For the fourth quarter of 2021, GAAP results include a noncash after-tax mark-to-market pension charge of $14 million and after-tax transformation and other charges of $45 million.
The after-tax total for these items is $59 million, an impact to fourth quarter 2021 earnings per share of $0.07 per diluted share.
The mark-to-market pension charge of $14 million represents losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans.
Let me begin by recognizing the efforts of our amazing UPSers, 534,000 strong around the world.
Not only did our team once again provide industry-leading service during peak, but over the last year, we delivered 1.1 billion COVID-19 vaccine doses, with 99.9% on-time service.
Consolidated revenue rose 11.5% from last year to $27.8 billion, and operating profit grew 37.7% from last year to $4 billion.
Consolidated revenue increased 15% to reach $97.3 billion, and operating profit totaled $13.1 billion, 50.8% higher than last year.
We generated $10.9 billion in free cash flow, more than double the amount generated in the prior year.
And diluted earnings per share were $12.13, an increase of 47.4%.
In 2021, our SMB average daily volume grew 18% and represented 26.8% of our total U.S. volume, putting us on track to achieve our 2023 target of more than 30%.
In 2020, I challenged the team to turn DAP into a $1 billion business.
In 2021, DAP generated $1.3 billion in revenue.
Looking ahead, we expect DAP to reach more than $2 billion in 2022 as we add new partners and expand to additional countries.
And in the fourth quarter, our international SMB revenue growth rate was 18%.
And in 2021, our healthcare portfolio reached more than $8 billion in revenue.
Our healthcare expertise and end-to-end solutions are unmatched in the industry, and we are well on our way to hitting our $10 billion revenue target for 2023.
You may not know this, but we generate over $9 billion in gross revenue annually from transactions on our global website.
We redesigned the U.S. site in 2021 and saw site visits grow 100-fold, with an equally impressive growth in monthly page views, up from 10,000 in January to 600,000 in December.
We know it will take time to move the needle on our Net Promoter Score, which stands at 30, but we set a target of 50 and have laid out a path to get there.
When I became CEO in 2020, our likelihood to recommend metrics stood at 51% globally, and our goal is to surpass 80%.
We've made great strides, gaining 10 percentage points to finish 2021 at 61%.
In fact, productivity in our U.S. operations improved by 1.7% for the fourth quarter, as measured by pieces per hour.
As Brian will detail, in 2021, we reversed a multiyear downward trend in this metric and delivered a return on invested capital of 30.8%, 910 basis points above 2020.
In June, we told you we were going to target a dividend payout ratio at year-end of 50% of adjusted earnings per share, and we're doing just that.
Today, the UPS board approved a 49% increase in the quarterly dividend, from $1.02 per share to $1.52 per share.
In 2022, consolidated revenues are expected to be about $102 billion.
Operating margin is expected to be approximately 13.7% and return on invested capital is anticipated to be above 30%.
Consolidated revenue increased 11.5% to $27.8 billion.
Consolidated operating profit totaled $4 billion, 37.7% higher than last year.
Consolidated operating margin expanded to 14.2%, which was 270 basis points above last year.
For the fourth quarter, diluted earnings per share was $3.59, up 35% from the same period last year.
And full year earnings per share was $12.13 per diluted share, an increase of 47.4% year over year.
Average daily volume increased by 39,000 packages per day, or 0.2% year over year, to a total of 25.2 million packages per day.
In fact, SMB average daily volume, including platforms, grew 8.4%, outpacing the market.
And in the fourth quarter, SMBs made up 25.8% of U.S. domestic volume, up 240 basis points versus last year.
Mix also shifted positively toward commercial volume as our B2B average daily volume continued to recover and was up 8.8%.
B2B represented 36% of our volume compared to 33% in the fourth quarter of 2020.
For the quarter, U.S. domestic generated revenue of $17.7 billion, up 12.4%, driven by a 10.5% increase in revenue per piece.
Fuel drove 380 basis points of the revenue per piece growth rate and demand-related surcharges drove 110 basis points of the growth rate increase.
Revenue per piece grew across all products and customer segments, with ground revenue per piece up 10%.
Total expense grew 8.1%.
Fuel drove 230 basis points of the expense growth rate increase.
Wages and benefits, which included market rate adjustments, drove 410 basis points of the increase.
For example, through our ongoing efforts to optimize our trailer loads, we eliminated over 1,000 loads per day compared to the same time period last year.
The U.S. domestic segment delivered $2.2 billion in operating profit, an increase of $786 million or 57% compared to the fourth quarter of 2020, and operating margin expanded 340 basis points to 12.2%.
Because of tough year-over-year comps and COVID-19 dynamics, we anticipated a fourth quarter decline in average daily volume, which was down 4.8%.
On a more positive note, product mix was favorable, with B2B average daily volume up 4.7% on a year-over-year basis.
This partially offset a decline in B2C volume, which was down 18.4% compared to an increase of 104% during the same period last year.
In addition to tough year-over-year comps, total export average daily volume declined by 5.2% due to the decrease in volume between the U.K. and Europe arising from Brexit disruptions and from fewer flights coming out of Asia.
In the fourth quarter, we operated 105 fewer flights than planned, primarily due to COVID-19.
Despite these factors, for the fourth quarter, international revenue increased 13.1% to $5.4 billion.
Revenue per piece increased 16.4%, including a 730-basis-point benefit from fuel and a 340 basis point benefit from demand-related surcharges.
Operating profit was $1.3 billion, an increase of 14.7%, and operating margin was 24.7%.
Revenue increased to $4.7 billion, up 6.7%, despite a $789 million reduction in revenue from the divestiture of UPS freight.
Forwarding revenue was up 37.9% and operating profit more than doubled as global market demand remained strong and capacity stayed tight.
International air freight kilos increased 3.3%.
And in ocean freight, volume growth on the Transpacific Eastbound Lane, our largest trade lane, grew 7.8%, which was more than twice the market growth rate.
In the fourth quarter, supply chain solutions generated strong operating profit of $456 million and delivered an operating margin of 9.7%.
Walking through the rest of the income statement, we had $173 million of interest expense.
Other pension income was $267 million.
And lastly, our effective tax rate came in at 22%.
Now, let me comment on our full year 2021 results.
Starting at the consolidated level, revenue increased $12.7 billion to $97.3 billion.
We grew operating profit by $4.4 billion, an increase of 50.8%, finishing the year at $13.1 billion.
Operating margin was 13.5%, an increase of 320 basis points.
And for context, this is the highest consolidated operating margin we've had in 14 years.
We increased our ROIC to 30.8%, an increase of 910 basis points.
We generated $10.9 billion of free cash flow, an increase of 114% over 2020, and we strengthened the balance sheet by paying off $2.55 billion of long-term debt.
And we reduced our pension liabilities by $7.8 billion, which improved our debt-to-EBITDA ratio to 1.9 turns compared to 3.6 last year.
And we returned over $3.9 billion of cash to shareholders through dividends and share buybacks.
domestic, operating profit was up 62.7%, an increase of $2.6 billion, to reach $6.7 billion for the full year.
And we expanded operating margin to 11.1%, a year-over-year increase of 340 basis points.
International grew operating profit by $1.2 billion, ending the year at a record $4.7 billion in profit.
And operating margin was 24.2%, an increase of 200 basis points.
And supply chain solutions increased operating profit by $649 million, up 61.3%, and delivered operating margin of 9.8%, 280 basis points above 2020.
Global GDP is expected to grow 4.2%.
So looking at 2022, on a consolidated basis, revenues are expected to be about $102 billion, which takes into account the divestiture of UPS freight.
Additionally, consolidated operating margin is expected to be approximately 13.7%.
In U.S. domestic, we anticipate revenue growth of around 5.5%, with revenue per piece growing faster than volume.
As a result, we anticipate domestic operating margin will expand around 50 basis points in 2022.
Revenue growth is anticipated to be approximately 7.7%, with volume growing slightly faster than revenue.
Pulling it all together, operating profit in the international segment is expected to increase around 5% and operating margin is anticipated to be around 23.6%.
In supply chain solutions, we expect revenue to be around $17 billion, driven by continued strong growth in healthcare and elevated demand in Forwarding.
Operating margin is expected to be about 9.4%.
And for modeling purposes, below the line, we anticipate $1.2 billion in other pension income, partly offset by $665 million in interest expense.
The full year net impact is expected to be around $570 million, which can be spread evenly across the quarters.
In line with the capex range we shared then, we expect 2022 capital expenditures to be about 5.4% of revenue or $5.5 billion.
These investments will continue to improve overall network efficiency and move us further down the path to achieving our 2050 carbon-neutral goals.
About 60% of our capital spending plan will be allocated to growth projects and about 40% to maintenance.
We have 30 delivery centers and two automated hub projects planned to be delivered this year.
We will purchase over 3,700 alternative fuel vehicles this year, including around 425 arrival electric delivery vehicles to be deployed in the U.S. and in Europe.
We will take delivery of two new 747-8 aircraft in 2022, which adds international capacity and will make predelivery payments on the 19 Boeing 767 freighters that we announced in December.
And lastly, across these projects and others, our annual capital expenditures will again include over $1 billion of investments that support our carbon-neutral goals.
We expect free cash flow of around $9 billion, including our annual pension contributions, which are equal to our expected service costs.
As Carol mentioned, the board has approved a dividend per share of $1.52 for the first quarter, which represents a 49% increase in our dividend.
We are planning to pay out around $5.2 billion in dividends in 2022, subject to board approval.
We expect to buy back at least $1 billion of our shares, and we'll evaluate additional opportunities as the year progresses.
We expect diluted share count to be about 880 million shares throughout the year.
Finally, our effective tax rate is expected to be around 23%.

Summary:
The after-tax total for these items is $59 million, an impact to fourth quarter 2021 earnings per share of $0.07 per diluted share.
In 2022, consolidated revenues are expected to be about $102 billion.
Now, let me comment on our full year 2021 results.
So looking at 2022, on a consolidated basis, revenues are expected to be about $102 billion, which takes into account the divestiture of UPS freight.