Why did UPS earnings per share decline so sharply in the second quarter?

Non-GAAP adjusted diluted EPS fell to $1.55 from $1.79 (down 13.4%). The main drivers were lower volume, particularly in U.S. Domestic, where average daily volume fell 7.3%. The International adjusted operating margin also compressed, from 18.9% to 15.2%, partly because the prior-year quarter included an $88 million one-time international regulatory payment that is excluded from adjusted results. Higher interest expense, which rose to $238M from $212M, added further pressure.

Is the cost-reduction program delivering results?

Management says it is on track for $3.5B of 2025 savings from the Network Reconfiguration and Efficiency Reimagined programs. It has closed daily operations at 74 buildings and expects to reduce roughly 20,000 operational positions in 2025. Management expects $400 to $650M of related non-GAAP adjusted expense in 2025. The savings are not yet visible in margins, however, and adjusted U.S. Domestic operating margin was flat at 7.0%.

Why is free cash flow so much weaker than last year?

First-half free cash flow was $742M, compared with $3.365B in the first half of 2024. The main factor was a $921M pension contribution, against $150M a year earlier. Operating cash flow fell to $2.67B from $5.31B, reflecting working-capital outflows and a smaller decline in receivables.

What is the outlook for the rest of 2025, and why is there no full guidance?

UPS did not provide revenue or operating profit guidance because of macroeconomic and trade-policy uncertainty. It did confirm full-year items: capex of about $3.5B, dividends of about $5.5B subject to board approval, an effective tax rate of about 23.5%, $1.4B in pension contributions (of which $921M has been made), and $1.0B in share repurchases, which are complete.

How did the balance sheet and capital returns change?

Long-term debt and finance leases rose to $23.8B from $19.4B at year-end 2024, while cash was roughly flat at $6.2B. Shareowners' equity fell to $15.8B from $16.7B, largely because retained earnings declined. Dividends paid in the first half were $2.7B, and $1.0B of common stock was repurchased.

UPS 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 29, 2025. Cited figures are marked; the original filing is the authoritative source.

UPS reported second-quarter 2025 consolidated revenue of $21.2 billion^a, down 2.7% year over year, with GAAP diluted EPS of $1.51 and non-GAAP adjusted diluted EPS of $1.55, versus $1.79 a year earlier (down 13.4%).

GAAP operating margin was 8.6%^b and non-GAAP adjusted operating margin was 8.8%, compared with 9.5% adjusted in the prior-year quarter. The decline was driven by the expected volume reduction from its largest customer, with U.S. Domestic average daily volume down 7.3%, and by the divestiture-related revenue drop in Supply Chain Solutions, where revenue fell 18.3% following the 2024 sale of Coyote. International was a relative bright spot, with revenue up 2.6% and export volume growth.

Management says the company is on track for its full-year target of $3.5 billion^c in expense reductions from the Network Reconfiguration and Efficiency Reimagined programs, with 74 buildings closed by June 30 and roughly 20,000 operational positions expected to be reduced in 2025. Management expects $400 to $650 million of related non-GAAP adjusted expense in 2025, and it is withholding revenue and operating profit guidance because of macroeconomic and trade uncertainty. Free cash flow for the first half was only $742 million, against $3.4 billion a year earlier, reflecting a $921 million pension contribution and lower operating cash flow.

For investors, the key tension is between cost-reduction progress and a shrinking U.S. domestic volume base. The company has committed to a $1.0 billion^d share repurchase, which has already been completed, and to roughly $5.5 billion in dividends, subject to board approval. Long-term debt rose to $23.8 billion from $19.4 billion at year-end 2024, which increases the importance of cash generation in the second half.

02—Key points

Key Highlights

Revenue was $21.2B, down 2.7% year over year, as U.S. Domestic revenue fell 0.8% and Supply Chain Solutions fell 18.3% after the Coyote divestiture.
GAAP diluted EPS was $1.51 and non-GAAP adjusted diluted EPS was $1.55, down from $1.79 a year earlier (down 13.4% on an adjusted basis).
Non-GAAP adjusted operating margin was 8.8%, versus 9.5% in 2Q 2024. U.S. Domestic adjusted margin held at 7.0%, while International adjusted margin fell to 15.2% from 18.9%.
International revenue grew 2.6%, driven by a 3.9% increase in average daily volume, while U.S. Domestic average daily volume fell 7.3%.
UPS remains on track for $3.5B in 2025 expense savings from Network Reconfiguration and Efficiency Reimagined, with 74 buildings closed by June 30.
No revenue or operating profit guidance was provided due to macro uncertainty. Full-year capex is about $3.5B, the effective tax rate about 23.5%, and the $1.0B buyback is already complete.
First-half free cash flow was $742M, down from $3.4B, largely because of a $921M pension contribution. Long-term debt rose to $23.8B from $19.4B at year-end 2024.

03—Questions

Frequently Asked Questions

Why did UPS earnings per share decline so sharply in the second quarter?
Non-GAAP adjusted diluted EPS fell to $1.55 from $1.79 (down 13.4%). The main drivers were lower volume, particularly in U.S. Domestic, where average daily volume fell 7.3%. The International adjusted operating margin also compressed, from 18.9% to 15.2%, partly because the prior-year quarter included an $88 million one-time international regulatory payment that is excluded from adjusted results. Higher interest expense, which rose to $238M from $212M, added further pressure.
Is the cost-reduction program delivering results?
Management says it is on track for $3.5B of 2025 savings from the Network Reconfiguration and Efficiency Reimagined programs. It has closed daily operations at 74 buildings and expects to reduce roughly 20,000 operational positions in 2025. Management expects $400 to $650M of related non-GAAP adjusted expense in 2025. The savings are not yet visible in margins, however, and adjusted U.S. Domestic operating margin was flat at 7.0%.
Why is free cash flow so much weaker than last year?
First-half free cash flow was $742M, compared with $3.365B in the first half of 2024. The main factor was a $921M pension contribution, against $150M a year earlier. Operating cash flow fell to $2.67B from $5.31B, reflecting working-capital outflows and a smaller decline in receivables.
What is the outlook for the rest of 2025, and why is there no full guidance?
UPS did not provide revenue or operating profit guidance because of macroeconomic and trade-policy uncertainty. It did confirm full-year items: capex of about $3.5B, dividends of about $5.5B subject to board approval, an effective tax rate of about 23.5%, $1.4B in pension contributions (of which $921M has been made), and $1.0B in share repurchases, which are complete.
How did the balance sheet and capital returns change?
Long-term debt and finance leases rose to $23.8B from $19.4B at year-end 2024, while cash was roughly flat at $6.2B. Shareowners' equity fell to $15.8B from $16.7B, largely because retained earnings declined. Dividends paid in the first half were $2.7B, and $1.0B of common stock was repurchased.

04—Continue

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