Good morning. My name is Matthew and I'll be your facilitator today. I'd like to welcome everyone to the UPS third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. Any analysts that want to ask a question, now is the time to press star, then one on your telephone keypad. It is now my pleasure to turn the floor over to your host, Mr. PJ Guido, Investor Relations Officer. Sir, the floor is yours. Good morning and welcome to the UPS third quarter 2025 earnings call. Joining me today are Carol Tomé, our CEO, Brian Dykes, our 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 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 2024 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 refers to adjusted results for the third quarter of 2025. GAAP results include a net charge of $164 million or $0.19 per diluted share, comprised of after-tax transformation strategy costs of $250 million, which were partially offset by an $86 million benefit from the reversal of an income tax valuation allowance. A reconciliation of non-GAAP adjusted amounts to GAAP financial results is available in today's webcast materials. These materials are also available on the UPS Investor Relations website. Following our prepared remarks, we will take questions from those joining us via the teleconference. If you wish to ask a question, press star and then one 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. Now I'll turn the call over to Carol. Thank you, PJ, and good morning. To start, I want to extend my sincere gratitude to all UPSers for their dedication and hard work. The third quarter brought a wave of tariff changes, some expected, others unforeseen, and our team navigated these complexities with exceptional skill and resilience. At the same time, we continued advancing our network reconfiguration, a critical step in shaping the future of our U.S. business. Amid this significant transformation, I remain deeply impressed by the determination of UPSers and their steadfast commitment to serving our customers and building a stronger, more agile UPS. Turning to our results in the third quarter, consolidated revenue was $21.4 billion, consolidated operating profit was $2.1 billion, and consolidated operating margin was 10%. The cash flow pressures we saw in the second quarter eased during the third quarter. As a result, our year-to-date free cash flow reached $2.7 billion. In the third quarter, our focus on revenue quality continued and, as expected, our U.S. average daily volume, or ADV, declined from last year. The largest drivers of the U.S. volume decline were the planned glide-down of Amazon volume and a targeted reduction in lower-yielding e-commerce volume. Our focus on revenue quality yielded solid results as U.S. revenue per piece grew by 9.8% in the third quarter. By coupling solid revenue per piece growth with outstanding expense control, we were able to grow our U.S. operating margin by 10 basis points to what we reported last year on an ADV decline of 2.3 million, or 12.3%. In our international business, total ADV grew 4.8%. Our priority is to our customers, and during the quarter we ran our international network with agility, rerouting capacity to where our customers needed it. Looking at export ADV, it increased 5.9%, marking the fifth quarter in a row of growth. Due to the changes in trade policy, export volume fell in our higher margin lanes and grew in our lower margin lanes. This volume mix change pressured our international operating margin and also pressured our forwarding business. On a positive note, we continue to see strength in healthcare with strong revenue growth in the third quarter year-over-year, driven by our portfolio of healthcare logistics solutions. As Brian will provide more details on our financial performance, let me provide some operational updates. In recent years, the spotlight on international commerce and the intricacies of supply chains has intensified, and in 2025 we're witnessing the most profound shift in trade policy in a century. At UPS, this is our domain. Every day we connect businesses and customers across more than 200 countries and territories, ensuring goods move seamlessly across borders. That includes navigating the complexities of customs brokerage, where we're one of the world's largest customs brokers, managing millions of customs entries annually. Our success is powered by deep expertise, exceptional talent, and cutting-edge technology. With our next-gen brokerage capabilities, we harness AI to digitally process over 90% of our cross-border transactions, delivering speed, accuracy, and reliability at a global scale. Following the elimination of the de minimis exemption for U.S. imports, UPS experienced a tenfold surge in daily customs entries. We responded swiftly, upgrading our shipping systems to capture the expanded data requirements mandated by U.S. Customs and Border Protection. To manage the increased volume and complexity, we enhanced our customs brokerage capabilities by integrating gentic AI. This advanced technology streamlined formal entry processes. At UPS, we don't just move goods, we remove friction. By absorbing regulatory complexity, we help our customers minimize disruptions and keep global commerce flowing. Due to the investments we've made in our brokerage business, we can absorb this complexity without adding cost that isn't offset by revenue. As you know, we have a goal to become the number one complex healthcare logistics provider in the world. To that end, we are making great progress towards our acquisition of Canadian-based Andlauer Healthcare Group. The addition of Andlauer's capabilities will further strengthen our solutions in global healthcare logistics, particularly in North America. We expect to close this transaction in early November. Now touching on DAP, our Digital Access Program. We have more than 8 million SMBs on DAP, and in the first nine months of the year we generated over $2.8 billion in global DAP revenue, an increase of 20% year-over-year. DAP continues to be an important SMB growth engine, and for the full year we expect to deliver over $3.5 billion in global DAP revenue. Before we move on, let me provide updates on our Amazon glide-down efforts and our Ground Saver product. Our Amazon glide-down efforts are proceeding as planned, as expected. In the third quarter, we experienced a stepped-up volume decline with Amazon versus last year. Amazon's total volume decline in the third quarter was 21.2% compared to 13% for the first half of the year. In tandem with this change, we are continuing to reconfigure our U.S. network. We closed an additional 19 buildings, bringing our total so far this year to 93 buildings. Further, during the quarter, we completed a successful voluntary retirement program for many long-term drivers who welcomed the opportunity to retire from UPS after decades of dedicated service. In total, our network reconfiguration and cost-out efforts are on schedule, and the profit improvement we expect to see from the Amazon glide-down Initiative is on plan. In a few minutes, Brian will provide more details about our progress here. Moving to Ground Saver, in the third quarter, our Ground Saver average daily volume declined 32.7% year-over-year. Due primarily to the actions we've taken with Amazon and to trim lower-yielding e-commerce volume, we recently reached a preliminary understanding on revenue and rates with the United States Postal Service to support last-mile delivery for our Ground Saver product. There's still more work to do, but we are confident we will come to an agreement that ensures our service levels will remain best in class. Which brings me to peak. As we've discussed, our top 100 customers drive about 80% of our peak surge each year, and we expect that to be the case again this year. Early forecasts from these customers suggest they are planning for a good peak that will result in a considerable surge in volume from our current volume levels. Remember that given the Amazon glide-down plan, we expect total peak average daily volume in the U.S. to be down year-over-year. Operationally, we're poised to deliver a strong peak season, driven by several key factors. First, thanks to strategic enhancements made through our Network of the Future initiative, we're operating more efficiently than ever. These changes will allow us to reduce reliance on seasonal hires and significantly cut back on leased trailers, vehicles, and aircraft. Compared to previous years, much of this efficiency is powered by automation. Over the past year, we've deployed new automated systems in 35 facilities. In the fourth quarter, we anticipate 66% of our volume will move through automated processes, up from 63% during the same period last year. Second, as we approach the peak shipping window, we'll continue to leverage our proven technologies and scale the network where needed, all while maintaining a sharp focus on service quality. These advancements position us to run the most efficient peak in our history. We've set the standard for holiday shipping, seven consecutive years of industry-leading service, and we're confident that our operational strategy and commitment to excellence will make it eight. With the uncertainty around tariffs now somewhat resolved and a clearer peak forecast from our largest customers, we're in a stronger position to offer guidance than we were at the end of the second quarter. As I wrap up, let me share our financial expectations for the fourth quarter. We anticipate consolidated revenue of approximately $24 billion and consolidated operating margin of approximately 11.5%. Brian will walk you through the details of our fourth quarter outlook shortly. Amid a rapidly evolving global landscape, UPS is executing the most significant strategic shift in our company's history. We're focused on winning where it matters most, capturing high-value parts of the market and onboarding customers with increasingly complex logistics needs. Our company is rock solid strong with more than sufficient liquidity to deliver upon our transformation and return capital to share owners. The changes we're implementing are designed to deliver long-term value for all stakeholders. Thank you for listening. Now I'll turn the call over to Brian. Thank you, Carol, and good morning, everyone. This morning I'll cover three areas, starting with our third quarter results. Next, I'll discuss progress with the Amazon volume glide-down and our network reconfiguration and cost out efforts. I'll close with our expectations for the fourth quarter and capital allocation for the full year. Moving to our results, starting with our consolidated performance in the third quarter. Revenue was $21.4 billion, and operating profit was $2.1 billion. Consolidated operating margin was 10%. Diluted earnings per share were $1.74. $0.30 of EPS came from a sale leaseback transaction involving five properties completed in the third quarter, which resulted in a $330 million pretax gain on sale. This transaction was part of a broader strategy aimed at freeing up capital for reinvestment as we reconfigure our network. The leases are structured to maintain operational continuity for our business, and as a result, we have not adjusted this gain on sale in our non-GAAP presentation. Now, moving to our segment performance, starting with U.S. Domestic. In the third quarter, we continued to improve the mix of volume in our network, and our disciplined approach to revenue quality meaningfully offset the impact lower volume had on revenue. Additionally, the team did an excellent job managing expense throughout the quarter, resulting in an improvement in U.S. Domestic operating margin for the quarter. Total U.S. average daily volume was down 12.3%, primarily due to the glide-down of Amazon volume and our focus on improving revenue quality. Total air average daily volume was down 13.9%, mainly due to Amazon. Healthcare and high tech customers both showed growth in air average daily volume in the third quarter, which was the third consecutive quarter of positive momentum from these key industries. Ground average daily volume was down 12% year-over-year. Within ground, Ground Saver ADV declined 32.7% due primarily to the actions we've taken with Amazon and to trim lower yielding e-commerce volume. As a result, our more premium ground commercial and residential services made up over 84% of our total ground average daily volume in the third quarter. That's the highest percentage we've seen in more than five years. Now, moving to customer mix, SMB average daily volume was down 2.2% versus last year. However, we continue to see bright spots in SMB, healthcare, and automotive, as well as growth from DAP, our Digital Access Program. In the third quarter, SMBs made up 32.8% of total U.S. volume, which is about a 340 basis point improvement compared to last year. In the third quarter, B2B average daily volume finished down 4.8% compared to last year due to softness in retail and in manufacturing activity. B2B represented 45.2% of our U.S. volume, which was a 350 basis point improvement versus last year. B2C average daily volume was down 17.6% year-over-year. Moving to revenue for the third quarter, U.S. domestic generated revenue of $14.2 billion, which was down just 2.6% year-over-year against an ADV decline of 12.3%. Our revenue performance reflects strong growth in revenue per piece and air cargo. In the third quarter, revenue per piece increased 9.8% year-over-year, which was the strongest revenue per piece growth rate we've seen in three years. Breaking down the components of the 9.8% revenue per piece improvement, base rates and package characteristics increased the revenue per piece growth rate by 350 basis points. Customer and product mix improvements increased the revenue per piece growth rate by 400 basis points. The remaining 230 basis point increase was from fuel. Turning to costs. In the third quarter, total expense in U.S. domestic was down 2.7%. The decline in total expense was primarily driven by our actions to reduce hours and operational positions with volume. Looking at cost per piece, we were up against a tough comparison from last year. This comparison, together with the costs associated with delivering Ground Saver volume and the contractual union wage increase that went into effect on August 1st, resulted in a cost per piece increase of 10.4%. The U.S. domestic segment delivered $905 million in operating profit and operating margin was 6.4%. Moving to our international segment, through ongoing shifts in trade patterns spurred by changes in U.S. trade policy, we are continuing to operate our global network with agility to serve our customers. As a result, in the third quarter, International delivered its fourth consecutive quarter of growth in average daily volume and revenue. In the third quarter, total international ADV increased 4.8%, led by Europe and the Americas regions. International domestic average daily volume increased 3.6% compared to last year, led by Canada. On the export side, average daily volume increased 5.9% year-over-year, driven by the agility of our network to adjust to changing trade lanes and led by strength between European countries. As the third quarter played out, we saw a decline in U.S. imports, led by an ADV decline on the China to U.S. lane of 27.1%. Turning to revenue in the third quarter, international revenue was $4.7 billion, up 5.9% from last year. Operating profit in the international segment was $691 million, down $101 million year-over-year, reflecting pressures from trade lane shifts, product trade down, and lower demand-related surcharges. International operating margin in the third quarter was 14.8%. Moving to Supply Chain Solutions. In the third quarter, revenue was $2.5 billion, lower than last year by $715 million, of which $465 million was due to our divestiture of Coyote in the third quarter of 2024. Within Supply Chain Solutions, demand softness in air and ocean forwarding resulted in lower market rates, which drove a decline in revenue year-over-year. Logistics revenue was down year-over-year, driven by a decline in mail innovation. This was partially offset by revenue growth in healthcare logistics and UPS Digital, which includes Rhodian. Happy Returns grew revenue by 9.5% year-over-year. In the third quarter, Supply Chain Solutions generated operating profit of $536 million. Operating margin was 21.3%. Our results in Supply Chain Solutions this quarter include the impact of the sale leaseback transaction, which generated the $330 million one-time gain that I mentioned earlier. Turning to cash and shareowner returns, year to date we generated $5.1 billion in cash from operations and free cash flow of $2.7 billion. We finished the quarter with strong liquidity and no outstanding commercial paper, and so far this year UPS has paid $4 billion in dividends. Now let me provide an update on our cost out and network reconfiguration efforts. In conjunction with our actions to significantly reduce the amount of Amazon volume in our network, we are executing the largest network reconfiguration in our history and will remove approximately $3.5 billion in related costs this year. We made a lot of progress since our last earnings call. Let me walk you through the details. Total Amazon volume was down 21.2% compared to the third quarter of last year. We achieved our reduction target in the portions of the Amazon volume we are exiting, and we grew the portions of Amazon volume that we are continuing to serve. Now let's look at the savings we generated so far this year. As a reminder, we are tracking our savings within three cost buckets. They are variable costs, which primarily captures operational hours, semi-variable costs, which reflects operational positions, and fixed costs, which includes closing buildings and reducing expense from support functions through our efficiency reimagine initiative. Looking at variable cost, total operational hours continued to move down with volume. So far this year, we are down more than 16 million hours, and we are on track to reach our reduction target of approximately 25 million hours for the year. Moving to semi-variable costs, attrition in operational positions accelerated each month during the quarter, and we finished down nearly 34,000 positions year-over-year, which includes the reduction from our driver voluntary separation program. Nearly a third of the reductions occurred in September. In our fixed cost bucket, year to date, we have completed the closure of 195 operations, including closing 93 buildings. As we are closing buildings, we are also investing through our Network of the Future efforts, and as Carol mentioned, we've deployed additional automation in 35 facilities. While we expect to be busy processing volume during peak, we also plan to deploy automation projects in seven additional buildings in December. Lastly, savings from our efficiency reimagined initiatives continued to accelerate in the third quarter. Pulling it all together, we are making meaningful progress executing our strategy. So far this year, we've reduced expense by $2.2 billion, and we're on track to achieve our 2025 expense reduction target of approximately $3.5 billion. Now, moving to our outlook at the consolidated level, we expect fourth quarter revenue of approximately $24 billion and an operating margin of approximately 11% - 11.5%. Looking at the segments in the fourth quarter, starting with U.S. domestic, we expect revenue to be around $16.2 billion in the fourth quarter, driven by the continued volume reduction with Amazon and strong revenue per piece growth, and we expect an operating margin of approximately 9.5% - 10%. I n terms of peak. In the U.S., we expect heavier volume earlier in the peak period, and we have one additional delivery day compared to last year, which gives us more flexibility. The network reconfiguration and additional automation we deployed through Network of the Future set us up to deliver a more efficient peak and another year of industry-leading service for our customers. In short, we're ready for peak. Turning to international, we expect the dynamic environment we've experienced throughout the year will continue. With this in mind, we expect fourth quarter revenue to be approximately $5 billion, and we expect an operating margin of between 17% and 18%. In Supply Chain Solutions, we expect revenue in the fourth quarter of around $2.7 billion and an operating margin of approximately 9%. Looking at capital allocation for the full year, we expect capital expenditures to be approximately $3.5 billion. We are planning to pay out around $5.5 billion in dividends subject to board approval, and we have completed the targeted share repurchase of about $1 billion of our shares. Lastly, we expect the tax rate to be approximately 23.75% for the full year 2025. Before I close, let me comment on our financial condition. UPS is rock solid strong, and we have plenty of liquidity to continue executing our strategy and return value to our shareowners. Following the completion of our acquisition of Andlauer Healthcare Group, we expect to end the year with around $5 billion in cash. Operator, please open the lines for questions. Thank you. We will now conduct a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Chris Weatherbee from Wells Fargo. Your line is live. Hey, thanks. Good morning, guys. Maybe we can start on domestic margins. Obviously some improvement, but we had a lot of revenue per piece growth in the quarter. I guess as we think forward, I know there's a mix of cost as well as yield management that we're going to see. I know you've given us some ranges for the fourth quarter, but generally speaking, where you think you are in the glide-down, can you give us a little sense of maybe what we can start to think about for 2026 from a domestic margin perspective? Thanks, Chris, I appreciate it. I think we're very pleased with both the revenue, the revenue quality we saw in the third quarter as well as the progress that we're making with the Amazon glide-down. We laid out the activity metrics around that on 2026. We'll update 2026 on the January call when we report fourth quarter. There are a few things that I think are worth kind of keeping in mind. Remember, we're three quarters into a six quarter drawdown. As we lap the year, you know, we kind of come through the first three quarters of this year, we will see a sequential increase in Amazon volume as we go into peak because everybody peaks. We'll continue the drawdown as we go through the first half of next year and the cost takeout will continue as we go through that. The second is, as Carol mentioned, we're taking strategic actions around Ground Saver that will start to take hold next year and we'll see economic benefit in the back half of next year for that as well. We do anticipate closing Andlauer Healthcare Group in November of this year and we'll update you on the financials as we wrap that into next year. That's an exciting acquisition to accelerate our healthcare strategy. We're continuing to focus on growing in the parts of the market that will help us continue to drive revenue per piece growth as well as higher margins as we go into the back half of 2026 and complete the Amazon glide-down. Got it. Thank you. Thank you. Our next question comes from the line of David Vernon from Bernstein. Please go ahead with your question. Hey, good morning guys and thanks for taking the time here. So Brian, can you talk a little bit about, you know, the exit rate on cost per piece coming out of the third quarter? It seems like this was kind of an inflection quarter where with the buyout and everything else you probably came out a little bit better than you started and whether we should expect that to accelerate into 4Q. It sounds like you guys are saying you found a way to work with the USPS on final mile for some of the residential lower rate e-commerce type of stuff. Can you kind of be more specific in terms of what that looks like and how that changes cost per piece? Thanks. Sure. First, let me talk about exit rate on Q3 cost per piece and I'll let Carol comment on the USPS. There are a couple of things on cost. Look, the cost per piece is on a tough comp year-over-year because this is probably the largest year-over-year comp related to the e-commerce volume that we're exiting. It has a big mix impact both on rep per piece and cost per piece. As we've gone through the quarter, we are seeing some of the best production metrics that we've seen, certainly on our inside, I think it's in 12 years, on our preload, in 20 years. The investments that we're making at automation that we're deploying through Network of the Future are certainly showing benefits and we're seeing that come through the cost per piece. The other thing that I'll point out, and I'm sure you saw it in the non-GAAP reconciliation, is that we executed on our driver voluntary severance program in the quarter. About 90% of those drivers exited on August 31, and those savings will start to materialize in the fourth quarter as well. Carol, do you want to comment on Ground Saver? I'm happy to. David, nice to hear from you. Just maybe going back on the driver piece, the total cost of the buyout is $175 million. The payback, annual payback is $179 million. The payback is less than one year. That's a good thing for our cost per piece, isn't it? Yeah. Now let's talk about the United States Postal Service. As you know, David, the Postal Service has a new Postmaster General, and when Mr. Steiner joined, I immediately started having a conversation with him about how we could create a win-win-win relationship: a win for the Postal Service system, a win for UPS, and a win for our customers. The way to do that is to leverage what they're best at, which is final mile, and what we're best at, which is middle mile. I'm happy to tell you that we've reached preliminary agreement on what that looks like from a volume and rates perspective. We're working through the details and we'll get those details all ironed out over the next weeks and months, and by the end of the fourth quarter we'll be able to give you more details. I'm very, very pleased with where we are today and this new renewed relationship with the United States Postal Service. Is there any way to talk a little bit more about timing and how that affects the domestic margin for 2026, or is it still too early? It's too early. Don't expect any benefit in the fourth quarter. It'll start, we hope, knock on wood. We knock it all down by the beginning of the year. It's not just for our Ground Saver product, which is in our package business, but also for Mail Innovations. We're excited about what that's going to mean to our Mail Innovations margin looking forward. At the end of the year, we'll give you more color. All right. Thank you for the time. Thank you. Our next question comes from the line of Tom Wadewitz from UBS. Please go ahead with your question. Yeah. Good morning. I wanted to ask, I mean, I think on your comments in 2Q you talked about concern on SMB stepping down. I think this was the impact of the elimination of the de minimis exemption that would have a meaningful impact. It became a global elimination, not just China and Hong Kong. Can you give us a bit more perspective on how SMB played out versus what seemed to be a lot of concern in 2Q? When we look at September, how is the impact different in the international business when it became a global elimination versus China, Hong Kong? Those two things. Thank you. Sure. If you look at our S&P results for the quarter, we were down slightly year on year, but as we look at our performance relative to the market, we took share both in volume and value. We were pleased with our performance relative to the market. The decline year on year was not as dramatic as we thought it could be. We are watching the SMBs very closely though, Thomas. Some are doing just fine and managing through the changes in trade policy, and some of them, candidly, are challenged. We have got close attention to these customers. Let me just give you some data, which is amazing. How many shippers are looking for help? In the third quarter, we had 12 trade webinars with more than 8,300 participants. We reached out and had conversations with 61,000 customers trying to help them navigate through these changes in trade policy. It is complicated. It is super complicated. To your point about the elimination of the de minimis, it certainly played some havoc on some of these shippers. I will just make that real for you too. Just some data. Back in March, we had 13,000 packages that came into the United States every day that required some sort of a dutiable clearance, and we handled that. About 21% was handled with technology, so cleared without any manual intervention. If you fast forward to September, when now it is a global elimination, 112,000 packages a day required some sort of dutiable clearance. Thank goodness we invested in technology, so we were able to clear 90% of those packages without any manual intervention, which is great. 10% needed some help, and where they needed some help, they really needed some help. When the global exemption went into place, you might have seen that some mail systems like Royal Mail or Deutsche Post, shipping into the United States, meant shippers, predominantly consumers who used to use those mail carriers as a way to get packages to the United States, came into carriers like UPS or FedEx or others. Many of those shippers, consumer to consumer, were naive and you would not expect them to understand the intricacies of trade policies. They shipped in packages that did not have the information necessary to clear. Kate, you might want to talk about how we worked with those shippers because it was a lot of hard work and effort to work with those shippers. Yeah, it sure was. To help especially these C2C consumer-to-consumer shippers, multiple calls with them, helping, trying to get them to understand the missing information that they are required to provide. A good portion was on food. If you think about a family shipping food to family members, that tended to be the pinch in that three-week, I'll call it initial surge from the international Post. The Post then got the exception, and that food and very low-end value of goods, consumer-to-consumer, moved back to the Post. Since that point, we have been clearing now up to 97% within the last week and a half, same-day clearance on our goods. Helping our very valued shippers ensure that they meet the requirements of the U.S. government. Tom, if I could just maybe dimensionalize the impact of that. In the third quarter, that had about a $60 million impact for us. We estimate in the fourth quarter the direct impact will be $75 million - $100 million. A lot of this is demand related, right, because the technology allows us to scale our brokerage operations. There is a demand impact. We'll just be clear on what that cost is. It's really not the cost of clearing, it's the change in trade lane. As you know, our most profitable trade lane is that between China and the United States. We saw an over 20% decline in that in the third quarter and expect that will continue into the fourth quarter. Right now, there's a big meeting coming up this week, so maybe we'll have a little bit more certainty about trade between our two countries. We're right now forecasting a decline in those trade lanes in the fourth quarter. Just quick, circling back on SMB. Do you think you're at stability now? Like now, we shouldn't have as much concern about a drop off going forward as maybe you had in 2Q. As we look at the peak forecast, that's the best way to tell you where we are. As we look at our, as you know, 100 of our customers, most of them are enterprise customers, make up 80% of our peak surge. What those large customers have told us is that they expect a good peak, that the surge should be about 60% from where their volume is today. That's the same surge that we've seen over the past three years. They've got the inventory, they're ready for peak. On the SMB side, they're a little short of where they were a year ago. If you think about effectiveness being 100% effective, our enterprise customers are at the 100% mark. The SMB customers that give us forecasts are at the 99% mark. Has it stabilized? A bit. It's still something I think to watch out for, particularly as we head into next year. Next year is when you're going to feel the full brunt of some of these tariffs hitting some of these SMBs. We're working with them to try to help them think about how do they change where they source their goods, how do they think about the mode of transportation they use, so on and so forth. We're working with them. I think it's prudent to be a bit cautious on the outlook here because it's still early days. Great, thank you. Thank you. Thank you. Our next question comes from the line of Ari Rosa from Citigroup. Please go ahead with your question. Hi, good morning. It was really nice to see the step up in free cash flow. Carol or Brian, I was hoping you could talk about how you think about kind of the sustainable level of free cash flow after some of these cost cutting initiatives occur and as you work through some of these shifts in revenue mix. Thanks. Yeah, great. Thanks, Ari. Good morning. It's great to hear from you. We saw the Q3 free cash flow bounce back. There were some timing issues in our Q2 versus Q3 that worked themselves out and we expect Q4 to look similar to Q3. On your question, I think you're exactly right. This is why we're leaning into the parts of the market that we're leaning into because you'll see that our penetration in B2B was up 350 basis points. Our penetration in SMB was up 340 basis points. We're seeing growth in the areas of the markets where we want to grow that allows us to drive better returns and better margins. With the cost takeout and the network efficiency that we're creating through our automation investment, we do expect the business to generate significantly more free cash flow over time. Clearly we've got a dividend of around $5.4 billion - $5.5 billion and we expect it to be above that in the very near future. Great, thank you. Thank you. Our next question comes from the line of Jonathan Chappell from Evercore ISI. Please go ahead with your question. Thank you. Good morning. Just kind of a two parter. I'm sorry to do two parters here, but Amazon glide-down. I said you're kind of running on track here. Said down 21%. I thought we're supposed to be around 30% at this point. Maybe just help us understand where you are as we think about exit rate and 4Q. Then secondly, it really looks like you're on track with the cost takeout associated with that volume glide-down. Can you speak to the cost alignment with the rest of the business ex Amazon, just given all these changes that you've spoken about already with rest of world de minimis, maybe some of the SMBs being a bit lighter into peak? Do you feel like you're on track there as well or is there a little bit more catch up to do on ex Amazon cost alignment? On the Amazon glide-down, we're gliding down the volume that we don't want and we're right on our plan over growing the volume that we do want. That's why the year-over-year decline wasn't as much as we had anticipated at the end of the second quarter. We're really pleased with that. Growing the volume that we want, like returns, is good for our business. On the question about cost out, I would say excellent job managing through the Amazon glide-down, but we're also driving a heck of a good business. Nando, you might want to talk about your production numbers. You know they're the best that we've seen in 20 years, 10 years. Talk a little bit about that. Yeah, sure. I think it's really exciting as we look at our network. We're not looking at everything exclusively or uniquely, but as one big network. Of course, we keep finding opportunities for us to bring costs down. If you think about the buildings we've closed, the operations we've closed, also the 34,000 positions that we've eliminated, that's part and parcel, of course, driven by some Amazon, but also our productivity. If you think about production across the network, you know, Brian mentioned that our inside operations are demonstrating the best process rates in 12 years, our hub process rates in 20 years, and then we can go down the list with safety in a decade and other items related to cost. What should give everybody comfort is what we've displayed in the first nine months. We've also started the stage next year in 2026. This continues and we will hit our Amazon targets and our drawdown in terms of cost and productivity just gets enhanced as we first introduce more NoF projects. Also, all the peripheral buildings that we had supporting those upgrades will start to fall off as we start to implement NoF. A great example of that is Mesquite. You know, 48,000 hub per hour for us just opened up two weeks ago and prior to that a similar hub in Texas in Sweetwater. Really excited about those additions to the network and, of course, more to come. Jonathan, just to put a number to it because I think the third quarter really shows a testament. We started the year saying that we were going to focus on getting the right volume in the network and drive efficiency and volume was down 12.3% and we expanded operating margin and we'll look to continue that trend going forward. All right, thanks, Brian, Carol and Amanda. T hank you. Thank you. Our next question comes from the line of Scott Group from Wolfe Research. Please go ahead with your question. Hey, thanks. Good morning. Just to follow up on the Amazon piece, I think when you first talked about this, it would be cut in about half by the middle of next year. Is that number changing at all, bigger or smaller? As we think about the next wave of Amazon volume to come out, is it any different in terms of mix, any harder or easier to manage from a decremental standpoint? It's all part of the same question. I know there's $3.5 billion of cost reduction this year. What's the right number to think about for next year in terms of cost reduction? Thank you. Thank you. Good to speak to you. On the Amazon look, think about it as there's a portion of the Amazon volume that we're exiting, that they're going to insource. That's the outbound. That's a pretty consistent glide. It's all scheduled, right? This is where e-commerce gets very physical, right. We have to hand over a building, they catch a building. There has to be tax cars and drivers and sorters that all transition in kind of the same week. Lane by lane, right? Lane by lane, building by building, city by city. That is all scheduled out. It is on track. We are working very collaboratively with them. I think it shows in our service numbers, both for ourselves and for them, that this has been a great relationship. Separate to that, Amazon is still going to be a large customer. There are a lot of places where we can add value to their supply chain, like returns, their inbound, the small business sellers that sell on the platform. That part of the business is growing. When you think about the decrementals going into next year, it is the same type of volume. It is just over a period of time on the cost takeout. We will reset that in January as we roll forward. Nando's team's been doing a great job that as these buildings transition, we move the work, we consolidate. We are investing in NoF and we will drive a similar level of efficiency next year. The same cost buckets remain. It will still be the variable, the semi-variable, and the fixed cost. That's right. You should expect that to continue into next year, and we'll dimensionalize that at the end of the quarter, end of the fourth quarter. Absolutely. Thank you. Our next question comes from the line of Jordan Alliger from Goldman Sachs. Please go ahead with your question. Yeah, hi, good morning. Just wanted to come back to international, maybe some additional thoughts around your international trade flow analysis now that the rest of de minimis is gone. You know, when we sort of lap Liberation Day next year, could we get back to more normal sort of trajectories or patterns, or is it permanent shifts? Along with that, you know, what does it take to keep international margin more sustainably in that high teen level you guys had been used to? That's with an eye towards 2026 as well. Thanks. Sure. Thanks, Jordan, and good to hear from you on international trade flows. Look, as Carol mentioned, as we went through the third quarter and particularly into September with de minimis, we did see things slow down. Now, look, there's still a lot of flux going on in the world where things are moving around. What we are seeing is a lot of growth outside the U.S., right. Trade's continuing to flow, but it's not touching the U.S. as much as it was before. As we look into next year and we think about the margin, there will be some permanent change until the system settles and the new equilibrium on trade flows settles. I do think that this mid to high teens margin for international is absolutely the target, but we need kind of trade flows to settle in order to get there. What Kate and her team have done is really operationalize the change in trade flows. In the third quarter alone, you did 100 different operational changes to make sure that we could meet the needs of our customers as trade flows were changing, and we're investing ahead of some of this. You might talk, Kate, about what you're doing in Asia. We've mentioned this before, but just remind everyone what we're doing in Hong Kong and in the Philippines. Yeah, absolutely. To unlock that growth, we're a global network with a global portfolio. We're seeing the return on the investments we made in Asia, expanding our service, fastening our time in transit. If you look at, say, the top 20 export lanes, non-U.S., 16 of them are growing and growing very nicely. A lot of them are Asia to either Asia, Asia or Asia to Europe and reverse. That's really the expansion. Customers have needs, they are shifting trade, and within there, I will tell you, we see the small and medium sized businesses and International growing 9% in many regions of the world. That also will help us with momentum for next year. Thank you. Thank you. Your next question is coming from the line of Bruce Chan from Stifel. Please go ahead with your question. Hey, thanks. Good morning everyone. Nice to see the results and the guidance here. Maybe just on that last point, I'm guessing that, since the books closed and since you built your guidance and fourth quarter budget, we've got yet another variable with a government shutdown. Wondering if that is contemplated in the guidance and if not, is there any downside to the range in terms of demand or service or operations, especially with regard to ATC and payrolls and consumption? We don't have a real crystal ball here. We're watching this closely, obviously, particularly as it relates to the airlines. So far we've seen no disruption of service, but we're watching this very closely because we all are reading the stories about what's happening with people not showing up to work from a volume perspective in the United States. Here we are at the end of October and we're right on where we thought we would be, if not a little bit better. We haven't factored in any significant impact to the peak season because we rely on what our customers are telling us and our customers are telling us, those who peak, that they're going to have a good peak. We haven't factored any of that in. Of course, it's smart to always think about what could happen. Hopefully there will be a resolution soon. That's what we should hope for. Thank you. Thank you. Our next question is coming from Ken Hoexster from Bank of America. Please go ahead with your question. Hey, great. Good morning. It seems like your 300 basis points in improvement in domestic is maybe a bit more. Sorry, sequential improvement is a bit more than normal in terms of your target of getting to 9.5% - 10%. Just trying to understand your view on maybe the potential for accelerating that cost cutting benefits above normal trend as we not only enter fourth quarter but your thoughts on as we go into 2026 and then next week we're going to start the Supreme Court hearings on tariffs. Initial thoughts on the potential impact to de minimis. Could that get reversed and we start seeing that for the rest of the world, if not China, Hong Kong Lane, maybe any thoughts on the Supreme Court process? Sure. Let me talk about the sequential impact first. Ken, as you go from Q3 to Q4, remember as Carol said, we have been working closely with our customers and we expect peak to be similar shape as it has in the last four years. Right. We'll see about 20% step up in sequential ADB in the U.S., about 10% in international. There will also be holiday demand surcharges that have been announced. Our take rate on those has been good. Even though there's one incremental day in the peak season, we're still balancing demand and expect to see good take on the holiday demand surcharges. On the cost side, remember, we've been investing in deploying automation throughout the year and network of the future. There will be 42 new automation projects live by the time we start peak. Part of the function of bringing down the water level in the total U.S. network is it allows us to run more efficiently. You need less variable capacity, fewer leased aircraft, fewer rented vehicles, fewer seasonal workers. That allows you to run a much more efficient network. We're excited. We think it's going to be one of our best service and production peaks that we've had in a long time. On the Supreme Court question, obviously we'll be watching it very closely, but Ken, we're not in a position to speculate on what the outcome will be. Thank you. Your next question is coming from Brian Ossenbeck from JP Morgan. Please go ahead with your question. Hey, good morning. Thanks for taking the question. Just one quick follow up, first, on the USPS in the last quarter, Carol, you called out some density headwinds. It sounds like those were probably still present here in 3Q, and I would expect in 4Q. If you could clarify that. Brian, can you give us a little bit more color on how you think rev per piece will track into the fourth quarter and sort of exit the year? There's a lot going on with the mix dynamics, some of the product service changes, but clearly it looks like there's still some base rate momentum and also a bit of the help from fuel. If you can give us a little more thoughts on those three parts of that trend, be helpful. Thank you. On the Ground Saver product, density continues to be a challenge. We just can't seem to get more packages per stop on these residential deliveries. This is one reason why we're so very excited about a renewed relationship with the United States Postal Service. We estimate that the cost drag in the third quarter was about $100 million. That's right, which is another cost that we overcame as the volume came down to drive margin expansion. Brian, on your point on rev per piece, look, we continue to see strong base rate improvement in rev per piece. We expect the fourth quarter to be a little bit above 6%. If you look at that with where we set out originally at the full year to be 6%, we're coming in higher than that. We expect that to come through both in base rate, slightly less mix improvement in the third quarter as we start to lap some of the Chinese e-commerce shipper actions that we took last year. Then holiday demand, strong holiday demand surcharge. Thank you. Thank you. Our next question is coming from Ravi Shanker from Morgan Stanley. Please go ahead with your question. Great, thanks. Morning everyone. You've obviously had a lot of traction with headcount reduction in both the building side and the driver side. The union saying that you guys have committed to net job increases through the course of the contract. How do you see that playing out in the remaining two and a half years of the contract? Would you have to start hiring again to make up for that difference? Thank you. We are in compliance with the terms of our contract. Brian, you might want to give a little bit more color there. Sure. Ravi, part of the terms of the contract allow us to offer full-time positions to part-time employees in order to give them the ability to go part-time to full-time, which, quite frankly, that's the best outcome for us. Right. We want to create lifetime jobs and good careers with people who can earn a solid income with benefits at UPS. The way the contract works is we offer full-time positions to part-time employees. From a net headcount standpoint, it doesn't really change things, but it's a way for us to create career pathing. It's good for the union, it's good for our people, it's good for us, and it helps us have more trained workers that are committed to UPS. And sometimes there are messaging that is confusing on this point. If you read something that's confusing, just call us and we'll clarify it. Thank you. Your next question is coming from Stephanie Moore from Jefferies. Please go ahead with your question. Hi, good morning. Thank you. I wanted to touch on the add backs specifically in the U.S. domestic segment for the quarter. If you could just break down, you know, maybe the delta between the add backs going from $66 million to the $302 million in the quarter. You know, really what the components of those, the major components of the add backs were for the quarter. Thank you. Stephanie, just to clarify, you're talking about the non-GAAP adjustments? That is correct. Correct. Yeah. As Carol mentioned, we executed on our driver voluntary separation plan in the quarter. About 90% of the drivers exited on August 31st. 80% of that charge is associated with that, severance included in that. In the second quarter, we laid out a range of $400 million, $650 million associated with the total network reconfiguration efficiency reimagined program. We're still within that range. And I t hink just to make it real, we had $166 million of cost in the third quarter for the driver buyout against a total cost of $175 million. Yeah. We won't see that same amount in Q4. That's right. Matthew, we have time for one more question. Certainly. Our final question comes from the line of Conor Cunningham from Melius Research. Please go ahead with your question. Hi everyone. I think you said you had 195 operations that have been reduced and then 93 buildings that have been closed. I was hoping you could talk about how that may trend into 2026. Are we expecting that to continue to ramp up? It seems like there's further opportunities. If you could just talk about the opportunity in terms of getting more efficient on the network. Thank you very much. Sure. The Amazon glide-down continues. We're three quarters in a six quarter glide-down. The Amazon glide-down continues, which means there will be further consolidation of buildings at the end of the fourth quarter. We'll provide guidance for 2026 or our outlook for 2026 where we can be more specific on what that looks like. Thank you. I'll now turn the floor back over to your host, Mr. PJ Guido. T hank you, Matthew. This concludes our call. Thank you for joining and have a good day.