UPS Adjusted Profit Grows 12% as Guidance Rises Despite EPS Hit
United Parcel Service raised its full-year revenue outlook to roughly $91.2 billion after quarterly revenue climbed 7.6% even as a $891 million restructuring charge cut GAAP earnings per share in half.
United Parcel Service (UPS) reported second-quarter revenue of $22.8 billion, up 7.6% from a year earlier, and raised its full-year guidance after two straight quarters of holding targets steady. The parcel and logistics company's non-GAAP adjusted operating profit rose 12.0% to $2.1 billion, marking a return to year-over-year growth following a roughly flat first quarter.
The quarter turned on a reversal in the U.S. Domestic segment, the company's largest by revenue. Domestic revenue grew 6.0% to $14.93 billion, a sharp swing from a 2.3% decline in the first quarter and a 3.2% decline in last year's fourth quarter, driven by a 9.3% increase in revenue per piece compared with 6.5% in the prior quarter. Average daily package volume in the segment still fell 3.3% to 16.0 million pieces a day, and non-GAAP adjusted cost per piece rose 8.0% to $13.09, indicating that pricing rather than volume drove the rebound.
GAAP diluted earnings per share fell to $0.71 from $1.51 a year earlier, a 53% decline, after UPS booked $891 million in after-tax transformation charges tied to a newly disclosed workforce-reduction effort called the Driver Choice Program. Those costs compare with just $74 million in transformation charges in the same quarter last year. On a non-GAAP basis, which excludes the charges, adjusted diluted earnings per share rose to $1.76 from $1.55, up 13.5%.
Most of the restructuring hit landed in U.S. Domestic, where $1.17 billion of the charges pushed GAAP operating profit in the segment down to $16 million from $916 million a year earlier. Stripped of those costs, the segment's adjusted operating margin reached 8.0%, up from 4.0% in the first quarter, showing the underlying network-reconfiguration effort gaining traction even as the one-time charges depressed reported results.
International revenue grew 12.5% to $5.04 billion, accelerating from 3.8% growth in the first quarter, on a jump in revenue per piece to 18.9% from 10.7%. That growth came with a cost: adjusted operating margin in the segment compressed to 12.4% from 15.2% a year earlier, extending a margin-erosion trend that has run through the past several quarters even as the top line strengthens.
Supply Chain Solutions provided the clearest turnaround among UPS's three segments. Revenue rose 7.8% to $2.86 billion, reversing declines of 6.5% in the first quarter and 12.7% in the fourth quarter of last year that had been driven by weakness in Mail Innovations. Adjusted operating profit in the segment jumped 37.3% to $291 million, lifting adjusted operating margin to 10.2% from 8.0% a year earlier, with the gain attributed to forwarding and logistics work, including healthcare, a driver not cited in prior quarters.
At the consolidated level, non-GAAP adjusted operating margin expanded to 9.2% from 8.8% a year earlier, reversing the compression UPS reported in the first quarter, when adjusted margin had fallen to 4.0%. The expansion marked the margin inflection the company had targeted.
UPS raised its full-year 2026 outlook to roughly $91.2 billion in consolidated revenue, $8.65 billion in non-GAAP adjusted operating profit and $7.22 in non-GAAP adjusted diluted earnings per share, up from the $89.7 billion revenue target it had reaffirmed in the first quarter and set at the end of last year. It was the company's first guidance increase after two consecutive quarters of holding those targets steady.