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USPS REPORTS 2021 RESULTS: Revenue Up, Loss Down

The U.S. Postal Service today announced its financial results for the 2021 fiscal year ended September 30, reporting an adjusted loss of $6.9 billion for 2021, compared to an adjusted loss of $7.6 billion for 2020.

WASHINGTON – The U.S. Postal Service today announced its financial results for the 2021 fiscal year ended September 30, reporting an adjusted loss of $6.9 billion for 2021, compared to an adjusted loss of $7.6 billion for 2020. On a U.S. generally accepted accounting principles basis, the Postal Service had a net loss of $4.9 billion for 2021, compared to a net loss of $9.2 billion for 2020.

USPS Fiscal Year 2021 Results

The Postal Service’s operating revenue was $77.0 billion for 2021, an increase of $3.9 billion, or 5.3 percent, compared to the prior year.

Shipping and Packages revenue increased $3.5 billion, or 12.2 percent, on volume growth of 253 million pieces, or 3.5 percent, largely driven by the surge in e-commerce resulting from the pandemic and record holiday volume. This surge has begun to abate as the economy continues to recover and market competition intensifies; however, Shipping and Packages volume remain higher than pre-pandemic levels.

Marketing Mail revenue increased $681 million, or 4.9 percent, compared to the prior year, on volume growth of approximately 2.2 billion pieces, or 3.4 percent. Marketing Mail experienced steep volume declines at the onset of the pandemic last year. The measured growth in Marketing Mail is a result of the low volume in the prior year due to the pandemic.

While it has been rebounding as the economy continues to recover, Marketing Mail volume remains lower than pre-pandemic levels. Marketing Mail also benefited during 2021 from the higher volume of political and election mail associated with the calendar year 2020 general election season.

These increases in revenue were partially offset by a decrease in First-Class Mail revenue of $500 million, or 2.1 percent, compared to the prior year, with a volume decline of 1.9 billion pieces, or 3.7 percent. This decrease is reflective of the continuing migration from mail to electronic communication and transaction alternatives, which has been exacerbated by the pandemic.

The pandemic has significantly transformed the mix of mail and packages processed through the Postal Service’s network and the Postal Service anticipates that its volumes and mix will not return to pre-pandemic levels. Despite these declines in mail, the most profitable revenue stream, and growth in Shipping and Packages, the most labor-intensive revenue stream, the Postal Service continues to grow its revenue through optimization of its pricing strategies and effective use of its pricing authority, as outlined in the Delivering for America plan.

Compensation and benefits expense increased $1.4 billion, or 2.8 percent, from the prior year, primarily due to contractual wage increases and additional work hours associated with the higher packages volume. Compensation and benefits expense is also impacted by the size and composition of the workforce, as the Postal Service continues to transition employees to permanent positions and add employees in line with the Delivering for America plan and operational needs. Transportation expense increased $838 million, or 9.5 percent, from the prior year, primarily due to higher highway transportation costs as a result of an increase in miles driven and higher average diesel fuel rates.

The other operating expense increases included a retiree health benefits expense increase of $450 million, or 9.7 percent, and a retirement benefits expense increase of $412 million, or 5.9 percent, from the prior year, due to the impact of changes in discount rates, which are outside of management’s control. Retirement benefits expense also increased due to higher pension contribution rates, as established by the Office of Personnel Management (OPM).

However, a workers’ compensation expense decrease of $3.5 billion, compared to the prior year, resulting from changes in discount rates, which are outside of management’s control, resulted in lower total operating expenses of $343 million, or 0.4 percent, compared to the prior year.

Selected FY 2021 and 2020 Results of Operations and Controllable Loss

This news release references loss excluding workers’ compensation adjustments, which is not calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). Loss excluding workers’ compensation adjustments is defined as net loss adjusted for workers’ compensation expenses caused by actuarial revaluation and discount rate changes, which are outside of management’s control.

This news release also references controllable loss, which is not calculated and presented in accordance with 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, expenses caused by the actuarial revaluation of Postal Service Retiree Health Benefits Fund (PSRHBF), and the amortization of the PSRHBF, Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) unfunded liabilities, which can fluctuate due to projected interest rates and inflation.

The following table presents selected results of operations, reconciles GAAP net loss to loss excluding worker’s compensation adjustments and to controllable loss and illustrates the loss from ongoing business activities without the impact of non-controllable items for the years ended September 30, 2021 and 2020:

USPS Fiscal Year 2021 Results - 2

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