Earnings Call

August 8, 2023

2Q23

Earnings Call

Ken Cook

Investor Relations Officer

UPS

Speakers

Carol B. Tomé

Chief Executive Officer

Brian Newman

Chief Financial Officer

Forward-Looking Statements

This presentation and our 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, the

impact of: continued uncertainties related to the COVID-19 pandemic; changes in general

economic conditions, in the U.S. or internationally; industry evolution and significant

competition; changes in our relationships with any of our significant customers; our ability to

attract and retain qualified employees; strikes, work stoppages or slowdowns by our

employees; results of negotiations and ratifications of labor contracts; our ability to maintain

our brand image and corporate reputation; increased or more complex physical security

requirements; a significant data breach or information technology system disruption; 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 and social developments in international markets; our ability to

realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic

alliances; changing prices of energy, including gasoline, diesel and jet fuel, or interruptions

in supplies of these commodities; changes in exchange rates or interest rates; our ability to

accurately forecast our future capital investment needs; significant expenses and 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 laws and

regulations, including relating 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, 2022, 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.

Information, including comparisons to prior periods, may reflect adjusted results. See the

appendix for reconciliations of adjusted results and other non-GAAP financial measures.

From time to time, the Company expects 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 the Company and you are encouraged to monitor this

site for any new posts, as we may use this mechanism as a public announcement.

Forward-Looking Statements and Non-GAAP Reconciliations

Diluted EPS

2Q222Q23

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2Q22 EPS Transformation & Other 2Q22 Adj. EPS*

$3.25 $3.29*

$0.04

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2Q23 EPS Transformation & Other 2Q23 Adj. EPS*

$2.42

$2.54*

$0.12

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

Carol B. Tomé

Chief Executive Officer

To UPSers

around the

world and

our customers

who trusted us

with their

business…

Thank

You

Reached

WIN-WIN-WIN

Labor

Contract

2Q23 Consolidated Results

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

“When faced with volume declines, some companies might go off strategy or chase

unprofitable business, but that is not today’s UPS. Today’s UPS is focused on the long term.”

Carol B. Tomé, CEO

In $ Millions

(except per share)

2Q23 2Q22 Change Y/Y

Total Revenue

$22,055 $24,766 -10.9%

Adj. Operating

Profit

$2,919 $3,576 -18.4%

Adj. Operating Margin

13.2% 14.4% -120 bps

Adj. Diluted EPS

$2.54 $3.29 -22.8%

Customer First. People Led. Innovation Driven.

• 500+ UPS executives had regular communication with many

customers to keep them informed during labor negotiations,

bringing us closer to our customers

• Laser focused on win-back and pulling through >$7B of opportunity

in sales pipeline by leveraging our capabilities and industry-leading

service

• Added seven platforms to DAP; expect to generate ~$3B in DAP

revenue in 2023

• Expanded European healthcare footprint with first dedicated facility

in Ireland; expect to generate $10B in healthcare revenue in 2023

• Expanded MOVIN in India, covering ~90% of domestic B2B market

opportunity

Win-win-win labor contract expected to be ratified in two weeks:

• Converting 22.4 employees to regular package car drivers, maintaining

weekend delivery for our customers and more work-life balance for our drivers

• Improving working conditions, including air conditioning in every new U.S.

package car starting in Jan 2024

• UPS retained ability to introduce new technology and the flexibility to use

seasonal support during the peak holiday season

• Strengthens industry-leading pay and benefits union employees already

receive. By the end of the new contract:

o Average full-time driver will make ~$170K annually in pay and benefits

o Part-timers already at UPS will make at least $25.75 per hour and receive

full healthcare and pension benefits

• New paid holiday on Martin Luther King, Jr. Day

Customer First. People Led. Innovation Driven.

• Leveraged our integrated network — powered by

Network Planning Tools and technology developed

by UPS engineers — to reduce U.S. hours by nearly

10%, in line with the decline in average daily

volume

• Operating nearly 50% of U.S. buildings with smart

package smart facility at the end of 2Q23; on track

to complete U.S. deployment by the end of October

Customer First. People Led. Innovation Driven.

Updated our full-year 2023 guidance primarily to

reflect the volume impact from labor negotiations

and the costs associated with the tentative agreement

Focused on our future

• Executing our winning strategy under our better

and bolder framework

• Winning in the best parts of the market

• Making our integrated network even more agile

and efficient

• New contract establishes a platform for the future

Closing Comments

Chief Financial Officer

Brian Newman

2Q23 Consolidated Results

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

“All three of our segments demonstrated agility and on a combined basis drove down

total expense by $2.1B in the second quarter year over year.”

Brian Newman, CFO

In $ Millions

(except per share)

2Q23 2Q22 Change Y/Y

Total Revenue

$22,055 $24,766 -10.9%

Adj. Operating

Profit

$2,919 $3,576 -18.4%

Adj. Operating Margin

13.2% 14.4% -120 bps

Adj. Diluted EPS

$2.54 $3.29 -22.8%

15,000

17,000

19,000

21,000

2Q23 ADVGroundDeferredNDA2Q22 ADV

In Thousands

-231

19,685

17,740

-314

-9.9% vs. Last Year

-1,400

-22.4%

Monthly ADV Growth (Y/Y)

Volume diversion increased as noise levels around labor negotiations grew louder

• B2B declined 7.7%

• Split was 43.7% B2B

2Q23

ADV Change (Y/Y)

• Combined impact of volume diversion and the slowdown in our

sales pipeline pull-through reduced volume by ~1.2M ADV

U.S. Domestic

2Q Average Daily Volume Declined 9.9%

Quarterly B2B % of U.S. ADV Mix

-12.1%

-8.6%

33.0%

36.0%

39.0%

42.0%

45.0%

Q1 Q2 Q3 Q4

2022 2023

-13.0%

-9.0%

-5.0%

-1.0%

3.0%

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2022 2023

• 2Q revenue per piece (RPP) growth of 3.3%

o Combination of strong base rates and customer mix

increased RPP growth rate by 670 basis points

o Fuel decreased the RPP growth rate by 220 basis points

o Remaining 120 basis point decline due to multiple

factors, including package characteristics and product

mix

$13.0

$14.0

$15.0

2Q23 RevenueRPPVolume2Q22 Revenue

In Billions

+$464M

$15.5B

$14.4B

-$1.5B

-6.9% vs. Last Year

Disciplined approach to revenue quality drove revenue per piece up 3.3%

Revenue Per Piece

Revenue Change (Y/Y)

$11.30

$12.80

1Q 2Q 3Q 4Q

LY TY

U.S. Domestic

2Q Revenue of $14.4B, Down 6.9% YOY

• Revenue per piece increase partially offset impact of volume

decline

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

• Adjusted operating expense

decreased 6.5% YOY

o Continued executing Total Service Plan to lower

hours by ~10%, in line with volume declines

o Utilized Network Planning Tools to reduce volume in

non-automated buildings by 18%, enabling us to

close sorts and decrease operations headcount by

7% YOY

o Lowered airline block hours 6.5% by pulling more

activity into Worldport and reducing 2

Day Air

flights

o Reduced management headcount by >2,500 YOY

• Adjusted operating margin

of 11.7%

U.S. Domestic Results

2Q23 2Q22

Change

Y/Y

Total

Revenue

$14.4B $15.5B -6.9%

Adj.

Operating

Profit

$1.7B $1.9B -9.4%

Adj.

Operating

Margin

11.7% 12.0% -30 bps

U.S. Domestic

Leveraged technology and agility of our integrated network to reduce cost by $889M YOY

2Q Adjusted Operating Margin

of 11.7%

-15%

-5%

15%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2023 2022

Total Asia Monthly ADV (Y/Y)

Total Americas

Monthly ADV (Y/Y)

Total Europe Monthly ADV (Y/Y)

-12%

-6%

12%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2023 2022

-12%

-6%

12%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2023 2022

Total Monthly ADV (Y/Y)

Lunar New Year occurred in January 2023 vs. February 2022

*Americas now includes U.S. Export ADV

International

Domestic ADV down 8.7%; Export ADV down 4.5%

2Q International Average Daily Volume down 6.6%

-30%

-20%

-10%

10%

20%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2023 2022

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

• Generated revenue of $4.4B, down 13.0% YOY

• Revenue per piece declined 5.7% YOY due

primarily to lower fuel surcharge revenue

• Total cost decreased $356M YOY

o Flight reductions drove international block

hours down 9.4%

o Reduced headcounts in operations and

overhead functions by >1,700 positions

• Adjusted operating margin* was 20.4%

International Results

2Q23 2Q22

Change

Y/Y

Total

Revenue

$4.4B $5.1B -13.0%

Adj.

Operating

Profit

$902M $1.2B -25.1%

Adj.

Operating

Margin

20.4% 23.7% -330 bps

International

Agility of integrated network enabled us to match capacity with demand

Generated Adjusted Operating Profit

of $902M

*Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

• Revenue of $3.2B, down $990M YOY

o Soft global demand, especially out of Asia,

drove down Forwarding market rates and

volume

o Logistics delivered revenue and operating

profit growth, including gains in our healthcare

business

• Adjusted operating margin

of 10.4%

Supply Chain Solutions Results

2Q23 2Q22

Change

Y/Y

Total

Revenue

$3.2B $4.2B -23.4%

Adj.

Operating

Profit

$336M $517M -35.0%

Adj.

Operating

Margin

10.4% 12.2% -180 bps

Supply Chain Solutions

Navigated Challenging Macro Environment While Reducing Cost

2Q23 YTD Cash Flow and Dividends

2Q23 YTD Share Buy Backs

2Q23 YTD Cash From Operations

$5.6B

-$2.7B Y/Y

* Non-GAAP financial measure. See Appendix for reconciliation to GAAP financial measure.

2Q23 YTD Dividends Paid

2Q23 YTD Free Cash Flow

Discretionary pension contribution increased $1.2B Y/Y due to

timing of the payments

$3.8B

-$3.1B Y/Y

YTD CapEx spend of $1.8B

$2.7B

$3.24 per share YTD

consecutive year of dividend payment increases

Plan to repurchase ~$3B of our shares in 2023

$1.5B

Average price per share of ~$178

2023 Full-year Outlook

Full-year 2023 Consolidated Outlook

• Revenue of about $93B

• Adjusted operating margin

of around 11.8%

• Capital expenditures of ~$5.3B

• Dividend payout of ~$5.4B and share repurchases ~$3B

2H23 Business Segments:

• U.S. Domestic:

• More volume diversion in 2Q than anticipated, resulting in 2H23 starting from a lower base;

expect average daily volume to be down by a mid-single digit percentage YOY

• Union wage-rate increases from new labor agreement included in guidance

• International:

• YOY average daily volume growth rate similar to 2Q23 and revenue-per-piece growth to be flattish

• Supply Chain Solutions:

• 2H23 revenue down by a high single-digit percentage YOY; full-year revenue approaching $14B

Now that labor

negotiations are

behind us, we’ve

updated our

guidance for the full

year primarily to

reflect the volume

impact from labor

negotiations and the

costs associated with

the tentative

agreement.

* Non-GAAP financial measure.

Questions &

Answers

Appendix

Reconciliation of GAAP and Non-GAAP Financial Measures

Non-GAAP Financial Measures; Reconciliations

From time to time 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.

Foreign Currency Exchange Rate Changes and Hedging Activities

We supplement the reporting of revenue, revenue per piece and operating profit with adjusted measures that exclude the

period-over-period impact of foreign currency exchange rate changes and hedging activities. We believe currency-neutral

revenue, revenue per piece and operating profit information allows users of our financial statements to understand

growth trends in our products and results. We evaluate the performance of International Package and Supply Chain

Solutions on this currency-neutral basis.

Currency-neutral revenue, revenue per piece and operating profit are calculated by dividing current period reported U.S.

Dollar revenue, revenue per piece and operating profit by the current period average exchange rates to derive current

period local currency revenue, revenue per piece and operating profit. The derived amounts are then multiplied by the

average foreign currency exchange rates used to translate the comparable results for each month in the prior year period

(including the period-over-period impact of foreign currency hedging activities). The difference between the current

period reported U.S. Dollar revenue, revenue per piece and operating profit and the derived current period U.S. Dollar

revenue, revenue per piece and operating profit is the period-over-period impact of currency fluctuations

Incentive Compensation Program Design Changes

During 2022, we completed certain structural changes to the design of our incentive compensation programs that

resulted in a one-time, non-cash charge in connection with the accelerated vesting of certain equity incentive awards that

we do not expect to repeat. 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 these changes. We

believe excluding the impacts of such changes allows users of our financial statements to more appropriately identify

underlying growth trends in compensation and benefits expense. For information regarding incentive compensation

program design changes, see note 13 to the audited, consolidated financial statements.

Long-lived Asset Estimated Residual Value Changes

During the fourth quarter of 2022, we incurred a one-time, non-cash charge resulting from a reduction in the estimated

residual value of our MD-11 fleet. 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 this charge.

We believe excluding the impact of this charge better enables users of our financial statements to understand the

ongoing cost associated with our long-lived assets.

Transformation Charges, and Goodwill, Asset Impairment and Divestiture 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, and

goodwill, asset impairment and divestiture 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.

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 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 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, transformation and

other costs, 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.

Reconciliations