Financial Struggles Continue, USPS Posts $1.7 Billion Loss for Q3 Ending June 30, 2023

The United States Postal Service (USPS) has released its financial results for the third quarter of the fiscal year 2023, encompassing the time frame spanning from April 1 to June 30, 2023.

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Following generally accepted accounting principles (GAAP), the Postal Service reported a net loss of $1.7 billion for the quarter, in stark contrast to the net income of $59.7 billion recorded for the same quarter in the previous year.

The primary factor behind this significant shift was the non-cash impact of the Postal Service Reform Act (PSRA) in April 2022. Adjusted for non-GAAP basis, the loss stood at $860 million, compared to losing $459 million during the corresponding period last year.

The financial results under GAAP encompass expenses related to retiree benefits, including the amortization of underfunded Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) plans, and workers’ compensation expenses due to actuarial revaluation and discount rate changes, along with the effects of the PSRA from the previous year’s quarter.

The USPS has provided adjusted results that exclude these expenses.

USPS Postmaster General Louis DeJoy stated, “Aligned with our Delivering for America transformation plan, we are making significant progress in enhancing our service to the American public. This includes the introduction of innovative offerings like USPS Ground Advantage, which delivers exceptional value to our customers.

“Concurrently, our team is diligently working to curtail our operational costs, effectively offsetting substantial inflationary and economic pressures. Our efforts are laying the foundation for sustained financial stability as we continue to modernize our processing, transportation, retail, and delivery networks.”

The total operating revenue for the quarter amounted to $18.6 billion, reflecting a 0.9% decrease or $168 million less compared to the corresponding period last year.

First-Class Mail revenue experienced a notable increase of 4.0%, totaling $221 million. However, this was accompanied by a volume decline of 678 million pieces, equating to a 5.9% decrease compared to the same quarter in the prior year.

Shipping and Packages revenue remained relatively steady despite a volume decrease of 41 million pieces, down by 2.4% year-on-year.

Marketing Mail revenue, on the other hand, saw a decline of $333 million, marking an 8.8% decrease. This decrease was attributed to a volume decline of 2.6 billion pieces, reflecting a 16.0% drop from the previous year’s quarter.

The decline in Marketing Mail revenue was driven by ongoing reductions in advertising expenditures due to economic pressures, elevated print media production costs amidst an inflationary environment, and diminished revenue and volume from political and election mail – largely due to election timing differences – compared to the same quarter last year.

USPS Expenses Are Up

In terms of expenses, the total operating expenses for the quarter totaled $20.5 billion, indicating a year-on-year (YoY) increase of $1.8 billion, or 9.6%. On a non-GAAP basis, adjusted operating expenses were up by $382 million, an increase of 2.0% compared to the same quarter last year.

USPS Chief Financial Officer Joseph Corbett acknowledged, “Persistent cost escalation across various aspects of our operations poses a substantial challenge. We remain committed to managing costs within our sphere of influence, evidenced by a 6 million-hour reduction in work hours compared to the prior year’s quarter, as well as a focused approach to optimizing transportation and other operational expenses.”

Please refer to this link for detailed information about the Postal Service’s third-quarter 2023 financials and performance metrics.