What happened

Shares of United Parcel Service (UPS -1.14%) fell by more than 7% on Thursday morning after the shipping giant reported first-quarter earnings that came in shy of expectations and provided guidance for the second quarter that disappointed Wall Street analysts. The company is still optimistic about full-year results, but members of management are giving themselves a lot of work to do in the second half of the year.

So what

UPS delivered first-quarter earnings of $1.39 per share on revenue of $17.16 billion, falling short of consensus analyst expectations for $1.41 per share in earnings on sales of $17.78 billion. The weakness was widespread: Domestic U.S. revenue came in at $10.5 billion in the quarter, about $200 million short of analyst forecasts, while international, at $3.6 billion, was about $100 million below consensus and supply chain was about $200 million below what analysts had expected.

A UPS truck at a loading dock.

Image source: United Parcel Service.

The company said first-quarter results were impacted by severe winter weather in many parts of the U.S., as well as by Easter falling into the second quarter. UPS is also in the process of upgrading its distribution network to better handle e-commerce deliveries, resulting in $123 million in one-time expenses during the quarter.

UPS also said it expects second-quarter earnings per share to be flat compared to the same quarter last year, implying about $1.94 per share in earnings. Wall Street had been expecting the company to earn $2.02 per share in the second quarter. The company said planned pension costs, as well as the expense of a number of new facility openings, would weigh on the current quarter.

Shares of UPS, down 18% in 2018, are still up 9% so far in 2019 even after Thursday's drop.

Now what

UPS did reaffirm its full-year earnings guidance of $7.45 to $7.75 per share, implying the company expects its business to pick up dramatically in the second half of the year. Coming into earnings, analysts were expecting UPS to earn $7.53 per share for the year.

The company has been transparent about its plans to invest in the network, arguing that the short-term expense and disruption will pay off in the future. Chairman and CEO David Abney, in a statement accompanying the earnings release, said that the transformation is unfolding as planned, providing some reason for optimism that results will improve as the year goes on.

"Our transformation initiatives are enhancing revenue quality and creating network efficiencies that will increase our long-term earnings power," Abney said. "We are on a path to take advantage of growth opportunities and enhance our future performance."

For patient investors, this might be a good time to give UPS a look.