Key Highlights

  • Consolidated revenue rose 6.7% to USD 22.9 billion, with growth across all three business segments.
  • Diluted EPS was USD 1.37 and adjusted diluted EPS was USD 1.69, with an adjusted operating margin of 9.0%.
  • International operating margin reached 14.9%, and U.S. Domestic adjusted operating profit rose 14.3% to USD 1,034 million.
  • Full-year adjusted EPS guidance rose to about USD 7.28, with adjusted free cash flow guided to about USD 6.1 billion.

Quarter Results

UPS (NYSE:UPS) reported third quarter 2026 results on Tuesday. Consolidated revenue rose 6.7% to USD 22.9 billion. Operating profit was USD 1.7 billion for a 7.6% margin, and adjusted operating profit was USD 2.1 billion for a 9.0% margin. Diluted EPS was USD 1.37, and adjusted diluted EPS was USD 1.69. GAAP results included a net charge of USD 279 million, or USD 0.32 per share, made up of USD 130 million of after-tax transformation strategy costs and a USD 182 million goodwill impairment in Supply Chain Solutions, partly offset by a USD 33 million gain on sale of MD-11 assets. The prior-year quarter included a USD 330 million pre-tax gain, or USD 0.30 per share, from a sale-leaseback.

Chief Executive Carol Tomé said results reflect strengthening fundamentals driven by premium growth and greater network efficiency, and described the network as the most automated and efficient in the company's history heading into the holiday season.

Segment Results

U.S. Domestic revenue rose 4.5% to USD 14,865 million, driven by a 6.1% rise in revenue per piece, about half from base rates and customer mix and the rest from fuel. Operating profit was USD 906 million, and adjusted operating profit rose 14.3% to USD 1,034 million, a 7.0% adjusted margin. Average daily volume fell 3.3% after earlier deliberate actions to reduce Amazon volume, while small and medium-sized business volume grew 3.7% to 35.1% of total U.S. volume.

International revenue rose 7.1% to USD 5,007 million on a 15.0% increase in revenue per piece, with operating profit of USD 746 million at a 14.9% margin. Asia-to-Asia export volume rose 8.4%. Supply Chain Solutions revenue rose 18.2% to USD 2,981 million on forwarding and logistics, including healthcare, with forwarding up 17.5%. Operating profit was USD 92 million, and adjusted operating profit was USD 274 million, a 9.2% margin. Healthcare revenue exceeded USD 3 billion for the third consecutive quarter.

Guidance

For the fourth quarter, management guided to revenue of about USD 25.7 billion, roughly a 5% increase, and adjusted operating profit of about USD 3.3 billion. For 2026 it now guides to revenue of about USD 92.6 billion, adjusted operating profit of about USD 8.75 billion, adjusted diluted EPS of about USD 7.28 and adjusted free cash flow of about USD 6.1 billion. The free cash flow figure was raised on business performance and a USD 450 million pension contribution made using bonds.

Confirmed items include capital expenditures of about USD 3.0 billion, dividend payments of around USD 5.4 billion subject to board approval, an effective tax rate of about 23% and USD 1.3 billion of pension contributions. Transformation strategy costs were USD 171 million in the quarter, within a projected USD 1.4 billion to USD 1.6 billion for 2026.

Parcel Network Markers to Follow

Tracking points include U.S. Domestic revenue per piece against 6.1%, average daily volume after the 3.3% decline, and the peak season sequential volume increase of about 25%. Further items are International margin against 14.9%, Supply Chain Solutions margin after the impairment, and transformation costs against the USD 1.4 billion to USD 1.6 billion range.