Financial Data and Key Metrics Changes - For Q4 2025, consolidated revenue was $24.5 billion, with an operating profit of $2.9 billion and an operating margin of 11.8% [7][21] - Full-year 2025 consolidated revenue reached $88.7 billion, with an operating profit of $8.7 billion and an operating margin of 9.8% [31] - The company incurred total charges of $238 million in Q4, including a $137 million non-cash after-tax charge for the write-off of the MD-11 aircraft fleet [4][22] Business Segment Data and Key Metrics Changes - U.S. Domestic segment generated $16.8 billion in revenue for Q4, a decrease of 3.2% year-over-year, with an operating profit of $1.7 billion and an operating margin of 10.2% [26][27] - International segment revenue was $5 billion in Q4, up 2.5% year-over-year, with an operating profit of $908 million and an operating margin of 18% [29][30] - Supply Chain Solutions revenue was $2.7 billion in Q4, down $388 million year-over-year, with an operating profit of $276 million and an operating margin of 10.3% [30][31] Market Data and Key Metrics Changes - U.S. average daily volume (ADV) decreased by 10.8% in Q4, with significant declines attributed to the glide down of Amazon volume [24] - International average daily volume declined by 4.7% in Q4, with U.S. imports down 24.4% year-over-year [28][29] - SMB penetration in the U.S. reached 31.2% of total volume, marking the highest fourth-quarter SMB penetration in history [25] Company Strategy and Development Direction - The company aims to reduce Amazon volume in its network by 50% over an 18-month period, with plans to glide down another million pieces per day in 2026 [11][34] - UPS is focusing on enhancing revenue quality and building a more efficient network, with a target of increasing automated processing to 68% of U.S. volume by the end of 2026 [14] - The company completed acquisitions to expand healthcare logistics capabilities, generating $11.2 billion in revenue from its global healthcare portfolio [10] Management's Comments on Operating Environment and Future Outlook - Management noted that 2025 was a year of considerable progress despite a dynamic macro environment, including changes in global trade policies [8] - For 2026, the company expects consolidated revenue of approximately $89.7 billion and an operating margin of about 9.6%, with a focus on growing SMB and enterprise revenue [17][35] - Management expressed confidence in completing network reconfiguration plans without hindering growth in targeted markets [12] Other Important Information - The company generated $8.5 billion in cash from operations in 2025 and returned $6.4 billion to shareholders through dividends and share repurchases [10][31] - UPS plans to further automate its network and expects to see cost per piece normalize to inflation levels as operational efficiencies improve [68] Q&A Session Summary Question: Guidance and exit rate for 2026 - Management indicated that the first half of 2026 will see margin pressure due to the transition costs related to the Amazon glide-down and the retirement of MD-11s, with expectations for recovery in the second half [43][47] Question: Domestic package growth post-glide-down - Management expects mid-single-digit growth in enterprise and SMB volumes in the second half of 2026, with revenue per piece growth normalizing [51][53] Question: Rate increases for domestic and international - Revenue per piece growth is expected to be around 4.5% for the year, with a normalization to about 3% in the second half [62][63] Question: Cost per piece trends - Management anticipates that cost per piece will trend down as the company finalizes its network reconfiguration and transitions Ground Saver back to USPS [68] Question: International segment pressures - Management noted that international segment EBIT is expected to decline year-over-year in the first quarter due to volume pressures and trade lane shifts, with recovery anticipated later in the year [75][78]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated revenue was $24.5 billion, with an operating profit of $2.9 billion and an operating margin of 11.8% [7][21][22] - Full year 2025 consolidated revenue reached $88.7 billion, with an operating profit of $8.7 billion and an operating margin of 9.8% [7][31] - The company incurred total charges of $238 million in Q4, including a $137 million non-cash after-tax charge for the write-off of the MD-11 aircraft fleet [4][22] Business Segment Data and Key Metrics Changes - U.S. Domestic segment generated $16.8 billion in revenue for Q4, a decrease of 3.2% year-over-year, with an average daily volume decline of 10.8% [26][27] - International segment revenue was $5 billion in Q4, up 2.5% year-over-year, despite a 4.7% decline in average daily volume [29] - Supply Chain Solutions revenue was $2.7 billion in Q4, down $388 million year-over-year, with operating profit of $276 million and an operating margin of 10.3% [30][31] Market Data and Key Metrics Changes - U.S. small package market growth is expected to be low single digits in 2026, with export volume growth outside the U.S. anticipated to be subdued [16][39] - The company increased SMB penetration to 31.8% of total U.S. volume, driven by a 25% year-over-year revenue growth in the Digital Access Program [9][10] - U.S. imports were down 24.4% year-over-year, with significant declines from Canada and Mexico [29] Company Strategy and Development Direction - The company aims to reduce Amazon volume in its network by 50% over an 18-month period, with plans to glide down another 1 million pieces per day in 2026 [11][34] - The strategy focuses on delivering differentiated value to customers and improving long-term profitability through effective capital allocation [19][41] - The company plans to further automate its network, increasing the percentage of U.S. volume processed through automated facilities to 68% by the end of 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in completing network reconfiguration plans without hindering growth in targeted markets, despite challenges from global trade policies and geopolitical concerns [7][12] - For 2026, the company expects consolidated revenue of approximately $89.7 billion and an operating margin of about 9.6% [17][35] - The first half of 2026 is expected to see revenue decline due to the Amazon glide down plan, with a recovery anticipated in the second half [18][38] Other Important Information - The company generated $8.5 billion in cash from operations in 2025 and returned $6.4 billion to shareholders through dividends and share repurchases [10][31] - The company completed acquisitions of Frigo-Trans and Andlauer Healthcare Group to expand healthcare logistics capabilities [10] Q&A Session Summary Question: Guidance and exit rate for 2026 - Management indicated that the first half of 2026 will experience margin pressure due to costs associated with the MD-11 retirement and the transition of GroundSaver to USPS, with expectations for recovery in the second half [43][46] Question: Domestic package growth expectations post-glide down - Management expects mid-single digit growth in enterprise and SMB volumes in the second half of 2026, with revenue per piece growth normalizing [51][53] Question: Rate increases for domestic and international - Revenue per piece growth is expected to be around 4.5% for the year, with a normalization to about 3% in the second half [62] Question: Cost per piece trends - Management anticipates a normalization of cost per piece as automation and network reconfiguration efforts take effect, aiming for a return to inflation-level increases [68][70]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated revenue was $24.5 billion, with an operating profit of $2.9 billion and an operating margin of 11.8% [6][21] - Full year 2025 consolidated revenue reached $88.7 billion, with an operating profit of $8.7 billion and an operating margin of 9.8% [30][31] - The company incurred total charges of $238 million in Q4, including a $137 million write-off for the MD-11 aircraft fleet [3][21] Business Segment Data and Key Metrics Changes - U.S. Domestic revenue for Q4 was $16.8 billion, a decrease of 3.2% year-over-year, with an average daily volume decline of 10.8% [26][27] - International segment revenue was $5 billion, up 2.5% year-over-year despite a 4.7% decline in average daily volume [28] - Supply Chain Solutions revenue was $2.7 billion, down $388 million year-over-year, with operating profit of $276 million and an operating margin of 10.3% [29][30] Market Data and Key Metrics Changes - U.S. average daily volume decreased by 2.4 million pieces, or 10.8%, with SMB penetration increasing to 31.2% of total U.S. volume [24][25] - International average daily volume decreased by 4.7%, with significant declines in U.S. imports, particularly from Canada and Mexico [28] - The company reported a 300% increase in daily customs entries in the U.S. compared to the previous year [9] Company Strategy and Development Direction - The company aims to reduce Amazon's volume in its network by 50% over an 18-month period, with a target of gliding down another 1 million pieces per day in 2026 [11][34] - The strategy focuses on enhancing revenue quality and operational agility through network reconfiguration and automation [7][12] - The company plans to increase the percentage of U.S. volume processed through automated facilities to 68% by the end of 2026 [13] Management's Comments on Operating Environment and Future Outlook - Management highlighted a dynamic macro environment in 2025, including changes in global trade policies and geopolitical concerns [6][7] - For 2026, the company expects U.S. small package market growth to be low single digits, with overall revenue expected to be approximately flat year-over-year [15][17] - Management expressed confidence in completing network reconfiguration plans without hindering growth in targeted markets [12][19] Other Important Information - The company generated $8.5 billion in cash from operations and returned $6.4 billion to shareholders through dividends and share repurchases in 2025 [10][30] - The company plans to invest in further automation and has identified 24 buildings for closure in the first half of 2026 [34][35] Q&A Session Summary Question: Guidance and exit rate for 2026 - Management indicated that the first half of 2026 will see margin pressure due to costs associated with the MD-11 retirement and the transition of GroundSaver to USPS, with expectations for recovery in the second half [44][46] Question: Domestic package growth and margin improvement - Management expects mid-single digit growth in enterprise and SMB volume in the second half of 2026, with revenue per piece growth normalizing [50][52] Question: Rate increases for domestic and international - Revenue per piece growth is projected at about 4.5% for the year, with expectations for higher rates in the first half and normalization in the second half [60][61] Question: Cost per piece trends - Management anticipates a normalization of cost per piece as the year progresses, with expectations to align with inflation levels [64][65] Question: International segment pressures - Management noted that international segment EBIT is expected to decline year-over-year due to volume pressures and trade lane shifts, with gradual recovery anticipated [72][73]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 was $21.4 billion, with an operating profit of $2.1 billion and an operating margin of 10% [4][15] - Year-to-date free cash flow reached $2.7 billion, showing improvement from previous quarters [4][23] - Diluted earnings per share were reported at $1.74, with $0.30 of EPS attributed to a sale leaseback transaction [15][16] Business Line Data and Key Metrics Changes - U.S. average daily volume (ADV) declined by 12.3%, primarily due to the planned reduction of Amazon volume and a focus on revenue quality [5][16] - U.S. revenue per piece increased by 9.8%, marking the strongest growth rate in three years [18] - International ADV grew by 4.8%, with export ADV increasing by 5.9%, marking the fifth consecutive quarter of growth [6][21] - Supply Chain Solutions revenue was $2.5 billion, down $715 million year-over-year, largely due to the divestiture of Coyote [22] Market Data and Key Metrics Changes - The international segment saw a decline in U.S. imports, particularly a 27.1% drop in ADV from China to the U.S. [21][46] - SMBs represented 32.8% of total U.S. volume, showing a 340 basis point improvement compared to last year [17] - The healthcare logistics segment experienced strong revenue growth, driven by UPS's portfolio of healthcare solutions [6][22] Company Strategy and Development Direction - The company is undergoing a significant network reconfiguration aimed at reducing costs by approximately $3.5 billion this year [24][26] - UPS aims to become the number one complex healthcare logistics provider globally, with an acquisition of Andlauer Healthcare Group expected to close in early November [8][13] - The focus is on capturing high-value market segments and onboarding customers with complex logistics needs [13][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating tariff changes and highlighted the importance of agility in the international network [4][6] - The company anticipates consolidated revenue of approximately $24 billion for Q4 2025, with an operating margin of 11% to 11.5% [13][28] - Management noted that the operational strategy and commitment to excellence are expected to lead to a strong peak season [12][28] Other Important Information - The company has successfully implemented automation in 35 facilities, with plans for further deployment [12][26] - UPS has paid $4 billion in dividends year-to-date and expects to pay around $5.5 billion in dividends for the full year [23][28] Q&A Session Summary Question: Domestic margins and future outlook - Management is pleased with revenue quality and progress on the Amazon glide down, with updates on 2026 expected in January [30][31] Question: Cost per piece and USPS collaboration - Cost per piece is on a tough comparison, but production metrics are strong, and savings from the driver voluntary severance program will materialize in Q4 [32][35][37] Question: SMB performance and trade policy impact - SMBs showed slight declines but performed better than expected relative to the market, with ongoing support for navigating trade policy changes [40][42] Question: International trade flow analysis - Permanent changes in trade flows are expected, with a target of mid to high teen margins for international operations [66][68] Question: Impact of government shutdown on operations - No significant impact on peak season has been factored in, but management is monitoring the situation closely [70]

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $21.5 billion, a decrease of 0.7% year-over-year, aligning with expectations [7][30] - Consolidated operating profit increased by 0.9% to $1.8 billion, with an operating margin of 8.2%, up 20 basis points from the previous year [7][30] - Diluted earnings per share rose by 4.2% to $1.49 [7][30] Business Line Data and Key Metrics Changes - U.S. Domestic segment operating profit increased by $164 million year-over-year, with an operating margin expansion of 110 basis points [8] - Total U.S. average daily volume (ADV) decreased by 3.5%, with ground ADV down 2.5% and air ADV down 9.6% [32] - International segment ADV increased by 7.1%, with export ADV growing by 9.3% year-over-year [38][39] Market Data and Key Metrics Changes - SMBs accounted for 31.2% of total U.S. volume, the highest concentration in ten years, driving changes in overall volume and revenue quality [34][19] - U.S. import volume is approximately 400,000 pieces per day, representing less than 2% of total global ADV [21] - Revenue from China to U.S. trade lanes represented 11% of total international revenue, with other trade lanes to the U.S. accounting for 17% [21] Company Strategy and Development Direction - The company is executing a significant network reconfiguration, including 164 operational closures, to optimize capacity and reduce dependency on labor [14][43] - The strategic focus includes improving revenue quality and expanding in healthcare, international, B2B, and SMB markets [18] - The company aims to achieve $1 billion in savings through the Efficiency Reimagined initiative, which targets process improvements and cost reductions [17][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the uncertain market, emphasizing the agility of their integrated network [28] - The company is not providing updates to the full-year outlook due to market uncertainties but is focused on executing strategic and financial goals [27][50] - Management highlighted the importance of modeling different scenarios to adapt to rapid shifts in business conditions [26][50] Other Important Information - The company plans to close 73 buildings by June 2025 as part of its network reconfiguration [43][48] - The first quarter saw $2.3 billion in cash from operations and $1.5 billion in free cash flow [42] - The company is leveraging next-gen brokerage technology to assist customers in navigating tariff changes [25] Q&A Session Summary Question: Cost savings from the $3.5 billion target - Approximately $500 million of the $3.5 billion cost savings was realized in Q1, with expectations for ramp-up in subsequent quarters [60][78] Question: Automation and efficiency initiatives - The company is exploring automation in various operations, aiming for significant cost savings and reduced labor dependency [70][74] Question: Impact of tariffs on SMBs - SMBs are facing challenges due to tariffs, with many being single-sourced from China, leading to uncertainty in the marketplace [80][81] Question: International volume growth outlook - The company anticipates a shift in trade flows, with potential growth opportunities outside the U.S. despite current uncertainties [89][90] Question: Domestic business performance and pricing strategies - The GroundSaver product has seen an intentional decline in volume as the company adjusts its cost structure and focuses on revenue quality [94][95]