY 2018 Operating Revenue and Volume by Service Category Compared to Prior Year
The following presents revenue and volume by service category for the year ended September 30, 2018, and 2017:

Revenue

Volume
(revenue in $ millions; volume in millions of pieces)

2018

2017

2018

2017
Service Category
First-Class Mail $

24,976

 $

25,689

56,714

58,834
Marketing Mail

16,512

16,626

77,269

78,329
Shipping and Packages

21,507

19,529

6,152

5,758
International

2,630

2,614

941

1,001
Periodicals

1,277

1,375

4,993

5,301
Other

3,720

3,760

333

367
Total operating revenue and volume $

70,622

 $

69,593

146,402

149,590

Selected FY 2018 and 2017 Results of Operations and Controllable Loss
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 PSRHBF, CSRS and 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 twelve months ended September 30, 2018, and 2017:

(results in $ millions)

2018

2017
Operating revenue $

70,622

 $

69,593
Other revenue

38

43
Total revenue $

70,660

 $

69,636
Total operating expenses $

74,445

 $

72,210
Interest and investment income (expense), net

(128)

(168)
Total expenses $

74,573

 $

72,378
Net loss $

(3,913)

 $

(2,742)
PSRHBF unfunded liability amortization expense1

815

955
Change in workers’ compensation liability resulting from fluctuations in discount rates

(1,066)

(1,362)
Other change in workers’ compensation liability2

(323)

(850)
CSRS unfunded liability amortization expense3

1,440

1,741
FERS unfunded liability amortization expense4

958

917
Change in normal cost of retiree health benefits due to revised actuarial assumptions5

138

527
Controllable loss $

(1,951)

 $

(814)
1 Expense for the annual payment due by September 30, 2018, and 2017, on the unfunded liability as calculated by OPM.
2 Net amounts include changes in assumptions, valuation of new claims and revaluation of existing claims, less current year claim payments.
3 Expense for the annual payments due September 30, 2018, and 2017, calculated by OPM, to amortize the unfunded CSRS retirement obligation. Payments are to be made in equal installments through 2043.
4 Expense for the annual payment due September 30, 2018, and 2017, calculated by OPM, to amortize the unfunded FERS retirement obligation. Payments are to be made in equal installments through 2047.
5 Represents the annual portion of the normal cost payment due September 30, 2018, and 2017, attributable to revised actuarial assumptions and discount rate changes. The total normal cost payment amount, calculated by OPM, is $3.7 billion and $3.3 billion, respectively.

Complete financial results are available in the Form 10-K, available at http://about.usps.com/who-we-are/financials/welcome.htm.

Financial Briefing
Postmaster General and CEO Megan J. Brennan and Chief Financial Officer and Executive Vice President Joseph Corbett will host a telephone/Web conference call to discuss the financial results in more detail. The call will begin at 11:00 am ET on November 14, 2018, and is open to news media and all other interested parties.

How to Participate:
US/Canada Attendee Dial-in: 844-340-4622   Conference ID: 3592257

Attendee Direct URL:  https://usps.webex.com/usps/onstage/g.php?MTID=e3161da429260c672d3fe035cac2519ab

If you cannot join using the direct link above, please use the alternate logins below:
Alternate URL: https://usps.webex.com
Event Number: 997 025 409

The briefing will also be available on live audio webcast (listen only) at:
http://about.usps.com/news/electronic-press-kits/cfo/welcome.htm.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

20 thoughts on “U.S. Postal Service Reports Fiscal Year 2018 Financial Results”

  5. The largest taxpayer bailout in this countries history is the only solution here….and these clowns in Elephant Plaza still have the audacity to state that the postal service receives no taxpayer monies…. I would love to see one of these clowns sitting in their ivory towers on Elephant Plaza tell Trump that.

    And newsflash for MIT Sloan Fellow, Maggie ….the postal service has never been a “business”, and never will be.

  6. A mandatory retirement age needs to be established. Especially inclusive would be “disability” retirees that continue with full pay until they pass. That is a scam on the Postal Service that affects all employees.

    • I agree that ones use fullness is tied to age. Why anyone is employed
      past 70 is beyond me. One went to Florida ever year for a month, or more. It must be nice to have a boss who cheats the public to give their
      friend the royal treatment.

  7. I am an expeditor in New England. On a daily basis we
    dispatch numerous empty trailers at $400 a trip. Maybe,
    just maybe this is one reason transportation costs are
    going up. Management orders us to dispatch these trips
    knowing that they are empty while mail sits around that
    could go out on these trips. What a bunch of bull. No one
    cares.

  8. How can a “business” cut 200,000 jobs and still lose money?
    Toolbags, toolbags, toolbags!!!!!! Cut back on the muffins and
    close the DC spa. Get rid of the extra 3 people who do the same
    job that someone actually does. Fire the stupidvisors and
    mismanagers and hire competent people.

  9. I think they should cut everyone’s pay in half in order to save the company. Everyone knows that the employees are way over paid for the work they do. I want to continue to get my pension so what ever needs to be done to assure that is fine with me

  10. I worked for postal service for 33yrs we pay high insurance cost why don’t we better insurance in stead 20 plans need just one plan get better deal had phs best some finger in cookie jar price to low for money fees address changes free at window should be 2$ people I hand over 30 changes daily passport fee should’ve 40$ where I work maintainer employees lazy some talkonphone all day I’m 63 I do the work 4people once they new clerks make reg they become lazy

  11. Seems like we’ve heard this song before. Oh well. We’ll hear again after the next report too. Yet we remain in business

  12. The Postal Regulatory Commission (PRC) is a major player in the USPS 2018 net loss. The PRC failed to provide the USPS with the revenue required to fully pay all obligations for fiscal year 2018. Recent action by the PRC should provide improved financial performance in 2019. USPS costs are primarily paid for by postage rates. There must be a rational rate setting process in place that accurately projects costs and provides sufficient revenue to pay all costs.

    Management has a burden as well. USPS management was only able to achieve about 5% of projected savings from their Network Rationalization Plan and relaxed service standards in 2016 and 2017 according to the USPS OIG. Best guess is that they didn’t do much better in achieving the 2018 target of $806 million. Either management dramatically overestimated expected savings from this program or failed to implement properly. Likely it was a combination of the two as any estimates coming out of USPS HQ require extensive scrutiny as USPS management has a track record of using numbers that favor their program whether or not there is any link to reality and equally problematic is their track record for implementing change.

    Finally, USPS management keeps lobbying Congress for legislative change. But their primary “ask,” changes to employee and retiree healthcare, is hurtful to some retirees and will only provide a short term benefit. This expected benefit is as low as $350 million per year or on the high side, the GAO estimate, about $500 million yearly. To put this in context, it is the same as a rate increase of .5% to .7%. Fix the rate process and stop messing with employees, especially those who have already retired.

    What management should be looking for in legislative change is: 1) a logical and rational rate setting methodology that balances revenue with costs. This includes all products covering their direct costs and all products contributing appropriately to all other indirect costs. 2) complete repeal of the 2006 Postal Accountability and Enhancement Act. This legislation burdened the USPS with multiple unsustainable provisions and should be reversed.

  13. Just end the health care prefunding crap now! Crazy idea of ex President Forrest Gump, the same President that dreamed up the ” Weapons Of Mass Deception” in Iraq. The Ratpublicans don’t want the tax payers to be required to “subsidize” those nasty Postal workers health care costs. However nothing wrong with subsidizing farmers soy bean crops, or giving businessmen massive wealthfare hand outs. Nothing wrong with having the tax payers pay for many employees in the President’s wife’s office. Why should the president’s wife have her own employees? How much does that cost? What is the reason she needs employees? Don’t want to pay for my health care costs? There is a lot that I don’t want to be forced to pay for either!

  14. Anyone who believes anything let alone financial reports from the liars, thieves, and crooks that infest postal mgmt. is a fool.
    These numbers are generated for purely political reasons. Period.

  15. wow ,so much loss ,why? the postal service manpower 10 years ago was 900,000 employees and we are at 475,000 employees now, you have saved 50 percent of your payroll cost which adds up to 10 billion a year in saving for the last 5 years ..what are you doing with the money? when you had 900,000 employees we didn’t have this much debt…someone doesn’t know how to manage the money, but keep blaming the employees and the down drop in first class mail…first class letters down 50 cent each letter we are down but packages up 5.00 a piece 1package =10 letters you do the math .you are stealing for the American people shame on you all

  16. Slash anyone’s salary that is over 100 grand to no more than 80 grand. BOOM!! Instantly in the black!! Problem solved. Better yet, get rid of all that overpaid dead weight instead!!

Comments are closed.