10-QPeriod: Q1 FY2026

UNITED PARCEL SERVICE INC Quarterly Report for Q1 Ended Mar 31, 2026

Filed May 6, 2026For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) reported its first-quarter 2026 financial results, revealing a decrease in revenue and net income compared to the prior year. This decline is largely attributed to strategic volume reductions with its largest customer, a focus on higher-yielding business, and challenging macroeconomic conditions, including higher fuel costs. Despite these headwinds, the company continued to invest in growth areas like healthcare and international markets and made progress on its transformation initiatives. Key financial metrics show a 1.6% decrease in consolidated revenue to $21.2 billion and a significant 23.9% drop in operating profit to $1.3 billion. Diluted earnings per share also fell to $1.02. However, the company maintained its commitment to shareholder returns by paying $1.4 billion in dividends. Management highlighted progress in improving revenue quality and operational efficiency through its Network Reconfiguration and Efficiency Reimagined programs, though these initiatives, alongside other transformation efforts, contributed to increased operating expenses in the short term.

Financial Highlights

50 data points
Beta

Revenue

$21.20B

Net Income

$864.00M

4.1% Net Margin

EPS (Diluted)

$1.02

Total Assets

$71.81B

Cash & Equivalents

$5.80B

Free Cash Flow

$1.19B

Financial Statements
Beta
Revenue$21.20B
Operating Expenses$19.93B
Operating Income$1.27B
Net Income$864.00M
EPS (Basic)$1.02
EPS (Diluted)$1.02
Shares Outstanding (Basic)850.00M
Shares Outstanding (Diluted)850.00M

Key Highlights

  • 1Consolidated revenue for the first quarter of 2026 was $21.2 billion, a 1.6% decrease from $21.5 billion in the prior year.
  • 2Operating profit declined significantly by 23.9% to $1.3 billion from $1.7 billion year-over-year, resulting in a lower operating margin of 6.0%.
  • 3Diluted Earnings Per Share (EPS) decreased to $1.02 from $1.40 in the comparable prior-year period.
  • 4The U.S. Domestic Package segment experienced a notable decline in operating profit (down 47.4%) due to lower volumes and increased operating expenses, despite a rise in average revenue per piece.
  • 5The International Package segment saw revenue increase by 3.8% to $4.5 billion, driven by higher revenue per piece and favorable currency movements, though operating profit declined 14.7%.
  • 6Supply Chain Solutions (SCS) demonstrated strong performance with operating profit increasing significantly by 345.7% to $205 million, largely due to improvements in its healthcare logistics and digital businesses.
  • 7The company continued its strategic transformation, including planned volume reductions from its largest customer and workforce optimization initiatives, which impacted short-term financial results but are aimed at long-term efficiency and profitability.

Frequently Asked Questions

The primary drivers for the decrease in consolidated revenue were the continued execution of planned volume declines from its largest customer, revenue quality actions affecting certain e-commerce customers, and the impact of 2025 trade policy changes. Mail Innovations volume also decreased, partially offset by improved revenue quality and benefits from a focus on higher-yielding volume, along with the impact of the AHG acquisition.

Operating expenses increased due to several factors including transition costs and operational staffing related to outsourcing its Ground Saver product to the USPS, increased third-party lease expenses to address capacity constraints from aircraft retirements, higher workers' compensation expenses, and increased depreciation from new investments. These increases were partially offset by cost reductions from Network Reconfiguration and Efficiency Reimagined initiatives and lower Mail Innovations volume.

The company is executing its 'Customer First, People Led and Innovation Driven' strategy, which includes targeted volume reductions from its largest customer, workforce optimization, and network efficiency improvements. These transformation initiatives, such as Network Reconfiguration and Efficiency Reimagined, have led to increased operating expenses in the short term due to costs associated with workforce reductions, facility closures, and outsourcing. However, management believes these efforts are crucial for long-term efficiency and profitability. Non-GAAP adjustments are provided to show the impact of these transformation costs separately.

The U.S. Domestic Package segment faced challenges with declining volumes and increased costs, leading to a significant drop in operating profit. The International Package segment saw revenue growth driven by higher per-piece rates and currency effects, but operating profit declined. The Supply Chain Solutions (SCS) segment showed strong performance with significant operating profit growth, driven by healthcare logistics and digital businesses, indicating a positive outlook for these diversified services.