This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

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.

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.

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.

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

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.

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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.

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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 2026

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Q4 2024

UPS (UPS): Company Profile, Stock Price, News, Rankings

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Good morning. My name is Matthew, and I'll be your facilitator today. I'd like to welcome everyone to the UPS first quarter two thousand twenty five earnings conference call. All lines have been placed on mute to prevent any background noise, And the speakers' remarks after the speakers' remarks, there'll be a question and answer period. Any analyst that wanna ask a question, now is the time to press star then one on your telephone keypad.

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

Good morning, and welcome to the UPS first quarter '20 '20 '5 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 to

the comments we'll make today are forward looking statements 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 2024 Form 10 ks 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. Unless stated otherwise, our discussion refers to adjusted results. For the first quarter of twenty twenty five, GAAP results included net charge of $83,000,000 or zero nine dollars per diluted share comprised of after tax transformation strategy costs of $44,000,000 and a non cash after tax impairment charge of $49,000,000 primarily related to asset and investment impairments.

These charges were partially offset by a $10,000,000 benefit for the partial reversal of an income tax valuation allowance. 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. You may rejoin the queue for the opportunity to ask an additional question.

And now I'll turn the call over to Carol.

Thank you, PJ and good morning. In the face of a very dynamic environment, I'm pleased with our first quarter performance. To begin, I want to thank all UPSers for delivering outstanding service to our customers. I also want to recognize the excellent progress our teams have made in executing the strategies we announced on our last earnings call. There's a lot going on at UPS and in the world.

So let's move to our results. In the first quarter, our consolidated revenue was $21,500,000,000 a decrease of 0.7% versus last year and in line with our expectations. Consolidated operating profit was $1,800,000,000 an increase of 0.9% compared to last year. Consolidated operating margin was 8.2%, up 20 basis points versus last year. And diluted earnings per share were $1.49 up 4.2% from last year.

Consolidated operating profit, operating margin and diluted earnings per share were slightly ahead of our expectations. Of note, our U. S. Domestic segment increased operating profit by $164,000,000 year over year and expanded operating margin by 110 basis points. While our revenue and volume in the first quarter was in line with our expectations, Results by month were not.

Starting with The U. S, while we expected negative ADV growth given our Amazon glide down plan, January's ADV decline was less than expected marked by positive average daily volume or ADV growth in certain B2B, SMB and healthcare customers. Then as we moved into February and March, uncertainty surrounding global trade policies and other matters led to a drop in consumer confidence and muted demand from some enterprise and SMB customers. As a result, the decline in U. S.

ADV for the month of February and March was higher than we expected. Looking outside The U. S, demand for U. S. Inbound services surged as customers pull forward inventory purchases ahead of expected tariff changes.

In response, we leveraged the flexibility of our global portfolio with the power of our next gen brokerage technology, which helped our customers avoid border disruptions and kept their supply chains moving. As a result, in the international segment, our U. S. Outbound volume increased 9.5% in the first quarter. In January, we announced three strategic actions to drive our business to a more profitable, agile and differentiated UPS.

Let me provide a high level update on our progress. Let's start with our plan to accelerate the glide down of Amazon's volume. You'll recall that we reached agreement with Amazon to reduce their volume in our network by more than 50% by June of twenty twenty six. Note that the volume we are transitioning out is Amazon's fulfillment center outbound volume. This volume is not profitable for us nor a healthy fit for our network.

The Amazon volume we plan to keep is profitable and it is healthy volume. In other words, volume where we can add value like returns and seller fulfilled outbound volume. In the first quarter, Amazon's ADV decline ran slightly ahead of plan, but is expected to be on plan by the end of the first half of this year. The Amazon Glide Downs plans have been integrated into our Network of the Future initiative. We are executing the largest network reconfiguration in our history.

We will optimize the capacity of our network with expected volume levels as well as increased productivity through additional automation. With this reconfiguration, we will also lessen our dependency on labor, reduce the capital requirements needed to run the network and will drive structural operating margins and return on invested capital improvements. While this may be the largest network reconfiguration in our history, we've got experience that gives us confidence that we will be able to complete our plans with very little customer disruption and at the right cost to serve. Over the last couple of years, we've demonstrated our ability to manage hours and labor in line with changes in volume, all while staying within the confines of our labor agreement. In 2024, we successfully closed 11 buildings and the learnings from those closings became the blueprint for our network reconfiguration approach.

We are moving very quickly. In this first phase, we will complete 164 operational closures, including 73 building closures by the June. And there's more to come. While our building footprint is changing, our pickup and delivery footprint is not. We remain committed to providing industry leading reliability to all customers across the country.

We'll just do it with fewer buildings. For our larger customers, we are working with them to update their operating plan. And for our SMBs, in the areas where we're closing buildings, UPS will still be accessible and convenient for customer drop offs and pickup due to our network of 5,300 UPS stores and 29,000 drop boxes and UPS access points. 90% of The US population lives within five miles of these locations and about two thirds of them are open on Sundays for added convenience. In a moment, Brian will provide more details on our cost out and network reconfiguration progress.

Our second strategic action was the in sourcing of SurePost final mile delivery. We smoothly absorbed that volume into our network and adjusted operating plans to address the additional stops associated with the final mile. Earlier this month, we replaced the SurePost product with GroundSaver. This is a new and differentiated domestic economy service that balances speed and reliability for our customers, while allowing significant operational flexibility for UPS. The third strategic action we announced was our efficiency reimagined initiative, which is designed to deliver $1,000,000,000 in savings by improving many of the ways we do business, including the elimination of manual tasks and enhancing our purchasing processes.

We've made good progress here. And as planned, we expect to accelerate the benefits beginning in the second quarter. Moving to our strategic growth update, we are focused on improving revenue quality and growing in the best parts of the market like healthcare, international, B2B and SMB. Last week, we entered into an agreement to acquire Ann Lower Healthcare Group, a move that will bolster our healthcare capabilities in Canada by adding 39 dedicated healthcare facilities across the country along with cold chain packaging and specialized transportation solutions. The acquisition of Ann Lower supports our goal of becoming the number one complex healthcare logistics provider in the world.

We expect this acquisition to close in the second half of twenty twenty five. Touching on SMBs, in the first quarter, SMBs including platforms made up 31.2% of our total U. S. Volume. And looking at DAP, our digital access program, in the first quarter, global DAP revenue grew by 24% year over year.

Finally, during the quarter, we reintroduced UPS ground with freight pricing, which provides exceptional value for shipments weighing more than 150 pounds. This positions us to be the only small package carrier that offers parcel like pricing for less than truckload shipments, which is a true differentiator. Let's turn to a discussion about tariffs and our approach to managing through what is turning out to be a very complex and ever changing topic. From an exposure perspective, our U. S.

Import volume is roughly 400,000 pieces per day, which from a volume perspective is less than 2% of our total global ADV. From a revenue perspective, last year revenue on our China to U. S. Trade lanes represented 11% of our total international revenue. And revenue from other trade lanes to The U.

S. Represented roughly 17% of our total international revenue. Our China to US trade lanes are our most profitable trade lanes. In The US, we've talked with our top 100 customers to understand how their business is being impacted both directly and indirectly by changes in trade policy. These customers have told us that they are exploring various options to address the tariff from absorbing the cost to pushing them into retail prices to asking suppliers to help defray the expense.

At this point, it remains an open question as to what path they will choose and what the potential impact could be on consumer demand and our business. For the rest of the world, through the April, we have interviewed nearly 45,000 international and freight forwarding customers to ascertain their shipping plans. For small package shippers, over 95% of those customers have told us that they expect to maintain their current business model, while the rest are considering several options, including trade shifts, transportation mode shifts, or exiting the business. Most of these customers are also telling us that they are letting inventory levels sell off, which will lead to lower shipping activity, at least for now. Freight forwarding customers are telling us that where they can, they are looking to move from air freight to ocean freight.

From an internal exposure perspective, we've looked at our purchasing and capital plans to estimate any potential tariff related cost increases that may come our way. Roughly $2,700,000,000 of our annual direct purchases are sourced outside of The U. S. With little exposure to China. From a service perspective, we are focused on making it easier for our customers to do business.

Our next gen brokerage capabilities make it easier for our customers to reclassify goods under harmonized tariff schedule codes and clear customs easily. Our new global checkout product makes it known what customers will pay for duties, taxes, and fees. Using artificial intelligence, global checkout enables our customers to display to their customers a guaranteed landed cost, covering all duties, taxes, and fees during online checkout. This eliminates surprise import fees at delivery and provides a much better customer experience. Global checkout is available in 43 origin countries and UPS is the only global carrier that offers a guaranteed landed cost that's integrated into shipping and billing technology.

Finally, for customers who need it, UPS provides bonded warehousing and foreign trade zone enabled solutions. Moving to our outlook, given the uncertainty in the market, there is a wide range of possible outcomes. We continue to model different scenarios, but these are just scenarios. The world hasn't been faced with such enormous potential impacts to trade in more than one hundred years. So the only thing we're certain of is we don't know which, if any of our scenarios will play out.

But by modeling different scenarios, we'll be able to adjust to rapid shifts in the business. Regarding our expectations for the full year, should market and economic conditions stabilize to be more in line with the assumptions we used to build our 2025 plan, we would be confident in the full year outlook we provided in January. Given today's level of uncertainty, however, we are not providing any updates to our consolidated full year outlook at this time. We think instead, it's prudent to focus on what we can control and continue to execute against our strategic and financial goals. Today, we're providing second quarter guidance based on April results and our expectations for the balance of the quarter.

Once we are through the second quarter, we will hopefully have more clarity about tariffs and trade and the implications for demand dynamics and we'll provide an update at that point. In the face of uncertainty, there are some known. We are confident in our position as a trusted leader in global logistics. And with the agility of our integrated network,

broad reach, our portfolio of services, and our proven trade expertise, we are well positioned to enable our customers to navigate a changing trade environment. Further, the strategic actions we launched in January to reconfigure our network and reduce costs across the business to not be timelier. The environment may be uncertain, but with our actions, we will emerge as an even stronger, more nimble UPS. So with that, thank you for listening. And now I'll turn the call over to Brian.

Thank you, Carol, and good morning everyone. This morning I'll cover three areas. Starting with our first quarter results including cash and share owner returns, then I'll provide more detail on our cost out and network reconfiguration progress as we reduce the volume we deliver for Amazon. Lastly, I'll touch on tariffs and trade policy changes and comment on our outlook for 2025. Starting with our consolidated performance.

In the first quarter, we generated $21,500,000,000 in revenue, a decline of 0.7% compared to the first quarter of last year. Consolidated operating profit was $1,800,000,000 an increase of 0.9% versus the first quarter of twenty twenty four. And consolidated operating margin was 8.2%, an increase of 20 basis points compared to the first quarter of last year. Diluted earnings per share was $1.49 up 4.2% from the first quarter of twenty twenty four. Now moving to our segment performance.

As Carol mentioned, while volume and revenue performance in the quarter were in line with our expectations, our monthly performance was not. In U. S. Domestic, following a strong January relative to our expectations, uncertainty in the market began impacting consumer behavior. Demand shifted down in February, falling further than our expectations and normal shipping patterns and remained at that level in March.

For the quarter, total U. S. ADV was down 3.5%, ground average daily volume decreased 2.5% year over year and total air average daily volume was down 9.6%. Excluding the volume decline from Amazon, total air ADV grew 6.2% driven by demand from healthcare and high-tech customers. Within Ground, our new economy product called GroundSaver, which replaced SurePost had an ADV decline of 8.4%, primarily due to pricing actions we took to grow yields on e commerce volume.

first ADV decline we've seen in this product in five quarters as we have leaned into revenue quality. For the quarter, B2B average daily volume was up 1.5% compared to last year. Growth was driven by returns, which increased 8.8% year over year. We also saw ADD strength from healthcare and high-tech customers. B2C average daily volume decreased 7% year over year, driven by our managed decline in volume from Amazon, our focus on revenue quality and some demand softness.

In terms of customer mix, we saw strong ADV growth from SMB customers of 4%. In the first quarter, SMBs made up 31.2% of total U. S. Volume. This is the highest SMB concentration we've seen in ten years and is driving meaningful change in overall volume and revenue quality.

Moving to revenue. For the first quarter, U. S. Domestic generated revenue of $14,500,000,000 up 1.4% compared to last year, driven by increases in air cargo. In the first quarter, revenue per piece increased 4.5 year over year, which was the strongest revenue per piece growth rate we've seen in eight quarters and it partially offset declines in volume.

Breaking down the components of the 4.5% revenue per piece improvement, the combination of base rates and package characteristics increased the revenue per piece growth rate by two forty basis points. Net impact of customer mix and product mix increased the revenue per piece growth rate by 170 basis points. Lastly, fuel drove a 40 basis point increase in the revenue per piece growth rate. Turning to costs, total expense increased 0.2% including an increase in air cargo. We continue to drive efficiency in the quarter as we reduced purchase transportation costs from insourcing 100% of Ground Saver volume for final mile delivery, partially offsetting the increase in delivery costs.

And we lowered small package block hours within our air network in response to the changing volume levels. These cost reductions were partially offset by expenses related to challenging weather. In the first quarter, cost per piece increased 3.7%. The U. S.

Domestic segment delivered $1,000,000,000 in operating profit, a 19.4% increase compared to the first quarter of twenty twenty four. Operating margin was 7%, a year over year increase of 110 basis points. Moving to our International segment, we leveraged the agility of our integrated global network to navigate this period of uncertainty and grew international average daily volume for the second consecutive quarter. Total international ADV increased 7.1% with all regions growing average daily volume versus last year. International domestic average daily volume increased 4.8% compared to last year led by Canada.

On the export side, average daily volume increased 9.3% year over year. Asia and Europe delivered double digit export growth throughout the quarter and at a country level 15 of our top 20 export countries grew export ADV. In the first quarter, international revenue was $4,400,000,000 up 2.7% from last year as we expected. Revenue per piece declined year over year due to a stronger U. S.

Dollar and lower demand related surcharges. Operating profit in the international segment was $654,000,000 down 4.1% year over year due to a mix shift to more economy services in Europe, lower demand related surcharges and investments we are making to expand weekend services in Europe. International operating margin in the first quarter was 15%. Moving to Supply Chain Solutions. In the first quarter, revenue was 2,700,000,000 Revenue decreased $471,000,000 driven by a reduction of $563,000,000 in revenue from Coyote due to our divestiture of this business in 2024.

Within Supply Chain Solutions, Air and Ocean Forwarding revenue was flat to last year. Airfreight revenue was slightly lower year over year due to lower volume, which was more than offset by higher market rates in Ocean. Core Logistics grew revenue by 5.1% and UPS Digital, including RoTE and Happy Returns grew revenue 32.5% year over year. In the first quarter, Supply Chain Solutions generated operating profit of $98,000,000 Operating margin was 3.6%, a decline of three twenty basis points compared to last year, primarily driven by cost pressure in our Mail Innovations business. This is a postal injection product and our contract with USPS expired at the end of twenty twenty four.

The new rates from the USPS are causing short term cost pressure, which we expect to address as we make adjustments to that business. Walking through the rest of the income statement, we had $222,000,000 of interest expense. Our other pension income was $37,000,000 which was higher than we anticipated due to updated expected return on asset assumptions and our effective tax rate for the first quarter was approximately 22.5%. Turning to cash and shareowner returns. In the first quarter, we generated $2,300,000,000 in cash from operations.

Free cash flow for the period was $1,500,000,000 Also in the first quarter, UPS paid $1,300,000,000 in dividends to shareowners and we repurchased $1,000,000,000 of our shares completing our share repurchase target for the year. Now let me provide an update on our cost out and network reconfiguration efforts. As we've discussed, we are reducing the amount of volume we deliver for Amazon by more than 50% by June of twenty twenty Associated with this volume reduction, we are undertaking the largest network reconfiguration in our history. This effort has been combined with our Network of the Future initiative as both will help drive us to a more efficient network. The first phase of our network reconfiguration includes 164 operational closures, including 73 building closures by the June year, and there's more to come.

These actions will enable us to expand our U. S. Domestic operating margin and increase profitability. Our reconfiguration plan is comprehensive and includes everything from closing buildings, reducing positions and cutting support costs through efficiency reimagine. To help you track along with our progress, we've grouped associated costs into three buckets.

First is variable cost, which captures operational hours and flexes down quickly with volume. Second is semi variable cost, which is represented by operational positions and will also be adjusted to match volume levels. And third is fixed cost, which includes closing buildings and reducing expense from support functions, both of which have specific completion dates assigned. Our network reconfiguration and efficiency reimagine program is aligned with our anticipated Amazon volume reduction in 2025 and is expected to remove $3,500,000,000 in expense this year. Splitting the savings between our three cost buckets, approximately 35% of our cost reduction will come from variable costs, about 35% will come from semi variable and about 30% will come from savings and fixed costs.

Now let me walk you through some of the details and how progress accelerates through the year. Starting with the pace of Amazon's volume decline. In the first quarter, Amazon ADV was down 16% year over year, which was more than we originally planned. Second quarter Amazon ADV is also anticipated to be down 16%, which is less than we originally planned. And looking at the first and second quarters together, our total expected Amazon decline for the first half of twenty twenty five is on track.

Then in the back half of this year, the ADV decline is expected to be approximately 30% in each of the third and fourth quarters. Looking at variable costs, this year associated with the Amazon volume decline, we plan to reduce total operational hours by approximately 25,000,000 hours. Our reduction in hours was on track through the first quarter. Moving to semi variable costs, our operational reduction target for 2025 is around 20,000 positions. Position changes are not only connected to the buildings we are closing, but will also be made across the entire U.

S. Network. Our planned reductions are in line with the total Amazon volume decline and our semi variable cost out efforts were on track through the first quarter. In our fixed cost bucket, we expect to close 73 buildings by the June. About two thirds of the buildings we are closing are in the Eastern part of the country with the remainder in the West.

As an engineering driven company, we've developed a detailed checklist for each building closure to ensure that we continue to provide industry leading service to our customers, assist our employees through these changes and leverage our network planning tools and other technology to efficiently process volume in our network. And lastly, as Carol mentioned, our efficiency reimagine initiatives that are redesigning many end to end processes like procurement and customer onboarding are underway and we expect to accelerate these savings starting in the second quarter. We are pleased with the progress we made in the first quarter with our cost out and network reconfiguration efforts related to the accelerated glide down of Amazon volume. And we are on track to achieve our 2025 cost reduction target of $3,500,000,000 Now turning to guidance for 2025. The macro environment is highly uncertain due to changing trade policy and tariff uncertainty.

As a global carrier, the eventual outcomes could result in pressure in some parts of our business and create new opportunities in others. We've modeled several different scenarios for how the balance of the year might play out so that we can quickly pivot, continue supporting our customers and lean into growth. And as Carol mentioned, we're also closely monitoring our direct exposure related to our purchasing and capital plan. Today, I'll provide you with our outlook for the second quarter. We are not providing any updates to our consolidated full year outlook until there's more certainty in the macro environment.

Let's start with our assumptions for the second quarter. In our international business, we have factored in announced tariffs and changes to de minimis exemption. We also expect weakening demand on the China to U. S. Trade lane will be partially offset by two factors.

First is growth on China to non U. S. Lanes and second is growth from the rest of the world inbound to The U. S. In our U.

S. Domestic business, we have included our expectations for the impact of volume and mix from the current levels of consumer demand. And lastly, we are implementing changes with how we process volume within our Mail Innovations business. In the second quarter on a consolidated basis, revenue is expected to be approximately $21,000,000,000 and operating margin is expected to be approximately 9.3%. In The U.

S. In the second quarter, we expect ADV to be down about 9% and revenue to be down low single digits compared to last year. SMBs will be disproportionately impacted by the uncertain environment, which will add some pressure to operating margin. We expect The U. S.

Domestic operating margin to expand by approximately 30 basis points compared to last year. Turning to International, we expect revenue to be down approximately 2% to last year and operating margin to be in the mid teens due to lower demand related surcharges and trade uncertainty. And in Supply Chain Solutions in the second quarter, revenue is expected to decline approximately $500,000,000 due to the reduction in revenue associated with Coyote in the same period last year. Operating margin is anticipated to be in the high single digits. And finally, in the second quarter, in total below the line, we expect approximately $160,000,000 in expense and we expect the tax rate to be between 2323.5%.

In closing, I'll note that this uncertain environment reinforces why we've taken action to reshape our volume mix, pull cost out and reconfigure our U. S. Network. We are focusing on controlling what we can control and executing our strategy to improve the long term profitability of our U. S.

Business, drive cash generation and deliver shareowner value. With that, operator, please open the lines for questions.

Thank you. We will now conduct a question and answer star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Our first question comes from the line of Tom Wadewitz from UBS. Sir, please go ahead with your question.

Good morning. Thanks for the question. Wanted to see if you could give a sense of, I guess, cost, how much of the $3,500,000,000 full year cost kind of comes And like how does it build through the year? And then is that like a full offset to the reduction in Amazon revenue or you know, kind of more or less? So maybe it's more on that.

I don't know if you wanna offer a a thought on how that flows into '26 as well. Maybe that's asking too much, but, you know, if you have kind of a similar number in '26 or more or less. So more on the the Amazon cost takeout in three and a half would be great. Thank you.

Sure. Thanks, Tom. And and yeah. So on the 3 and a half billion, if you think about it in the buckets that we laid out, right, the variable cost is gonna come out in line with the Amazon volume, right, as we as we kinda laid it out. The semi variable cost is generally going to follow the same pattern.

The fixed cost, what we described is we will be closing 73 buildings in the second quarter. So the majority there's more fixed cost, about 60% of it is weighted towards the back half. Efficiency Reimagined is also in that and is also about 60% in the back half. So you think across those three buckets, generally, the first two will follow Amazon volume and the others will be back half weighted.

And the Amazon volume decline is higher in the back half of the year than it is in the first half

we laid out, it's about 16% in the first half, 30% in the second half.

In 2026, look, we will wrap because remember, in the Amazon glide out, it's over the course of eighteen months. So in the first half of twenty twenty six, there will be incremental, both variable, semi variable, and fixed cost reductions that we'll lay out as we get the into the back half years. But those will be incremental to the three and a half billion that's in 2025.

it as kind of an exact match, or do you take out more cost than the revenue you lose?

Well, I think if you look at what we've talked about with the revenue and the cost that we're taking out, we are we are making structural changes to the business to improve the margin. Tom, I think we talked about the revenue that we're losing was non nutritive to the business, and so we are taking out more costs.

And the one thing I would add is on efficiency reimagined. That's really not tied to the Amazon volume decline. That's about making our business more productive. How does that play out, Brian?

Yes. So efficiency reimagined is all about making processes more efficient within the business. And so as we do that, we will also be taking out about $500,000,000 this year, rolling to 1,000,000,000 into 2026 that is going to be back half weighted in 2025, but will be incremental to the piece that's just directly related to the Amazon volume. It is included in the fixed cost bucket that we laid out, but but it's a route process redesign around restructuring of the business.

Thank you. Your next question is coming from Ari Rosa from Citigroup.

Carol, you mentioned this objective of being less dependent on labor going forward. I think there was a headline we saw the other day that you were testing out robotics and leveraging more warehouse automation. Could you just talk about those efforts and how that fits into the efficiency reimagine initiative? What kind of cost savings do you expect to realize that realize from that over the longer term? Thanks.

Well, as part of our Network of the Future initiative, we are looking at automating our buildings by automating the sort. But there's much more to automation than just automating the sort. We're also looking at the use of robotics for automatic label application, automatic, many other automatic opportunities, unloading and loading trailers as well as, how we sort packages in certain of our functions. And maybe I'll turn to Nando for a little more comment on that.

Yeah. Sure. So what you're going to see at the end of this is 400 facilities that are either partially or fully automated. On top of that, we're working ahead of ourselves as new automation technology, the application of AI in certain areas to help us with labor is introduced into these operations, and that allows us to really take cost out of the network. And also, the end state is 200 facilities that will be closed in our network.

And of course, as we work through this, we're creating capacity for ourselves through the productivity improvements. And again, you know, as we look at this, we've developed really good muscle here, and we're moving at a speed that we're all really happy with. But the end result will be a much more efficient operation with less dependency on labor. And as we grow and scale up, that's going to continue to provide benefits for UPS.

And so that activity coupled with our Amazon activity gives us confidence that we'll reach that 12% US operating margin by the end of twenty twenty six.

That's right. And and I would say we're, know, as as Carol and Endo have articulated, we're not stopping. Right? So while we're drawing down less efficient capacity, we're we're automating at the same time. We told you in the fourth quarter that 63% of our volume went through automated hubs.

That's now 64, which is up about four and a half percent year over year. And so we're moving towards a new a a more efficient net more efficient, more scalable network faster.

Thank you. Your next question is coming from Scott Group from Wolfe Research. Your line is live.

Hey. Thanks. Good morning. So I just want to understand that the of the the 3,500,000,000.0, how much has been realized to date in q one? And then when I look at Q1 margins domestically improved 110

think you said second quarter only 30 basis points. That a function of more macro and getting worse? Or is that I guess, why is that why are we seeing a deceleration in the in the market improvement in q two as I would imagine the cost savings are ramping?

Sure. So Scott, just to hit on the first point, about $500,000,000 of the $3,500,000,000 is in Q1. And like I said, we that that will ramp as both the Amazon volume comes out as well as our initiatives ramp as we go through Q2. There's a couple of things happening in Q2. And the first is we have to, as we outlined, we built into our guide the expectation from our customers of what the announced tariffs will be, right?

The net impact of that is that we do see some volume deceleration in both enterprise and SMB, particularly in SMBs, they do not have the tools to deal with the changes that our enterprise customers do. That will put some pressure on RPP and margin. The second piece I would add is, look, we're closing 7% of our US buildings in the quarter, right? And so we have built in some chaos costs in order to manage the volume and maintain service as we go through that process.

UPS (UPS) Q1 2025 Earnings Call Transcript

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