United Parcel Service Inc (UPS)

“In the third quarter, we expect Supply Chain Solutions revenue growth in the low double digits year-over-year and operating margin between 10% and 11%.”

“And we expect the operating margin to be between 13% and 14%.”

“We expect a similar performance in the third quarter with revenue up mid-single digits, driven by strong revenue per piece.”

“We expect revenue to be approximately flat year-over-year and a third quarter operating margin of approximately 7%.”

“Looking at the third quarter, we expect average daily volume to decline mid-single digits, reflecting a seasonal decline as well as the impact of this year's Amazon glide down, which completed in June.”

“We talked about SMB, but we will see volume growth in the back half of this year.”

“And to add to Carol's point on the U.S., Ken, we will see volume growth excluding Amazon in the back half of this year across all segments.”

“Now, in mid-teens EPS growth in both the third quarter and the fourth quarter.”

“But as we build our financial plan that supports the guidance that we just gave, we expect the volume sequentially in the United States to lift about 24% from Q3 to Q4, much like it did last year.”

“So as revenue grows, our capital dollars will increase, but that 3.5% is a good number to think about for you.”

“About 3.5% of revenue, Jeff, I think it's about the right level to think about.”

“I would also say our international business will perform a bit better than seasonality because of the volume momentum we have going into the fourth quarter, especially with surge fees and other fees we typically see in the market.”

“That momentum will carry through into the back half of the year.”

“So yes, base pricing plus 50 to 100 basis points of product mix is a reasonable expectation going forward, and we'll be focused on maintaining that unit cost spread to drive operating leverage.”

“That will come down closer to 4 to 4.5% as we work through those impacts from last year.”

“Jordan, I think the way to think about it is that a 50 to 100 basis point spread between revenue per piece and cost per piece will help us drive margin accretion in our U.S. business as we go forward.”

“We think about base pricing in this 250 to 350 basis points range, which is about where we are this quarter.”

“Lastly, we are still planning to pay out around $5.4 billion in dividends in 2026 subject to Board approval.”

“We expect free cash flow to be approximately $5.5 billion, which includes the payments for the Driver Choice program I mentioned earlier.”

“Turning to our expectations for cash in the balance sheet. For the full year 2026, capital expenditures are still expected to be about $3 billion, and we plan to complete our pension contribution of $1.3 billion.”

“We expect full year operating margin to be between 10% and 11%.”

“Lastly, in Supply Chain Solutions, we expect full year 2026 revenue growth in the high single digits, driven by growth in forwarding and health care logistics.”

“Operating margin in the International segment is expected to be in the mid-teens.”

“Turning to the International segment. And starting with the full year, we anticipate revenue growth in the mid-single digits year-over-year, driven by strong revenue per piece growth.”

“Lastly, in the back half of the year, we expect the U.S. domestic operating margin of approximately 8.8%, reflecting year-over-year margin expansion in both the third and fourth quarters.”

“an operating margin of approximately 7.5%.”

“Starting with domestic, we expect full year 2026 revenue of approximately $60 billion, up 1% year-over-year and an operating margin of approximately 7.5%.”

“As a result, we still expect to deliver approximately $3 billion in related benefits in 2026.”

“lifting our diluted earnings per share guidance to approximately $7.22.”

“We are raising our consolidated operating profit expectation to approximately $8.65 billion and lifting our diluted earnings per share guidance to approximately $7.22.”

“Based on our year-to-date results, today, we are raising our full year 2026 consolidated revenue outlook to approximately $91.2 billion.”

“And I would just add, Carol, I think what we see from a pricing environment standpoint is that the pricing remains rational and we think that we'll be able to price accordingly for the demand as well.”

“Well, and that's part of the step-up that we've got, right? So we had a roughly $150 million in transitional costs in the first quarter that starts to go away as we go to the second quarter, and it helps us with the margin improvement that we see in the second quarter and then going into the second half.”

“Looking at the second quarter, we expect momentum from the first quarter to continue, and we expect revenue in SES to be up low single digits year-over-year and operating margin between 9.5% and 10.5%.”

“These cost pressures are largely behind us as we move into the final months of the execution of our Amazon glidedown and network reconfiguration initiatives.”

“So at the end of the year, we'll give you a sense of what we think '27 will look like, but it's going to be much better than '26 based on what we're seeing in the underlying health of the business.”

“This is the year of inflection. So the back half of the year will look considerably different than the first half of the year.”

“Taken together, these actions set us up for operating margin expansion and greater operational agility.”

“We are pleased with the progress that we are making on our Amazon glidedown and network reconfiguration initiatives and are on track to achieve our targeted $3 billion in savings in 2026.”

“In addition, the Driver Choice program that we initiated during the quarter is expected to reduce full-time driver positions by approximately 7,500 over time, putting us firmly on target to reach our reduction goal of 30,000 operational positions this year.”

“Total operational hours paced down with volume in the first quarter, and we're on track to reach our 2026 reduction target of 25 million hours versus last year.”

“As we reach the finish line on our Amazon glide down and complete our network reconfiguration, costs will continue to come out. Premium volume will continue to strengthen and we will return to revenue and profit growth with higher operating margins and stronger returns on invested capital.”

“Based on these actions and more, we are firmly on track to achieve our $3 billion cost-out target for the year.”

“Yes, that's a really important point. And I think, as Carol mentioned, we are purely a pass-through, so we don't expect that this will have an impact on our financial statements.”

“That should allow us to keep CCP in the low single digits. And then have that 50 to 100 basis point spread because we've got a more healthy customer mix and grow from there.”

“And I think even if you look into the back half of this year, our CPP gets down into the low single digits, right?”

“It's a combination of actions that we are driving to drive back to mid to high teens in our international business.”

“And I think we'll continue to get that kind of base pricing increase.”

“Well, I'll start and so thanks. So look, I think getting back to this, call it, 50 to 100 basis point spread is healthy, right, for our business. And we'll be back there by the end of this year, right, is the way the year kind of sits out.”

“This is going to normalize over time. And in fact, with the elimination of the EBA tariff and going back now to the 122 tariffs of 10%, we're actually seeing trade lanes move from red to orange yellow in the subpieces grain. So things are starting to normalize. So that means the margin will get back up.”

“We'll lap some of the actions that we took on the enterprise customers as we go through the second quarter and see growth back to Amazon in volume in the back half.”

“We expect revenue at Amazon to grow every quarter this year.”

“And as we exit this year, we have an opportunity to grow U.S. margins in a meaningful way with that between RPP and CPP.”

“Lastly, we are still planning to pay out around $5.4 billion in dividends in 2026, subject to Board approval.”

“We expect free cash flow to be approximately $5.5 billion, including onetime payments for the Driver Choice program.”

“Capital expenditures are still expected to be about $3 billion, and we plan to make our annual pension contribution of $1.3 billion.”

“And in Supply Chain Solutions for the full year 2026, we still expect revenue to be up high single digits, which includes revenue from our Andlauer acquisition and operating margin in SCS is expected to be in the low double digits.”

“Operating margin in the International segment is expected to be in the mid-teens.”

“We still anticipate revenue growth in the low single digits year-over-year, driven by a solid increase in revenue per piece.”

“Full year operating margin is still expected to be flat to 2025.”

“We expect ADV to be down mid-single digits year-over-year due to our actions with Amazon which will be offset by a strong revenue per piece growth rate in the mid-single digits.”

“Looking at U.S. domestic, full year 2026 revenue is still expected to be approximately flat year-over-year.”

“We are on track to generate revenue of approximately $89.7 billion with an operating margin of approximately 9.6% and diluted earnings per share expected to be about flat to 2025.”

“We are planning to close an additional 27 buildings this year, most of which will be closed in the second quarter.”

“Today, we are reaffirming 2026 consolidated financial goals. For the year, we expect to generate consolidated revenue of approximately $89.7 billion, and a consolidated operating margin of approximately 9.6%.”

“Our actions are moving us toward a more profitable U.S. small package business with the back half of 2026 expected to be the inflection point.”

“we will lap the tariff impact in May, and start to see positive growth from that, and then we'll lap the de minimis impact in September.”

“So just on the saver portion, we will have that network up and running by the end of this month.”

“It's going to be like that in the first.”

“Look, I think what we expect to see evolve in the international business is we are going to see extreme weakness in the first quarter that kind of gradually recovers.”

“We expect profit to be down about 30% in the first quarter and then recover as we go throughout the year.”

“The way to think about it is really about a 100 basis points of pressure in the first half that will release in the second half, most of that pressure coming in the first quarter.”

“Looking at the first quarter, we expect revenue to be approximately flat with a year-over-year decline in operating profit due to changes in trade lanes and tough comps from the front-running of tariff and de minimis changes in 2025.”

“In the first half of the year, we expect a decline in revenue compared to 2025, driven by volume decline.”

“we have identified 24 buildings for closure in the first half of the year, and we are evaluating additional buildings to be closed later in the year.”

“From an operating profit perspective, higher expenses are expected to weigh on operating profit early in the year.”

“That is going to flip on us. So I'm very confident that the cost per piece will be in a much better position as we align to the driver buyout proposals that we're discussing, network of the future implementations, building closures, short closures, and, of course, the outsourcing of the USPS one.”

“we will have a less labor-intensive, more nimble, more profitable network that will minimize the impact of the increase.”

“we'll be kind of around this three to three and a half percent of revenue as a normalized CapEx”

“the revenue quality actions that we're taking in international have helped to offset the volume declines in the third quarter and will continue to help drive revenue growth as we go through Q2, Q3, and Q4 of next year.”

“what we expect to see is not only volume normalize but also margin improve as we go through the year.”

“We have 127 buildings that are automated. We are adding another 24 in 2026.”

“Yes, we will see the cost per piece normalize to that kind of normal inflation level.”

“if you think about rev per piece for the year, Ken, it's about four and a half percent.”

“I wouldn't expect to see that full benefit until 2027.”

“that will translate into savings in the second half of this year and going forward.”

“we expect to see cost per piece come down below the rep per piece, so we're driving unit cost improvement.”

“I would think about a couple percent on the base rate.”

“we expect to see kind of mid-single digit enterprise and SMB volume growth in the back half.”

“we will be exiting at a healthy double-digit margin that will take us into 2027.”

“It will be about double that in 2026 that's included in the guidance.”

“We are planning to pay out around $5.4 billion in dividends in 2026, subject to Board approval.”

“Capital expenditures are expected to be about $3 billion.”

“For modeling purposes, in total below the line, expect approximately $760 million in expense, which includes pension income of approximately $250 million, and we expect the tax rate for the full year to be approximately 23%.”

“In Supply Chain Solutions, for the full year 2026, we expect revenue to be up high single digits, which includes revenue from our Andalar acquisition.”

“Operating margin in the International segment is expected to be in the mid-teens.”

“we anticipate revenue growth to be in the low single digits year over year, driven by a solid increase in revenue per piece.”

“we expect enterprise and SMB revenue growth. First half cost pressures are expected to be behind us, and we will be running a more agile U.S. network.”

“Full year operating margin is expected to be flat to 2025.”

“We expect ADV to be down mid-single digits year over year due to our actions with Amazon, which will be offset by a strong revenue per piece growth rate in the mid-single digits.”

“Pulling it all together, we are targeting $3 billion in savings related to the Amazon glide down.”

“In terms of semi-variable costs, we expect to reduce operational positions by up to 30,000.”

“Looking at the variable costs associated with the Amazon volume decline, in 2026, we plan to reduce total operational hours by approximately 25 million hours.”

“As we've discussed, offsetting some of these savings was the incremental costs associated with insourcing Groundsaver, which we expect to moderate in 2026.”

“Over the next fifteen months, we expect to take delivery of 18 new Boeing 767 aircraft, with 15 expected to deliver this year.”

“We expect to return to operating profit growth in the second half of the year.”

“we are planning to grow SMB and enterprise revenue in the low single digits in the first half of the year and then accelerate that growth to mid-single digits in the second half of the year.”

“Our new air hub in The Philippines is slated to open towards the end of 2026, and our expansion in Hong Kong is on track to open in 2028.”

“Over the next year or so, we will replace much of that capacity with new, more efficient Boeing 767 aircraft.”

“This year, we plan to further automate our network, and as a result, we expect to increase the percentage of U.S. volume we process through automated facilities to 68% by the end of the year, up from 66.5% at the end of 2025.”

“We suspect in the range of 24 for sure, first half, that we've got another 60 or 70 worth assessing.”

“My guess is there'll be a few more closures than the 24 you've identified.”

“As we right-size the driver staffing levels and moving forward, then, yes, over time, I think we'll get that back.”

“We think it's going to be one of our best service and production peaks that we've had in a long time.”

“And Brian, on your point on rev per piece, look, we continue to see strong base rate improvement in rev per piece. We expect the fourth quarter to be a little bit above 6%.”

“There's been -- there will be 42 new automation projects live by the time we start peak.”

“Even though there's one incremental day in the peak season, we're still balancing demand and expect to see good take on the holiday demand surcharges.”

“So Ken, if you go from Q3 to Q4, remember, as Carol said, we have been working closely with our customers, and we expect peak to be in similar shape as it has in the last 4 years, right? So we'll see about a 20% step-up in sequential ADV in the U.S., about 10% in international.”

“We haven't factored in any significant impact to the peak season because we rely on what our customers are telling us and our customers are telling us those from peak that they're going to have a good peak.”

“Yes, look, we saw the Q3 free cash flow bounce back. There were some timing issues in our Q2 versus Q3 that have kind of worked themselves out, and we expect Q4 to look similar to Q3.”

“And we estimate in the fourth quarter, the direct impact will be $75 million to $100 million.”

“And then we'll continue to draw down as we go through the first half of next year and the cost takeout will continue as we go through that.”

“And following the completion of our acquisition of Andlauer, we expect to end the year with around $5 billion in cash.”

“Lastly, we expect the tax rate to be approximately 23.75% for the full year 2025.”

“We are planning to pay out around $5.5 billion in dividends, subject to Board approval, and we have completed the targeted share repurchase of about $1 billion of our shares.”

“Looking at capital allocation for the full year, we expect capital expenditures to be approximately $3.5 billion.”

“And we expect an operating margin of approximately 9.5% to 10%.”

“We expect to close this transaction in early November.”

“I do think that this mid- to high teens margin for international is absolutely the target, but we need kind of trade flows to settle in order to get there.”

“I guess what should give everybody comfort is what we've displayed in the first 9 months, we've also started the stage next year in 2026. So this continues, and we will hit our Amazon targets and our drawdown in terms of cost and productivity just gets enhanced as we first, introduce more NOF projects”

“On the cost takeout, we'll reset that in January as we roll forward. But Nando's team has been doing a great job that as these buildings transition, we move to work, we consolidate, we're investing in NOF, and we'll drive a similar level of efficiency next year.”

“Clearly, we've got a dividend of around $5.4 billion to $5.5 billion, and we expect it to be above that in the very near future.”

“We're seeing growth in the areas of the markets where we want to grow. That allows us to drive better returns and better margins. And with the cost takeout and the network efficiency that we're creating through our automation investments, we do expect the business to generate significantly more free cash flow over time.”

“And look, we're continuing to focus on growing in the parts of the market that will help us continue to drive revenue per piece growth as well as higher margins as we go into the back half of '26 and complete the Amazon glide down.”

“The second is, as Carol mentioned, we're taking strategic actions around Ground Saver that will start to take hold next year, and we'll see economic benefit in the back half of next year for that as well.”

“Now there's a big meeting coming up this week. So maybe we'll have a little bit more certainty about trade between our 2 countries, but we're right now forecasting a decline in those trade lanes in the fourth quarter.”

“Putting it all together, we remain on track to achieve our 2025 expense reduction target of about $3.5 billion.”

“We expect that, as Carol said, part-timers will work out over time. Full-timers, we'll get them on plan.”

“We expect that to catch up over time.”

“We'll lap that in the fourth quarter.”

“Right now, we think it's kind of the same second quarter to third quarter. But as we get more certainty, that allows us to make adjustments that can drive the margin back to where we think international can be, mid to high teens over the long term.”

“International and SCS, I mean, you see in the performance, things are holding pretty well. We expect those to be about the same.”

“Lastly, we expect tax rate to be approximately 23.5% for the full year 2025.”

“We are planning to pay out around $5.5 billion in dividends, subject to Board approval, and we have completed the targeted repurchase of about $1 billion of our shares.”

“We expect capital expenditures to be approximately $3.5 billion.”

“We continue to evaluate the network and the impact of the Amazon volume decline and expect to close additional buildings and operations in the back half of 2025.”

“For part-timers, we expect the attrition rate to synchronize over time.”

“Now that we are in the second half of the year, we expect to accelerate the pace of Amazon volume decline to approximately 30% year-over-year in each of the third and fourth quarters.”

“We are working on solutions to relieve this pressure in the back half of the year.”

“We expect this acquisition to close before the end of the year.”

“So yes, we would expect that the volume for Amazon to be declining, efficiency reimagine ramps, it will carry through a similar number to next year.”

“So as you think about Q3 margins, they could be pressured a little more than we thought earlier in the year, even more than the kind of normal seasonality that we have from Q2 to Q3.”

“And so, we are taking out more costs.”

“In this first phase, we will complete 164 operational closures, including 73 building closures by the end of June.”

“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 margin and return on invested capital improvements.”

“we expect a tax rate to be between 23% and 23.5%.”

“And finally, in the second quarter, in total below the line, we expect approximately $160 million in expense, and we expect a tax rate to be between 23% and 23.5%.”

“We expect the U.S. Domestic operating margin to expand by approximately 30 basis points compared to last year.”

“On the charges associated with the restructuring plans, think about it as about 60% cash, 40% non-cash.”

“I think the first quarter margin was suppressed a bit because of the investments we're making in Europe for weekend delivery. We will lap those investments later in the year, so that will give us margin expansion at that point.”

“Look, longer term, we expect International to get back to this mid to high teens margin as a long-term margin.”

“So, as we do that, we will also be taking out about $500 million this year, rolling to $1 billion 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.”

“So, we are making structural changes to the business to improve the margin.”

“Correct. As we laid out, it's about 16% in the first half and 30% in the second half.”

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

“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.”

“And so, that activity, coupled with our Amazon activity, gives us confidence that we'll reach that 12% U.S. operating margin by the end of 2026.”

“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.”

“We're growing profit dollars, not just margin. We're growing profit dollars, and I think we're not shrinking the profit dollars, we're growing the profit dollars.”

“we will expand domestic operating margin in every quarter of this year, right. We will expand it every quarter of this year, and we will finish with almost 130 basis points better than we finished last year.”

“Our GRI on our core business is 5.9% for 2025. We're going to keep probably 50% of that.”

“around 20% of the volume in the U.S. network 2025 depending on the time and the price”

“It's fair to say it will accelerate as we go through the year, especially in the second half and then into the first half of 2026.”

“we anticipate based on the numbers we've just laid out for you today, that our return on invested capital will grow about 300 basis points year-on-year.”

“We expect free cash flow to be approximately $5.7 billion including our annual pension contribution of $1.4 billion.”

“We expect pension expense to be approximately $37 million for the full year 2025 which is $306 million higher than in 2024 primarily due to the impact of market shifts and interest rates on our pension assets last year.”

“For modeling purposes, in total below the line, we expect approximately $780 million in expense, with a little more than half in the back half of the year.”

“We expect the first quarter to be the lowest SCS operating margin in 2025.”

“operating margin to be approximately 8.5%.”

“in Supply Chain Solutions for the full year 2025, we expect revenue to be approximately $11 billion and operating margin to be approximately 8.5%.”

“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.”

“with an operating margin of around 18.6%”

“For the year, we expect 2025 revenues to increase approximately 2.5% year-over-year, with an operating margin of around 18.6%”

“we expect mid-single digit ADV growth throughout the year, but with lower demand related surcharges than we've seen in prior years.”

“Full year operating margin is expected to be approximately 8.8%, an increase of 130 basis points compared to 2024.”

“We expect the intended volume and revenue declines to accelerate as we progress throughout the year.”

“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 on-boarded USPS air cargo business.”

“operating margin is expected to be approximately 10.8%.”

“for the full year 2025 on a consolidated basis, revenue is expected to be approximately $89 billion, and operating margin is expected to be approximately 10.8%.”

“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.”

“Efficiency Reimagined should drive approximately $1 billion in savings.”

“Yeah, absolutely, because we will accelerate the cost out related to the fixed cost.”

“We're going to hit the operating margin targets. We are absolutely confident on that.”

“Amazon will remain a customer of UPS when we finish our accelerated glide down on those areas that are a win for us and a win for them.”

“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 which gives us the margin expansion that we've explained.”

“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 second half of 2026”

“we will be managing the capital base. So thinking about CAPEX in line with depreciation is where we think that we're going to need to manage it as we continue to automate, but also manage the capital base as we improve ROIC.”

“between 2024 and 2026 on average and of course, this is not the average, it is just an average, but the average between 2024 and 2026 will be 1.2 5 million packages per day per year. So five times as fast as what we did before.”

“We've got plans to take that to $20 billion by 2026”

“We're going to take that up to 32% in 2025, ROA to 35% in 2026 and beyond.”

“As the impact of our cost-out efforts increased over the next 18 months, we expect to pace operating margin improvement to accelerate into 2026, where we expect by the fourth quarter to generate a 12% U.S. operating margin.”

“we expect to close up to 10% of our building, cut back our vehicle and aircraft leads, and reduce labor.”

“Our guidance for 2025 does not reflect any significant potential global trade implications due to changes in tariffs.”

“We have full confidence that that's going to provide very good productivity improvements. And then next year, we're accelerating and pulling in the number of projects that we can execute in 2025.”

“We feel very confident in both of those and we're seeing them actually start to come through in the third quarter and early in the fourth quarter on the revenue side.”

“are lifting our consolidated operating margin target to approximately 9.6%.”

“Now as we translate into the fourth quarter, we actually expect rev per piece to inflect positive in the U.S. and that's really driven by a couple of things.”

“in the fourth quarter, we'll see SCS go back to 9 -- about 9% and domestic to around 9.5%.”

“No impact in the fourth quarter. We'll tell you more about it when we come back with the fourth quarter earnings in January.”

“we do expect about $70 million incremental to go about $350 million in the fourth quarter, and we've seen great progress with that program.”

“look, it's a positive trajectory on rev per piece and it's clearly an area of focus as we move from our year-one to our plus two strategy.”

“The other thing is what we're doing on the surcharging and the GRIs that we will continue to see lift as we go through the fourth quarter and into '25.”

“So we had strong rev per piece for international we held our cost CPP flat and so delivered operating leverage. We would continue to do that into the next year.”

“As we carry into Q4, we do expect to have strong cost performance. We'll probably be up about 1% per piece, which is still going to be less than our rev per piece growth rate.”

“So it will still be a good peak.”

“We do expect the domestic margin to be around 9.5%. And now we do expect to exit the year higher than -- slightly higher than the 10% that we guided to before.”

“And lastly, we expect the tax rate for the full year to be between 23% and 23.5%.”

“We plan to pay around $5.4 billion in dividends subject to Board approval.”

“Capital expenditures are expected to be about $4 billion.”

“Turning to capital allocation. For the full year in 2024, we expect free cash flow to be around $5.1 billion after the $1.4 billion pension contribution we made to fund annual service costs.”

“we expect to generate an operating margin of approximately 9%.”

“In Supply Chain Solutions, we expect revenue in the fourth quarter of around $3.3 billion, which takes into consideration the disposition of Coyote, and we expect to generate an operating margin of approximately 9%.”

“we still expect around a 20% operating margin in the fourth quarter.”

“we expect fourth-quarter revenue growth to be up mid-single digits year-over-year and we still expect around a 20% operating margin in the fourth quarter.”

“Looking at International. We expect the positive volume momentum we've experienced throughout the year will continue.”

“We expect to generate a fourth quarter operating margin of approximately 9.5%, and we now expect the operating margin in December to be slightly higher than 10%.”

“Starting with U.S. domestic, we expect the combination of both volume and revenue per piece growth to increase revenue by 1.5% in the fourth quarter.”

“we are lifting our consolidated operating margin expectation to approximately 9.6% to align with these new volume and revenue expectations.”

“At the consolidated level, we now expect full year revenue of approximately $91.1 billion.”

“Now that we have fully onboarded this volume, we expect it to generate consistent revenue and we expect an attractive margin on a consolidated basis.”

“Given our third quarter results, our latest peak volume expectations, and adjusting for the impact of the Coyote disposition, we now expect consolidated revenue of approximately $91.1 billion for the year and are lifting our consolidated operating margin target to approximately 9.6%.”

“Looking at our consolidated revenue outlook in the third quarter, we increased our emphasis on revenue quality resulting in a glide down of certain volume which we expect will continue into the fourth quarter.”

“This year on our peak day, which is December 18th in the U.S. we expect to deliver 2 million more packages than we did on peak day last year, but we'll do it at a higher productivity rate.”

“As of October 1, all contracted USPS air cargo business has been fully onboarded and we expect this business to deliver strong consistent revenue at an attractive margin.”

“In the first nine months of this year, we generated $2.3 billion in global GAAP revenue, and we expect to deliver over $3 billion in GAAP revenue for the full year.”

“We are targeting to close the Frigo-Trans acquisition in the first quarter of next year.”

“Our revenue per piece growth rate improved in the third quarter from what we reported in the second quarter, and we expect this trend to continue.”

“So we absolutely feel confident that we are back to the point of revenue growth, profit growth and back to margin expansion in the US.”

“Importantly, we expect to exit the final month of 2024 with a US operating margin of 10%, which creates a solid footing as we drive the US business to a longer-term operating margin target of 12%.”

“And lastly, we expect a strong peak driven by volume growth and demand surcharges.”

“However through expense management and slowing labor inflation, we expect to grow third quarter operating profit by double digits and exit the year with a US operating margin of 10%.”

“Next, product mix is expected to continue to pressure revenue per piece.”

“First, we expect average daily volume to grow by mid-single digits.”

“In US Domestic, we anticipate back half 2024 revenue growth of around 5%, driven by strong volume growth.”

“And in Supply Chain Solutions, in the second half of 2024, we expect revenue to be over $7 billion and an operating margin in the high-single digits.”

“Operating margin in the second half of the year in the International segment is anticipated to be approximately 20%.”

“Within the International segment, our full year and second half outlook remains consistent with what we provided at the beginning of the year. For the second half of 2024, we anticipate volume growth rates will inflect positively and the revenue growth to be in the mid-single digits.”

“Included in our guidance is the newly won air cargo business from the USPS, which will be fully onboarded by the end of the third quarter.”

“And lastly, we expect the tax rate to be approximately 22% for the remainder of the year.”

“And given our strong liquidity, while we originally had not planned to repurchase shares, we now plan to repurchase approximately $500 million of shares this year.”

“We plan to pay out around $5.4 billion in dividends, subject to Board approval.”

“We've tightened our capital expenditure forecast and now expect to spend about $4 billion.”

“For the full year in 2024, we expect free cash flow to be around $5.8 billion before any pension contribution.”

“So we think that the prices are going to stick because of what the environment is telling us from a demand perspective.”

“And as we look at the volume projections for peak, we’re expecting on our Peak day, which is December 18, has the highest volume ever in our network.”

“And then it will moderate a little bit. The growth will moderate a little bit in Q4 as the comp levels out.”

“And just one other piece of color, don't forget that we are anniversarying our labor contract on August 1. So the pressure associated with that contract moderates dramatically in the back half.”

“Our Q3 op margin is in the high teens and then getting to over 20% in Q4.”

“First, if you think about in the US from Q3 to Q4, we expect ADV to be up around kind of mid-single digit.”

“So as we get past this time frame and get into an easier compare, that's why we think our base rates can improve dramatically in the -- from where it was in the second half.”

“So we expect that to improve dramatically in the back half of the year.”

“As we look to the back-half of the year, we expect that to improve. Our pipeline is quite robust. So we expect to see good movement in that space.”

“And as Carol said we are on track to deliver roughly $1 billion in savings by the end of the year.”

“Further, with the pending sale of Coyote, we expect to free up cash that was not in our original guidance plan.”

“As we have fine-tuned our capital requirements for Network of the Future, we expect to spend less than we originally anticipated.”

“While we still expect an operating profit bathtub effect with solid earnings growth in the back half of the year, the growth rate will not be as high as we projected at the beginning of the year.”

“But for operating profit, as we look to the back half of the year, in the US, we expect the same volume mix characteristics as we had in the first half of the year, which compresses revenue per piece growth.”

“And we are on plan to complete an additional five operational closures in the second half of this year.”

“We continue to expect this business to be margin accretive for the company.”

“In the first six months of this year, DAP generated $1.5 billion in revenue and we are well on our way to achieving our 2024 DAP revenue target of over $3 billion.”

“which creates a solid footing as we drive the US business to a longer-term operating margin target of 12%.”

“As we continue deployment, we expect to achieve our reduction target by 2026.”

“Just, Carol, this year marks the 15th consecutive year we've increased the dividend, and we're committed to a stable and growing dividend.”

“We'd expect that base rate to continue over the course of the year.”

“And as we look towards the end of this year, we should be over 30 in the low 30s.”

“So we just raised the dividend and we look to, of course, subject to board approval, we look to raise the dividend every year.”

“We're on track to that $1 billion that I mentioned. And at a full annual run rate going into next year, we'd expect $1.3 billion.”

“Well, really, the excess capacity is around 6 million today, and we think that will be fully absorbed by 2025.”

“Now you may say why. Well, we're part of that excess. And so we're closing stores. We're taking capacity out of the market, and our Network of the Future initiative is capacity neutral. Also with our large competitors' consolidation efforts capacity will be leaving the market.”

“And then from an ADV perspective, internationally, Kate is looking to see that business improve as we sequentially move over the course of the year.”

“I think ADV in domestic, we're expecting Q2 to be slightly positive.”

“So from a volume mix perspective, if I look at the volume that’s in our pipeline, I would say the volume that’s in our pipeline is not sure cost. We’ve got commercial volume in our pipeline, additional enterprise volume in our pipeline.”

“So we anticipate that the international business and our planning for the international business to be in the high teens as we told to.”

“So we don’t expect we love by the way, but we don’t expect to see the drag on the RPP I’m sure costs in the back half, like we said, in the first quarter.”

“The projection for fuel is that is going to increase.”

“The big component, though, full year on a run rate basis, the Fit to Serve program will generate $1.3 billion in savings and we're ramping that up in Q2.”

“So this will be margin accretive. It will be EPS great at beginning in year one and through the life of the contract.”

“We expect to see a benefit to operating margins this year at both the consolidated level and within the U.S. Domestic segment.”

“We will leverage our integrated network and existing assets, and we expect the majority of the volume will fit within our current U.S. domestic daytime flight operations.”

“For the full year in 2024, we still expect capital expenditures to be within our target of around 5% of revenue or $4.5 billion.”

“And lastly, in U.S. domestic, we expect to exit the year at a 10% operating margin.”

“We still expect revenue per piece to outperform cost per piece.”

“And in the back half of the year, we expect volume and revenue growth to accelerate as we lap the diversion we experienced as a result of our labor negotiations.”

“Versus last year, we still expect first half earnings to decline and second half earnings to grow as we lap the first year of the Teamster's contract, and we still expect to exit the year with a U.S. operating margin of 10%.”

“In 2024, we expect to generate consolidated revenue ranging from approximately $92 billion to $94.5 billion and a consolidated operating margin ranging from approximately 10% to 10.6%.”

“We have no intent to cut the dividend to make that math work. We're going to earn back into it and the dividend is an important part of the value proposition.”

“We have a targeted dividend payout ratio of 50%. We are higher than that. It's our intent to earn back into a 50% payout ratio over time.”

“Additionally, we expect to expand our consolidated operating margin to more than 13% by 2026, which includes expanding our domestic operating margin to at least 12%.”

“We are confident we can get back to consistent expansion of US margins as we lap the first year of the contract.”

“So we expect the base to continue into 2024, our GRI for 2024 is 5.9%.”

“I think you can expect the second half of the year to be 11% to 12% in that range and you can back into the first half.”

“up 4% to 8% in the back half.”

“Yeah, I think as we look to the back end of the year, certainly the volume projections that are in there, in terms of the volume growth for the back end of the year, in that 2% to 4% range, domestically, we start to see CPP growing slower than RPP.”

“So it's a $1 billion of cost out now, but there's even more cost out to come as we have a full-year benefit in 2025.”

“But you're absolutely right in terms of the timing and announcement, it will be back-end weighted.”

“And for modeling purposes, in total below the line, we expect approximately $400 million in expense in 2024.”

“And in Supply Chain Solutions, for the full year in 2024, we expect revenue to be within a range of approximately $13 billion to $13.5 billion.”

“Moving to the International segment, we expect 2024 average daily volume to be within a range of approximately flat-to-up around 3%.”

“At both the low and high end of the range, we expect the revenue per piece growth rate to outpace the cost per piece growth rate beginning in the third quarter and we expect to exit the year at a 10% operating margin.”

“Looking at US Domestic, average daily volume growth is expected to be within a range of approximately flat-to-up 2% for the full year.”

“Lastly, we expect to generate our lowest consolidated operating margin of the year in the first quarter.”

“Looking at consolidated operating profit, we expect material improvement as the year progresses with the second half of the year outperforming the first half.”

“And in the back half of the year, revenue growth is anticipated to be up within a range of mid-to-high single-digits.”

“Additionally, cost will weigh on us in the first half of the year, primarily due to the higher labor cost inflation associated with the new contract.”

“We expect to move total average daily volume from negative growth in the first half of the year to positive growth in the back half.”

“This will result in a workforce reduction of approximately 12,000 positions and around $1 billion in cost out this year.”

“This program will continue into 2024.”

“We have nothing else planned, Brian, today. So we'll be buying MNX and Happy Returns this quarter, and it's about $1.3 billion in total that we'll be spending on those two companies.”

“Our health care business will be $10 billion this year against an addressable market that's over $100 billion. We're going to grow that market.”

“So we plan to grow not just at the market, but ahead of the market because of the investments that we're making with new products, new capabilities and actually new acquisitions, which we're very excited about.”

“The contract is front-end loaded. We're bearing the pain of that front-end load. For a five-year contract that's very attractive. The compounded annual growth rate on the five years is 3.3%. So once we get through this first front-end load with 46% of the cost in the first year, once we get through that, the margin is going to grow. It's going to grow in a big way.”

“We intend to do it again this year.”

“These efforts and more are keeping us on track to reach our $10 billion healthcare revenue target this year, and we're just getting started.”

“Taking that and they've done a good job of demonstrating that Q1 was 18% margin International, Q2 was a 20%, so we're probably in the middle of that range for the fourth quarter.”

“We're looking in the fourth quarter to step back up into that high-single-digit, low-double-digit range.”

“I think the guide now implies from a low-single-digit to a mid-single-digit in the month of December, and that's pending some of the backdrop I just talked about in terms of the retail outlook.”

“Back half of the year, we get into two to three-year glide path with lower inflation per year, and then, so pricing and productivity can help expand the margins.”

“So I would tell you from a shape, certainly the first half of the year will be more challenged than the back half of the year.”

“So going into next year, getting back on level footing with a system that has higher ADV will help us certainly from a cost and margin perspective, the revenue per piece we announced a 5.9% GRI, so that will be coming in.”

“Today, we've won about 25% of that pipeline. Now, that $7 billion is an annualized number. So, all those packages and volume haven't come into the network yet, it will come in over the next year.”

“To get to the low end of the guide, it would require about $800 million in profit.”

“And lastly, we expect the tax rate for the full-year to be approximately 22%.”

“We have repaid $1.6 billion in debt this year as planned, and expect to repay an additional EUR700 million of debt in the fourth quarter.”

“We are still planning to pay out around $5.4 billion in dividends in 2023, subject to Board approval.”

“Turning to capital allocation for the full-year, capital expenditures are still expected to be about $5.3 billion.”

“And exports on our most profitable trade lane, which is China to the US, are not improving at the pace we had expected.”

“We now expect consolidated revenue to be between $91.3 billion and $92.3 billion, and consolidated operating margin to be between 10.8% and 11.3%.”

“In addition, we plan to hire over 100,000 seasonal employees to help process and deliver holiday volume.”

“So based on what appears to be slowing demand in all business segments, we are revising our guidance accordingly.”

“We still expect to have healthy peak volume in the fourth quarter.”

“In the first nine months of this year, we generated $2.1 billion in DAP revenues, and we expect to deliver $3 billion in DAP revenue for the year.”

“We are working to win back all diverted volume by the end of the year.”

“1H of '24 would expect to be under some pressure, the back half, less inflation.”

“So we're not putting in a lot of recovery into the international business going forward.”

“On the CPP basis, we're still calling from a U.S. basis, we would look from a full year standpoint to be about 11.24, which is about a 1.4% change from the 11.08 we had previously.”

“SCS, I would expect full year revenue to approach $14 billion with a margin of about 10%.”

“And then I would say, Europe and Asia ADV growth would bottom in Q3.”

“And as you think about the International business, the second half ADV, we're expecting to be down around 6.5%, RPP should be flattish.”

“So from a margin perspective, Jordan, we'd expect International full year to be 19% to 20%, SCS should be at 10%.”

“I would say Q3 will be more challenged than Q4 due to the ADV growth rates and seasonality. And we've got some one-time costs in the third quarter. So I would just think of Q4 being a bit stronger than Q3.”

“As Brian commented, we think by the end of the year, we will pull back everything that diverted. And I think we're going to win that extra 200,000 packages as well.”

“This year, we had guided to roughly a 500-basis point improvement in rate, and then we had expected about 200 basis point headwind in fuel to land at about 3%. So we're staying with that guide for this year.”

“We're looking at ESMO improving in the back end of the year. So from a macro standpoint, I think the trends are stable to improving in the U.S., obviously, under some more pressure internationally.”

“On the bottoming, we have thought we would have seen the bottom in Asia in Q2, which I would say, it didn't recover. It stalled. In Europe, we think the bottom will be more in Q3, but there could be an elongated period here.”