UPS(UPS) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for United Parcel Service, Inc. for the period ended June 30, 2025, including balance sheets, income statements, cash flows, and detailed notes Consolidated Balance Sheets Total assets increased slightly to $70.92 billion by June 30, 2025, while total shareowners' equity decreased to $15.78 billion Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $18,850 | $19,310 | | Property, Plant and Equipment, Net | $37,711 | $37,179 | | Goodwill | $4,806 | $4,300 | | Total Assets | $70,923 | $70,070 | | Total Current Liabilities | $14,240 | $16,441 | | Long-Term Debt and Finance Leases | $23,820 | $19,446 | | Total Liabilities | $55,146 | $53,327 | | Total Shareowners' Equity | $15,777 | $16,743 | | Total Liabilities and Shareowners' Equity | $70,923 | $70,070 | Statements of Consolidated Income Q2 2025 revenue decreased to $21.22 billion, with net income declining to $1.28 billion, reflecting a similar trend for the six-month period Statements of Consolidated Income Highlights (in millions, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $21,221 | $21,818 | $42,767 | $43,524 | | Operating Profit | $1,822 | $1,944 | $3,488 | $3,557 | | Net Income | $1,283 | $1,409 | $2,470 | $2,522 | | Diluted EPS | $1.51 | $1.65 | $2.91 | $2.94 | Statements of Consolidated Cash Flows Net cash from operating activities significantly decreased to $2.67 billion for the six months ended June 30, 2025, impacting the period's cash balance Consolidated Cash Flow Highlights - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $2,666 | $5,309 | | Net cash (used in) from investing activities | $(2,278) | $653 | | Net cash used in financing activities | $(519) | $(2,767) | | Net Increase in Cash | $82 | $3,113 | | Cash, End of period | $6,194 | $6,319 | Notes to Unaudited, Consolidated Financial Statements This section provides detailed disclosures on revenue recognition, debt, leases, employee benefits, goodwill, equity movements, and transformation costs Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, strategic initiatives, segment results, liquidity, and capital resources amidst a complex macroeconomic environment - The company is executing its 'Customer First, People Led and Innovation Driven' strategy, focusing on healthcare, SMBs, and International markets[205] - A key strategic action is the planned volume reduction from its largest customer, expected to be over 50% relative to 2024 by June 2026, with the glide-down proceeding as planned[206] - The 'Network Reconfiguration and Efficiency Reimagined' programs are expected to reduce the operational workforce by approximately 20,000 positions and achieve $3.5 billion in savings in 2025[209][210] Consolidated Results Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue (in millions) | $21,221 | $21,818 | (2.7)% | | Operating Profit (in millions) | $1,822 | $1,944 | (6.3)% | | Diluted EPS | $1.51 | $1.65 | (8.5)% | | Avg. Daily Package Volume (thousands) | 19,741 | 20,933 | (5.7)% | Results of Operations - Segment Review Segment performance shows U.S. Domestic Package revenue decline, International Package revenue growth with margin pressure, and Supply Chain Solutions revenue decrease Segment Operating Profit (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. Domestic Package | $916 | $988 | $1,895 | $1,821 | | International Package | $672 | $718 | $1,313 | $1,374 | | Supply Chain Solutions | $234 | $238 | $280 | $362 | Liquidity and Capital Resources UPS held $6.3 billion in cash as of June 30, 2025, with net cash from operations decreasing due to higher pension contributions and working capital changes - Net cash from operating activities decreased by $2.6 billion in the first half of 2025, driven by higher pension contributions and unfavorable changes in working capital[309][310] - Capital expenditures for the first half of 2025 were $2.0 billion, with the full-year forecast at approximately $3.5 billion[311][315] - During the first six months of 2025, the company repurchased 8.6 million shares for $1.0 billion and paid dividends of $2.7 billion[317] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from commodity prices, foreign currency, and interest rates, with no material changes to its hedging strategies since year-end 2024 - Market risks, hedging strategies, and financial instrument positions as of June 30, 2025, have not materially changed from the 2024 year-end report[338] Net Fair Value of Derivative Financial Instruments (in millions) | Derivative Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Currency Derivatives | $(276) | $283 | Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, following the deployment of a new enterprise-wide general ledger system - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[343] - In April 2025, the company implemented a new enterprise-wide general ledger system, leading to changes in its internal control over financial reporting[344] PART II—OTHER INFORMATION Item 1. Legal Proceedings Material legal proceedings, including wage-and-hour lawsuits and a Spanish investigation, are not expected to materially impact the company's financial condition - The company is involved in various judicial proceedings, including wage-and-hour lawsuits and an investigation in Spain, but does not believe any will have a material impact on its financial condition, results of operations, or liquidity[123][125][128] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[349] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 8.6 million shares for $1.0 billion in Q1 2025, with $1.3 billion remaining under the share repurchase authorization - In Q1 2025, the company repurchased 8.6 million shares for $1.0 billion. No repurchases were made in Q2 2025[350] - As of June 30, 2025, $1.3 billion remains available under the current share repurchase authorization[350]