Key Highlights

  • Third-quarter revenue rose 6.7% to $22.9 billion; adjusted operating margin was 9.0%, versus 10.0% a year earlier.
  • Adjusted diluted EPS was $1.69 versus $1.74; GAAP EPS was $1.37 versus $1.55, including a $182 million Supply Chain Solutions goodwill impairment.
  • U.S. Domestic revenue per piece rose 6.1% while average daily volume fell to 15.621 million pieces from 16.150 million.
  • Management raised 2026 guidance to about $92.6 billion of revenue, $8.75 billion of adjusted operating profit and $7.28 of adjusted EPS.
  • Nine-month free cash flow was $4.220 billion versus $2.744 billion; 2026 free cash flow is guided to about $6.1 billion.

United Parcel Service Earnings: Why Raise Guidance While Margin Slipped to 9.0%?

United Parcel Service (NYSE:UPS) reported third-quarter results on Tuesday, October 27, with revenue of $22.9 billion, up 6.7%. Adjusted diluted EPS was $1.69 compared with $1.74 a year earlier, and GAAP EPS was $1.37 versus $1.55. As screened, adjusted EPS was 4.04% above the $1.62 estimate.

Adjusted operating profit was $2.054 billion at a 9.0% margin, against $2.132 billion at 10.0%. The prior-year quarter included a $330 million pre-tax sale-leaseback gain in Supply Chain Solutions worth $0.30 per share, which flatters the comparison.

Management raised full-year guidance, citing premium growth and greater network efficiency.

Segment Drivers: Is Pricing Offsetting Falling U.S. Volume?

U.S. Domestic revenue was $14.865 billion, up 4.5%, with revenue per piece up 6.1% as average daily volume fell 3.3% (calculated) to 15.621 million pieces. Adjusted operating profit rose to $1.034 billion from $905 million, lifting the adjusted margin to 7.0% from 6.4%. Adjusted cost per piece rose 5.5% to $13.32.

International revenue rose 7.1% to $5.007 billion, with revenue per piece up 15.0% and a 14.9% operating margin.

Supply Chain Solutions revenue jumped 18.2% to $2.981 billion on forwarding and logistics, including healthcare. Adjusted operating profit fell to $274 million from $536 million, and the adjusted margin to 9.2% from 21.3%.

Transformation Costs: What Is Efficiency Reimagined Delivering?

The company said program benefits reached about $1.8 billion over nine months and should be nearly $3 billion for 2026. Planned volume reductions from its largest customer, not named in the release, were completed in the second quarter.

Excluded transformation costs were $171 million in the quarter versus $328 million a year earlier. Full-year excluded costs are expected at $1.4 billion to $1.6 billion, of which $1.2 billion relates to the Driver Choice Program, and Efficiency Reimagined is not expected to conclude until the fourth quarter of 2027.

Guidance and Cash: What Do the Raised Ranges Imply for the Fourth Quarter?

Fourth-quarter guidance is revenue of about $25.7 billion and adjusted operating profit of about $3.3 billion. For 2026 the company expects about $92.6 billion of revenue, $8.75 billion of adjusted operating profit, $7.28 of adjusted EPS and $6.1 billion of free cash flow.

Nine-month operating cash flow was $5.986 billion versus $5.148 billion, with capital spending of $2.221 billion. For 2026 the company expects about $3.0 billion of capex and about $5.4 billion of dividends, subject to board approval.

What to Watch Next: Can Peak Season Deliver the $3.3 Billion Quarter?

The fourth quarter carries the guidance. Investors will watch U.S. volume against 15.621 million daily pieces in the third quarter, cost per piece, and Supply Chain Solutions margins.