The U.S. Postal Service is pointing to the recent passage of the Postal Service Reform Act (PSRA) for helping to push the agency to improved financial results in its latest quarterly earnings report, although pandemic trends and price inflation still weighed down its bottom line.
Passed in April, the act reformed how the money-losing agency pays its employee health and retirement benefits. Specifically, the legislation repealed a requirement that USPS annually prepay future retiree health benefits, and canceled all past due prefunding obligations.
USPS reflected the impact of PSRA on its books as a one-time, non-cash benefit of $59.6 billion to net income for the period, which was its fiscal third quarter ending June 30. Thanks to that boost, USPS posted net income of $59.7 billion for the quarter, compared to net loss of $3.0 billion for the same quarter last year, due almost exclusively to the impact of the PSRA.
But excluding that one-time accounting move, USPS said that its adjusted loss for the quarter was $459 million, compared to an adjusted loss of $41 million for the same quarter last year.
“The one-time, non-cash benefit we recorded due to the enactment of postal reform legislation was significant, but also distortive,” Postmaster General and CEO Louis DeJoy said in a release. “The fact of the matter is that we have a long road and a lot of hard work ahead in our 10-year transformation to ensure the long-term financial sustainability of the Postal Service, but we are confident that we will achieve what we have set out to accomplish.”
Digging into its operations, USPS said its operating revenue was $18.7 billion for the quarter, an increase of $257 million, or 1.4%, despite a volume decline of 201 million pieces, or 0.7%, compared to the same quarter last year.
The impact of the pandemic continues to force broad changes in the mix of letters and packages the service carries. For example, USPS said that marketing mail experienced steep volume declines at the onset of the pandemic but has been rebounding as the economy continues to recover. By the numbers, marketing mail revenue increased $324 million, or 9.4%, compared to the same quarter last year, on volume growth of 545 million pieces, or 3.5%.
Likewise, shipping and packages volume remains higher than pre-pandemic levels despite a volume decline compared to the same quarter last year, due to the prior year pandemic-related surge in e-commerce, USPS said. For the quarter, shipping and packages revenue decreased $85 million, or 1.1%, compared to the same quarter last year, on a volume decline of 92 million pieces, or 5.0%, compared to the same quarter last year.
And finally, first-class mail revenue was essentially flat compared to the same quarter last year, despite a volume decline of 620 million pieces, or 5.1%. USPS explained that first-class mail volume remains lower than pre-pandemic levels, and continues to decline further due to an ongoing migration from paper mail to electronic communications and to digital transaction alternatives.