Union Pacific Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ken Hexter - Bank of America - Analyst : Hey, good morning Jim and team. Thank you for the question. I guess two things. One, can you just clarify when you talk consistent with last quarter? Are you talking on an operating ratio level? Are you talking on a revenue or up income level? Just want to clarify that? And then I guess Kenny, it seems (inaudible) taken a big step down lately. Can you talk about what puts and takes about what's built into the full-year target that you're targeting there? Thanks.

Question: Ken Hexter - Bank of America - Analyst : Thanks Jim.

Question: Chris Wetherbee - Wells Fargo Bank - Analyst : Hey, thnaks. Good morning guys. So I guess I just maybe wanted to understand a little bit about how you think about the intermodal outlook and maybe how that influences that comment around the fourth quarter. So we came off of what is a been a remarkable sort of pre loaded peak season potentially in the third quarter, particularly for international. Do you see the mix start to change a little bit, but maybe sort of work that into a little bit of the drivers of that consistency in the fourth quarter. It would be helpful.

Question: Chris Wetherbee - Wells Fargo Bank - Analyst : Thank you.

Question: Walter Spracklin - RBC Capital Markets - Analyst : Yeah, thanks. Good morning everyone. So, Jim in your prepared remarks, you kind of alluded to margins of reps weren't what you were hoping is that to say that you kind of the prior margin improvement that you achieved in your first, a few years ago, is not possible in the current environment or is it just taking longer? And I think, and I'm just curious whether your mention of an industry leading or do you think that is in effect for next year? In other words, can you have an industry leading LR as early as next year?

Question: Walter Spracklin - RBC Capital Markets - Analyst : Absolutely. Thanks Jim.

Question: David Vernon - Bernstein Private Wealth Management - Analyst : Yeah. Hi. Hi. Thanks for the time. Sorry about that. I was just trying to get off mute. So, Eric, I had a question for you on the intermodal train speeds, the data we're looking at from the outside looking in, those numbers are trending kind of as low as they've been. We've seen some issue on dwell at the west coast ports as well. So how, do I reconcile some of those external data points with the performance that you guys are driving in the results today, in terms of talking about the best ever train links, just best ever improvements in customer service. I'm just trying to square that circle because it's come up in a couple of client conversations. Thank you.

Question: David Vernon - Bernstein Private Wealth Management - Analyst : Thank you.

Question: Mike Triano - UBS Investment Bank - Analyst : Hey Jim. This is Mike Triano on for Tom. So if we look at the workforce productivity and locomotive productivity, they're both up mid single digits through September and they've been a driver of or improvement this year despite the volume and the mix headwinds. If we look out to next year, the volume backdrop is still kind of murky, but volumes are kind of flat to up. Do you think you can get another mid single digit improvement in those productivity metrics?

Question: Mike Triano - UBS Investment Bank - Analyst : Will do.

Question: Daniel Imbro - Stephens Inc - Analyst : Yeah. Hey, good morning, everybody. Thanks for taking our questions. Maybe I wanted to ask a broader one just from a competitive standpoint. I know it's hard to know, but your Western peers has been more vocal but wanted to improve it. So they are. I'm curious if you're noticing anything different when you're out there bidding on business or going head to head with them in the market and then you're prepared to March. You mentioned merchandise pricing was positive. Just curious how you're seeing core merchandise pricing out there in the market if it's changing at all. Thanks.

Question: Daniel Imbro - Stephens Inc - Analyst : Understood. Thanks, Jim. Thanks Kenny.

Question: Jonathan Chappell - Evercore Inc - Analyst : Thank you. Good morning. Good morning Jim. Kenny, I was going to ask this anyway, it may be a pretty well timed follow up to the last one. So the arc of 5% in both bulk and industrial obviously points to your pricing. Jim says that, customers have to see value in the service and you're seeing that, but with inflation conceptually coming down a little bit the volume headwinds remaining to keep that type of pricing momentum despite the good service, do you need a little bit of help from the volume side from the macro from demand to continue to push price at a certain point? Is that kind of cap out without getting some volume tailwinds?

Question: Jonathan Chappell - Evercore Inc - Analyst : Okay, thanks Kenny.

Question: Brian Ossenbeck - JPMorgan Chase & Co - Analyst : Hey, good morning. Thanks for taking the question. So Jim maybe just to come back to the one of the initial comments you had earlier here and then also something you said when you first came on board, just to take a little while to get over the labor challenges that you sort of inherited on the network. Obviously, we've seen mix and coal not help and then just a broader inflationary trend. So maybe just to help level set things a little bit. You said it's going to take a while. Can you offer any sort of context in terms of, what the timing should be, if it's going to be gradual or if there's some step change that we could be thinking of as we look -- excuse me more broadly to getting over some of these hurdles and probably to a better place than what you started off with? Thanks.

Question: Brian Ossenbeck - JPMorgan Chase & Co - Analyst : I appreciate it, Jim. Thank you.

Question: Ben Nolan - Stifel Financial Corp - Analyst : Yeah, thanks a lot. So the service performance index for both intermodal and Manifest has been trending up higher. I'm just curious, if you think there's a point where, if you arrive at a certain level or if a certain range where you can really lean more heavily into pricing that maybe you already REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:45PM, UNP.N - Q3 2024 Union Pacific Corp Earnings Call have or, and maybe also just share gains versus competitors or, versus trucking? Is that -- is there like a magic number or at least a magic range where you feel like, really, we have a strong or much stronger competitive advantage.

Question: Ben Nolan - Stifel Financial Corp - Analyst : Do you think you're there now?

Question: Ben Nolan - Stifel Financial Corp - Analyst : Got it. Appreciate it. Thank you.

Question: Eric Morgan - Barclays - Analyst : Hey, good morning. This is Eric Morgan on for Brandon. Thanks for the question -- taking the question. I just wanted to come back to the mix discussion in the fourth quarter. I think you mentioned mixed headwinds continuing in the quarter, maybe with some international intermodal volume growth moderating somewhat. But can you just talk about some of the mix effects from other commodity groups outside of intermodal? And in particular, maybe how you view margin contribution from coal would be helpful? Thank you.

Question: Eric Morgan - Barclays - Analyst : Great. Thanks.

Question: Stephanie Moore - Jefferies Group LLC - Analyst : Hi, good morning. Thank you. You talked a lot about the strength in export grain to Mexico. But could you also talk a little bit more broadly about your Mexico business? How you see that going forward? And any thoughts on geopolitical administration changes as well? Would be helpful. Thank you.

Question: Scott Group - Wolfe Research, LLC - Analyst : Hey, thanks. Good morning. Jennifer, any color on that comp per employee up 8% and how to think about that going forward. And then I know someone else asked already about like what that sort of flat Q4 comment meant. But I just, I guess I'm not sure, if that was still not sure if that was an earnings and margin or revenue comment. So I know, any color. Thank you.

Question: Scott Group - Wolfe Research, LLC - Analyst : Thank you guys.

Question: Elliot Alper - TD Cowan - Analyst : Great. Thank you. This is Elliott on for Jason Seidl. I believe this is the first quarter of this year where your domestic intermodal volume outlook is positive. Can you talk about what you're seeing in the domestic intermodal market in Q4? And I know you already talked about kind of the mix headwinds and international growth and fuel, but we see domestic intermodal growing into the quarter. Could that maybe partially offset intermodal RevPAR car in Q4? Just trying to gauge the magnitude? Thank you.

Question: Elliot Alper - TD Cowan - Analyst : Thanks Kenny.

Question: Ari Rosa - Citigroup - Analyst : What, what's that, Jim? I'm sorry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:45PM, UNP.N - Q3 2024 Union Pacific Corp Earnings Call

Question: Ari Rosa - Citigroup - Analyst : Yeah, I know that's, hey, it's, it happens. It's okay. Thank you for fitting me in regardless. I just wanted to, I know some other people have spoken about this already, but I wanted to ask about this -- the target to price above rail inflation. Could you give us color just to be clear, is that something that's being achieved currently and that we can expect for 2024? And then kind of given the looser class environment, would you say that you've kind of gotten more push back from customers as you have those pricing discussions or do you think service is sufficient currently to kind of compensate for whatever the loose truck environment might be doing? Or the kind of the software demand environment might be?