July 23, 2024

UPS Releases 2Q 2024 Earnings

Consolidated Revenues of $21.8B, Compared to $22.1B Last Year
Consolidated Operating Margin of 8.9%; Adjusted* Consolidated Operating
Margin of 9.5%
Diluted EPS of $1.65; Adj. Diluted EPS of $1.79, Compared to $2.54 Last Year
Updates Full-Year 2024 Financial Guidance; Restarts Share Repurchase
Program, Targeting $1B Annually

ATLANTA--(BUSINESS WIRE)-- UPS (NYSE:UPS) today announced second-quarter 2024

consolidated revenues of $21.8 billion, a 1.1% decrease from the second quarter of 2023.
Consolidated operating profit was $1.9 billion, down 30.1% compared to the second quarter
of 2023, and down 29.3% on an adjusted basis. Diluted earnings per share were $1.65 for
the quarter; adjusted diluted earnings per share of $1.79 were 29.5% below the same period
in 2023.

For the second quarter of 2024, GAAP results include an after-tax charge of $120 million, or
$0.14 per diluted share, comprised of a one-time payment of $94 million to settle an
international regulatory matter, and transformation and other charges of $26 million.

“I want to thank all UPSers for their hard work and efforts in the second quarter,” said Carol
Tomé, UPS chief executive officer. “This quarter was a significant turning point for our
company as we returned to volume growth in the U.S., the first time in nine quarters. As
expected, our operating profit declined in the first half of 2024 from what we reported last
year. Going forward we expect to return to operating profit growth.”

U.S. Domestic Segment

Adjusted Adjusted
2Q 2024 2Q 2024 2Q 2023 2Q 2023
Revenue $14,119 M $14,396 M
Operating profit $989 M $997 M $1,602 M $1,681 M

Revenue decreased 1.9%, driven by a 2.6% decrease in revenue per piece due
primarily to changes in product mix.
Operating margin was 7.0%; adjusted operating margin was 7.1%.
International Segment
Adjusted Adjusted
2Q 2024 2Q 2024 2Q 2023 2Q 2023
Revenue $4,370 M $4,415 M
Operating profit $718 M $824 M $883 M $902 M

Revenue decreased 1.0%, driven primarily by a 2.9% decrease in average daily

volume.
Operating margin was 16.4%; adjusted operating margin was 18.9%.

Supply Chain Solutions1

Adjusted Adjusted
2Q 2024 2Q 2024 2Q 2023 2Q 2023
Revenue $3,329 M $3,244 M
Operating profit $237 M $243 M $295 M $336 M
1 Consists of operating segments that do not meet the criteria of a reportable segment under ASC Topic 280 – Segment Reporting.

Revenue increased 2.6% due primarily to growth in logistics, including healthcare.

Operating margin was 7.1%; adjusted operating margin was 7.3%.

2024 Outlook

The company provides certain guidance on an adjusted (non-GAAP) basis because it is not
possible to predict or provide a reconciliation reflecting the impact of future pension
adjustments or other unanticipated events, which would be included in reported (GAAP)
results and could be material.

For 2024, UPS updates its full-year, consolidated financial targets**:

Consolidated revenue expected to be approximately $93.0 billion

Consolidated adjusted operating margin expected to be approximately 9.4%
Capital expenditures of approximately $4.0 billion
Targeting around $500 million in share repurchases
* “Adjusted” or “Adj.” amounts are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial measures, including a

reconciliation to the most closely correlated GAAP measure.

**
Excludes the impacts of pending disposition of Coyote and announced acquisition.

Conference Call Information

UPS CEO Carol Tomé and CFO Brian Dykes will discuss second-quarter results with
investors and analysts during a conference call at 8:30 a.m. ET, July 23, 2024. That call will
be open to others through a live Webcast. To access the call, go to www.investors.ups.com
and click on “Earnings Conference Call.” Additional financial information is included in the
detailed financial schedules being posted on www.investors.ups.com under “Quarterly
Earnings and Financials” and as furnished to the SEC as an exhibit to our Current Report on
Form 8-K.

About UPS

UPS (NYSE: UPS) is one of the world’s largest companies, with 2023 revenue of $91.0
billion, and provides a broad range of integrated logistics solutions for customers in more
than 200 countries and territories. Focused on its purpose statement, “Moving our world
forward by delivering what matters,” the company’s approximately 500,000 employees
embrace a strategy that is simply stated and powerfully executed: Customer First. People
Led. Innovation Driven. UPS is committed to reducing its impact on the environment and
supporting the communities we serve around the world. UPS also takes an unwavering
stance in support of diversity, equity and inclusion. More information can be found at
www.ups.com, about.ups.com and www.investors.ups.com.

Forward-Looking Statements

This release, our Annual Report on Form 10-K for the year ended December 31, 2023 and
our other filings with the Securities and Exchange Commission contain and in the future may
contain “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements other than those of current or historical fact, and all
statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,”
“assume,” “intend,” “anticipate,” “target,” “plan,” and similar terms, are intended to be
forward-looking statements. Forward-looking statements are made subject to the safe
harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.

From time to time, we also include written or oral forward-looking statements in other
publicly disclosed materials. Forward-looking statements may relate to our intent, belief,
forecasts of, or current expectations about our strategic direction, prospects, future results,
or future events; they do not relate strictly to historical or current facts. Management believes
that these forward-looking statements are reasonable as and when made. However, caution
should be taken not to place undue reliance on any forward-looking statements because
such statements speak only as of the date when made and the future, by its very nature,
cannot be predicted with certainty.

Forward-looking statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from our historical experience and our present expectations
or anticipated results. These risks and uncertainties include, but are not limited to: changes
in general economic conditions in the U.S. or internationally; significant competition on a
local, regional, national and international basis; changes in our relationships with our
significant customers; our ability to attract and retain qualified employees; strikes, work
stoppages or slowdowns by our employees; increased or more complex physical or
operational security requirements; a significant cybersecurity incident, or increased data
protection regulations; our ability to maintain our brand image and corporate reputation;
impacts from global climate change; interruptions in or impacts on our business from natural
or man-made events or disasters including terrorist attacks, epidemics or pandemics;
exposure to changing economic, political, regulatory and social developments in
international and emerging markets; our ability to realize the anticipated benefits from
acquisitions, dispositions, joint ventures or strategic alliances; the effects of changing prices
of energy, including gasoline, diesel, jet fuel, other fuels and interruptions in supplies of
these commodities; changes in exchange rates or interest rates; our ability to accurately
forecast our future capital investment needs; increases in our expenses or funding
obligations relating to employee health, retiree health and/or pension benefits; our ability to
manage insurance and claims expenses; changes in business strategy, government
regulations or economic or market conditions that may result in impairments of our assets;
potential additional U.S. or international tax liabilities; increasingly stringent regulations
related to climate change; potential claims or litigation related to labor and employment,
personal injury, property damage, business practices, environmental liability and other
matters; and other risks discussed in our filings with the Securities and Exchange
Commission from time to time, including our Annual Report on Form 10-K for the year ended
December 31, 2023, and subsequently filed reports. You should consider the limitations on,
and risks associated with, forward-looking statements and not unduly rely on the accuracy of
predictions contained in such forward-looking statements. We do not undertake any
obligation to update forward-looking statements to reflect events, circumstances, changes in
expectations, or the occurrence of unanticipated events after the date of those statements,
except as required by law.

From time to time, we expect to participate in analyst and investor conferences. Materials
provided or displayed at those conferences, such as slides and presentations, may be
posted on our investor relations website at www.investors.ups.com under the heading
"Presentations" when made available. These presentations may contain new material
nonpublic information about our company and you are encouraged to monitor this site for
any new posts, as we may use this mechanism as a public announcement.

Reconciliation of GAAP and Non-GAAP Financial Measures

We supplement the reporting of our financial information determined under generally

accepted accounting principles ("GAAP") with certain non-GAAP financial measures.

Adjusted financial measures should be considered in addition to, and not as an alternative
for, our reported results prepared in accordance with GAAP. Our adjusted financial
measures do not represent a comprehensive basis of accounting and therefore may not be
comparable to similarly titled measures reported by other companies.

Forward-Looking Non-GAAP Metrics

From time to time when presenting forward-looking non-GAAP metrics, we are unable to
provide quantitative reconciliations to the most closely correlated GAAP measure due to the
uncertainty in the timing, amount or nature of any adjustments, which could be material in
any period.

One-Time Payment for International Regulatory Matter

In the second quarter of 2024, we made a one-time payment of $94 million of previously
restricted cash to settle a previously-disclosed challenge by Italian tax authorities to the
deductibility of Value Added Tax payments by UPS to certain third-party service providers, a
review of which was launched in the fourth quarter of 2023. We supplement the presentation
of our operating profit, operating margin, interest expense, total other income (expense),
income before income taxes, net income and earnings per share with non-GAAP measures
that exclude the impact of this payment. We believe excluding the impact of this payment,
which we do not believe is a component of our ongoing operations and we do not expect to
recur, better enables users of our financial statements to view and evaluate underlying
business performance from the same perspective as management.
Transformation and Other Costs, and Asset Impairment Charges

We supplement the presentation of our operating profit, operating margin, income before
income taxes, net income and earnings per share with non-GAAP measures that exclude
the impact of charges related to transformation activities, asset impairments and other
charges. We believe excluding the impact of these charges better enables users of our
financial statements to view and evaluate underlying business performance from the
perspective of management. We do not consider these costs when evaluating the operating
performance of our business units, making decisions to allocate resources or in determining
incentive compensation awards.

One-Time Compensation Payment

We supplement the presentation of our operating profit, operating margin, income before
income taxes, net income and earnings per share with non-GAAP measures that exclude
the impact of a one-time payment made to certain U.S.-based, non-union part-time
supervisors following the ratification of our labor agreement with the Teamsters. We do not
expect this or similar payments to recur. We believe excluding the impact of this one-time
payment better enables users of our financial statements to view and evaluate underlying
business performance from the same perspective as management.

Defined Benefit Pension and Postretirement Medical Plan Gains and Losses

We recognize changes in the fair value of plan assets and net actuarial gains and losses in
excess of a 10% corridor (defined as 10% of the greater of the fair value of plan assets or
the plan's projected benefit obligation), as well as gains and losses resulting from plan
curtailments and settlements, for our pension and postretirement defined benefit plans
immediately as part of Investment income (expense) and other in the statements of
consolidated income. We supplement the presentation of our income before income taxes,
net income and earnings per share with adjusted measures that exclude the impact of these
gains and losses and the related income tax effects. We believe excluding these defined
benefit pension and postretirement plan gains and losses provides important supplemental
information by removing the volatility associated with plan amendments and short-term
changes in market interest rates, equity values and similar factors.

Free Cash Flow

We calculate free cash flow as cash flows from operating activities less capital expenditures,
proceeds from disposals of property, plant and equipment, and plus or minus the net
changes in other investing activities. We believe free cash flow is an important indicator of
how much cash is generated by our ongoing business operations and we use this as a
measure of incremental cash available to invest in our business, meet our debt obligations
and return cash to shareowners.

Adjusted Return on Invested Capital

Adjusted ROIC is calculated as the trailing twelve months (“TTM”) of adjusted operating
income divided by the average of total debt, non-current pension and postretirement benefit
obligations and shareowners’ equity, at the current period end and the corresponding period
end of the prior year. Because adjusted ROIC is not a measure defined by GAAP, we
calculate it, in part, using non-GAAP financial measures that we believe are most indicative
of our ongoing business performance. We consider adjusted ROIC to be a useful measure
for evaluating the effectiveness and efficiency of our long-term capital investments.

Adjusted Total Debt / Adjusted EBITDA

Adjusted total debt is defined as our long-term debt and finance leases, including current
maturities, plus non-current pension and postretirement benefit obligations. Adjusted
EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted
for the impacts of incentive compensation program redesign, one-time compensation,
goodwill & asset impairment charges, transformation and other costs, a one-time
international regulatory matter, defined benefit plan gains and losses and other income. We
believe the ratio of adjusted total debt to adjusted EBITDA is an important indicator of our
financial strength, and is a ratio used by third parties when evaluating the level of our
indebtedness.

Adjusted Cost per Piece

We evaluate the efficiency of our operations using various metrics, including adjusted cost
per piece. Adjusted cost per piece is calculated as adjusted operating expenses in a period
divided by total volume for that period. Because adjusted operating expenses exclude costs
or charges that we do not consider a part of underlying business performance when
monitoring and evaluating the operating performance of our business units, making
decisions to allocate resources or in determining incentive compensation awards, we believe
this is the appropriate metric on which to base reviews and evaluations of the efficiency of
our operational performance.
 Reconciliation of GAAP and Non-GAAP Income Statement Items
(in millions, except per share data):

Three Months Ended June 30, 2024

One-Time Int'l Transformation

As Reported Regulatory & As Adjusted
(GAAP) Matter(1) Other Adj.(2) (Non-GAAP)
U.S. Domestic Package $ 13,130 $ — $ 8 $ 13,122
International Package 3,652 88 18 3,546
Supply Chain Solutions 3,092 — 6 3,086
Operating Expense 19,874 88 32 19,754

U.S. Domestic Package 989 — 8 997

International Package 718 88 18 824
Supply Chain Solutions 237 — 6 243
Operating Profit 1,944 88 32 2,064

Other Income and (Expense):

Other pension income (expense) 67 — — 67
Investment income (expense) and other 70 — — 70
Interest expense (212) 6 — (206)
Total Other Income (Expense) (75) 6 — (69)

Income Before Income Taxes 1,869 94 32 1,995

Income Tax Expense 460 — 6 466
$ 1,409 $ 94 $ 26 $ 1,529
Net Income

$ 1.65 $ 0.11 $ 0.03 $ 1.79

Basic Earnings Per Share

$ 1.65 $ 0.11 $ 0.03 $ 1.79

Diluted Earnings Per Share

(1) Reflects a one-time payment for an international regulatory matter and related interest of $94 million.
(2) Reflects other employee benefits costs of $20 million and $12 million of other costs.
 Reconciliation of GAAP and Non-GAAP Income Statement Items
(in millions, except per share data):

Six Months Ended June 30, 2024

One-Time
Int'l Asset Transformation
As Reported Regulatory Impairment & As Adjusted
(GAAP) Matter(1) Charges(2) Other Adj.(3) (Non-GAAP)
U.S. Domestic Package $ 26,539 $ — $ 5 $ 17 $ 26,517
International Package 7,252 88 2 42 7,120
Supply Chain Solutions 6,176 — 41 59 6,076
Operating Expense 39,967 88 48 118 39,713

U.S. Domestic Package 1,814 — 5 17 1,836

International Package 1,374 88 2 42 1,506
Supply Chain Solutions 369 — 41 59 469
Operating Profit 3,557 88 48 118 3,811

Other Income and (Expense):

Other pension income (expense) 134 — — — 134
Investment income (expense) and other 121 — — — 121
Interest expense (407) 6 — — (401)
Total Other Income (Expense) (152) 6 — — (146)

Income Before Income Taxes 3,405 94 48 118 3,665

Income Tax Expense 883 — 13 17 913
$ 2,522 $ 94 $ 35 $ 101 $ 2,752
Net Income

$ 2.95 $ 0.11 $ 0.04 $ 0.11 $ 3.21

Basic Earnings Per Share

$ 2.94 $ 0.11 $ 0.04 $ 0.12 $ 3.21

Diluted Earnings Per Share

(1) Reflects a one-time payment for an international regulatory matter and related interest of $94 million.
(2) Reflects impairment charges of $41 million for acquired trade names within Supply Chain Solutions and $7 million for software
licenses.
(3)Reflects other employee benefits costs of $51 million and $67 million of other costs, including a one-time expense related to a
regulatory matter.

Reconciliation of Free Cash Flow (Non-GAAP measure)

(in millions):

Six Months Ended June 30,

2024
Cash flows from operating activities $ 5,309
Capital expenditures (1,968)
Proceeds from disposals of property, plant and equipment 28
Other investing activities (4)
$ 3,365
Free Cash Flow (Non-GAAP measure)
 Reconciliation of Adjusted Debt to Adjusted EBITDA (Non-GAAP measure)
(in millions):

TTM (1) Ended

June 30,
2024
Net income $ 5,254
Add back:
Income tax expense 1,482
Interest expense 815
Depreciation & amortization 3,489
EBITDA 11,040
Add back (deduct):
Incentive compensation program redesign —
One-time compensation 61
Asset impairment charges 276
Transformation and other 411
Defined benefit plan (gains) and losses 359
Investment income and other pension income (533)
One-time international regulatory matter 88

Adjusted EBITDA $ 11,702

Debt and finance leases, including current maturities $ 22,205

Add back:
Non-current pension and postretirement benefit obligations 6,449

Adjusted total debt $ 28,654

5.45
Adjusted total debt/Net income

2.45
Adjusted total debt/adjusted EBITDA (Non-GAAP)

(1) Trailing twelve months.

 Reconciliation of Adjusted Return on Invested Capital (Non-GAAP measure)
(in millions):

TTM (1) Ended

June 30,
2024
Net income $ 5,254
Add back (deduct):
Income tax expense 1,482
Interest expense 815
Other pension (income) expense 93
Investment (income) expense and other (267)
Operating profit $ 7,377
Incentive compensation program redesign —
Long-lived asset estimated residual value changes —
One-time compensation 61
Asset impairment charges 276
Transformation and other 411
One-time international regulatory matter 88
$ 8,213
Adjusted operating profit

Average debt and finance leases, including current maturities $ 21,484

Average pension and postretirement benefit obligations 5,542
Average shareowners' equity 18,545
$ 45,571
Average invested capital

11.5%
Net income to average invested capital

18.0%
Adjusted Return on Invested Capital (Non-GAAP)

(1) Trailing twelve months.

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UPS Media Relations: 404-828-7123 or [email protected]

UPS Investor Relations: 404-828-6059 (option 4) or [email protected]

Source: UPS