Good morning. My name is Steven, and I will be your facilitator today. I would like to welcome everyone to the UPS Investor Relations Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question-and-answer period. Any analyst that wants to ask a question, now is the time to press one, then zero on your telephone keypad. It is now my pleasure to turn the floor over to your host, Mr. P.J. Guido, Investor Relations Officer. Sir, the floor is yours. Good morning, and welcome to the UPS second quarter 2024 earnings call. Joining me today are Carol Tomé, our CEO, Brian Dykes, our new CFO, and a few additional members of our executive leadership team. Before we begin, I want to remind you that some of the comments we'll make today are forward-looking statements within the federal securities laws and address our expectations for the future performance or operating results of our company. These statements are subject to risks and uncertainties, which are described in our 2023 Form 10-K and other reports we file with or furnish to the Securities and Exchange Commission. These reports, when filed, are available on the UPS Investor Relations website and from the SEC. Unless stated otherwise, our discussion today refers to adjusted results. For the second quarter, GAAP results include an after-tax charge of $120 million, or $0.14 per diluted share, comprised of a one-time payment of $94 million to settle an international regulatory matter and transformation and other charges of $26 million. A reconciliation to GAAP financial results is available on the UPS Investor Relations website and also available in the webcast of today's call. Following our prepared remarks, we will take questions from those joining us via the teleconference. If you wish to ask a question, press one and then zero on your phone to enter the queue. Please ask only one question so that we may allow as many as possible to participate. You may rejoin the queue for the opportunity to ask an additional question. And now I'll turn the call over to Carol. Thank you, P.J., and good morning. Let me begin by welcoming Brian Dykes as UPS's new Chief Financial Officer. With over 25 years of multinational experience with the company, Brian brings deep financial and strategic experience to our executive leadership team. Welcome, Brian. Our second quarter performance was a significant turning point for our company as we return to volume growth in the United States, the first time in 9 quarters. I would like to recognize and thank UPSers for their hard work and efforts in delivering these results. At the beginning of the year, we shared our outlook for 2024 based on four key planning assumptions. The first planning assumption acknowledged the front loading of costs associated with our new labor contract, which we believed would cause our financial performance to reflect a bathtub effect, with first half 2024 earnings down as much as 30% and second-half earnings returning to growth. In the first half of the year, our earnings were in line with the down 30% scenario. The second assumption was that we would return to volume growth, which we did in the U.S. during the month of May. Further, while international volume growth in the second quarter was down 2.9% year-over-year, we saw growth in certain markets. The third planning assumption was based on our Fit to Serve initiative to rightsize our management structure, and we are on track with this initiative to deliver roughly $1 billion in savings by the end of the year. Finally, we said we would explore strategic alternatives for Coyote, and we did, leading to a pending sale to RXO at considerably more than our carrying value. So the key assumptions we used to build our plan are holding with one distinction, and that's U.S. volume mix, both in terms of product and customer segmentation. During the quarter, we experienced a shift toward value products, with shippers choosing ground over air and SurePost over ground. There was also a notable shift in product characteristics, with a surge in lightweight, short-zone volume moving into our network. We will discuss the full year impact of these shifts in a few moments, but let me first highlight our second quarter results and then provide a few updates on our longer-term strategies. In the second quarter, consolidated revenue was $21.8 billion, a decline of 1.1% versus last year. Consolidated operating profit was $2.1 billion, down 29.3%, and consolidated operating margin was 9.5%. At our March Investor Day, we set forth our declarations to become the premium small package provider, the premium logistics orchestrator, and the number one complex healthcare logistics provider in the world. To that end, we said we would pursue certain inorganic opportunities, and we have. As you've seen, we just announced our plans to acquire Estafeta, a leading domestic small package provider in Mexico. This is a big win for UPS, and it's a big win for our customers. By combining Estafeta with the end-to-end services we already have in Mexico and connecting it to the global reach of our integrated network, we will greatly enhance our logistics orchestration capabilities for customers that are shifting manufacturing and distribution closer to the United States. We are targeting to close this acquisition by the end of this year. Let me share a few other strategic updates, starting with Customer First. In healthcare, we just opened our first dedicated healthcare facility in Dublin, Ireland. This 82,000 sq ft facility provides storage and fulfillment for a range of complex pharmaceutical and healthcare products. In the Netherlands, we increased the size of our flagship facility in Roermond to now more than 235,000 sq ft, including expanded ultra-cold storage capabilities to support the growing market of complex biopharma products. Looking at SMBs, we continue to add partners to our Digital Access Program, or DAP, meeting small businesses where they are. In the first six months of this year, DAP generated $1.5 billion in revenue, and we are well on our way to achieving our 2024 DAP revenue target of over $3 billion. Because speed will always be important to our customers, in the U.S., we expanded our weekend service offering to six additional markets. With this service, we provide deliveries 1 day earlier than competitors who don't offer weekend pickup services. In fact, we are the only private U.S.-based carrier that provides both commercial and residential pickup and delivery services on Saturday as a general service offering. Outside of the U.S., we are continuing to enhance our portfolio to support our customers as they balance the need for speed with cost. For example, in record time, we launched enhancements to our Worldwide Economy service globally. This is an e-commerce solution for non-urgent cross-border shipments. Here, we created a true door-to-door service with customs clearance and delivery fees baked into the solution, making the experience simpler for the shipper and the receiver. In Asia, over the last several quarters, we've made a series of network enhancements, with the latest being in Taiwan. Because Europe is a top three export destination for Taiwan, we've expanded our capacity by 30% and extended pickups to as late as midnight. These enhancements enable our customers, including high-tech manufacturing and automotive shippers, to better serve their European customers by reaching their destination in just two business days. In supply chain solutions, we've expanded our supply chain operations at our Frankfurt Airport gateway by adding nearly 25% more warehouse space. This facility is a major SCS hub for Central Europe, where it connects all transportation modes. In this expansion, we can now provide even greater flexibility to the region's growing technology and healthcare industries. Importantly, also in SCS, we are onboarding the new USPS Air Cargo business, with plans to be fully implemented before peak. The onboarding has gone well, and we continue to expect this business to be margin accretive for the company. Now, let's turn to Innovation Driven and progress with Network of the Future. In the first half of 2024, we completed 35 operational closures, which included closing five buildings, and we are on plan to complete an additional five operational closures in the second half of this year. Simultaneously, we are continuing to automate more of our operational tasks. For example, in the U.S., we are automating the dispatch process for our package car and feeder drivers to reduce dispatch staffing by half. We deployed phase one of the project, and so far this year, we've reduced staffing by 26%. As we continue deployment, we expect to achieve our reduction target by 2026. As a reminder, these actions are outside of Fit to Serve and are part of Network of the Future. Lastly, touching on Smart Package, Smart Facility, which is our RFID solution, we are moving from a scanning network to a sensing network. As we've discussed, we're adding RFID readers to our package cars, but we're not stopping there. We're moving upstream. First, we are enabling customers to print RFID labels themselves. Second, we are installing readers at customer dock doors. This will enable immediate visibility as our trailers are loaded for pickup. This solution provides a significant competitive advantage to us and to our customers. Moving to our financial outlook. Brian will provide more details, but let me share a few highlights. First, while we have entered into an agreement to sell our Coyote business, we are retaining Coyote revenue and earnings in our outlook until the transaction is consummated. Second, while our first half earnings were in line with the low end of the guidance we provided, our revenue came in just short of the low end. Given the current volume momentum we are now experiencing in our business, we are resetting our revenue guidance, taking us to the midpoint of our original revenue guide. But for operating profit, as we look to the back half of the year, in the U.S., we expect the same volume mix characteristics as we had in the first half of the year, which compresses revenue per piece growth. While we still expect an operating profit bathtub effect, earnings growth in the back half of the year, the growth rate will not be as high as we projected at the beginning of the year. Accordingly, we are adjusting our full year operating margin guidance to reflect the nature of the volume flowing through our U.S. network. As a result, we now expect consolidated revenue of approximately $93 billion and a consolidated operating margin of approximately 9.4%. Importantly, we expect to exit the final month of 2024 with a U.S. operating margin of 10%, which creates a solid footing as we drive the U.S. business to a longer-term operating margin target of 12%. One last comment before I hand the call over to Brian. We believe it is important to have a disciplined and balanced approach to capital allocation, with the first uses of capital going back to the business and to pay our dividend, and then any excess cash being used for share repurchases. As we have fine-tuned our capital requirements for Network of the Future, we expect to spend less than we originally anticipated. Further, with the pending sale of Coyote, we expect to free up cash that was not in our original guidance plan. As a result, we are restarting our share repurchase program with the intent of repurchasing about $1 billion of shares annually, including roughly $500 million in 2024. So with that, thank you for listening, and let me turn the call over to Brian. Thank you, Carol, and good morning, everyone. First, I'm very thankful for the opportunity to lead the global finance organization and work with the entire leadership team to achieve the targets we set. We have a lot of opportunity in front of us and the right team to achieve our goals. I'm also particularly eager to meet our investors as I hit the road over the next few weeks. This morning, I'll review our second quarter results, provide an update on capital allocation, and lastly, provide additional detail for our 2024 financial outlook. First, our results. The second quarter represented an important turning point for our business. In the U.S., volume reflected positively, and it was the last full quarter of the high wage growth rate associated with the first year of our new Teamsters contract. Outside the U.S., we saw pockets of demand improved in each export region, driving growth in many of our more profitable lanes. Additionally, through our Fit to Serve initiative, we've reduced our workforce by over 11,500 positions, which has translated into approximately $350 million in savings for the first half of 2024. As Carol said, we are on track to deliver roughly $1 billion in savings by the end of the year. Looking at our consolidated performance, in the second quarter, revenue was $21.8 billion, a reduction of $237 million compared to the second quarter of 2023. Consolidated operating profit was $2.1 billion, down 29.3%, and consolidated operating margin was 9.5%. Diluted earnings per share was $1.79, down 29.5% from the second quarter of 2023. Now, let's look at our business segments. In the second quarter, U.S. average daily volume increased 0.7% year-over-year. This marks a return to positive volume growth for the first time since the fourth quarter of 2021. Consequentially, when compared to the first quarter of 2024, the average daily volume year-over-year growth rate increased by 390 basis points. At the beginning of the year, we expected to see three things in the second quarter: volume growth, growth in B2C, and a relatively consistent product mix to what we had experienced last year. While we saw strong volume growth in the second quarter, led by B2C, it came with a different product mix. For the quarter, B2C volume increased 4.8% year-over-year and made up 58.5% of our volume, an increase of 220 basis points from a year ago. This growth was driven in large part by several new e-commerce customers that entered our network. B2B average daily volume finished down 4.6%, but returns remained a bright spot and increased 3% year-over-year. From a product perspective, we saw customers trade down between services. Specifically, we saw customers shift from air to ground and from ground to SurePost. As a result, total air average daily volume was down 7.8%, while ground average daily volume increased 2.3%. Within ground, SurePost average daily volume grew 25%, driven by new shippers product choices, product trade downs, and easier comparisons due to last year's decline in volume during our contract negotiations. By enhancing our matching algorithm, we saw an increase in the percentage of SurePost packages redirected to UPS for delivery. As a result, SurePost redirect increased, returning to 2020 levels. Turning to SMBs, we saw the trend from the first quarter continue, with total SMB volume down until June, when it flipped positive. And in terms of total volume, SMBs made up 29.7% in the second quarter. For the quarter, U.S. domestic generated revenue of $14.1 billion, down 1.9% compared to last year. Revenue per piece was down 2.6% year-over-year. Let me break down the components of the revenue per piece decline. Base rates increased the revenue per piece growth rate by 90 basis points. The combination of product mix, lighter weights, and shorter zones decreased the revenue per piece growth rate by 310 basis points. The remaining 40 basis point decline in the revenue per piece growth rate was due to the combination of changes in customer mix and fuel. Turning to cost, total expense increased 3.2% in the second quarter. Union wage rates increased 11.7%, driven by the contractual increase that went into effect in August of last year. The U.S. domestic team took several actions and executed on productivity initiatives to partially offset the increase in compensation rates.... We leveraged Total Service Plan and network planning tools to reduce total operational hours by 1.4%, while volume grew 0.7%. Through Network of the Future, we had 17 operational closures in the second quarter, bringing our year-to-date total to 35. Because we're routing more volume through our automated facilities, we've permanently closed five buildings so far this year. We lowered block hours by 12.5% versus last year, and we recorded our best auto safety results in 10 years, driving a better outcome for our people and a better long-term cost picture for UPS. Putting it all together, due to the actions we took in the second quarter, we held the cost per piece growth rate to only 2.5%, even as union wages increased nearly 12%. This is the lowest cost per piece growth rate we've seen in more than three years. The U.S. domestic segment delivered $997 million in operating profit, down 40.7% compared to the second quarter of 2023, and the operating margin was 7.1%. Moving to our international segment. The second quarter was a turning point for our international business as well. For the first time in 10 quarters, 11 of our top 20 export countries demonstrated year-over-year average daily volume growth, including several key markets in Europe. At the region level, Asia grew average daily volume and revenue in the quarter, and in the Americas region, we continue to see solid signs of the shift in nearshoring. Looking at volume in the second quarter, international total average daily volume was down 2.9% year-over-year, which is half the decline we saw in the first quarter of this year. About three-quarters of the decline in the second quarter came from lower domestic average daily volume, which was down 4.4%, primarily driven by Europe. On the export side, average daily volume declined 1.5% year-over-year. However, on a sequential basis from the first quarter, export average daily volume improved 210 basis points. While overall export average daily volume was down in Europe, in Germany, our largest export market, outbound grew 1%. In Asia, export average daily volume increased 1.7%, and within Asia, export volume on the China to U.S trade lane increased 20.6%. This is the third consecutive quarter of volume growth on this lane, which is our most profitable lane. Looking at the Americas region, export average daily volume increased 5%, which was the sixth consecutive quarter of growth. As we see the shift to nearshoring continue to take hold, our announced acquisition of Estafeta will further enhance our end-to-end services in Mexico. In the second quarter, international revenue was $4.4 billion, down 1% from last year, primarily due to the decline in volume. Revenue per piece increased 2.4%, driven by strong base pricing and the positive impact of region and product mix. In the second quarter, total international expense was relatively flat year-over-year. Here, we leveraged the agility of our integrated network to manage block hours down 2.1% compared to last year. Operating profit in the international segment was $824 million, down $78 million year-over-year. Operating margin in the second quarter was 18.9%. Moving to Supply Chain Solutions. In the face of a dynamic market, we remained agile and leaned into areas of growth. In the second quarter, revenue was $3.3 billion, up 2.6% year-over-year. Looking at the key drivers, within international air freight, strong e-commerce demand, particularly in China outbound, drove an increase in volume and lifted market rates as demand outpaced capacity, resulting in an increase in revenue. On the ocean side, total volume and revenue was down year-over-year. However, toward the end of the quarter, demand on Asia outbound lanes improved and drove market rates higher. Our truckload brokerage business, known as Coyote, continued to face market pressures, which drove revenue down. In logistics, revenue grew, driven by the impact of MNX and healthcare. In the second quarter, Supply Chain Solutions generated operating profit of $243 million, down $93 million year-over-year, reflecting market conditions. Operating margin was 7.3%. Walking through the rest of the income statement, we had $206 million of interest expense. Our other pension income was $67 million, and our effective tax rate for the second quarter was 23.4%. Now let's turn to cash and capital allocation. Year to date, we've generated $5.3 billion in cash from operations and free cash flow of $3.4 billion. We finished the quarter with strong liquidity and no outstanding commercial paper. In May, we successfully issued $2.8 billion of debt to refinance $1.6 billion in current maturities, which will shore up additional liquidity and support our acquisition strategy. In the quarter, we announced that we would be outsourcing the asset management portion of our pension plan in order to focus squarely on our core business, while adding more expertise and oversight that will benefit UPS retirees. Lastly, so far this year, UPS has paid $2.7 billion in dividends, which brings us to our outlook for the second half of 2024. Global economic growth forecasts remain relatively unchanged in the back half of 2024. According to S&P Global, global GDP is expected to grow 2.7% for the full year of 2024, and U.S. GDP is expected to grow 2.4%. Additionally, as we've discussed, we still expect the U.S. small package market, excluding Amazon, to grow by less than 1%. Looking at our business in the first half of 2024, revenue was below our expectations and operating profit was at the low end of the range we provided and finished down about 30%. Based on our performance in the first half of the year, combined with our expectation that the product shift we experienced in the U.S. will continue through the rest of 2024, we have updated our guidance. This includes moving to a point estimate because it represents our best view of the many moving parts within our business. We now expect consolidated revenue to be approximately $93 billion, and because the volume characteristics are different from what we originally anticipated, we now expect a consolidated operating margin of approximately 9.4%. Our guidance includes roughly $1 billion in savings from Fit to Serve. As Carol mentioned, Coyote revenue and operating profit remains in our guidance and will until the transaction is executed. Looking at the segments, in U.S. Domestic, we anticipate back half 2024 revenue growth of around 5%, driven by strong volume growth. As you update your models for U.S. Domestic, there are a few things to keep in mind. First, we expect average daily volume to grow by mid-single digits. Second, we will anniversary the first year of the Teamsters contract on August 1st. Next, product mix is expected to continue to pressure revenue per piece. However, through expense management and slowing labor inflation, we expect to grow third quarter operating profit by double digits and exit the year with a U.S. operating margin of 10%. Lastly, we expect a strong peak driven by volume growth and demand surcharges. Within the International segment, our full year and second half outlook remains consistent with what we provided at the beginning of the year. For the second half of 2024, we anticipate volume growth rates will inflect positively and the revenue growth to be in the mid-single digits. Operating margin in the second half of the year in the International segment is anticipated to be approximately 20%. In Supply Chain Solutions, in the second half of 2024, we expect revenue to be over $7 billion and an operating margin in the high single digits. Included in our guidance is the newly won air cargo business from the USPS, which will be fully onboarded by the end of the third quarter. Lastly, we expect the tax rate to be approximately 22% for the remainder of the year. Turning to capital allocation, for the full year in 2024, we expect free cash flow to be around $5.8 billion before any pension contribution. We've tightened our capital expenditure forecast and now expect to spend about $4 billion. We plan to pay out around $5.4 billion in dividends, subject to board approval, and given our strong liquidity, while we originally had not planned to repurchase shares, we now plan to repurchase approximately $500 million of shares this year. With that, operator, please open the lines for questions. Thank you. We will now conduct a question-and-answer session. Our first question will come from the line of Tom Wadewitz of UBS. Please go ahead. Yeah, good morning. I wanted to see if you could offer some more thoughts on what's happening with domestic package volume and the mix effect. If I look at the core ground, so excluding SurePost, it looks like you saw a decline sequentially. So, you know, let's say, or excuse me, 12.3 million pieces a day in 1Q to 11.7, if I exclude SurePost. So do you think, is that just market weaker, or is that kind of competitive performance? So just wanted to see if you could offer more thoughts on what's happening in domestic package volume, and then maybe why would, you know, what are key levers to see that mix performance improve as we look at second half? Thank you. Yeah, thanks, Tom, for the question. I think when you look at the domestic volume performance from the second quarter and then going forward, in the second quarter, there was really two big impacts that were driving the change. One is we did see customers favoring our more economical products, so going from air to ground and within ground, from ground to SurePost. And that was across the broad base of customers. We also saw an acceleration of new entrants, new e-commerce customers that were coming into the market that are, quite frankly, running a different model than our traditional customers and are highly leveraging our SurePost product. So we saw an acceleration of SurePost. The growth rate is also complicated as you think about what happened in the second quarter of last year, because of the type of customers that diverted early, as we were approaching the Teamster contract. It does also skew the growth rate. As we move forward, and you see, you can see it in our forecast, and within the guide, that we do expect that mix to rationalize as we move towards the end of the year. And we've got line of sight to that in our pipeline and are working to actively pull those through as we kind of balance the mix of products going into the second half. Maybe a couple of other comments about just the volume. As you saw, our commercial business was down year-over-year, although the rate of decline has moderated greatly. As we look to the back half of the year, we expect that to improve. Our pipeline is quite robust, so we expect to see good movement in that space. Great. Thank you. Our next question will come from the line of Jordan Alliger of Goldman Sachs. Please go ahead. Yeah. Hi, morning. Just again on the trade down from more premium products to economic products, what changes customer behavior to go back, and is it simply the economy? And then what are your thoughts on sort of the B2B side of the equation, which I guess is still under pressure? Do you anticipate a step up with more of a focus on just-in-time inventory, a need to move things quicker from that end? And when would you think that timing could look better? Thanks. ...On the B2B front, as we discussed, it was down year-on-year. Part of that was because of customers who left us during the contract negotiation that have not returned. They left us, they locked themselves into long-term contracts, and they have not yet returned. That just gives us an opportunity to win them back for the excellent service that we provide. We've also seen some dynamics within the B2B space occur recently within carriers, companies going out of business like overnight, which gives us an opportunity to bring that business back into our network. It's already starting to flow. And as I mentioned, the pipeline of commercial accounts is robust. So we expect that to improve dramatically in the back half of the year. On the RPP, it's really interesting. We've had these new e-commerce entrants into the United States, and their volume, well, it's exploded. It was certainly more than we anticipated flowing into our network. So in and to your question, is this a phenomenon forever? I don't know. It depends on what consumer demand will be, but we're gonna focus on the parts of the market that really value our end-to-end service and expect to see some of the pressure that we saw on the RPP in the second quarter moderate. And Brian, maybe you can give a little bit more color on what we think the RPP will look like in the back half of the year. Yeah. So as Carol mentioned, yes, we do expect our—the RPP growth to moderate in the back half. And actually, as we move from kind of the, the - 2.6% that we're at to almost approach breakeven as we get towards the end of the year. And there's, there's a couple pieces that Carol had mentioned, the, the B2B piece. I would say the bright spot within B2B is returns that— Yes They grew 3%, and we are seeing uptake with the addition of Happy Returns into the portfolio. And as that pipeline builds and we start to see that pull through, that continues to accelerate our B2B business. The other thing I would say is that we do have a strong pipeline of ground resi products. And what happens with the SurePost product is it allows you to get new customers in, leveraging that. We get the integration into their systems, we get the pickups process set up, and they become part of the UPS portfolio. That then allows us to expand that as we go through the cycles. Maybe one other comment about SurePost, because the question may be, do you like that product? We actually like the product. It provides a scalable solution for us. We also, through our matching algorithm, we can redirect the packages back into the Brown network, and in fact, the redirect percentage was 40%. So that's returning back to levels we saw during the COVID. Thank you. Our next question will come from the line of Ken Hoexter of Bank of America. Please go ahead. Hey, great. Good morning. Carol or Brian, I guess the spread of margins, I mean, can you talk about kind of the reaction we should see in third quarter? I guess typically we see maybe 100 basis points pullback. I just want to get seasonality or kind of flow that we should expect through the year. And then I think you mentioned the 90 basis points of pure pricing. I want to understand the margin impact there. Is that just a fraction of GRI? Is that—has that shifted as well? Thanks. So maybe I'll talk about the RPP, and then you can talk about the margin. So on the base pricing, there are many dynamics on the base pricing. First, we were up against very tough comparisons from a year ago. Why? Well, you'll recall that our volume declined in the United States in the second quarter by almost 10%. Well, and this was related to noise around the labor contract negotiation. If you look at who declined during that time frame, it was predominantly dual sourcers who were low GRI customers. So last year's base pricing was a bit artificially inflated because of just the mix change. If you roll forward now to this year, what you see in the base pricing is, okay, the tough comparisons year on year, as well as new entrants that don't have a GRI because they're starting to ship with us for the first time. And then finally, if you zoom out and say, "Well, what's the keep rate looking like on those customers who have a GRI?" The keep rate is looking about 50%. So as we get past this time frame and get into an easier compare, that's why we think our base rates can improve dramatically in the second half from where it was in the second half. And maybe you can talk about the margins. Yeah, and, Ken, I'll give you a little bit of shaping for how we think the second half is going to go, because we do have confidence in how we're going to be able to pull through the margin. First, if you think about in the U.S. from Q3 to Q4, we expect ADV to be up around kind of mid-single digit. We do as we just talked about, the decline in RPP growth will moderate, so about - 1.5% in the third quarter, - 5% in the fourth quarter. And as we get to peak, and we see the holiday demand surcharges, we expect that to get even better. And we expect op profits to be up kind of double digits in Q3. And then December, as Carol had mentioned before, we're going to hit a 10% operating margin. In international, Q3 ADV is kind of flat to slightly positive year-over-year, with Q4 up mid-single digits, and the RPP growth of 1%-2% year-over-year in the second half. Our Q3 op margin is in the high teens and then getting to over 20% in Q4. So, continuing that strong momentum in international. And then we expect a mid-teens revenue growth in SBS and stronger year-over-year profit growth in Q3 and Q4, with the second half up about 20%. And look, and I think we've got a lot of confidence that we can pull through the second half forecast for a couple reasons. One is we've got line of sight to the volume. We've shown the volume momentum has been building. We've got a line of sight to the volume that we need to deliver the top line, and that helps offset some of the RPP growth, and you can see that in the guide. On the cost side, Fit to Serve is on track. We have reduced 11,500 or 90% of the resources that we had anticipated. And then we've also got line of sight to revenue improvements that are in the pipeline as well, that are gonna help us drive better profitability as we get into the second half. So we absolutely feel confident that we're back to the point of revenue growth, profit growth, and back to margin expansion in the U.S. And just one other piece of color. Don't forget that we're anniversary in our labor contract on August 1st. So the pressure associated with that contract moderates dramatically in the back half. That's right. Thank you. Our next question will come from the line of Ravi Shanker of Morgan Stanley. Please go ahead. Thanks. Good morning. A two-parter, if I may please. Given, I mean, you've done a pretty good job of kind of managing your largest customer in terms of size. Will you be looking to also meter the growth from these new e-commerce customers as part of Better not Bigger, if the mix is not being helpful? And second question is, can you help us dimension the size of returns in your operation, either in terms of volume or revenue, please? Thank you. So first, in terms of our largest customer, we have a very good relationship with that customer, and the revenue for the quarter was at 11.5% of total revenue, so about the same as it was a year ago, and we look forward to continuing to optimizing the relationship we have with that customer. In terms of the new e-commerce entrants that have come into our network, now we are focused on serving the segments of the opportunities that really respect our end-to-end network, and we will continue to do that. One reason why we're leaning so hard into healthcare. Another reason why we're leaning so hard into SMBs, and couldn't say enough goodness about our SMB business, particularly our Digital Access Program, where the revenue grew 7.7% year-on-year. We now have 38 partners around the world in that program and over 5.8 million shippers on the program. Returns, Brian, you wanna comment on that? Yeah, so Ravi, returns rolls up into our B2B product and also into the ground commercial breakout that we give. Look, returns is a portfolio that UPS has had for a long time, that we continue to add to and be a leader in. It's one that we've continued to see growth in B2B, even when we've had pressures in other parts of the business, and it leverages not only our kind of single piece returns and technology capabilities that enable customers to integrate with their process, but also the UPS Store footprint, which allows us to have a very unique re-returns offering. Now, when you add Happy to that, and we're able to do consolidated returns, it really becomes a unique portfolio that provides growth in B2B. Matt Guffey is here. Maybe Matt, you wanna comment on Happy Returns and how that's going, the integration's going? Absolutely. So Happy Returns integration has been extremely important. Remember, we made that acquisition last November. We turned on all 5,200 stores in a matter of eight weeks, which gives us great scale. And with this, to Brian's point, it's just not about the digital capabilities, but it's also about that physical footprint and the experience that you can drive for not just the consumer, but also the shipper. So we continue to see growth from the Happy Returns portfolio, but it's also complementary to the single piece returns as well. So as we think about no box, no label and consolidation, we're also doing the no box, no label, single piece. So it allows consumers and shippers to get the benefit on and managing the rules on how they want the returns to come back to them. Thank you. Our next question will come from the line of Scott Group of Wolfe Research. Please go ahead. Hey, thanks. Good morning. So Brian, can you just clarify, you're saying the U.S. package EBIT will be up double digits? Or, are you sort of pointing us towards that, you know, around that 10% growth rate? And then, just 'cause double digits can obviously mean a lot. And then bigger picture, Carol, you know, at the Analyst Day, you talked about industry oversupply. We're seeing negative yields. It doesn't feel like there's a lot of pricing power right now, but in that context, your the peak season surcharges coming are really big, and we were just surprised by the magnitude of them. So I guess my question is, like, are we at an inflection point where you think you can start pushing price more aggressively and this is, you know, a turn? Is this just a unique quarter with a compressed peak? I just wanna understand, you know, the peak surcharges seem to go in, you know, contrast with what we're seeing in underlying price and yield right now, and I just wanna understand if we're at a turning point. Well, let's talk about the margin first, and then we'll talk about peak. Yeah. So, Scott, I think what I was talking about was the shaping of Q3 to Q4. And in Q3, yes, we expect a domestic package EBIT to be up, you know, in the 10%-15% range. And then it'll moderate a little bit. The growth will moderate a little bit in Q4 as the comp levels out. And Carol, did you want to- I'm happy to talk about peak. So it is a condensed peak. It's the most condensed peak since 2019. There are only 17 days between Thanksgiving and Christmas. And as we look at the volume projections, for peak, we are expecting on our peak day, which is December 18th, to have the highest volume ever in our network. Now, when you have that kind of volume flowing through your network, you actually have to charge to service it well, 'cause you have to hire people and lease aircraft and delivery vehicles, so on and so forth. So we think that the prices are gonna stick because of what the environment is telling us from a demand perspective. I would also say candidly, they're up against very easy comparison from last year, because, you know, as you recall, well, we peaked. Volume was declining in the network. So the year-over-year comparisons, and the fact that this peak is tight gives us confidence. That being said, we also have an opportunity to price, use moving from the art of pricing to the science of pricing through the new tools that we have been talking to you about. Pricing Architecture of the Future gives us the opportunity to use modifiers and price that creates opportunities to, for value for our customers as well as value for ourselves. That plus Deal Manager, which has been a huge home run for us, we are winning more deals at less discounts than we have in the past. And Matt, maybe I'll turn it back over to you for a comment on price. Yeah. So first off, we think we're competing in a rational pricing environment today. And to Carol's point, I think about it in three segments. One, she hit on some of the mediums. We also talked about our Digital Access Program, where we have the ability to leverage the architecture of tomorrow. And the way to think about the technology, if I could just give you context, is it's dynamic pricing across all customer segments and all channels. So we've leveraged it to win in the Digital Access Program. Carol highlighted Deal Manager. How you think about now moving forward, which I think is really exciting for us, is now we have the ability, through the modifiers that she highlighted, to dynamically price across our enterprise customers to better align our price to our cost to serve, while also providing the best value for our customers. Hopefully that's helpful, Scott. Thank you. Our next question will come from the line of David Vernon of Bernstein. Please go ahead. Hey, good afternoon or good morning, and thanks for taking the question. So Carol, when you came in, you know, there was a lot of focus on value over volume, but, but here we are guiding down the back half on, on really easy comps through growth and lower value volume. Has something changed in your focus for the company? Like, what, what should investors take away from this sort of what seems like a pivot towards, you know, chasing volume again? Yeah, so we're not chasing volume. We actually accepted new customers into our network with certain volume expectations that blew up on us. We're not chasing it; it's just their demand was much higher than we had anticipated. And so we're laser focused on focusing on the segments of the market that value our end-to-end network. Better not Bigger, has not gone away. We'll be managing through this. We need to manage through it, and we will be managing through it. So don't read anything into this other than we had new customers come into our network, whose volume blew up. And we were able to serve that with the best on-time service of any carrier. Carol, if I could just add one thing, because I think the value of the volume is also very important. While we had a lot more SurePost in the network, it is important to reinforce this point that SurePost rides in the same feeders and the same hubs that all the other packages do, and it helps us drive incremental productivity. Our cube utilization was up in the feeder network, our hub productivity was up, our preload productivity was up. When you look at what that does with cost per piece, you know, the U.S. business was able to hold cost per piece to a 2.5% growth rate in the face of a 12% increase in compensation rate. So that alone is huge. Then you layer on top of that the impact that it can have on the delivery side with the redirect and really driving stop and route density. It's the volume generates productivity improvements throughout the entire network that now we have the ability to manage as we move forward. So, I mean, I guess I appreciate that, but when you think about the guidance you just gave for Q3 being up 10%- 15% off a really low base, it just doesn't seem like it's dropping to the bottom line. And that's what investors are looking to capitalize your earnings, not necessarily productivity or cost per piece growth. Yeah, no, we, we appreciate that. We do. There are a number of actions that we can take to address this, but we thought it was important to provide guidance today that's the most realistic view of the back half of the year. Doesn't mean that this is the future of our company. In fact, as we mentioned, we will exit the U.S. with a 10% operating margin. That's a significant change from where we have been. Mm-hmm. All right. Thank you for the time. Thank you. Our next question will come from the line of Chris Wetherbee of Wells Fargo. Please go ahead. Yeah. Hi, thanks. Good morning. You know, maybe touching on that last response, Carol, what are some of the things that you can do to adjust to the network changes that we're seeing and the product mix changes that we're seeing? Is there ability to pull forward Fit to Serve, cost takeout, you know, some of the other network structure changes? I guess, you know, just how do you fix profitability running at that low a level as it is right now? So one way is to accelerate Network of the Future, and I'm getting a review from the team every two weeks on what we're doing in that regard. While we've committed to five additional closures in the back half of this year, I think there's an opportunity to do more. Nando, would you like to comment on that? Yeah, there sure is. And, and look, we're... I would just say the operators and the engineers are in tip-top shape right now. And our network is matching to the actual activity that is occurring. But I will tell you there's additional opportunity. As we've closed 35 operational operations this year, we've got additional in the second half, but also, we're starting online 23 new projects that is going to drive additional automation into our efficiency. And so as you start to see the efficiency unfold, we talked about the hours versus the volume, our air volume versus block hours. And of course, there's a lot of discussion about SurePost. We're up 300 basis points, making sure we're matching that product with every other package in our network to reduce our operational costs. So, as we find those opportunities, we continue making sure we're pressing forward. And, for what it's worth, ... you know, the value of all of that is one very efficient, very safe, and pleasing network to our customers. Yeah. And Kate, the same is true outside of the United States. So what cost out activities are you focused on? Yeah. So, Carol, I think, the important move that we made at the start of the year that is playing out in the second half, and you can see it in the margins, of course, is the flattening of our structure. We actually, we're focused on how do we speed up from the customer to the decision making, and we eliminated a whole layer throughout the world. And we are getting great feedback, both from the customer as well as from our people. One example of that, also playing off of what Matt talked about with Deal Manager, we have actually shaved off two weeks of pricing time, internationally. International is very complex. Every bid is different countries and different cost structures. To be able to do that and get it down now into a two-day turn time or less for our SMBs, that's why we're seeing an over 60% SMB mix in the international arena as well, so both sides of the profit equation. Productivity is a virtuous cycle here at UPS. I think we've shown that we can drive cost out, and we will continue to do that. Our next question will come from the line of Bruce Chan of Stifel. Please go ahead. Hey, thanks, operator, and good morning, everyone. Brian, you know, you talked a little bit about the line of sight on volumes in the back half, and I'm wondering if maybe you could give us a bit more color on where, you know, RPP or yield trends have been moving into the third quarter so far. And I ask this because, you know, I think we saw a little bit of a deterioration, maybe a surprise deterioration on those metrics, you know, last quarter. You know, seems like that was not expected. So I'm just kind of curious, you know, what makes you so confident that, you know, the mix issues and the trade down issues that surprised us, you know, have kind of stabilized here and you know, won't continue to deteriorate? You know, maybe just worth a shot here, but is it possible to talk about what domestic volume growth would have been without that e-commerce customer? So certainly, on the first point around the RPP growth rate, I think when you take a look at the second quarter, you do have to remember the comp is a big issue in the second quarter, and we did see quite a shift from Q1 to Q2. As we go into Q3 and Q4, we do expect the growth rate to moderate. Sorry, the negative growth rate to moderate. So we'll improve to about -1.4% in the third quarter, -0.4% in the fourth quarter, and that will continue to improve as we go through the back half. There's a couple things that are going on there. One is we absolutely have line of sight to new customers that are gonna be coming on that normalize the mix of volume that we have. And also, we have seen the wave of these kind of new entrants come into the market, and the volume levels are stabilized, and we're working with those customers on what those forecasts look like in the back half, so we have better, better line of sight to that. Related to your second question, you know, we invited these customers into our network. I think it's, you know, the idea of what they would look like if they weren't there, it doesn't really matter- Doesn't matter. Right? Because, because they are, they're there. We, we found a way to make this volume very efficient within our network, and look, we'll continue to grow in the, in the places of the market that are growing fastest. Just on the line of sight question, we've really tightened up the visibility as to when we win an account versus when it actually comes into the network. I will say our visibility there wasn't as sharp as it should have been, so we've gotten much better now, and we are holding everyone accountable for getting the cardboard onto the package car. And that makes a... Well, it may not be cardboard, it may be a poly bag, but the package onto the package car. So I feel much better than I have over the past several years, candidly, in terms of our visibility on onboarding. Okay, great. Thank you. Thank you. Our next question will come from the line of Brian Ossenbeck of JP Morgan. Please go ahead. Morning. Thanks for taking the question. So Carol, following up on the pipeline, you mentioned that several times in terms of the visibility, the types of customers, the confidence coming through there. Maybe you can elaborate on that last comment, given just how that one large customer or e-commerce customer surprised the upside when the volumes blew up. And then separately, can you give us an update on the USPS contract, how it's going so far, any surprises, and whether or not that was a big contributor to the updated 2024 guide? Thank you. Yeah. Yes. So to be perfectly clear, there were two new e-commerce customers that came into our network, and you can imagine who they are. These are new e-commerce shippers in the United States, whose volume has been quite explosive. We are working through those relationships as we speak. As it relates to the USPS, Nando, would you like to comment on how that's going? Yeah, sure. I think, because with regards to the USPS, both teams are actually face-to-face planning and executing, so far close to 50% of the change, and we'll continue pushing forward. We'll be fully implemented in terms of the UPS network in place to serve the USPS on September eighth, and contract really starts officially 10/1, where we'll see all of the volume come over to UPS. So far, in recognition of two parties getting together for the first time in this regard, there's been some bumps, but nothing systemic. So it's working out really well on both sides. Professionals from the USPS and UPS really doing some good work here. ... Our next question will come from the line of Connor Cunningham with Melius Research. Please go ahead. Hi, everyone. Thank you. I was hoping you could provide some color just on revenue contribution for Estafeta and then maybe price paid, and then just bigger picture, how you're viewing the M&A landscape now. Are you happy with the portfolio? How are the returns of the businesses that you have or are acquiring holding up right now? Thank you. So we're super excited about the Estafeta announcement. Acquiring companies in Mexico isn't easy. The teams worked very hard to get us to this point, and we'll work through all the closing conditions. We hope to have the acquisition closed by the end of the year. Together, UPS and Estafeta will be a billion-dollar-plus business. So this firmly cements our leadership position in North America, and we couldn't be more excited about it. Do you wanna take the second part of the question? Yeah, certainly. And then, Kate, maybe you'll want to talk about the broader piece of it. But I think Estafeta, just to give you a little bit of context, it covers 95% of the population of Mexico with 145 facilities. So this is a fairly large business, does about 325,000 pieces a day. So it gives you context of where it fits into the portfolio, and it fits very firmly within our nearshoring strategy. And, Kate, do you want to add anything on that? Yeah, absolutely. So, think about, first of all, that 300,000 pieces, all those shippers, they need a, a transporter or cross-border solution that is quality and that has access to, the best small package network in the U.S. That's what we give it, so it's the additional packages. I'll, I'll answer that other part of the question on our track record with the acquisitions. If you look back at Marken, also Bomi, on to MNX, all of them are meeting their, business cases as well as their synergy, both on the revenue and cost side of the equation. Because what it does is opens up, again, this end-to-end opportunity to these premium customers. We expect the same thing. We are ahead of the supply chain shift into Mexico. Our supply chain cross-border business is up double-digit, so this will only help with Estafeta as well. I know you asked about the purchase price. We typically don't disclose the purchase price, but I can give you a hint. Brian said that we accessed the debt capital markets in the second quarter and raised some additional debt capital for growth. It's about $1.2 billion. Yeah. We're not spending $1.2 billion on the business, so that gives you- Right, right. A sense of where the purchase price is gonna come in. That's right. In terms of the portfolio of assets that we have, you know, we looked at strategic alternatives for Coyote. We are delighted to reach an agreement with RXO to sell Coyote to that business at a great value, higher than our carrying value, and the multiple on EBITDA was over 12x. So I'm just really pleased with the value that we received or will receive when we close that transaction, and we're always looking at the portfolio of assets. Are there other things that we can optimize or monetize? So we're never done, but there's nothing large that would need to be talked about today. Steven, we have time for one more question. Our final question will come from the line of Bascome Majors of Susquehanna. Please go ahead. Thanks for taking my questions. If you go back to the trade down discussion and the SurePost, can you talk a little bit high level about how that business moves through your network? And, you know, what's different about it that better matches the cost of that package with the lower yield for that package? And just extending that a little bit further, if SurePost is a higher mix of the domestic business than you'd expected longer term, you know, what nuance changes would there need to be with the network to make that a better fit? Thank you. Well, SurePost is a great product in many ways. As I mentioned, it is a Sunday solution for us, and we are, with our matching algorithm, able to redirect volume, so it's delivered in our ground network. Maybe, Nando, you want to give a little bit more color on how does that work? Yeah, sure. And, as Brian mentioned earlier, I mean, SurePost is gonna flow through our network, regular feeders, regular hubs, and sortation. What we're working on, and very close to solving, is looking ahead more than one day, so we can match even more of those SurePost shipments. So right now, if a package shows up at a destination that particular morning, we will match that package with other deliveries for that day. The option moving forward is to look for additional, matching opportunities, and we're very close to that solution, so we can actually look further out. In total, as I said before, we're matching a lot more, about 3% more than last year, and each one is offsetting the cost and providing profitability to that shipment or that delivery, if you will, to that one location. That matching capability then creates more delivery density- Correct. which is a big value unlock for us. We've talked about in the past, you know, every ten basis points of improvement is a couple hundred million dollars. So this is an important initiative to make this product even more attractive to us over time. Thank you. Thank you. I would now like to turn the conference back over to our host, Mr. Guido. Please go ahead. Thank you, Steven. This concludes our call. Thank you for joining, and have a good day.