UNION PACIFIC CORPORATION FIRST QUARTER 2025 EARNINGS APRIL 24, 2025 EXECUTIVE SUMMARY FIRST QUARTER 2025 Jim Vena Chief Executive Officer 2 First Quarter Highlights & Executive Summary Highlights Executive Summary SAFETY + SERVICE & OPERATIONAL EXCELLENCE FINANCIAL REVIEW FIRST QUARTER 2025 Jennifer Hamann Executive Vice President & Chief Financial Officer 3 4 $2.70 Earnings per Share $2.4B Operating Income $1.6B Net Income 60.7% Operating Ratio Freight Car Velocity up 6% Workforce Productivity up 9% • Qua ...

Financial Performance - Union Pacific reported Q1 2025 net income of $1.6 billion, or $2.70 per diluted share, compared to $1.6 billion, or $2.69 per diluted share in Q1 2024[2]. - Net income for Q1 2025 was $1,626 million, a slight decrease of 0.9% from $1,641 million in Q1 2024[19]. - Cash provided by operating activities increased to $2,210 million in Q1 2025, up 4.1% from $2,122 million in Q1 2024[19]. - Free cash flow for Q1 2025 was $468 million, down 11% from $525 million in Q1 2024[19]. Revenue and Expenses - Operating revenue for Q1 2025 was $6.0 billion, flat year-over-year, with a 7% increase in revenue carloads and a 4% increase in freight revenue excluding fuel surcharge[5]. - Total operating expenses were flat at $3.7 billion, with productivity improvements offsetting volume-related costs and inflation[15]. - Freight revenue from intermodal shipments increased by 10% to $1.2 billion, while automotive freight revenue decreased by 5% to $581 million[16]. Operational Metrics - The operating ratio remained flat at 60.7%, impacted by lower fuel prices and a leap year, with a 90 basis point unfavorable effect[6]. - Quarterly freight car velocity improved by 6% to 215 daily miles per car, while workforce productivity increased by 9% to 1,091 car miles per employee[11]. - Average train speed decreased by 2% to 23.7 miles per hour in Q1 2025, down from 24.1 miles per hour in Q1 2024[21]. - Total revenue ton-miles increased by 3% to 104,011 million in Q1 2025, up from 101,265 million in Q1 2024[21]. - Average fuel price per gallon consumed decreased by 11% to $2.51 in Q1 2025, down from $2.81 in Q1 2024[21]. Capital and Investments - The capital plan for 2025 is set at $3.4 billion, with share repurchases expected to be between $4.0 billion and $4.5 billion[11]. - Capital investments rose to $906 million in Q1 2025, compared to $797 million in Q1 2024, reflecting a 13.7% increase[19]. Balance Sheet - Cash and cash equivalents increased to $1.4 billion as of March 31, 2025, up from $1.0 billion at the end of 2024[18]. - Total assets rose to $68.5 billion, compared to $67.7 billion at the end of 2024, with total liabilities increasing to $52.5 billion[18]. - Debt increased to $32,842 million as of March 31, 2025, from $31,192 million at the end of 2024[23]. - Adjusted debt to adjusted EBITDA ratio improved to 2.8 in Q1 2025, compared to 2.7 in Q4 2024[24]. Outlook - Union Pacific affirmed its 2025 outlook, targeting earnings per share growth consistent with a 3-year CAGR target of high-single to low-double digits[11].

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Core Viewpoint - Union Pacific Corporation (UNP) is expected to report first-quarter 2025 results on April 24, with earnings estimates showing a slight decline compared to previous forecasts, indicating potential challenges in the freight market and consumer demand [1][3]. Earnings Estimates - The Zacks Consensus Estimate for first-quarter 2025 earnings is $2.73 per share, reflecting a 2.15% downward revision over the past 60 days, but a 1.5% increase from the previous year [1][2]. - Revenue estimates for the same period are projected at $6.09 billion, which is a 0.9% increase year-over-year [1]. Revenue Insights - Freight revenues are estimated at $5.7 billion, indicating a decline from fourth-quarter 2024 figures, while other revenues are expected to rise by 5.5% to $350.4 million [3]. Cost Management - The company’s cost-cutting measures are anticipated to positively impact its bottom line, with operating expenses expected to decrease by 0.4% year-over-year [4]. - The operating ratio is projected to improve by 60 basis points to 60.6%, suggesting enhanced operational efficiency [4]. Earnings Prediction Model - The current Earnings ESP for UNP is -0.05%, and it holds a Zacks Rank of 3, indicating that the model does not predict a definitive earnings beat for this quarter [5]. Previous Quarter Performance - In the fourth quarter of 2024, UNP reported earnings of $2.91 per share, surpassing the Zacks Consensus Estimate of $2.78, with a year-over-year improvement of 7.4% due to operational efficiency and favorable pricing [7]. - Operating revenues for the fourth quarter were $6.12 billion, slightly below the consensus estimate, with a year-over-year decline of 0.6% attributed to lower fuel surcharge revenues and an unfavorable business mix [7].

In its upcoming report, Union Pacific (UNP) is predicted by Wall Street analysts to post quarterly earnings of $2.73 per share, reflecting an increase of 1.5% compared to the same period last year. Revenues are forecasted to be $6.09 billion, representing a year-over-year increase of 0.9%.Over the last 30 days, there has been a downward revision of 1.2% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initi ...

Wall Street expects a year-over-year increase in earnings on higher revenues when Union Pacific (UNP) reports results for the quarter ended March 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on April 24, 2025, might help the stock move higher if these key numbers are better than expe ...

Group 1 - Union Pacific (NYSE: UNP) operates over 32,000 miles of tracks and has a fleet of 8,300 locomotives, serving approximately 10,000 customers [1] - The company connects the Pacific Coast, Mexico, and the industrial heart of the United States, making it a vital transportation artery in the western U.S. [1] Group 2 - The article emphasizes the importance of well-researched commentary and insights into various industries and asset classes, including high-growth technology equities and undervalued blue-chip stocks [1]

Core Viewpoint - The stock market experienced a significant rally, with Union Pacific's stock rising over 7%, but it lagged behind the broader market due to recent analyst price target cuts [1] Analyst Price Target Cuts - Jefferies' Stephanie Moore reduced her price target for Union Pacific from $255 to $230 per share [2] - TD Cowen's Jason Seidl lowered his price target from $258 to $252 per share [2] - Both analysts maintained their recommendations, with Moore suggesting a hold and Seidl a buy [3] Market Sentiment and Future Outlook - The recent price target cuts have dampened sentiment regarding Union Pacific's future, despite the stock's recent performance [2] - Investors had previously sold off the stock, anticipating vulnerabilities due to high tariffs announced by the Trump administration [3] Impact of Tariffs - Prohibitive tariffs, particularly on major Asian trading partners, could negatively impact Union Pacific's cargo volume, as it is a key operator for west coast ports [4] - The ongoing tariff situation may lead to increased volatility in Union Pacific's stock, making it a risky investment for those averse to market fluctuations [4]

Core Viewpoint - The recent tariff announcements have created uncertainty in the market, particularly affecting Union Pacific's stock performance and raising concerns about future import volumes and consumer spending [1][3]. Company Overview - Union Pacific is a major railroad company serving the U.S. West Coast, with a network that provides significant access to key Pacific Ocean ports, facilitating the distribution of goods imported from Asia [2]. Impact of Tariffs - If tariffs successfully reduce import volumes, Union Pacific is expected to experience a decline in its shipping volumes. The market has reacted negatively to the tariff news, leading to a sell-off in transportation stocks due to fears of decreased consumer spending and demand for goods [3][4]. Market Volatility - The trading session on Monday was marked by volatility, with Union Pacific's shares fluctuating in response to changing news regarding potential tariff repeals. The stock followed broader market trends as investors reacted to the evolving outlook [4]. Long-term Outlook - Despite the current uncertainties, the long-term outlook for railroads, including Union Pacific, remains positive. Even with the possibility of permanent tariffs, there will continue to be substantial demand for goods transportation, with rail being a cost-effective option [5]. Investment Considerations - Investors considering Union Pacific shares face short-term uncertainties but can benefit from a dividend yield exceeding 2.5%, which may enhance total returns during this period of tariff-related volatility [6].

Core Viewpoint - The industrial sector is currently facing significant challenges, but high-quality companies within this sector have demonstrated resilience and the ability to continue raising dividends, making them attractive investment opportunities [2][3]. Group 1: Economic Context - The industrial sector is experiencing turmoil due to potential tariffs and economic uncertainty, with the Federal Reserve Bank of Atlanta projecting a 2.8% contraction in U.S. GDP for Q1 2025 [2]. - Industrial stocks are typically sensitive to economic fluctuations, but many companies have successfully navigated these cycles and provided returns to shareholders over time [3]. Group 2: Investment Opportunities - **Lockheed Martin**: - A leading defense contractor with a strong position in government contracts, Lockheed Martin has received a recent contract worth up to $4.94 billion [5]. - The company has a history of paying and raising dividends for 22 consecutive years, with a current dividend yield of 2.85% and a payout ratio of about 50% of 2025 earnings estimates [7]. - Analysts project an average earnings growth of 13% annually, with a P/E ratio of 20, indicating a favorable investment opportunity [8]. - **Union Pacific**: - As a major player in the North American railroad industry, Union Pacific operates 32,693 miles of rail and has a strong balance sheet with an investment-grade credit rating [9][10]. - The company has paid and raised dividends for 18 consecutive years, with a current dividend yield of 2.2% and a payout ratio of 45% of 2025 earnings estimates [10][11]. - Analysts expect earnings growth of 10% annually, with a P/E ratio of 21, reflecting a fair valuation for a company with growth potential [11]. - **A. O. Smith**: - A. O. Smith specializes in water heaters and treatment equipment, having paid and raised dividends for 31 consecutive years [12]. - The company anticipates significant growth opportunities in emerging markets, with a current dividend yield of just over 2% and a payout ratio of 36% of 2025 earnings estimates [13]. - Analysts project an average earnings growth of 12% annually, with a P/E ratio of 18, suggesting it is a compelling investment [14].