Union Pacific Corp Q3 2025 Earnings Call Transcript

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

Question: Thomas Wadewitz - UBS Equities - Analyst : I wanted to see if you could offer some more thoughts on just how you see the merger application, the process of building support from shippers from Union's. Just how that process is progressing? I think the deal you had with Smart, the agreement was a nice win for you. I don't know if you expect any more of those coming or if you expect kind of any gains on the shipper side? Or is it more like we're in a waiting period for the filing? And then I don't know, you said a couple of weeks for the filing, any more kind of just expectation of when that filing will come with STB.

Question: Thomas Wadewitz - UBS Equities - Analyst : No, on the shipper side, anything new there? Or is that -- that's the only thing you didn't hit. And thanks for all the perspective.

Question: Ken Hoexter - BofA Global Research - Analyst : So Jen, you talked a little bit about sequential OR or I guess, fourth quarter, you threw out some initial thoughts there. Can you talk to the puts and takes? You mentioned the favorable equipment settlements, the lower mix impact, your revenue thoughts. So maybe just talk about all the puts and takes that we should expect in the fourth quarter. If we're starting with volumes down mid-single digits, ultimately, should we see earnings

Question: Ken Hoexter - BofA Global Research - Analyst : And then specific to the [rent] question?

Question: Brandon Oglenski - Barclays - Analyst : Since you guys announced your merger agreement, it seems like your competitors are maybe collaborating a lot more than they have in the past. Do you view this as potentially a risk, especially as you're going through a pretty complicated process with the STB here?

Question: Brandon Oglenski - Barclays - Analyst : Thank you, Jim. 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call

Question: Jonathan Chappell - EVERCORE ISI - Analyst : Thank you. Good morning, everyone. Eric, Jennifer just noted in one of her prior answers, productivity is challenged and the volumes are coming down. In your prepared remarks, you said you had the locomotives and the labor position for new business wins. We look at Kenny's outlook slide and there's actually more minus signs than positive signs for 4Q. So when we think about your ability to be nimble, your productivity or efficiency, as you're going through kind of a choppy macro backdrop but with all eyes on the UP and your service during this merger review process, can you be as nimble and reap as much productivity if volumes continue to be weaker than expected? Or do you need to have a little bit more slack in the system at the present time?

Question: Jonathan Chappell - EVERCORE ISI - Analyst : Thanks, Eric.

Question: Scott Group - Wolfe Research - Analyst : So maybe just, Jim, like to ask it more directly, like (inaudible) rail that seems like publicly opposed to the merger. Like in the past, maybe that has mattered, like do you think that rail opposition matters today, given all the other sort of puts and takes as it relates to this merger? And then maybe just separately, if I can, Jennifer. The yields ex fuel were up 3.5%. I know there's maybe a little bit of mix here. But it feels like we're like now more clearly in a positive price cost backdrop? Like does that continue? Any reason to think that, that isn't sustainable looking ahead?

Question: Scott Group - Wolfe Research - Analyst : No, that was great. 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call

Question: Brian Ossenbeck - JPMorgan - Analyst : Maybe a quick one for Kenny, and then a follow-up for Jim. So Kenny, just looking at the intermodal, it looks like there's some share shift between yourself and other Western competitor, if we look at just an originated basis. I know there's a lot of moving parts with international and domestic, but wanted to see if we're reading that directly. And then, Jim, you mentioned that the customers are lining up, there's a good amount of support, but one that's been pretty vocal, obviously, maybe this is the Starbucks example you're referring to. But the chemical shippers in the Gulf Coast, they've been a lot more vocal winning enhanced competition. Is that something -- I'm sure we'll hear about in the application, but is that something you can deal with directly? Or do you take that to the STB and have them weigh on it? And just how should we think about how that progresses since it's a pretty big and important in vocal group.

Question: Brian Ossenbeck - JPMorgan - Analyst : Jim, the 15% to 20% increase, just to clarify, that's a speed or a throughput? What does that number referred to?

Question: Brian Ossenbeck - JPMorgan - Analyst : We appreciate those details, Jim. Thank you.

Question: Stephanie Moore - Jefferies - Analyst : Thank you. Good morning. When you look at your service metrics, as you noted, they're about the best they've ever been or 100% or so. Can you talk about your level of confidence and the steps you can take to implement your service best practices to [NSE] post-merger? And Jim, just the time line do you think realistically for some of these world-class levels to convert over?

Question: Jason Seidl - TD Cowen - Analyst : I totally get the perpetual dissatisfaction comment, but hopefully, you guys can take a day to enjoy some very, very solid results for the quarter. My question is going to be on yields, but Jennifer is going to actually be happy that I'm not looking for guidance here. How should we think about your ability to sort of directionally change domestic intermodal yields if sort of the market starts to inflect on the truckload side, sort of given all the governmental actions taken against foreign drivers right now? And also, when we look into ag, can you help us sort of frame up how to think about near-term ag RPU. And so how does export RPU compare historically versus sort of domestic ag RPU?

Question: Jason Seidl - TD Cowen - Analyst : Okay, if I could follow up there. Just how do you think about the timing? Like if the market inflected on the truckload side, is it going to be a couple of months lag? Is it going to be a couple of quarter lag with your ability to adjust price on the domestic side? 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call

Question: Jason Seidl - TD Cowen - Analyst : I appreciate it anyway. Take care, guys.

Question: Christian Wetherbee - Wells Fargo Securities LLC - Analyst : Maybe sticking with Ken, I guess I was curious about sort of the pricing environment as we move into next year. So I guess, do you think as you go through contracting at the end of the year, that pricing is kind of (inaudible) is better in '26 than '25? Is it kind of the same? I know the backdrop from intermodal really kind (inaudible) trucking environment hasn't done much here just yet. And then just kind of curious or generally speaking, the response from customers, I don't know if it's sort of the conversation tones have changed at all in the last couple of months? Or are they still relatively constructive and as you think about next year? So just any thoughts around pricing would be great.

Question: Christian Wetherbee - Wells Fargo Securities LLC - Analyst : Just in the context of the service product that you're putting out there, I guess it's a little unclear. Does that drive better pricing sort of conversations as you go into next year? I guess, it may be -- is kind of what you've been doing.

Question: Christian Wetherbee - Wells Fargo Securities LLC - Analyst : Good characterization of the service product. Appreciate it, guys.

Question: David Vernon - Bernstein Research - Analyst : So Kenny, a couple of months ago, UP and Norfolk put out some marketing material around enhanced collaboration in the network. I was wondering if you could maybe just talk a little bit about how those changes are being made and how that level of integration is -- would compare to maybe a post-merger world. And then if you have any comments on kind of what you're thinking about doing with the UMAX program longer term, we'd love to hear kind of some more perspective from you on that. 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call

Question: Walter Spracklin - RBC Capital Markets - Analyst : Thanks for the detail today. I just want to double-click a little bit on next year. And I know, Jennifer, you don't have guidance out there, but you do have that S4 document that we normally wouldn't have this time of year and the numbers are out there. They are below -- you reiterated your high

Question: Richa Harnain - Deutsche Bank - Analyst : So Jim, you said that no one is really talking about this world-class quarter. I guess after that, a couple of people did, but maybe we can tie a bow on it. This past quarter results were pretty remarkable. You managed 12% EPS growth with virtually no volume help. Labor productivity continues to be a strong driver. I think you had like another 3.5% drop in headcount. You're coming out ahead on comp per employee. I think (inaudible), you said 3% for the year. And last quarter, you guided at 3.5%. Eric, you talked about the overall records and various measures of productivity. But I think is this really the pricing lever starting to kick in Jennifer that you've talked about in earnest in the past around repricing contracts like (inaudible) the work you're doing to reflect the good service you guys are introducing. And if yes, what inning are we in there? And then just like why shouldn't the high end of your long-term high single-digit to low double-digit EPS target be more appropriate, especially into 2026. Again, that 12% on 0% volume growth really stands out.

Question: Bascome Majors - Susquehanna Financial Group LLLP - Analyst : One for Jennifer here. You've got a little over $2 billion of debt maturities between now and the first half of '27, call it, $10 billion to $15 billion in debt to raise to fund the deal when it hopefully is approved and closes. And you don't have a potential on financing. So you're on the hook to go through to that no matter how the capital markets play out between now and then. And so how do you think about sort of hedging your bets on managing the balance sheet for that capital need between now and in 2027. 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call If you could just kind of walk us through debt pay down and do it all at once versus kind of opportunistically chip away at that over time, I think that would be helpful.

Question: Ariel Rosa - Citi - Analyst : Team, congrats on the strong network performance, really, really impressive to see UP running so well. So Jennifer, you were talking about some of the weakness in some of these macro indicators, housing starts and other things. I'm just curious to hear your perspective on kind of the overall economy, where you see risks? And specifically, I wanted to hear, is there any kind of level of deterioration in the macro that would cause you to either reassess your synergy targets for the NS or even, I mean, in kind of an extreme scenarios or any level of deterioration where you would think about walking away from the deal?

Question: Brady Lierz - Stephens Inc - Analyst : Kenny, in your fourth quarter volume outlook slide, the word business win or contract win or just really win in general is used a couple of different times. Can you help us understand what's driving these wins, particularly at a time of economic and trade uncertainty? And how does your pipeline of wins per se look as we start to turn our attention to 2026. Do you think these wins can drive volume growth in '26 even without help from the macro? Just any clarity there would be helpful. 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 23, 2025 / 12:45PM, UNP.N - Q3 2025 Union Pacific Corp Earnings Call