• Consolidated Revenue: $21.5 billion, a decrease of 0.7% year-over-year.
• Consolidated Operating Profit: $1.8 billion, an increase of 0.9% year-over-year.
• Consolidated Operating Margin: 8.2%, up 20 basis points from the previous year.
• Diluted Earnings Per Share (EPS): $1.49, up 4.2% year-over-year.
• US Domestic Segment Operating Profit: Increased by $164 million year-over-year.
• US Domestic Operating Margin: Increased by 110 basis points.
• International Segment Revenue: $4.4 billion, up 2.7% year-over-year.
• International Average Daily Volume (ADV): Increased 7.1% year-over-year.
• Supply Chain Solutions Revenue: $2.7 billion, with a decrease of $471 million due to divestiture.
• Free Cash Flow: $1.5 billion for the first quarter.
• Share Repurchases: $1 billion completed, meeting the annual target.
• Dividend Payments: $1.3 billion paid to shareholders.
• Amazon Volume Decline: ADV down 16% year-over-year in the first quarter.
• Building Closures: 73 buildings to be closed by the end of June as part of network reconfiguration.

• Warning! GuruFocus has detected 2 Warning Sign with UPS.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• United Parcel Service Inc (NYSE:UPS) reported a consolidated operating profit increase of 0.9% year-over-year, reaching $1.8 billion.
• The US Domestic segment saw a significant increase in operating profit by $164 million year-over-year, with operating margins expanding by 110 basis points.
• UPS successfully insourced SurePost's final mile delivery, replacing it with the new Ground Saver product, which offers operational flexibility.
• The company is executing a major network reconfiguration, including 164 operational closures, to optimize capacity and increase productivity.
• UPS's strategic acquisition of Andlauer Healthcare Group aims to bolster its healthcare capabilities in Canada, supporting its goal to become the leading complex healthcare logistics provider globally.

Negative Points

• Consolidated revenue for the first quarter of 2025 decreased by 0.7% compared to the previous year, totaling $21.5 billion.
• The decline in US average daily volume (ADV) for February and March was higher than expected due to uncertainties in global trade policies and muted demand.
• International operating profit decreased by 4.1% year-over-year, impacted by a mixed shift to more economy services in Europe and lower demand-related surcharges.
• Supply Chain Solutions segment experienced a revenue decline of $471 million, primarily due to the divestiture of Coyote in 2024.
• The macroeconomic environment remains highly uncertain, with potential impacts from changing trade policies and tariffs, leading UPS to withhold updates to its full-year outlook.

Q & A Highlights

Q: Can you provide more details on the $3.5 billion cost reduction plan and how it aligns with the Amazon volume reduction? A: Brian Dykes, CFO, explained that the cost reduction is divided into variable, semi-variable, and fixed costs. The variable and semi-variable costs will align with the Amazon volume reduction, while fixed costs, including building closures, will be more back-half weighted. The Amazon volume decline is higher in the second half of the year, and the cost reductions are expected to exceed the revenue loss from Amazon.

Q: How is UPS leveraging automation and robotics to reduce dependency on labor? A: Carol Tome, CEO, mentioned that UPS is automating its facilities, including sorting processes and using robotics for tasks like label application and trailer loading. Nando Cesarone, President U.S. and UPS Airline, added that 400 facilities will be automated, and 200 will be closed, enhancing efficiency and reducing labor dependency.

Q: What impact do you expect from the announced tariffs and changes to trade policies? A: Brian Dykes, CFO, noted that UPS anticipates some volume deceleration, particularly among SMBs, due to announced tariffs. The company has factored in potential impacts on revenue per piece and margins, and is prepared for trade shifts, such as increased trade from China to non-US lanes.

Q: How is UPS managing the shift in trade lanes and the impact on International margins? A: Brian Dykes, CFO, stated that while the China to US trade lane is the most profitable, UPS expects shifts to other lanes, such as China to the rest of the world, to offset some impacts. The company anticipates International margins to return to mid- to high-teens in the long term.

Q: What is UPS's strategy for handling potential recessionary scenarios while undergoing network realignment? A: Carol Tome, CEO, emphasized that the network realignment adds agility and flexibility, allowing UPS to manage various scenarios. The company is focused on reducing dependency on non-profitable Amazon volume and enhancing efficiency through automation, positioning UPS to handle potential economic downturns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.