How much of the adjusted profit improvement is tied to restructuring savings?

Management reported about $1.2B of program benefits in the first half of 2026 and expects roughly $3B for the full year. Those savings are part of why adjusted margins improved, but the release does not quantify how much of the adjusted gain is attributable to them versus pricing (revenue per piece up 9.3% in U.S. Domestic) or other factors.

Are the restructuring costs truly one-time?

UPS expects $1.3B to $1.5B of excluded costs in 2026 and has incurred $1.8B to date, with the initiatives expected to conclude by 2027. Because the company has excluded transformation costs across several years, investors should consider whether recurring restructuring charges reflect the economic cost of running the business.

What is the outlook for the business after the Amazon volume glide-down?

Management said the Amazon glide-down and network reconfiguration were completed as designed and that the company entered the second half with strong momentum. Guidance was raised across revenue, adjusted operating profit, and adjusted EPS. However, U.S. Domestic average daily volume still declined 3.3% in the quarter, so volume stabilization is not yet evident.

Does the company's cash generation support its dividend?

First-half free cash flow was $1.57B, and the company expects about $5.4B in dividend payments for 2026, subject to board approval. First-half dividends were $2.7B, but cash declined $1.2B in the period and long-term debt rose modestly, so dividend coverage from free cash flow depends on second-half cash generation and continued capital discipline.

UPS 8-K: Earnings & Results

Q: Why did GAAP earnings fall so sharply if revenue grew?

GAAP operating expenses rose 12.9% to $21.9B, outpacing the 7.6% revenue increase. The main cause was $1.17B of transformation charges, mostly employee separation costs from the Driver Choice Program and related network reconfiguration, which reduced GAAP operating margin to 4.1%. Excluding these charges, adjusted operating profit grew 12%.

01—Abstract

Summary

Summary of the 8-K filed July 28, 2026. Cited figures are marked; the original filing is the authoritative source.

UPS reported second-quarter 2026 consolidated revenue of $22.8 billion^a, up 7.6% year over year, but profitability was sharply lower on a GAAP basis.

GAAP operating profit fell 49% to $930 million^b (4.1% margin, versus 8.6% a year ago), and diluted EPS was $0.71 versus $1.51. The decline was driven by $1.17 billion of transformation charges tied to the Network Reconfiguration and Efficiency Reimagined initiatives, primarily employee separation costs from the Driver Choice Program. On a non-GAAP adjusted basis, operating profit rose 12% to $2.1 billion, the adjusted operating margin expanded to 9.2% from 8.8%, and adjusted diluted EPS was $1.76, up 13.5%.

Management characterized the quarter as the first clear sign of the post-Amazon glide-down recovery, with revenue and adjusted profit both growing year over year. The segment picture is mixed. U.S. Domestic Package revenue grew 6.0%^c on a 9.3% increase in revenue per piece, even as average daily volume fell 3.3%, and adjusted operating margin improved to 8.0% from 7.0%.

International revenue rose 12.5%, but adjusted operating profit declined 8.7% and margin compressed to 12.4% from 15.2%, as operating expenses grew faster than revenue. Supply Chain Solutions was the standout, with revenue up 7.8% and adjusted operating profit up 37% to $291 million^d. Free cash flow for the first half improved to $1.57 billion from $742 million, though net cash from operations is supported by lower pension contributions and working capital benefits, and cash fell to $4.65 billion at quarter-end.

Management raised its full-year 2026 guidance: consolidated revenue to about $91.2 billion, non-GAAP adjusted operating profit to about $8.65 billion, and non-GAAP adjusted diluted EPS to about $7.22. The company expects roughly $3.0 billion of capital expenditures and about $5.4 billion of dividends, and it projects about $3 billion of full-year 2026 program benefits from the transformation initiatives against $1.3 to $1.5 billion of excluded costs. Investors should weigh the strength of the adjusted metrics against the recurring nature of restructuring charges, which have totaled $1.8 billion since the programs began, and against the reliance on non-GAAP measures that exclude these costs.

02—Key points

Key Highlights

Consolidated revenue of $22.8B, up 7.6% YoY, with U.S. Domestic revenue up 6.0%, International up 12.5%, and Supply Chain Solutions up 7.8%.
GAAP operating profit fell 49% to $930M (4.1% margin) and GAAP diluted EPS fell to $0.71 from $1.51, driven by $1.17B of Network Reconfiguration and Efficiency Reimagined charges.
Non-GAAP adjusted operating profit rose 12% to $2.1B, with adjusted operating margin of 9.2% (vs. 8.8%) and adjusted diluted EPS of $1.76 (up 13.5%).
U.S. Domestic adjusted operating profit rose 21% to $1.19B, with revenue per piece up 9.3% while average daily volume fell 3.3%.
International adjusted operating profit declined 8.7% to $623M as expenses grew 16.3% against 11.5% for the first half, compressing margin to 12.4%.
Full-year 2026 guidance raised: revenue to ~$91.2B, non-GAAP adjusted operating profit to ~$8.65B, and non-GAAP adjusted diluted EPS to ~$7.22.
First-half free cash flow of $1.57B versus $742M a year earlier, though cash and equivalents declined to $4.65B from $5.89B at year-end 2025.

03—Questions

Frequently Asked Questions

Why did GAAP earnings fall so sharply if revenue grew?
GAAP operating expenses rose 12.9% to $21.9B, outpacing the 7.6% revenue increase. The main cause was $1.17B of transformation charges, mostly employee separation costs from the Driver Choice Program and related network reconfiguration, which reduced GAAP operating margin to 4.1%. Excluding these charges, adjusted operating profit grew 12%.
How much of the adjusted profit improvement is tied to restructuring savings?
Management reported about $1.2B of program benefits in the first half of 2026 and expects roughly $3B for the full year. Those savings are part of why adjusted margins improved, but the release does not quantify how much of the adjusted gain is attributable to them versus pricing (revenue per piece up 9.3% in U.S. Domestic) or other factors.
Are the restructuring costs truly one-time?
UPS expects $1.3B to $1.5B of excluded costs in 2026 and has incurred $1.8B to date, with the initiatives expected to conclude by 2027. Because the company has excluded transformation costs across several years, investors should consider whether recurring restructuring charges reflect the economic cost of running the business.
What is the outlook for the business after the Amazon volume glide-down?
Management said the Amazon glide-down and network reconfiguration were completed as designed and that the company entered the second half with strong momentum. Guidance was raised across revenue, adjusted operating profit, and adjusted EPS. However, U.S. Domestic average daily volume still declined 3.3% in the quarter, so volume stabilization is not yet evident.
Does the company's cash generation support its dividend?
First-half free cash flow was $1.57B, and the company expects about $5.4B in dividend payments for 2026, subject to board approval. First-half dividends were $2.7B, but cash declined $1.2B in the period and long-term debt rose modestly, so dividend coverage from free cash flow depends on second-half cash generation and continued capital discipline.

04—Continue

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