10-QPeriod: Q2 FY2026

UNITED PARCEL SERVICE INC Quarterly Report for Q2 Ended Jun 30, 2026

Filed August 5, 2026For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) reported its financial results for the second quarter and the first half of 2026. The company experienced a significant increase in revenue, driven by higher fuel surcharges, a focus on revenue quality, and the acquisition of Andlauer Healthcare Group (AHG). However, operating expenses also rose substantially, primarily due to substantial employee separation costs related to the "Driver Choice Program" and increased purchased transportation and fuel costs linked to geopolitical events. This led to a notable decrease in operating profit and net income compared to the prior year. Despite the challenges, UPS continued to execute its strategic transformation initiatives, including network optimization and workforce adjustments. The company also returned significant capital to shareholders through dividends. Investors should closely monitor the impact of ongoing transformation costs, volatile fuel prices, and macroeconomic factors on future profitability.

Key Highlights

  • 1Revenue increased by 7.6% for the quarter and 3.0% year-to-date, driven by higher fuel surcharges, revenue quality initiatives, and the AHG acquisition.
  • 2Operating expenses saw a significant increase of 12.9% for the quarter and 6.5% year-to-date, largely due to $1.1 billion in employee separation costs for the "Driver Choice Program" and higher fuel and transportation expenses.
  • 3Operating profit declined sharply by 49.0% for the quarter and 37.0% year-to-date, reflecting the significant rise in operating expenses.
  • 4Net income decreased by 52.9% for the quarter and 40.6% year-to-date, directly impacted by reduced operating profit and transformation costs.
  • 5Average daily package volume in global small package operations decreased by 3.7% for the quarter and 5.7% year-to-date, attributed to planned reductions from a major customer and revenue quality actions.
  • 6The company returned $2.7 billion to shareholders through dividends in the first half of 2026, maintaining its dividend per share at $3.28 year-to-date.
  • 7Transformation strategy costs, primarily employee separation costs, amounted to $1.2 billion in the first half of 2026, impacting profitability but aligned with long-term efficiency goals.

Frequently Asked Questions

The primary driver for the substantial increase in operating expenses, particularly in the second quarter, is the "Driver Choice Program," which resulted in approximately $1.1 billion in employee separation costs. Additionally, higher fuel costs and purchased transportation expenses, influenced by global events, contributed to the rise.

The significant decrease in net income and earnings per share is a direct consequence of the sharp rise in operating expenses, particularly the transformation strategy costs related to employee separations. This, combined with lower operating profit, led to a substantial reduction in net income compared to the prior year.

UPS is actively executing its "Network Reconfiguration and Efficiency Reimagined" initiatives, which involve facility consolidations, workforce adjustments, and process redesign. While these initiatives incur significant costs in the short term (e.g., separation costs), they are expected to drive long-term benefits in efficiency and profitability. The company anticipates around $3 billion in benefits from these initiatives for the full year 2026.

As of June 30, 2026, UPS reported $4.7 billion in cash, cash equivalents, and marketable securities. The company believes its current liquidity position, combined with expected cash from operations and access to capital markets, is adequate to fund its short- and long-term cash requirements, including operational needs, capital expenditures, transformation costs, and shareholder returns.