The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Fortune Global 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA-2024-UPS

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMA-2023-UPS

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-037-United-Parcel-Service

In 2022 the largest package delivery company in the U.S. saw $100.3 billion in revenue, up 3.1% from the year before. But profits fell 10.4% to $11.5 billion, presaging a difficult 2023. The company has already told investors it expects revenues to be $97 billion for the year, the lower end of its initial guidance, as the pandemic-era e-commerce surge wanes and as inflation inhibits retail spending. 
<ul> 
 	<li>UPS is racing against the clock to negotiate a new labor agreement with the Teamsters union, which represents 340,000 of its workers; its current contract is slated to expire on July 31, 2023.</li> 
 	<li>In 2022 UPS acquired Italian health care logistics firm Bomi and software company Delivery Service, which makes specialized software for same-day deliveries, as it looks to expand its offerings in both areas.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-31-UPS

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 UPS

UPS increased its revenue 15% in 2021, while profits leaped 860%—despite competition with Amazon, supply-chain setbacks, high consumer expectations, inflation, and a tight labor market all putting pressure on the company. Along the way it sold UPS Freight, part of its trucking infrastructure, to TFI International for $800 million and acquired Roadie, a company that takes advantage of the growing gig economy by matching drivers with deliveries they can complete during other trips they’ve already planned out. UPS was also a central artery for vaccine dispersal in 2021, delivering more than 1.1 billion doses in more than 110 countries.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-28-UPS

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-089-Sony

Big Brown continues its reign as the leading U.S. delivery business. Pandemic-fueled demand propelled United Parcel Service 40 spots higher, to No. 89, on this year’s Global 500. UPS’s revenues rose 14.2%, to $84.6 billion, in 2020, keeping it ahead of perennial rival FedEx. But the shift in emphasis to residential over commercial parcels took a 70% bite out of profits, which declined to $1.34 billion. A bigger threat looms, as well. Amazon—a major partner, and rising competitor—is doubling down on a delivery network of its own. How the shipper’s CEO, Carol Tomé, installed on June 1, 2020, confronts this “frenemy” may prove to be the defining mark of her tenure.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-35-UPS

Big Brown continues its reign as the leading U.S. delivery business. Pandemic-fueled demand propelled United Parcel Service eight spots higher, to No. 35, on this year’s list. UPS’s revenues rose 14.2%, to $84.6 billion, in 2020, keeping it ahead of perennial rival FedEx. But the shift in emphasis to residential over commercial parcels took a 70% bite out of profits, which declined to $1.34 billion. A bigger threat looms, as well. Amazon—a major partner, and rising competitor—is doubling down on a delivery network of its own. How the shipper’s CEO, Carol Tomé, installed on June 1, 2020, confronts this “frenemy” may prove to be the defining mark of her tenure.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-129-UPS

Big Brown continued its reign as America’s leading delivery business. UPS's revenues rose 3.1%, to $74.1 billion, in 2019, keeping it ahead of perennial rival FedEx. But another threat looms. While FedEx cut ties with Amazon, UPS has hitched its signature brown wagons to the retailer-rocket ship, relying on it for growth. Still unclear is how that alliance will fare as Amazon doubles down on a delivery network of its own. Though UPS will benefit from increasing demand for store-to-door package service amid the coronavirus pandemic, the shipper's new CEO, Carol Tomé, will have to keep an eye on what may turn out to be a tricky coopetition arrangement with mighty Amazon.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-043-UPS

Big Brown continued its reign as America’s leading delivery business even as it slipped two spots, to No. 43, on this year’s list. UPS's revenues rose 3.1%, to $74.1 billion, in 2019, keeping it ahead of perennial rival FedEx. But another threat looms. While FedEx cut ties with Amazon, UPS has hitched its signature brown wagons to the retailer-rocket ship, relying on it for growth. Still unclear is how that alliance will fare as Amazon doubles down on a delivery network of its own. Though UPS will benefit from increasing demand for store-to-door package service amid the coronavirus pandemic, the shipper's new CEO, Carol Tomé, will have to keep an eye on what may turn out to be a tricky coopetition arrangement with mighty Amazon.

As we face unprecedented collective challenges, cooperation has become a business superpower.

49.CTW20.UPS

The world’s package delivery leader is also a leader in the emerging, potentially high-margin delivery-drone field. UPS’s Flight Forward unit is partnering with health care systems and others in North Carolina, Virginia, and Utah to deliver patient samples to labs, prescriptions to patients, and supplies to hospitals. Delivery by drone is up to 10 times as fast as by van, as the unmanned aerial craft fly past traffic jams. And since they don’t choke roadways, drones help reduce CO2 emissions.

Change the World

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

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United Parcel Service (UPS), founded in 1907, is a global giant in logistics, package delivery, and supply-chain management. Headquartered in Atlanta, UPS operates in more than 220 countries and territories, offering services ranging from shipping and freight to warehousing and distribution. The company is known for its distinctive brown delivery trucks and uniforms.

Q2 2025

Q1 2025

Q4 2024

United Parcel Service (UPS): Company Profile, Stock Price, News, Rankings

legacy

United Parcel Service

united parcel service

Good morning. My name is Greg Alexander, and I will be your facilitator today.

I would like to welcome everyone to the UPS Fourth Quarter twenty twenty four Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question and answer period.

It It is now my pleasure to turn the floor over to your host, Mr. PJ Guido, Investor Relations Officer. Sir, the floor is yours.

Good morning, and welcome to the UPS fourth quarter twenty twenty four earnings call. Joining me today are Carol Tomei, our CEO Brian Dykes, our CFO and a few additional members of our executive leadership team. Before we begin, I want

the comments we'll make today are forward looking statements within the federal securities laws and address our expectations for the future performance or operating results of our company. These statements are subject to risks and uncertainties, which are described in our 2023 Form 10 K and other reports we file with or furnish to the Securities and Exchange Commission. These reports, when filed, are available on the UPS Investor Relations website and from the SEC. Now let me share a reporting change we've made between business segments. Effective with the results have been moved from Supply Chain Solutions to The U.

Domestic segment. We made this change to align with our management structure and to simplify intercompany allocations and reporting. This change is visible in the web schedules that have been posted on the UPS Investor Relations website. Note that U.

S. Domestic revenue per piece and cost per piece metrics are not impacted by this change as USPS transact with us on a wait basis, not on a per piece basis. Unless stated otherwise, our discussion today refers to non GAAP adjusted results. For the GAAP results include a non cash after tax mark to market pension charge of $5.00 $6,000,000 total after tax transformation strategy costs of $73,000,000 after tax asset impairment charges of $46,000,000 and an after tax cost related to the withdrawal from a multi employer pension plan of $14,000,000 The after tax total for these items is $6.39,000,000 dollars or $0,.74 per diluted share. Additional details regarding year end pension charges are included in the appendix of our earnings presentation that is posted to the UPS Investor Relations website.

A reconciliation of non GAAP adjusted amounts to GAAP financial results is available in today's webcast materials. These materials are also available on the UPS Investor Relations website. Following our prepared remarks, we will take questions from those joining us via the teleconference. And now, I'll turn the call over to Carol.

Thank you, PJ, and good morning. We have a lot to cover today. I'll begin with a review of our and full year results. Then I'll provide an overview of the moves we are taking in 2025 to drive our performance. Brian will wrap up our prepared remarks with more detail about our financial performance and our 2025 outlook, and we'll leave plenty of time for questions.

But first, let me start by thanking UPSers for their hard work and efforts as we executed another outstanding peak. For the seventh year in a row, we were the industry leader in on time service during peak season, the most important time of the year for our customers. In the face of the compressed holiday period, our people enabled by the agility of our integrated network did what they do best and that's deliver for our customers. Moving to our results, the positive momentum we saw in the continued into the Compared to last year, consolidated revenue increased 1.5% to $2,530,000,000,0.0 Operating profit was $310,000,000,0.0 an increase of 11.2% from last year better than we expected and consolidated operating margin was 12.3. Importantly, our U.

S. Domestic operating margin was over 10% for the quarter, reflecting improved revenue quality and strong expense control. Looking at the full year, consolidated revenue was $9,110,000,000,0.0 slightly above last year. Consolidated operating profit totaled 8900000000.0 and consolidated operating margin was 9.8%. We generated $1,010,000,000,0.0 in cash from operations in 2024 and we returned $590,000,000,0.0 to share owners in the form of dividends and share repurchases.

Before I discuss our plans for 2025, let me share a few operational and financial highlights. In 2024, we continue to grow our U. S. SMB penetration and finished the year with SMBs making up 28.9% of our total U. S.

Volume, an increase of 30 basis points from last year. DAP, our digital access program was a big driver of the increase. And in 2024, we generated $330,000,000,0.0 in global DAP revenue, a 17% increase year over year. As we discussed, we are moving from a scanning network to a sensing network through our smart package, smart facility RFID initiative. In 2024, we equipped nearly 60000 U.

S. Package cars with sensors, which represents 66% of our fleet, eliminating 12000000 manual scans per day and enhancing package visibility for our customers. Within network of the future, in 2024, we accelerated operational closures and completed 9 more than planned, resulting in 49 operational closures, which included permanently closing 11 buildings. And we did this while continuing to deliver outstanding customer service. Today, about 63% of our U.

S. Volume flows through our automated facilities compared to 60% in 2023. Finally, we took actions in our Healthcare Logistics business to further support our growth plans. Earlier this month, we completed the acquisition of FrigoTrans, a European healthcare logistics company specializing in cold chain. And in Dec.

0, we opened 2 state of the art healthcare crosstalk facilities in Italy and Germany. These moves further expand our cold chain capabilities to serve a growing European market. Before I talk about 2025, I'd like to take a short look back at the last five years. In in the face of the COVID-nineteen pandemic, we launched our Better Not Bigger strategy hinged on 3 elements: customer first, people led, innovation driven. For the first few years, we focused on growing select markets and optimizing financially attractive volume, including volume from SMBs and healthcare customers.

Further, we focused on making productivity a virtuous cycle by launching Transformation 2 and we began a portfolio optimization program, including selling our LTL freight business and making a few strategically important acquisitions. From 2020 through 2022, we delivered solid financial results in line with our strategy at a time when much of the world was struggling due to the challenges presented by the pandemic. In 2023, our financial results faced unexpected challenges due to an unfavorable economic environment and a prolonged labor negotiation with the Teamsters. While the labor negotiation caused volume and earnings disruption, we gained certainty regarding our labor costs for the next several years. After wrapping the first year of our new labor contract, in the positive momentum began to build and we returned to volume, revenue and operating profit growth.

We continue to drive productivity through several programs and focused on revenue quality. And we took further actions to optimize our portfolio by selling our truckload brokerage business known as Coyote. And we entered into agreements to acquire Estafeta, a leading Mexican logistics integrator and Frigo Tramp. We closed out 2024 with an outstanding peak delivering best in class service and financial results ahead of our target. But as we wrapped up 2024, it became clear to us that if we didn't address 3 specific challenges facing us in The U.

S, we could lose momentum. The first challenge relates to the dynamics of The U. S. Small package market. Today, it's a slow growth market with changing package characteristics.

The second challenge comes from the concentration of volume and revenue we have with our largest customer. Looking ahead, we project this business if we take no action will drive diminishing returns. The third challenge is the reliance we have had with the USPS for our Surepost product. In this case, the USPS is changing its operating model, which we believe puts service at risk. So we've taken actions to address all 3 of these challenges head on, including doubling down on revenue quality and serving the customer segments we want to serve best.

First, we've reached an agreement in principle with our largest customer for a significant reduction in volume, lowering their volume with us by more than 50% by the With this, we will right size our network and retain the volume that is nutritive for us and for our customer. Second, effective this year on January '1, we no longer use the USPS for our Surepost product. Service is a fundamental part of our value proposition. And by in sourcing this product, we can be certain we deliver great service with no material impact to our financial performance. In connection with these changes, while I'm incredibly proud of the productivity actions taken by our leaders, we've realized we're not done.

We are reconfiguring our U. S. Network and have launched multi year initiatives we're calling Efficiency Reimagined, which tackle our processes from end to end from peak hiring practices to processing payments and more. Efficiency reimagine should drive approximately $1,000,000,000 in savings. These significant business and operational changes coupled with the foundational changes that we've already made will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market, namely healthcare, B2B, S and B and international.

We've got some work to do to make this all happen, but there's no better team than the UPS team. We will deliver. As Brian will detail, in 2025, these actions are expected to result in expanded operating margins and an improvement in return on invested capital. And by taking these actions, we expect by the to have a U. S.

Domestic operating margin of at least 12%. With that, thank you for listening. And I'll now turn the call over to Brian.

Thank you, Carol, and good morning, everyone. Our financial performance in the was better than we expected due to our focus on revenue quality and excellent cost management. The positive momentum that we began in the continued throughout our busiest time of the year. This morning, I'll cover 4 areas, starting with our results, followed by a review of our full year 2024 results, including cash and shareowner returns. Then I'll provide more detail on the business and operational changes we are making.

And I'll close with our expectations for the market and our financial outlook for 2025. Starting with our consolidated performance. In the we delivered revenue and operating profit growth and margin expansion. This is a continuation of the momentum that we showed in the and the first time in three years that we've shown growth in the on all 3 of these financial metrics. In the we generated $2,530,000,000,0.0 in consolidated revenue, an increase of 1.5% compared to the Consolidated operating profit was $310,000,000,0.0 an increase of 11.2% versus the And consolidated operating margin was 12.3 an increase of 110 basis points compared to the Diluted earnings per share was $2,.75 up 11.3% from the Now moving to our segment performance, U.

S. Domestic delivered strong results driven by gains in revenue quality and outstanding cost management. And during the compressed 2024 peak season, our average on time service led the industry by four seventy basis points over our closest competitor, which drove high demand for our services allowing us to continue winning new customers throughout peak. For the quarter, U. S.

Average daily volume or ADV was flat to last year. Ground average daily volume increased 2.1% year over year, while total air average daily volume was down 12.9%. Excluding the volume decline from our largest customer, total air ADV grew, driven by demand from healthcare and high-tech customers. Within ground, Surepost ADV as a percentage of total ADV increased slightly compared to the Through the power of our matching algorithm, we increased Surepost redirects by six sixty basis points sequentially from the which resulted in half of the Sherpa's volume being delivered by UPS drivers. For the quarter, total B2B average daily volume was down 1% year over year.

However, we saw B2B growth from healthcare customers, including healthcare SMBs. On the B2C side, average daily volume was up slightly year over year and made up 64.7% of our volume. In terms of customer mix, we saw strong ADV growth from SMB customers, which grew 4.5% in the driven by double digit growth in Dec. 0. In the SMBs made up 27.8% of total U.

S. Volume. This was the highest concentration we've seen in ten years. For the quarter, U. S.

Domestic generated revenue of $1,730,000,000,0.0 up 2.2% compared to last year due to the strength of small package in Dec. 0 and increases in air cargo. In the the revenue per piece growth rate flipped positive for the first time this year and was up 2.4% year over year, which was a sequential improvement of four sixty basis points from the Breaking down the components of the 2.4% revenue per piece improvement, base rates increased the revenue per piece growth rate around two fifty basis points, strong keep rates on our holiday demand surcharge increased the revenue per piece growth rate by 110 basis points. The net impact of customer mix combined with product mix and lighter weights decreased the revenue per piece growth rate by 80 basis points. Lastly, fuel drove a 40 basis point decline in the revenue per piece growth rate.

Turning to costs, total expense increased 1.3%. Since we lapped the first year of our labor contract at the July,, this was the first full quarter at a lower contractual union wage growth rate. In fact, the average increase over the prior 4 was 10.5%. In the union wage rates increased by only 3%. Through our Network of the Future initiative, we exceeded our initial target by completing 49 operational closures this year, including 11 buildings.

By leveraging our technology and increasing automation, we process and delivered the same amount of volume in the as last year, but we did it with 3000000 fewer hours, while delivering excellent service. We lowered small package block hours within our air network in response to changing volume levels. Purchase transportation and other expenses declined as we in sourced 50% of Surepost volume during the and we tightly manage rental equipment through peak. Lastly, our safety performance was better than we expected and drove a benefit in casualty expense. Looking at cost per piece, throughout the and the peak period, we leveraged technology and our proven practices to hold the increase to just 0.9%.

The U. S. Domestic segment delivered $180,000,000,0.0 in operating profit, an 11% increase compared to the and the operating margin was 10.1%, a year over year increase of 80 basis points. Moving to our international segment. For the second quarter in a row, our international business grew revenue and operating profit and expanded operating margin.

Total international average daily volume growth flipped positive for the first time in three years and was up 8.8% year over year. International domestic average daily volume increased 5.8% compared to last year, driven by strong performance in Canada. And on the export side, average daily volume increased 11.7% year over year with all regions delivering ADV growth. Asia export average daily volume was up 15.4%, delivering growth for the third consecutive quarter. And at the country level, 17 of our top 20 export countries grew export ADV led by Mexico and Germany.

And in Germany, which is our largest export market, export average daily volume increased 8.6% compared to last year. In the international revenue was $490,000,000,0.0 up 6.9% from last year with all regions growing revenue year over year. International generated positive operating leverage driven by our ongoing network optimization and cost management efforts. Operating profit in the international segment was $110,000,000,0.0 an increase of 18.1% year over year. Operating margin in the was 21.6% an increase of two ten basis points from a year ago.

Moving to Supply Chain Solutions. In the revenue was $310,000,000,0.0 Revenue decreased $3.00 $6,000,000 with the reduction impacted by $5.88,000,000 dollars in revenue from Coyote in the 2023 period. Revenue within our Forwarding and Logistics businesses increased $2.82,000,000 dollars Looking at the key drivers, Air and Ocean Forwarding revenue was up 10.3%, led by continued strong market demand out of Asia. And Logistics revenue grew by 16.2%. In the supply chain solutions generated operating profit of $2.84,000,000 dollars down $24,000,000 year over year, which included an impact of $1,350,000,0.0 of operating profit from Coyote in the same period in 2023.

Operating margin in the was 9.3, an increase of 20 basis points compared to last year. Walking through the rest of the income statement, we had $2.29,000,000 dollars of interest expense, Our other pension income was $67,000,000 and our effective tax rate for the was approximately 20.5 lower than our expectations due to discrete items. Now let me comment on our full year 2024 results. For the full year 2024, revenue was $9,110,000,000,0.0 a slight increase over 2023. We delivered operating profit of $890,000,000,0.0 and a consolidated operating margin of 9.8%.

We generated $1,010,000,000,0.0 in cash from operations and continue to follow our capital allocation priorities. We invested $390,000,000,0.0 in CapEx. We distributed $540,000,000,0.0 in dividends. We repaid $380,000,000,0.0 in debt that matured during the year. And at the end of the year, our debt to EBITDA ratio was 2.25 terms.

Lastly, we completed $500,000,000 in share buybacks in 2024. And in the segments for the full year, in U. S. Domestic operating profit was $450,000,000,0.0 and operating margin was 7.5%. The international segment generated $340,000,000,0.0 in operating profit and operating margin was 18.7% and Supply Chain Solutions delivered operating profit of $1,000,000,000 and operating margin was 8%, which brings us to 2025.

As Carol described, we are taking a set of strategic actions to address the challenges facing our U. S. Business head on. Execution is already well underway and these actions together will create a more agile and profitable UPS. Let me provide more detail on what we're doing.

I'll start with the agreement in principle we've reached with our largest customer to significantly reduce the volume we deliver for them. The accelerated decline has already begun and will step up meaningfully so that by the their volume will be down by more than 50% of what it was at the beginning of the year. The speed of the glide down is 5 times faster than our initial glide down efforts between 2021 and 2024. The results of this change will be lower overall volume levels, but an improved customer mix at a significantly higher revenue per piece. We are deliberately shifting our business and increasing our focus on growing higher yielding volume and value share.

Lower overall volume levels from this customer will lead to lower revenue dollars in the near term. However, we expect to grow revenue per piece through shifting our customer mix and by leveraging our architecture of tomorrow pricing technology. This will enable us to continue the strong base rate improvements in 2025 that we delivered from our enterprise and SMB customers in the Additionally, we will double down on growing volume and revenue in the best parts of the market for us, including SMB, healthcare and B2B. And in terms of SMBs, this year we expect to take the SMB percent of our U. S.

Volume to 32% and the momentum will continue for the longer term. Now looking at costs, as we bring volume down, we will not only reduce the hours and miles associated with this volume, we will be able to take out fixed costs to match our capacity to our new expected volume levels. All facts for the network are included in the reconfiguration. And we expect to close-up to 10% of our buildings, cut back our vehicle and aircraft fleets and reduce labor. The right sizing of our U.

S. Capacity allows us to accelerate our network of the future initiative. We will be able to more quickly bring down less efficient capacity while further investing in automation across the network, getting us to a more efficient U. S. Network faster.

The capital requirements to run our reconfigured network will also decrease. We will share more details on our execution plan on our earnings call in April 0. Now turning to the changes we made with Surepost. As of January '1, we began delivering 100% of our Surepost volume and in we implemented a 9.9% average rate increase on Surepost. Offering a reliable economy service is an important part of our product portfolio and overall value proposition.

The changes we made give us greater point to point operational control and the ability to provide better service to our customers, which brings me to our efficiency reimagine initiatives. Lower overall volume and a reconfigured U. S. Network create an opportunity for us to increase efficiency by redesigning processes from end to end. Through efficiency reimagine, we expect to deliver approximately $1,000,000,000 in savings.

Pulling it all together, even while we're undergoing the largest network reconfiguration in our history, we expect to expand U. S. Domestic operating margin in every quarter of 2025 with the full year operating margin approaching 9%. As the impact of our cost out efforts increase over the next eighteen months, we expect the pace of operating margin improvement to accelerate into 2026 where we expect by the to generate a 12% U. S.

Operating margin and we see even more upside potential in the longer term. Turning to guidance for 2025, starting with the macro, S and P Global forecast global GDP growth of 2.5% compared to 2024. Real exports and global industrial production are both expected to increase around 2% year over year. In The U. S, manufacturing is expected to turn positive for the after seven quarters of negative year over year growth and the consumer is expected to remain resilient.

Moving to our 2025 financial outlook. For the full year 2025 on a consolidated basis, revenue is expected to be approximately $89,000,000,000 and operating margin is expected to be approximately 10.8%. Our guidance for 2025 does not reflect any significant potential global trade implications due to changes in tariffs.

a little color on the segments. Looking at U. S. Domestic, as a result of the actions we're taking, full year 2025 revenue is expected to decline 2.3% year over year, driven by an ADV reduction of about 8.5%, partially offset by strong expected revenue per piece growth of approximately 6% and we will wrap the newly onboarded USPS air cargo business. We expect the intended volume and revenue declines to accelerate as we progress throughout the year.

Full year operating margin is expected to be approximately 8.8%, an increase of 130 basis points compared to 2024. And to provide a little shape for the which has 1 fewer operating day compared to the we expect revenue to increase nearly 1% year over year despite ADV being down approximately 4% and and we expect to expand operating margin by approximately 140 basis points year over year. Moving to the International segment, we expect mid single digit ADV growth throughout the year, but with lower demand related surcharges than we've seen in prior years. For the year, we expect 2025 revenues to increase approximately 2.5% year over year with an operating margin of around 18.6%. And looking at the we expect revenue to be flattish compared to the same period last year and operating margin to be moderately down year over year due to lower demand related surcharges.

And in Supply Chain Solutions for the full year 2025, we expect revenue to be approximately $11,000,000,000 and operating margin to be approximately 8.5%. In SCS in the revenue is expected to decline about $500,000,000 due to the reduction in revenue associated with Coyote in the same period last year. Operating margin in SCS in the is anticipated to be low to mid single digits due to pressure from purchase transportation costs related to our Mail Innovations business. We expect the to be the lowest SES operating margin in 2025. For modeling purposes, in total below the line, we expect approximately $7.80,000,000 dollars in expense with a little more than half in the back half of the year.

We expect pension expense to be approximately $37,000,000 for the full year 2025, which is $3.00 $6,000,000 higher than in 2024, primarily due to the impact of market shifts and interest rates on our pension assets last year. We included a slide in the appendix of today's webcast deck to provide you more detail on pension. The webcast deck is available on the UPS Investor Relations website. Now let's turn to our expectations for cash and the balance sheet. We expect free cash flow to be approximately $570,000,000,0.0 including our annual pension contribution of 1400000000.0 Capital expenditures are expected to be about $350,000,000,0.0 While we are accelerating our Network of the Future initiative, our reconfigured U.

S. Network should require less investment in vehicles and aircraft as we right size the capital base. We are planning to pay out around $550,000,000,0.0 in dividends in 2025, subject to board approval. We expect to buy back around $1,000,000,000 of our shares. And lastly, we expect the tax rate for the full year to be approximately 23.5% as we expect the current U.

S. Corporate tax regime to remain. We've covered a lot today. We are moving quickly to continue our momentum. The results of our actions will be an even stronger, more agile and more profitable UPS that's growing in the best parts of the market that value our end to end integrated network.

With that, operator, please open the lines for questions.

Thank you. Your first question today comes from the line of Tom Wadewitz from UBS. Please go ahead.

Yes, good morning. You got a lot of big things going on. Wanted to see if you could talk a little bit more about how can we build confidence that against a pretty meaningful drop in revenue from the Amazon change that you're able to, I guess, quickly enough get out the fixed costs. So that as opposed to seeing deleveraging and margin pressure that you're seeing the margin improvement that you're talking about. So yes, I think just a bit more of kind of how that equation can play out, recognizing that we think of the network as having a fair bit of fixed cost to start with.

Tom, happy to do that. But maybe I'll just start by talking about the Amazon announcement. We've been a partner to Amazon for nearly thirty years and we hold that company in high regard. Amazon is our largest customer, but it's not our most profitable customer. Its margin is very dilutive to The U.

S. Domestic business. Our contract with Amazon came up this year and so we said it's time to step back for a moment and reassess our relationship because if we take no action, it will likely result in diminishing returns. So we considered a number of different options and landed on what we think is the best option for our company. And that is to accelerate the glide down of their volume with us as we commented in our prepared remarks by more than 50% by As you pointed out, Tom, there are a lot of assets and resources that support that Amazon volume.

But as we glide down the volume, we will also be gliding out those assets and resources, explained. Now I'll turn it over to Brian, so you can explain how the cost will come out.

Sure. Thank you. And Tom, as we said before, clearly there's a lot of stakeholders that are involved here and we needed to make this announcement, so we can engage with those stakeholders. But you're absolutely right in your intuition that this is going to require a reconfiguration of the network so that we bring the fixed asset base, the buildings, the vehicles, the aircraft in line with the new volume levels. And we'll give you a lot more color on how we're going to roll that schedule out on the earnings call once we have a chance to engage all the stakeholders involved.

But I do think that is the key here, that is the mission. And quite frankly, it's already underway with our teams.

And 1 reason for a glide down over eighteen months rather than six months because we wanted to make sure that we didn't strand cost. Now clearly, our labor costs will flex with volume. As volume goes up, we have more hours. As volume comes down, we have less hours. So that's just part of the DNA of how we operate our business.

But we have, I think, proven in 2024 that we can close buildings because with network of the future, we did just that. We closed down 11 buildings with improved service.

Sure. Thanks. And good question, Tom. Just to give you comfort here, you'll know that 5 facilities already in Jan.

0 have been partially or completely closed. And this year, we'll have 140 active Network of the Future projects, 61 of them will go live this year. Of course, just driving up the number of shipments that run through our automated facility. So that gives me a lot of confidence, gives our people a lot of confidence. So we feel good about these moves and we're ahead of schedule.

Your next question comes from the line of Jordan Ellinger from Goldman Sachs. Please go ahead.

Yes. Hi. Just to follow-up on the Surepost side of things. Maybe give some sense for how much volume sort of is going to be pulled into the network. Can the network as it's currently constituted today ready from day 1 to move all the volume that the post office had done so?

And then maybe along with that, can you touch a little bit, is this some of this bringing Surepost in house designed in part at least to replace or infill some of the Amazon business going out in terms of network density? Thanks.

Well, Jordan, thanks for the question. Let's step back for a moment on Surepost. All Surepost products are sorted through our buildings. We had used the USPS for last month delivery for a portion of that. And through our engineering and IT matching algorithms, we've been able to redirect a lot of the Surepost volumes back into the network.

In fact, for delivery by our people. In fact, in the '50 of the Surepost, volume was delivered, in the Brown network. So as we came to the decision to in source all of it and have it all delivered by our network, it was simply a matter of well-service. Up until this year, we had been injecting into the last mile network of the USPS, and the service there was good. But as I think you know, the USPS is changing their operating model.

And as a result of those changes, we were going to have to insert upstream into their sorting facilities. And we were very concerned about service deterioration.

same time, they were going to increase their cost to us. And that value proposition of an increased cost as well as deteriorating service, well, that didn't work for us. So in the December,, we determined that we would in source 100% of the Surepost volume, which we have done. And I'm pleased to say that's gone very well for us. Yes, we have a few more delivery stops per car.

aren't driving more miles. So when we look at the financial, impact in sourcing Surepost, we feel very good that it's actually not going to have a material impact to our business at all. Now we did make a GRI increase, I will admit. But from an operating perspective, it's going swimmingly well. And, Natalie, would you like to add?

Yes, sure. So, Jordan, there's multiple opportunities for us to match shipments now as we control that volume over multiple days. We've also adjusted our algorithm to really target stops or stop matching to 100 feet of a regular stop. And certainly, this helps us smooth the daily dispatch for our employees. So resources in terms of spiking 1 day versus another, we're able to flatten that and keep the staffing picture very linear for the company.

In addition to that, of course, we're exploring different ways on how we can move the volume through slower networks because it is an economy service as we look at rail and how we leverage rail across the country as well as ground movements to make sure that we're hitting our service portfolio. Early days show as Carol had said, mileage index looks good, packages per car look good, the just overall performance right now, just really proud of the team and they continue to try to optimize the service as we go forward.

And, Nando, if I could just add 1 thing, because I think it relates to the prior question as well. Because I think the investments that we have made in the network and the technology allowed us to in source almost 1500000.0 stops within a matter of weeks. I think it's a testament to the operators, but also a testament to the agility that we've created into the network.

And that will help us as we move forward with the reconfiguration we're undertaking. The other thing I do think is important is that you should know is that we have included some expectation that there could be some churn, right, with the GRI and the changing service. There are some customers that this might not work for and we've taken that into account in our forecast.

Your next question comes from the line of David Vernon from Bernstein. Please go ahead.

Hey, good morning. So a couple of questions for you here on this on sort of the guidance and the growth outlook. When you think about the 10.8% margin that we're going to have for full year 2025, is there any way to think about what that number would look like if you had sort of adjusted the network at the start of the year? I'm just trying to get a sense for what the run rate level of margin would be if you didn't have the deleveraging that would ultimately come with lower volume. And then Carol, can you maybe talk about what the growth picture looks like ex the glide down?

There's a lot of concern in the market right now from investors around the organic or lack of organic growth in the small package business. And I'm just trying to get a sense for what how you guys are thinking about the growth outside of the glide down in

Sure. So why don't I take the margin question first. And Dave, I think what we've built into our forecast is we are going to be taking the fixed cost out commensurate with the volume drawdown as we go through the course of the year. Now that will also accelerate as we go into 2026 and you'll see an improvement margin.

And as we said, we expect to get to the 12% as we go through 2026. I think what's really important is you take a step back and you look at what's going on, even though volume is going to decline relatively significantly in The U. S, Rep per piece is going to go up 6%, right? And that will be a combination of customer mix, product mix, but also the continuation of the good base pricing discipline that we've shown in the And by taking this, I would say, relatively non nutritive volume, we're unlocking the ability for us to control our margin profile as we move forward and really push it not just to the 12%, but beyond as we move forward and we grow in the areas where it's most important for us.

United Parcel Service (UPS) Q4 2024 Earnings Call Transcript

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