Dear Fellow Shareowners,

In 2025, UPS took decisive steps to strengthen revenue quality while reconfiguring our network to deliver differentiated logistics capabilities. We also navigated a rapidly evolving macro landscape, marked by shifts in global trade policies and increasing geopolitical uncertainty. Our actions position UPS for sustained long-term growth and value creation for our shareowners.

To that end, here are some highlights for the full year 2025:

• Delivered $3.5 billion in planned savings through network reconfiguration and our Efficiency Reimagined initiatives, reaching our Amazon volume reduction target of approximately one million pieces per day¹. As part of this effort, we streamlined our U.S. footprint by closing 93 buildings and deploying automation in 57 facilities.
• Delivered industry-leading service, providing the best average on-time performance during peak season of any carrier in the U.S. over the last eight years².
• Maintained discipline on revenue quality and product mix, driving 7.1% U.S. revenue-per-piece growth year over year.
• Shifted our U.S. mix toward premium volume, increasing small and medium-sized business (SMB) penetration to 31.8% and growing business-to-business (B2B) volume to 42.3% of total U.S. volume.
• Grew revenue from DAP, our Digital Access Program, by 25% year over year, reaching $4.1 billion globally.
• Expanded our U.S. non-GAAP adjusted operating margin* by 20 basis points, despite an average daily volume decline of 8.6%.
• Completed the acquisitions of FrigoTrans and Andlauer Healthcare Group, further expanding our healthcare cold chain capabilities. In 2025, our global healthcare portfolio generated $11.2 billion in revenue, advancing our goal to become the world's leading complex healthcare logistics provider.
• Grew revenue in our UPS Digital business, which includes Roadie and Happy Returns, by 24% year over year.
• Deployed Smart Package Smart Facility, our RFID labeling solution, to 5,500 UPS Store locations and completed installing RFID readers in all U.S. package cars.
• Generated $88.7 billion in consolidated revenue with a non-GAAP adjusted operating margin of 9.8%*.
• Maintained disciplined capital allocation, generating $8.5 billion in cash from operations and returning $6.4 billion to shareowners in the form of dividends and share repurchases.

Being Customer First means configuring our network and capabilities around what matters most to our customers: speed, ease and reliability. While UPS is best known for small package delivery, we are expanding far beyond that foundation. Our RFID labeling solution improves end-to-end visibility and inventory management for high-value and time-sensitive shipments. Our healthcare cold-chain capabilities are designed to keep temperature-sensitive products safe, compliant and delivered on time. DAP integrates UPS shipping into the marketplaces and e-commerce platforms SMBs already use. Solutions like Roadie and Happy Returns extend our digital ecosystem with same-day delivery and frictionless box-free and label-free returns.

Innovation is also central to how we operate. Automation and AI power our integrated network, driver dispatching, pricing and customer support. In 2025, we expanded AI usage to manage a more than 300% increase in our customs brokerage filings resulting from evolving global trade policies. By year end we were processing more than 90% of all cross-border transactions digitally.

Looking ahead, we are building on our momentum as we complete the Amazon volume glide down and further advance our network reconfiguration efforts. By the end of June 2026, we will reach an inflection point emerging with a smaller, more automated network, purpose-built to support premium volume growth. Our 2026 second half performance will better reflect our go-forward financial performance, with a focus on top-line growth and operating margin expansion.

Our strategy is not about shrinking UPS. It is about growing in the most attractive parts of the market including enterprise, SMB, B2B, healthcare, and international. It is about delivering differentiated value to our customers, improving long-term profitability, and delivering value for our shareowners through disciplined capital allocation.

As we approach our Annual Meeting in May, I encourage all shareowners to vote your shares. This is your opportunity to share your views with us. We listen carefully and incorporate your feedback as we work to grow our business, strengthen governance and create long-term shareowner value. If you have any questions or comments, please contact us at 404-828-6059.

We are moving our world forward by delivering what matters. None of our achievements would be possible without the dedication and hard work of UPSers around the globe. Their commitment was tested last November after the tragic accident of UPS Flight 2976. As we mourn the three UPSers and twelve civilians who lost their lives, I remain deeply grateful for the strength, compassion and unwavering service of our People. Their resilience honors the memory of those we lost and reflects the very best of who we are.

Thank you for your support.

Carol B. Tomé
Chief Executive Officer