Good morning. My name is Matthew, and I'll be your facilitator today. I would like to welcome everyone to the UPS Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there'll be a question-and-answer period. Any analyst that would like 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. P.J. Guido, Investor Relations Officer. Sir, the floor is yours. Good morning, and welcome to the UPS Fourth 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 fourth quarter of 2025, GAAP results include total charges of $238 million or $0.28 per diluted share, comprised of a non-cash after-tax charge of $137 million due to a write-off of the company's MD-11 aircraft fleet and after-tax transformation charges of $101 million. 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, P.J., and good morning. Before I discuss our results, I'd like to start by remembering those who lost their lives in the tragic crash of UPS Flight 2976. Our thoughts and prayers remain with their families and everyone affected. I am incredibly proud of our team at Worldport and how they responded to this accident, and I would like to thank the Louisville community, as well as our business and industry partners for their outpouring of support. I also want to express my deep appreciation to UPSers around the globe for their exceptional dedication and tireless commitment to serving our customers. For the eighth year in a row, we were the industry leader in on-time service during peak. Looking at the fourth quarter, our results exceeded our expectations, driven by strong revenue quality, solid cost management, and overall great execution. All three of our business segments contributed to our outperformance, with U.S. Domestic and Supply Chain Solutions delivering year-over-year operating margin expansion and International Small Package reporting record revenue with the highest fourth quarter revenue in four years. In the fourth quarter, consolidated revenue was $24.5 billion. Consolidated operating profit was $2.9 billion, and consolidated operating margin was 11.8%. Looking at the full year, consolidated revenue was $88.7 billion. Consolidated operating profit totaled $8.7 billion, and consolidated operating margin was 9.8%. Brian will provide more detail about our financial results in a moment. In 2025, we operated through a very dynamic macro environment, including significant change in global trade policies and increasing geopolitical concerns. But at the same time, 2025 was a year of considerable progress for UPS as we took action to strengthen our revenue quality and build a network that's designed to deliver differentiated logistics capabilities. To that end, here's some of what we accomplished in 2025. By the end of the year, we reached our volume reduction target and reduced Amazon's volume in our network by approximately 1 million pieces per day. As planned, we delivered $3.5 billion in savings from our network reconfiguration and Efficiency Reimagined initiatives. We closed 93 buildings in the U.S. and deployed automation in 57 buildings while maintaining the high level of service our customers expect. We were disciplined on revenue quality and product mix and grew U.S. revenue per piece by 7.1% year-over-year. We increased small and medium-sized business or SMB penetration to 31.8% of total U.S. volume, driven by DAP, our Digital Access Program, which grew revenue 25% year-over-year and delivered $4.1 billion in global revenue. As a percentage of total U.S. volume, we grew B2B to 42.3%, a 250 basis point improvement versus 2024. Importantly, we expanded our U.S. operating margin in 2025 on an average daily volume or ADV decline of 8.6% for the full year. We leveraged artificial intelligence and our next-gen brokerage capabilities to process nearly 90% of all cross-border transactions digitally, including in the U.S., where we saw more than a 300% increase in daily customs entries compared to last year. We completed our acquisitions of Frigo-Trans and Andlauer Healthcare Group, further expanding our healthcare cold chain capabilities. In 2025, our global healthcare portfolio generated $11.2 billion in revenue, putting us well on our way to achieving our goal to become the number one complex healthcare logistics provider in the world. Our UPS digital business, which includes Roadie and Happy Returns, saw revenue grow by 24% compared to 2024. We deployed Smart Package Smart Facility, our RFID labeling solution, to 5,500 UPS Store locations and completed installing RFID readers in all U.S. package cars. We maintained a disciplined and balanced approach to capital allocation by generating $8.5 billion in cash from operations and returning $6.4 billion to shareowners in the form of dividends and share repurchases. While we made great progress in 2025, we have more work to do. Let's start with our network reconfiguration. One year ago, we announced our Amazon Accelerated Glide Down plan for the actions we plan to take that would drive future operating margin expansion and greater operational agility. Specifically, we set out to reduce the Amazon volume in our network by 50% over an 18-month period, while at the same time reconfiguring our network in line with our new volume levels. We're in the final six months of our Amazon Accelerated Glide Down plan, and for the full- year 2026, we intend to glide down another million pieces per day while continuing to reconfigure our network. Given the success of our glide down and cost out efforts in 2025, we are confident that we will be able to complete our network reconfiguration plans without impeding our ability to grow in targeted markets. Brian will provide the details of our Amazon glide-down plans in a moment, which remain anchored on reducing hours, labor, and fixed costs in line with new volume levels. Deliberately shrinking a network is a daunting task, and our success was driven by disciplined planning and effective execution, as well as the added flexibility and efficiency that's coming from deploying state-of-the-art technology and automation across a smaller and nimbler network. This year, we plan to further automate our network, and as a result, we expect to increase the percentage of U.S. volume we process through automated facilities to 68% by the end of the year, up from 66.5% at the end of 2025. Our airline is a key part of our network, and over the past several years, we've taken a systematic, programmatic approach to modernizing our global air fleet. To that end, we made the decision to accelerate our plans and retire all MD-11 aircraft in our fleet. Over the next year or so, we will replace much of that capacity with new, more efficient Boeing 767 aircraft. Now let's move to our economy product we call Ground Saver. At the end of the fourth quarter, we formalized a new relationship with the United States Postal Service to support last-mile delivery of this product. Our new agreement improves the economics associated with this product while ensuring our service expectations are met. Ramp-up has already begun, and over the next several weeks and months, we will continue to increase the flow of Ground Saver volume to the USPS. As in the past, we will use density matching technology to determine which economy packages will be delivered by UPS versus the USPS. And touching on our activities outside the U.S., our new air hub in the Philippines is slated to open towards the end of 2026, and our expansion in Hong Kong is on track to open in 2028. Both gateways give us broader access and faster time in transit in the trade lanes that are growing in Asia. Now let me move to our 2026 outlook. In 2026, growth in the U.S. small package market, excluding Amazon, is expected to be up low- single digits. Outside the U.S., export volume growth is expected to be subdued, partly due to the tough comparisons coming from the boost of tariff front-running in 2025. Now, looking at UPS in 2026, two important framing comments. First, for the first six months of the year, we will be working through the revenue and operating margin impacts of completing the Amazon glide-down, the outsourcing of Ground Saver to the USPS, and adjustments to our international business in response to trade policy changes. Second, for the back half of the year, we will be operating a more efficient U.S. network and lapping trade lane disruptions. For the full year 2026, we expect to generate consolidated revenue of approximately $89.7 billion and a consolidated operating margin of approximately 9.6%. Brian will provide more details, but let me touch a bit more on the shape of the year, focusing specifically on the U.S. In the U.S., we expect revenue to be flattish year-over-year, with revenue declining in the first half of the year due to the Amazon glide-down plan, and then sequentially increasing in the second half as the Amazon glide-down efforts will have concluded. While we expect overall U.S. domestic revenue to be flat, we are planning to grow SMB and enterprise revenue in the low- single digits in the first half of the year and then accelerate that growth to mid-single digits in the second half of the year. From an operating profit perspective, higher expenses are expected to weigh on operating profit early in the year. These higher expenses are mostly related to when we will recognize benefits from the Ground Saver transition to the USPS and our network reconfiguration. We know that variable costs come out as volume exits the network, but have learned that reductions in fixed and semi-variable costs lag. We expect to return to operating profit growth in the second half of the year. The way I think about the year is like a bathtub effect. The halves will look different. First half down, second half up, but for the year, the U.S. revenue and operating margin will be flat, and we will exit 2026 with a leaner, more agile U.S. network, one that's built for growth and sustained margin expansion. As I wrap up, I'm extremely proud of our team and the progress we've made in executing our strategy. June of 2026 will be the inflection point. Our strategy is not a shrink the company strategy, but rather one where we grow in the best parts of the market, including enterprise, SMB, B2B, healthcare, and international. Our strategy is about delivering differentiated value to our customers, improving the long-term profitability of our company, and delivering value for our shareholders through effective capital allocation. So with that, thank you for listening. And now I'll turn the call over to Brian. Thank you, Carol, and good morning, everyone. Before I begin, I would also like to recognize and remember those affected by the crash of UPS Flight 2976. I'd like to thank our team at Worldport for their steadfast commitment to the community, their teammates, and our customers. Now let's move to our performance. This morning, I'll cover four areas, starting with our fourth quarter results. Then I'll review our full- year 2025 results, including cash and shareowner returns. Next, I'll discuss the Amazon glide-down and our network reconfiguration and cost out efforts. Lastly, I'll close with our financial outlook for 2026. Moving to our results, starting with our consolidated performance, in the fourth quarter, revenue was $24.5 billion and operating profit was $2.9 billion. Consolidated operating margin was 11.8% and diluted earnings per share were $2.38. As noted in our earnings press release and financials, in the fourth quarter, we took a $137 million after-tax charge to write off our MD-11 fleet. During the fourth quarter, we proactively grounded our fleet of MD-11 aircraft and leveraged the flexibility of our integrated network to seamlessly operate through peak season. Specifically, we repositioned some aircraft from other parts of the world to the U.S. We increased the amount of volume we moved on the ground, and we leased additional aircraft to meet capacity demands. With the learnings from operating during peak season, we made the decision to accelerate the retirement of our MD-11 fleet, which was completed in the fourth quarter. Over the next 15 months, we expect to take delivery of 18 new Boeing 767 aircraft, with 15 expected to deliver this year. As new aircraft join our fleet, we will step down the leased aircraft and associated expense. We believe these actions are consistent with building a more efficient global network positioned for growth, flexibility, and profitability. Now moving to our segment performance. U.S. domestic demonstrated strong performance in the fourth quarter, driven by the combination of revenue quality and great execution. We delivered a very efficient peak, which is a testament to the transformational effects from the additional automation and network reconfiguration we made throughout the year. Importantly, we continued to take care of our customers during their busiest time of the year and provided industry-leading service during peak for the eighth consecutive year. For the quarter, total U.S. average daily volume was down 2.4 million pieces, or 10.8%. More than half of the decline is from the glide down of Amazon volume and our deliberate actions to remove lower-yielding e-commerce volume from our network. Total air average daily volume was down 11.9%, driven by the glide down of Amazon. Ground average daily volume was down 10.6% compared to the fourth quarter of 2024. Within ground, Ground Saver ADV declined 27.7%, mainly due to our revenue quality actions. Moving to customer mix, SMB average daily volume was flat to last year. However, in the fourth quarter, SMBs made up 31.2% of total U.S. volume, an increase of 340 basis points compared to last year. This is the highest fourth quarter SMB penetration in our history. B2B average daily volume finished down 5.2% in the fourth quarter compared to last year, but returns was a bright spot and increased 1.6% year-over-year. B2B represented 37.5% of our U.S. volume, which was a 220 basis point improvement versus the fourth quarter of 2024 and was the highest fourth quarter B2B penetration we've seen in six years. B2C average daily volume was down 13.8% compared to the fourth quarter of 2024. The product and customer mix improvement we saw in the fourth quarter demonstrate the progress we are making as we shift our U.S. mix to more premium volume with a focus on revenue quality. Moving to revenue. For the fourth quarter, U.S. domestic generated revenue of $16.8 billion. This was a decrease of 3.2% year-over-year against an ADV decline of 10.8%. The strong revenue per piece growth largely offsetting the lower volume. In the fourth quarter, revenue per piece increased 8.3% year-over-year, which was the strongest fourth quarter revenue per piece growth rate we've seen in four years. Breaking down the components of the 8.3% revenue per piece improvement, base rates and package characteristics increased the revenue per piece growth rate by 340 basis points. Customer and product mix improvement increased the revenue per piece growth rate by 320 basis points. The remaining 170 basis point increase was from fuel. Turning to cost. In the fourth quarter, total expense in U.S. domestic was down 3.3%. The decline in total expense was primarily driven by our actions to remove hours and operational positions to align with volume. Cost per piece increased 8.9% year-over-year, primarily due to costs associated with the insourcing of Ground Saver, as well as additional costs to secure air capacity after we grounded our MD-11 fleet. Even in the face of unexpected challenges, the U.S. domestic segment delivered $1.7 billion in operating profit, and operating margin was 10.2%, a 10 basis point improvement compared to last year. Moving to our international segment, we continued to adjust the network to support our customers through evolving trade policies and delivered strong top-line growth, driven by revenue quality efforts in all regions. In the fourth quarter, total international average daily volume declined 4.7%. International domestic ADV decreased 3.5% compared to last year, led by a decline in Europe that was partially offset by growth in Canada. On the export side, average daily volume in the fourth quarter decreased 5.8% versus last year, led by declines on U.S. destination lanes resulting from the change in the de minimis exemption. U.S. imports in total were down 24.4% year-over-year, led by an ADV decline from Canada and Mexico of 30.5%, and the China to U.S. lane was lower by 20.9% compared to last year. Turning to revenue, in the fourth quarter, international generated revenue of $5 billion, up 2.5% from last year, despite the decline in volume. Operating profit in the International segment was $908 million, down $154 million year-over-year, with more than half of the decline related to trade policy changes, which resulted in a shift away from more profitable U.S. import lanes. As a result, International operating margin in the fourth quarter was 18%. Looking at Supply Chain Solutions, in the fourth quarter, revenue was $2.7 billion, lower than last year by $388 million. Looking at the key drivers, within air and ocean forwarding, demand softness 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 Innovations. This was partially offset by revenue growth in healthcare logistics. UPS Digital, which includes Roadie and Happy Returns, grew revenue 27% compared to the fourth quarter of 2024. In the fourth quarter, supply chain solutions generated operating profit of $276 million. Operating margin was 10.3%, up 100 basis points compared to last year. Now let's move to our full- year 2025 results. For the full year 2025, on a consolidated basis, revenue was $88.7 billion, operating profit was $8.7 billion, and operating margin was 9.8%. We generated $8.5 billion in cash from operations and continued to follow our capital allocation priorities. We invested $3.7 billion in CapEx and spent $2 billion on acquisition. We distributed $5.4 billion in dividends. Lastly, we completed $1 billion in share repurchases. In the segments for the full year, in U.S. domestic, operating profit was $4.6 billion and operating margin was 7.7%. The international segment generated $2.9 billion in operating profit, and operating margin was 15.8%. Supply Chain Solutions delivered operating profit of $1.1 billion, and operating margin was 10.6%. Now, let me provide an update on our Amazon glide-down, cost out, and network reconfiguration efforts in 2025. We are pleased with the progress we've made after four quarters of a six-quarter glide down, and we remain on track to achieve our targeted volume reductions. As Carol mentioned, we delivered $3.5 billion in savings from our network reconfiguration and Efficiency Reimagined initiatives. The savings came from three buckets. Starting with variable costs, in line with the declines in volume, we removed 26.9 million labor hours in 2025. Looking at semi-variable costs, which reflects operational positions, we finished down 48,000 positions, including 15,000 fewer seasonal positions compared to 2024. Moving to our fixed cost bucket, we completed the closure of 195 operations, including closing 93 buildings, and we saw savings from our Efficiency Reimagined initiatives continue to accelerate in the fourth quarter. As we've discussed, offsetting some of these savings was the incremental costs associated with insourcing Ground Saver, which we expect to moderate in 2026. Which brings us to 2026 and the last two quarters of our six-quarter glide down of Amazon volume. In total, for the full year, we intend to glide down another million pieces per day of Amazon volume. Along with this reduction in volume, we will continue to reconfigure our U.S. network and take out variable, semi-variable, and fixed costs. Looking at the variable costs associated with the Amazon volume decline, in 2026, we plan to reduce total operational hours by approximately 25 million hours. In terms of semi-variable costs, we expect to reduce operational positions by up to 30,000. This will be accomplished through attrition, and we expect to offer a second voluntary separation program for full-time drivers. And in the fixed cost bucket, we have identified 24 buildings for closure in the first half of the year, and we're evaluating additional buildings to be closed later in the year. Plus, we plan to further deploy automation across the network. Pulling it all together, we are targeting $3 billion in savings related to the Amazon glide-down. Moving to our 2026 financial outlook. For the full year 2026, on a consolidated basis, we expect revenue to be approximately $89.7 billion. Operating margin is expected to be approximately 9.6%, and diluted earnings per share are expected to be about flat to 2025. As a reminder, 2025 EPS included a $0.30 benefit from sale-leaseback transaction. Lastly, our guidance for 2026 does not reflect any significant changes to the current tariff landscape. Now let me add color on the segments. Looking at U.S. domestic, we are going through significant structural changes, and in 2026 marks the inflection point of our strategy. Full-year 2026 revenue is expected to be approximately flat year-over-year. We expect ADV to be down mid-single digits year-over-year due to our actions with Amazon, which will be offset by a strong revenue per piece growth rate in the mid-single digits. Full- year operating margin is expected to be flat to 2025. Looking at the shape of the year, revenue and our cost structure in the back half of the year will be meaningfully different than in the beginning of the year. In the first half of the year, we expect a decline in revenue compared to the first half of 2025, driven by volume decline. Looking at the first quarter of 2026, we expect to generate an operating margin in the mid-single digits. This is due to short-term transition expenses related to Ground Saver, the timing of removing Amazon-related costs, including the execution of a voluntary driver separation program, and additional expense associated with the aircraft leases related to the retirement of our MD-11 fleet. In the second half of the year, we expect high single-digit operating profit growth, reflecting the completion of our strategic actions. We will still be comping year-over-year declines from Amazon, but we expect enterprise and SMB revenue growth. First half cost pressures are expected to be behind us, and we'll be running a more agile U.S. network. The USPS will be delivering some of our Ground Saver products, and our driver staffing will align with our new delivery volume level. Our results in the second half of the year will be more indicative of our go-forward financial algorithm, with an emphasis on both top line growth and operating margin expansion. Moving to the international segment, we expect the dynamic environment we experienced in 2025 will continue in 2026, primarily due to the tariff and de minimis policy changes that will continue to drive changes in trade lane mix. With that in mind, we anticipate revenue growth to be in the low- single digits year-over-year, driven by a solid increase in revenue per piece. Operating margin in the international segment is expected to be in the mid-teens. Looking at the first quarter, we expect revenue to be approximately flat, with a year-over-year decline in operating profit due to changes in trade lanes and tough comps from the front running of tariff and de minimis changes in 2025. In Supply Chain Solutions for the full year 2026, we expect revenue to be up high- single digits, which includes revenue from our Andlauer acquisition. Operating margin in SCS is expected to be in the low- double digits. For modeling purposes, in total below the line, we expect approximately $760 million in expense, which includes pension income of approximately $250 million, and we expect the tax rate for the full year to be approximately 23%. Now let's turn to our expectation for cash and the balance sheet. We expect free cash flow to be approximately $6.5 billion, including our annual pension contribution of $1.3 billion. But before we factor in the financial impact of a voluntary driver separation program, capital expenditures are expected to be about $3 billion. We are planning to pay out around $5.4 billion in dividends in 2026, subject to board approval. To close, I'd like to echo Carol's comments and express how proud I am of our teams for executing the strategy while continuing to take care of our customers. Our efforts today are setting our business up for future margin expansion and greater operational agility, and we're focused on growing in the best parts of the market to deliver long-term value for our shareowners. With that, 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 do ask that while posing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. We do ask that participants please ask one question, then reenter the queue. Once again, if you have any questions or comments, please press star one on your phone. Our first question comes from the line of David Vernon from Bernstein. Your line is live. Hey, good morning, guys, and thanks for taking the question. So I guess, Brian, maybe just a big picture question in terms of what's embedded in the guidance and sort of the exit rate as we're leaving 2026. I think you mentioned full year domestic margins expected to be flat. Can you kind of give us a sense for what the second half or the exit rate margin should be? And then as far as kind of what's embedded in the domestic cost outlook, is there any sort of numbers you can put around costs from the retirement of the MD-11s or additional stuff maybe that we didn't know before the earnings release today? Thanks. Bye. Yeah. Great. Good morning, and thank you, Dave. So let me first just address the MD-11s. I think in the fourth quarter, including our results, with about $50 million of incremental lease costs that we incurred to replace the capacity, it'll be about double that in 2026. It's included in the guidance, about 90% of that in the first half. The 767s are scheduled to come in through the course of the year, with five in the first half and 10 in the second half, and then we'll have three in 2027. So that's it, it's the first part. I think when we think about the shape of the year, there's a couple really important things to think about. First, as we saw as we went through 2025, and Carol mentioned in her remarks, there's a timing lag between us taking the cost out and realizing the benefits in the P&L along with the volume. So as we go through the first quarter, we're going to have a step down in the Amazon volume in the first quarter. We're taking actions in order to rightsize the variable costs and fixed costs. But there will be a lag in that that'll hit the second quarter. So you do see pressure from three things in the first quarter: the drawdown of the Amazon volume and the timing of the cost out, the transition cost of moving Ground Saver back to the USPS that'll go through the first half of the year. We'll see benefits come through in the second half of the year. And then, as I mentioned before, this incremental MD-11 cost. That's going to put margin pressure on domestic in the first half. Way to think about it is really about 100 basis points of pressure in the first half that relieves in the second half. Most of that pressure coming in the first quarter, right? In our international business, you have a similar dynamic, right? Where we've got pressure from de minimis in the third quarter and fourth quarter, that's going to roll into Q1. Additionally, as I mentioned in my prepared remarks, we had a lot of pull forward in the first quarter of 2025, so we've got a really tough comp. So that's not only going to put pressure on the margin, as we saw in the fourth quarter, but also push down a profit in international, where we expect profit to be down about 30% in the first quarter and then recover as we go throughout the year. And then, look, I think in the second half, we will look at, like, a very different business as I articulated. SMB and enterprise will be growing mid-single digits. We'll, we'll be in a much more efficient cost structure. We'll still be driving good mid-single-digit rev per piece improvement, through, through our pricing. And our cost per piece will, will normalize as we rightsize the driver staffing, realize the benefits of automation, and we'll be exiting at a, at a healthy double-digit margin that will take us into 2027. All right. Thanks, guys. Thank you. Your next question is coming from Tom Wadewitz from UBS. Your line is live. Yeah, good morning. Wanted to see if you could give some thoughts on just kind of like the algorithm post the glide- down with Amazon. Do we think about it as for domestic package. So do we think about it as kind of low- single digits revenue growth? Would that, that be kind of what you would aim for? And, you know, what kind of pace of margin improvement can you consider? I know obviously macro matters, so there are a lot of, you know, things you don't necessarily know, but maybe high level, how you think about that. And then I guess within that, if we look into 2026, 2027, I think you've talked about maybe like $400 million-$500 million of EBIT headwind in 2025 from the insourcing of SurePost. So now that you're handing that back to postal, I don't know if you get that fully back and if that's kind of like half of a benefit in second half of this year and then, you know, half of it in 2027. So, just some, I guess, some thoughts on kind of that overall domestic package margin and how to look at it. Thank you. Sure. Yeah, yeah. Thanks, Tom. So as we think about the kind of go forward algorithm, as I mentioned, look, we expect to see kind of mid-single digit enterprise and SMB volume growth in the back half. Now, our rev per piece will normalize because some of the mixed benefits that we've seen as the Amazon volume has come down, also come down, but we've had healthy base rate increases that have been continuing. So I would think about a couple percent on the base rate. From the cost side, our cost per piece will normalize as well, right? And we expect to see cost per piece come down below rev per piece. So we're driving unit cost improvement as we have, you know, prior to the Amazon glide-down, and that will drive kind of structural long-term margin improvement as we go forward. So look, I think what we'll see in the back half of the year is we're exiting with, you know, non-Amazon volume and revenue growth and margin improvement will be the go forward algorithm. On the USPS cost, we will be transitioning a portion of our Ground Saver delivery back to the USPS through the first half of this year. We do expect that we'll see the benefits start to materialize in the second half. It will look slightly different than what we had before, because obviously, we're, you know, going back at a different rate than what we had before with the USPS, but that will translate into savings in the second half of this year and going forward. It also, you know, helps us with aligning our product strategy with how we want to think about an economy product as a holistic part of our product portfolio. Do you think you get back the full $400 million-$500 million that you gave up in 2025, or maybe not? As we rightsize the driver staffing levels and moving forward, then yes, over time, I think we'll get that back. It will take time, though, because we've got to migrate the work back, and we have to rightsize the position levels commensurate with the new delivery stop levels. I wouldn't expect to see that full benefit until 2027. Correct. Right. Okay, thank you. Thank you. Your next question is coming from Ken Hoexter from Bank of America. Your line is live. Hey, great. Good morning. You threw out some costs pretty quickly there, Brian. I just want to clarify, did you throw out the costs in the first quarter on the driver out and the postal service costs impact that margin? But my question is just on the rate increases for both domestic, international. I think you threw out there that it was going to be low single digit for domestic. Your thought on how this should trend for core rate, both domestic and international? Thanks. Yeah, so if you think about rev, rev per piece for the, for the year, Ken, it's about 4.5%, right? Rev per piece growth. But you're going to be higher than that in the first half and then normalize to about 3% in the second half, right? As some of the mixed benefit comes out. Look, in the fourth quarter, we saw a 340 basis point improvement in base rates. We've been seeing kind of around this 300 basis point improvement in base rates. I would expect that as you think about going forward. Related to the driver buy-out, we didn't give a number because, you know, we've-- we're, we have not yet to launch the program. It's too early to make an estimate. Look, this is a tactical move that we used to did something similar last year in order to help us to rightsize the position levels and the network infrastructure with the new volume and delivery levels, right? 'Cause it includes the change in the Ground Saver stops as well. We'll keep you updated with that as we go through the course of this year. Thank you. Your next question is coming from Ari Rosa from Citigroup. Your line is live. Hi, good morning. So I wanted to dig a little bit further into the cost per piece trends. Obviously, it was elevated a bit in fourth quarter, but you talked, Brian, about that normalizing on a go-forward basis. Maybe you could separate those things out. Just like if we think about normalized CPP run rate, how we should think about that, and then as we think about the improvement in revenue quality and the kind of shift in mix, does that assume kind of a higher cost per piece to handle that business? Or can we get that back to kind of a that low single digit run rate, more in line with inflation? Thanks. Yes, I think, yeah. So Ari, I think as you think about the cost per piece profile, again, it's gonna trend down as we go through the year, right? It'll look similar in the first quarter as it did to last year, but by the time we get through the year, and we transition Ground Saver, we've finalized the execution of the network reconfiguration, and our cost out. We're deploying additional automation that will go online through Network of the Future. Yes, we will see the cost per piece normalized to that kind of normal inflation level, right? With a 3% revenue per piece growth rate and a lower cost per piece, right, we'll be able to get back to that kind of, you know, 100 basis point separation that we see to drive unit cost and margin improvement as we grow. Perhaps we just comment on how are we driving this productivity. One way is through automation. We have 127 buildings that are automated. We are adding another 24 in 2026. The cost per piece in these automated buildings is 28% less than the cost per piece in our conventional buildings. So automation is one way that we will continue to drive productivity. Then we're just getting better from a capacity perspective and a production perspective. Nando, maybe you wanna comment on that. Yeah, sure. So I, I think, first six months next year will be, or this year, I'm sorry, will be very similar to last year. In fact, we've already started optimizing some of the closures of sorts and buildings, 'cause we didn't stop automating until December 31st. We did take a day off, but we're right at it, right back at it. And I just for some proof points, as we work through the month of December, the activity was up 4.4%. By activity, I mean, a lot more stops out there to serve our customers, when in fact, the volume was, was soft and negative. That is going to flip on us. So I'm very confident that the cost per piece will be in a much better position as we align to the driver buy-out proposals that we're discussing, Network of the Future implementations, our building closures, store closures, and of course, the outsourcing of the USPS work. Very helpful. Thank you. Thank you. Your next question is coming from Chris Wetherbee, from Wells Fargo. Your line is live. Hey, thanks. Good morning, guys. Maybe if we could touch a little bit on the international segment, make sure we just sort of move through the, you know, run through the moving pieces there. Obviously, we talked a lot about the domestic side, but just get a sense of some of the pressure there. Maybe we can sort of break out some of the individual costs or de minimis pressures as we go through first quarter specifically, but also first half. Yeah. Thanks, Chris. So yeah, in the international segment, what you saw in the third quarter is we did see export volume decline for the first quarter in 2025. That was really. There was a lot of pressure, both from Canada and Mexico, as well as continued decline in our China to U.S. lanes and really, you know, all of our U.S. inbound lane. That's gonna roll over into the first quarter as well. Look, I think what we expect to see evolve in the international business is we are gonna see extreme weakness in the first quarter that kind of gradually recovers. There's two dynamics going on. One is volume, right? So volume, we will lap the tariff impact in May and start to see positive growth from that, and then we'll lap the de minimis impact in September. So the second dynamic is the trade lanes are shifting, right? And that's driving a margin headwind. Look, we make double digit margin on all of our U.S. inbound lanes, but the ones that are growing, right, are call it mid-teens versus the high- double digit margins that we've got in, you know, 20%-30% margins that we have in the China to U.S. lanes. So while we're seeing some offsetting volume growth, we are seeing margin pressure as a result of that. That also will abate as we go through the year, and what we expect to see not only volume normalize, but also margin improve as we go through the year. And look, I think the revenue quality actions that we're taking in international have helped to offset the volume declines in the third quarter and will continue to help drive revenue growth as we go through Q2, Q3 and Q4 of next year. Okay, but the EBIT decline, that's year-over-year or sequential that you noted before? Year-over-year. Got it. Thank you. The way I would do it, just simply, is we were down 360 basis points in the fourth quarter. Yeah. It's gonna be like that in the first. Yeah. 'Cause nothing's changing until we actually anniversary, you know, Liberation Day and then the move of the de minimis exception, so. J ust got some tough comparisons, but we'll manage through it, and Kate's doing a really nice job of managing the network so that we can serve our customers, 'cause there is growth in parts of the world. Maybe you wanna talk, Kate, about where you're seeing growth. Yeah, absolutely. We mentioned before, years ago, when we first saw the China lockdown, we invested heavily in Asia diversification, and it has really unlocked growth. We're in Vietnam, in a new air hub, and it's already 80% full for a five-year plan. So we've actually got double-digit growth going out of a lot of the Asian countries, but they're going to Europe and India, and so we shifted with the trade. So while we do that, you have to pull down the block hours, and we have shown that over the last couple of years that that is what we do. So we are seeing good growth, and we're helping our customers to understand the shift as well, whether it be by lane or by mode, package to forwarding or the reverse. So proud of the team. Last year, with the tariff and de minimis, haven't seen anything like it in 36 years, and proud to say that we've delivered, for instance, in the fourth quarter, 18% margin. Thank you. Your next question is coming from Jordan Alliger from Goldman Sachs. Your line is live. Yeah. Hi, morning. Question for you. Can you maybe talk a little bit more what underpins, I think you said mid-single digit type of package growth in the second half? Is it inventories in better shape so that we could see business to business grow again? Is there some expectation that the tax benefits or refunds which are higher this year will help the consumer and, and demand? And assuming that type of volume happens, I mean, talk about your confidence level in the revised network and headcount moving the goods. Thanks. Well, just from a macro perspective, the U.S. small package market appears to be stabilizing. The market, excluding Amazon, is projected to grow in the low single digits, so we should grow along with that. And fiscal and monetary policy changes should support this growth. Further, the outlook for manufacturing is better. It's not robust, but it's better, which gives us a confidence that we can grow into that space as well. And then the one thing I would ask you to remember, candidly, growth is a reflection of year-over-year comparisons, and we are gonna anniversary the decisions that we made to exit, not just some of the Amazon volume, but also Chinese e-commerce volume. So you just naturally get some growth from a year-over-year comparison. Brian, what would you like to add to that? I think also, Jordan, you know, the places where we have been investing, we are seeing wins, right? Healthcare, even in the domestic small package business, SMB healthcare is a robust growth area for us, automotive, so the air products. So we're seeing the quality volume that we've been shifting to show up in the network, right? In the fourth quarter, we saw heavier weights, we saw longer zones, we saw the highest SMB penetration we've ever had, the highest B2B penetration we've had in four years. So the mix shift is happening, and we can see that. That enables us to lean in the places where we've invested, we've got differentiated capabilities, and we wanna grow, and that helps support, as Carol said, you know, a growth in excess of the market. On the differentiating capabilities, perhaps I'll just take a moment to talk about our RFID capability. As you know, we've been talking to you about RFID or our Smart Package, Smart Facility initiative for a few years, and it's really starting to crystallize into three big pillars. The first is what we call Smart Facility, but it's really a smart car, where we've enabled now all of our cars with RFID sensors. So we're moving from a scanning to a sensing network. And what this does, well, makes us more productive on the car, but also improves the level of misloads. Then, by using the RFID labeling, our packages become smarter, which reduces defects. But the more interesting development, which drives commercial business, is what we call Smart Fulfillment. What Smart Fulfillment is, is putting the RFID labeling at the point of origin, which gives better transparency, order to cash, something that customers are desperately seeking. It gives them better control. And so we launched the RFID fulfillment, if you will, in the fourth quarter by putting RFID labeling at the origin of all of our UPS stores. We have 5,500 UPS stores, as you know. They're processing now 1.3 million packages a day with RFID labeling, and this is allowing us to earn new commercial business. So it's not just the fact that the market is growing and we've got some easier comparison. It's we're investing in capabilities that are turning into wins. In fact, the win for domestic business in the fourth quarter, and we sold during peak, the win during the fourth quarter was 25% higher than a year ago. Thank you. Thank you. Your next question is coming from Ravi Shanker, from Morgan Stanley. Your line is live. Great, thanks, morning, everyone. Carol, you gave us long-term targets for 2026 at your Investor Day in 2024, and obviously, a lot has happened since then. I'm sure you'll have Investor Day early next year. But in the meanwhile, how do you think we should think about that long-term earnings growth trajectory and where kind of normalized EPS is at this time, kind of in your view? Thank you. Well, I think it's such a fair question, to ask us, but clearly, things have changed a lot since 2024, 'cause back then, we hadn't planned the Amazon glide-down. So what I'd ask, Ravi, is that you let us get through this year. 2026 is the pivotal year for UPS, and once we get through this year, we'll come back out and give our view on that. Understood. Thank you. Thank you. Thank you. Our next question comes from Bruce Chan from Stifel. Your line is live. Yes, thank you, and good morning, everybody. I don't know if you've discussed it in the past, but I'm just curious if maybe you can talk about the selection process for, you know, which facilities were automated in 2025 versus what's ahead in 2026. And I guess what I'm trying to get to is, you know, whether there's anything to read from the complexity of the operations that you attacked last year versus what you've got ahead this year. So Nando, talk about our process. Yeah. So, look, we've got, and, and we have reviewed this, I think, a couple of calls ago, where we look at each individual site, 1,100 checkpoints of things that we need to make sure that we are absolutely sure, 'cause once we close, we're not going back, to those facilities. And then we take a very, very, detailed exercise to make sure we're pointing that volume to the automation. And so what's happening is you're seeing a cascading effect of, sites being closed that are legacy, conventional facilities, a lot of, labor required to run those facilities to a much more nimble, quicker, automated, consolidated facility. As we bring in all of those peripheral centers, we start to see the efficiencies of feeds, cube utilization, and of course, any service disconnects can be rationalized right there in one facility. So that's also helping from a customer perspective. The next set of buildings, of course, we wanted to accelerate, and we went after the more complex, bigger facilities in the middle of our project last year. They will be just as challenging, but we don't see any concerns whatsoever in the complexity and closing these centers and making sure they map back to the automation, so we can help ourselves financially. While staying on service, that's really so important, just to not trade off productivity for cost out for service. I'm proud that we have eight years in a row now of leading service. One other observation about how the team is performing in this regard, 'cause I'm super proud of them. The beginning of last year, we targeted 73 buildings to be closed as related to our Amazon glide-down. We actually closed 93. This year, you've targeted 24 buildings. My guess is there'll be a few more closures than the 24 you've identified. Yeah. So that's just the first half. We continually put all of those facilities through a process to make sure that we're not missing anything. We suspect in the range of 24 for sure, first half, that we've got another 60 or 70 we're assessing, and then we'll have a number that comes out of that, of that total. We'll update you as we go. Correct. That's great. Very helpful. Thank you. Thank you. Your next question is coming from Richa Harnain from Deutsche Bank. Your line is live. Hey, thank you, everyone, and good morning. So just piggybacking off of that question, you know, great stat on the cost per piece being 28% lower in these automated facilities than your conventional ones, Carol. But, and you talked about the runway now you have for that to continue, but how does that play into maybe your ability to do more with less? So, you know, how can we think about your CapEx plans? Your 2026 CapEx outlook is below 2025. That's despite replacement plans for fleet, which you spoke to. So maybe talk a little bit more about what's underpinning that, and as you adjust to maybe a smaller footprint, a more efficient footprint, how should we think about the long-term CapEx outlook? Sure, I'll start, and then Brian, you can jump in. Sure. When you think about our network, Nando mentioned 1,100 points in the U.S. Some of those buildings are really old, with a lot of maintenance expense. And as we're closing those buildings, that maintenance expense goes away. So that's part of the year-over-year change. On the fleet additions, we're actually financing the aircraft through a build and lease structure that, Brian, you might want to describe. Yeah, sure. Yeah, yeah. And Richa, yeah, as Carol mentioned, yeah, we do have financing structures around the aircraft. And, but I think importantly, look, if you think about the CapEx profile, look, our volumes continue to come down, right? And as Carol mentioned, we've closed facilities. When we look at the asset categories where we really have pulled back, we're not buying as many vehicles, right? 'Cause we don't need them as we rightsize the U.S. network. We continue to invest in our international network through both air hubs, aircraft, and vehicles. But it's bringing down our maintenance expense. It's bringing down our vehicle expense. And look, and I think as we turn and we continue to grow, we'll be kind of around this 3%-3.5% of revenue is a normalized CapEx. But we're creating more efficiency, we're creating more flexibility, so you don't have to spend CapEx on variable capacity like we used to. Yeah. That's gonna allow us to run a more capital-efficient network going forward. Nice to hear. Thank you. Thank you. Your next question is coming from Jason Seidl from TD Cowen. Your line is live. Thank you, operator. Good morning, Carol, Brian, and team. Carol, I think you talked a little bit about the technology that's gonna redirect parcels to the USPS versus sort of in-house. Can you maybe give us some more color on that, in terms of how much of your network is gonna be equipped with that by the end of the year, and sort of how we should think about that helping margins over the longer term, because I'm assuming that'll help with cost as well as productivity? Well, I'm happy to talk about the math of it, but on the technology part of it, I'll throw it back over to Nando. Yeah, so just on the Saver portion, we will have that network up and running by end of this month. And so it's really a matter of some of the conversions we did last year with our customers, making sure that the labels are readable by both UPS and the USPS as we tender through the automation to the USPS for last mile delivery. The matching algorithms are within our control, so we can expand those. In fact, the peak season, I think we expanded those proximity stops up to 500 ft, in some cases, down to 100 ft, or an exact match to the address. It really depends on the mix of volume that's in our network. But as far as delivering the service, physically, we can move the packages. We need to enable the packages so they can be read through the network and then through the USPS to our end customer. And Matt, you're responsible for this relationship, so is there any color you wanna add in terms of volume going to the- Yeah. Postal Service? No, I think just a couple points. One is, look, we continue to Nando's point, we continue to ramp the volume up this, in the month of January. And it also gives us an opportunity that Brian highlighted earlier, is really to differentiate our product portfolio because our customers are asking us, one, they want the reliability of the UPS network, but we, and the service that we can provide, we've demonstrated we can provide, but they also want to make sure they have a economical option. So this really gives us an opportunity to both, Nando and Carol's point, to, one, bring our customers online and get these dual labels so that we can have, they can have visibility, but also giving them the right experience along the way with that economic option. It's not just the economics. We're going into the DDUs. Yes. That opportunity was not presented to us a year ago. So we're very excited to be able to use the DDUs, because that will ensure our service labels stay high. Appreciate the color. Thank you. Your next question is coming from Bascome Majors from Susquehanna. Your line is live. Thanks for taking my questions. If we go back to the 2023 deal with the Teamsters, you had to absorb a lot of inflation really quick, and then you had three years of fairly moderate labor inflation in the U.S., and then, you know, that was scheduled to tick up in the fifth year of the contract. Can you talk a little bit about, you know, what the initial plan was to deal with that cadence of high labor inflation, low, and then some moderate increase in the back half? You know, how the Amazon glide-down and the network reconfiguration has maybe changed that plan. And, and ultimately, you know, how you feel about dealing with that uptick in labor inflation in the U.S. in the second half of next year. Thank you. Well, at that time, we also were looking at Network of the Future, as you can recall, which was the rationalization of our network, the automation within our network, and that work has progressed quite nicely. We are ahead of where we thought we would be. You couple that with the Amazon glide-down, and the number of employees in our workforce will decrease considerably. As Brian pointed out, we're down over 40,000 people. That's gonna impact the cost of any contractual increase on wage, of course. So we're managing through this, I think, very well. And Brian, is there anything you want to add? Sure. And I think Carol hit on the right points, right? When we started out with the labor contract, we knew that we were gonna be investing in order to create a lower labor-intensive network, right? With more flexibility, that had the ability to scale, right? Particularly for peak, because we're seeing peak be increasingly important, without the need for so much labor. You're seeing that, right? We saw it with and without the Amazon drawdown in 2020, without in 2024, with and without in 2025. We've set out targets for incremental position eliminations that'll drive efficiency in 2026. And so as we approach that point, we will be driving down total expense. At the same time, remember, we will have a different characteristic of revenue in the network so that the, you know, incremental costs will not turn customer ORs upside down. Right. Right? And so, we'll have a less labor-intensive, more nimble, more profitable network that that'll minimize the impact of the increase. Matthew, we have one time for one more question. Certainly. Our final question comes from Brandon Oglenski from Barclays. Your line is live. Hi, Carol, and thanks for taking the question here at the end. I guess, can we, you know, maybe summarize all this? Because it sounds like you guys are really protecting service, even though, you know, the network's getting smaller here. Does that create any market share opportunities or challenges, especially with where pricing is going up for the industry as well? I appreciate it. Service is paramount to winning new business. It's almost table stakes. Without it, how do you win? It's not just service, though, it's capabilities. And the capabilities that we've been investing in, and I talked a little bit about RFID, but there are a lot of other capabilities that we've been investing in that's allowing us to take share. I'll just focus us right on our Digital Access Platform. When I joined the company, the revenue in that platform was $139 million. Fast forward to the end of 2025, $4.1 billion. We continue to add more partners to the platform. We're growing it globally, not just in the United States. And that platform is something that our small and medium-sized businesses enjoy using for delivery as they're selling through partners like eBay and Shopify and others. We're gonna continue to invest in capabilities that allow us to win new business. The service is paramount. Thank you. I will now turn the floor back over to your host, Mr. P.J. Guido. Thank you, Matthew, and this concludes our call. Thank you for joining, and have a good day.