UPS presents updated financial goals and strategic targets at its investor day

Earlier today, Atlanta-based global freight transportation and logistics services provider UPS unveiled details regarding its strategic growth and productivity initiatives and its three-year financial targets at its Investor Day.

Company officials stated that through its ongoing “Customer First, People Led, Innovation Driven” strategy, UPS is focused on setting up to the company to be the “premium small package provider and logistics partner in the world.”

“We executed the strategy we set forth nearly three years ago by changing almost every aspect of our business. After coming off a difficult market in 2023, the small package industry is poised to return to growth in 2024 and beyond. Over the next three years, we plan to make bold moves to create a growth flywheel in premium markets, while at the same time drive higher productivity and efficiency,” said Carol Tomé, UPS chief executive officer. “The growth and productivity initiatives we are executing will result in higher revenue, expanded operating margins and increased free cash flow to deliver long-term value to our shareowners.”

UPS laid out various 2026 financial targets, including:

• Consolidated revenue ranging from approximately $108 billion to approximately $114 billion;
• Consolidated adjusted^* operating margin above 13%;
• U.S. Domestic Package segment adjusted^* operating margin of at least 12%;
• International Package segment adjusted^* operating margin between 18% and 19%;
• Supply Chain Solutions adjusted^* operating margin of around 12%;
• Free cash flow of between $17 billion and $18 billion; and
• Capital spending from 2024–2026 of approximately 5.5% of total revenue.

In comments made this morning at the company’s Lousiville, Ky.-based Worldport Hub air hub, Tomé observed that today marked the company’s first Investor Day since June 2021.

“While our principles haven’t changed in terms of how we operate the business, we are fundamentally a different company than we were three years ago,” she said.

One key difference she highlighted was reducing the company’s dependence on growth for what was one company and instead expanded its portfolio of offerings to other customer segments, beginning with healthcare. That was done through its acquisition of Bomi and MNX Global Logistics, expanding UPS Premier to 48 countries, and growing its healthcare facility footprint to more than 17 million square-feet, enabling UPS to generate $10 billion in 2023 healthcare revenue.

On the SMB side, Tomé said UPS has improved its time in transit, expanded its Digital Access Program, and increased SMB penetration in the U.S. by around 200 basis points, which contributed to a 12% improvement in U.S. revenue per piece. And she also cited the acquisitions of Roadie and Happy Returns, which each added enabling capabilities to its portfolio. For supply chain, Tomé said the company’s supply chain portfolio, UPS Symphony, went from being a pilot at its last investor day to managing more than $1 billion in revenue across the platform.

“We measure innovation through returns on invested capital and in 2023 we delivered an adjusted return on invested capital of 21.9%, which is industry-leading in our sector,” she said. “We've accomplished a lot in the face of a market that is very different than we thought it would be. At our last Investor Day, the U.S. small package market was expected to grow from 74 million average daily volume, or ADV, to 108 million ADV by 2023. But changes in market conditions slowed market growth.

In fact, the U.S. small package market last year only reached 84 million packages per day. As COVID spikes in demand reverted, further driving demand reversion, forecasters did not project the high rate of inflation that curbed consumer spending, nor did forecasters anticipate wars or higher geopolitical tensions that are causing changes in global trade lines. The convergence of several mega trends and macroeconomic forces has us at a critical crossroads: either disrupt ourselves or be disrupted. And we've elected to disrupt through reimagination. We sold UPS freight and bought digital companies. We've launched new ways of working and we're right-sizing our company.”