United Parcel Service Inc. (NYSE:UPS) shares traded lower on Tuesday after reporting stronger-than-expected first-quarter 2026 results, with revenue of $21.20 billion beating the $20.99 billion estimate.

Adjusted EPS came in at $1.07, above the $1.03 forecast, while GAAP diluted EPS was $1.02. Net income declined to $864 million from $1.19 billion a year earlier.

Consolidated operating profit was $1.27 billion, or $1.32 billion on an adjusted basis. Operating margin fell to 6.0% from 7.7%, while adjusted margin declined to 6.2% from 8.2%.

Results included after-tax transformation charges of $42 million, or $0.05 per share.

Segment Performance

U.S. Domestic revenue fell 2.3% to $14.13 billion, driven by lower volume, with average daily volume declining to 16.0 million from 17.4 million.

Revenue per piece increased 6.5%. Operating profit dropped to $515 million from $979 million, with margin at 3.6%, or 4.0% adjusted.

International revenue rose 3.8% to $4.54 billion, supported by a 10.7% increase in revenue per piece. Operating profit declined to $547 million from $641 million, with a margin at 12.0%, or 12.1% adjusted.

Supply Chain Solutions revenue decreased 6.5% to $2.54 billion, primarily due to lower Mail Innovations volume. Operating profit increased to $205 million from $46 million, with a margin at 8.1%.

Cash Flow And Cost Savings Update

Operating cash flow was $2.22 billion, and free cash flow was $1.28 billion, down from $1.49 billion a year earlier.

The company generated approximately $600 million in cost savings during the quarter and expects about $3 billion in full-year savings from transformation initiatives, with cumulative program costs of $599 million.

"The first quarter of 2026 marked a critical transition period for UPS in which we needed to flawlessly execute several major strategic actions and we delivered. With that behind us, we expect to return to consolidated revenue and operating profit growth, and adjusted operating margin expansion in the second quarter of this year," CEO Carol Tomé said.

Outlook and Guidance

UPS reaffirmed full-year 2026 revenue guidance of approximately $89.7 billion, above the $89.60 billion estimate, and expects a non-GAAP adjusted operating margin of about 9.6%.

The company also expects capital expenditures of about $3.0 billion, dividend payments of around $5.4 billion, and an effective tax rate of approximately 23%, while citing risks including global trade policy changes, tariffs, and geopolitical conditions.

UPS Price Action: United Parcel Service shares were down 4.66% at $103.20 at the time of publication on Tuesday, according to Benzinga Pro data.

Photo: Shutterstock