Core Viewpoint - Union Pacific Corporation reported strong financial performance in the third quarter, highlighting double-digit growth in operating income and overall positive business momentum [5]. Financial Performance - The company achieved an 11% growth in operating income during the third quarter [5]. - There was also a 10% growth in another unspecified financial metric, indicating robust operational efficiency and demand [5]. Conference Details - The conference featured key executives from Union Pacific, including Jennifer Hamann, Executive Vice President and Chief Financial Officer, and Rahul Jalali, Executive Vice President and Chief Information Officer [2][3]. - The session was part of the Baird 2024 Global Industrial Conference, indicating the company's engagement with investors and stakeholders [1].

Union Pacific Corporation Conference Call Summary Company Overview - **Company**: Union Pacific Corporation (NYSE: UNP) - **Participants**: Jennifer Hamann (CFO), Rahul Jalali (CIO), Garrett Holland (Robert W. Baird & Co.) Key Points Financial Performance - **Q3 Performance**: Achieved 11% growth in operating income and 10% growth in earnings per share (EPS) [5][10] - **Volume Growth**: Reported a 6% increase in volume, primarily driven by a 33% increase in international intermodal volumes [7][12] - **Revenue Growth**: Freight revenue growth, excluding fuel, was 5% [7] - **Operating Ratio**: Improved by 310 basis points to 60.3%, marking the third consecutive quarter of industry-leading performance [10][11] Strategic Focus - **Core Strategy**: Emphasizes safety, service, and operational excellence as fundamental components of the business [6] - **Service Improvement**: Noted improvements in freight car dwell and freight velocity, indicating enhanced service delivery [13][14] - **Workforce Productivity**: Achieved all-time best productivity metrics in September and Q3 [14] Growth Opportunities - **Revenue Pipeline**: Identified a pipeline of $1.6 billion in revenue opportunities from approximately 200 track construction projects [19] - **Market Segments**: Focus on truckload conversion, access to Mexico, petrochemicals, and grain products as key growth areas [20][22][23] - **Long-term Contracts**: 75% of long-term contracts have been repriced since 2022, with expectations for further adjustments [25][26] Pricing Strategy - **Pricing Dynamics**: Core pricing continues to exceed inflation, with expectations for pricing to become accretive to margins starting in 2025 [30][52] - **Customer Engagement**: Emphasizes the importance of providing value to customers to facilitate pricing discussions and increase market share [52] Technology and Innovation - **Tech Investments**: Implemented advanced technology systems, including AI and machine learning, to enhance operational efficiency [42][44] - **Customer Visibility**: Launched a pilot program for a visibility solution called "Customer Vision" to improve customer experience [48][49] Market Outlook - **2025 Guidance**: Anticipates moderate growth in volumes and revenue, with a focus on maintaining industry leadership in operating ratio [29][31][61] - **Economic Indicators**: Current outlook suggests incremental growth rather than dramatic shifts in the market [61] Capital Allocation - **Shareholder Returns**: Plans to return $4 billion to $5 billion in shares to shareholders annually over the next three years, alongside consistent annual dividend increases [32] Regulatory Environment - **Regulatory Impact**: Acknowledges the potential for regulatory changes to positively impact the business, though specifics remain uncertain [39] Conclusion - **Overall Sentiment**: The company expresses optimism about future growth and the execution of its strategic initiatives, positioning itself well for sustained performance in the industry [33][66]

Core Viewpoint - The article discusses the author's investment strategy focusing on dividend stocks, specifically highlighting Union Pacific (NYSE: UNP) as a significant investment choice made in 2020 [1]. Group 1: Investment Strategy - The company has committed to investing all available funds and future cash flows into dividend stocks since 2020 [1]. - Union Pacific was one of the first stocks purchased under this investment strategy, indicating its perceived value and potential for returns [1]. Group 2: Analyst's Position - The author holds a beneficial long position in Union Pacific shares, which may include stock ownership, options, or other derivatives [1]. - The article reflects the author's personal opinions and is not influenced by external compensation, emphasizing an independent analysis [1].

Core Viewpoint - Union Pacific is considered a valuable investment opportunity despite recent stock price declines and earnings misses, primarily due to its strong infrastructure assets and consistent dividend payments [1][11]. Financial Performance - Union Pacific's stock has decreased by over 8% in the last three years, reflecting challenges in its financial performance [3]. - Operating revenue for Q1-Q3 2024 was reported at $18.1 billion, with total operating expenses at $10.9 billion, resulting in an operating income of $7.19 billion and an operating margin of 39.7% [9][10]. - Revenue growth has been modest, while operating margins have declined due to inflationary pressures affecting costs, including fuel and labor [4][6]. Dividend and Shareholder Returns - The company has a dividend yield of 2.3%, with a projected dividend payment of $5.28 per share for 2024, up from $5.20 in 2023, marking a 3% increase [2][11]. - Union Pacific has a strong track record of dividend payments, having raised its dividend annually since 2008 and maintained a payout ratio just under 50%, indicating affordability even in the face of declining earnings [11][12]. - Over the past decade, the company has increased its dividend by 168% and reduced its outstanding share count by 31.4%, contributing to faster growth in earnings per share (EPS) compared to net income [12]. Capital Investments - Union Pacific plans to invest $3.4 billion in capital expenditures in 2024, focusing on infrastructure upgrades and equipment, which is consistent with its previous investment levels [7][8]. Market Position and Industry Context - The railroad industry is characterized by high operational efficiency, and Union Pacific benefits from a diverse revenue mix, transporting various bulk and industrial products [5][6]. - Despite cyclical demand fluctuations tied to macroeconomic conditions, railroads generally maintain high operating margins, which supports Union Pacific's profitability [6][7]. Valuation - Union Pacific's current price-to-earnings (P/E) ratio is 21.2, which is within its historical range of 20.3 to 22.1, suggesting it is fairly valued relative to its historical performance [13].

Financial Performance - The company reported earnings of $2.75 per diluted share on net income of $1.7 billion, with an operating ratio of 60.3% for Q3 2024, compared to earnings of $2.51 per diluted share and net income of $1.5 billion with an operating ratio of 63.4% in Q3 2023[72]. - Operating income rose by 11% to $2.4 billion, while operating expenses decreased by 2% due to productivity gains and lower fuel prices[75]. - The total revenue for the nine months ended September 30, 2024, was $18.129 billion, reflecting a 1% increase compared to $17.960 billion in the same period of 2023[76]. - Net income for the trailing twelve months ended September 30, 2024, was $6,637 million, up from $6,379 million in the previous year[110]. - Cash provided by operating activities increased to $6,684 million in the first nine months of 2024, compared to $5,984 million in the same period of 2023[113]. - Free cash flow for the same period was $1.855 billion, significantly up from $954 million in 2023, indicating a 94.5% increase[119]. Revenue and Freight Metrics - Freight revenues increased by 4% in Q3 2024 to $5.768 billion, driven by a 6% volume increase and core pricing gains, despite a negative mix and lower fuel surcharge revenues[72][77]. - International intermodal business surged by 33% year-over-year, contributing to improved operating metrics, including a 5% increase in freight car velocity and locomotive productivity[73]. - Grain and grain products revenue increased by 12% to $923 million in Q3 2024, while coal and renewables revenue decreased by 17% to $405 million[81]. - The company experienced a 6% increase in total revenue carloads to 2.167 million in Q3 2024 compared to 2.052 million in Q3 2023[82]. - Premium freight revenues rose by 33% in Q3 2024 compared to Q3 2023, driven by increased international intermodal demand and business development efforts[87]. - Revenues from Mexico business increased by 7% to $724 million in Q3 2024, supported by a 2% volume increase and a 5% increase in ARC[88]. Operating Efficiency - The operating ratio improved by 3.1 points from Q3 2023, indicating enhanced operational efficiency[75]. - Workforce productivity improved by 12%, with total train, engine, and yard employees remaining flat year-over-year[73]. - Total operating expenses decreased by 2% in Q3 2024 to $3,675 million compared to $3,764 million in Q3 2023, driven by productivity and lower fuel prices[89]. - Fuel expenses decreased by 13% in Q3 2024, with locomotive diesel fuel prices averaging $2.60 per gallon compared to $3.12 in Q3 2023[93]. - Gross ton-miles increased by 4% to 216.0 billion in Q3 2024 compared to Q3 2023, while revenue ton-miles rose by 1% to 104.0 billion[102]. - Freight car velocity improved by 5% in Q3 2024, with average daily miles per car reaching 210 miles[104]. Cash Flow and Investments - Total cash capital investments for the first nine months of 2024 were $2,530 million, slightly down from $2,582 million in 2023[115]. - The capital plan for 2024 is expected to be approximately $3.4 billion, an 8% decrease from 2023[117]. - The cash flow conversion rate improved to 83% in 2024 from 72% in 2023, reflecting enhanced efficiency in converting net income to cash flow[120]. - During Q3 2024, the company generated $2.7 billion in cash from operating activities and repurchased $738 million in shares[121]. - As of September 30, 2024, the company had $947 million in cash and cash equivalents, with $2.0 billion available under its revolving credit facility[121]. Debt and Financial Obligations - Interest expense decreased by 6% in Q3 2024 to $314 million, attributed to a lower weighted-average debt level of $31.4 billion[99]. - Total contractual obligations as of September 30, 2024, amounted to $62.303 billion, with debt obligations comprising $58.298 billion[123]. - The company expects to remain in compliance with its debt covenants despite potential economic fluctuations[121]. - Adjusted debt to adjusted EBITDA ratio improved to 2.7 in September 2024, down from 3.0 in December 2023[110]. Taxation - Income tax expense increased by 23% in Q3 2024 to $518 million, driven by higher pre-tax income and lower deferred tax adjustments[100]. - The effective tax rate for year-to-date 2024 was 23.5%, up from 21.9% in 2023[100]. Future Outlook - There are no known trends or uncertainties that could materially adversely affect the company's financial condition or liquidity as of the reporting date[122]. - The company continues to evaluate its financial condition and liquidity under various economic scenarios to ensure sufficient cash generation capabilities[121]. - Forward-looking statements indicate potential impacts from geopolitical tensions and public health crises, which may affect future operations and financial results[125].

Core Insights - Union Pacific Corporation (UNP) reported third-quarter 2024 earnings of $2.75 per share, slightly missing the Zacks Consensus Estimate of $2.76 per share, but showing a year-over-year improvement of 9.6% due to strong operational efficiency and favorable pricing [1] - Operating revenues reached $6.09 billion, falling short of the Zacks Consensus Estimate of $6.19 billion, yet reflecting a 2.5% year-over-year increase driven by core pricing gains and higher volumes [2] - Freight revenues, which constitute 94.7% of total revenues, increased by 4% to $5.77 billion, surpassing the estimate of $5.72 billion, while other revenues decreased by 18% to $323 million [2] Financial Performance - The operating income rose by 11% year over year to $2.4 billion, with total operating expenses declining by 2% to $3.68 billion [2] - Fuel expenses decreased by 13%, and expenses on purchased services and materials fell by 4%, contributing to the overall reduction in operating expenses [2] - The operating ratio improved by 310 basis points year over year to 60.3%, aided by lower quarterly fuel prices which positively impacted the ratio by 120 basis points [3] Segment Performance - Bulk freight revenues amounted to $1.80 billion, a 2% increase year over year, despite a projected decline of 0.3% [4] - Industrial freight revenues totaled $2.12 billion, up 3% year over year, while Premium division freight revenues increased by 7% to $1.84 billion, with Premium revenue carloads improving by 14% year over year [4] Liquidity and Outlook - Union Pacific ended the third quarter of 2024 with cash and cash equivalents of $947 million, down from $1.06 billion at the end of 2023, while debt decreased to $29.76 billion from $31.16 billion [5] - The company anticipates fourth-quarter results to be consistent with the third quarter, with expectations for year-over-year improvement compared to the fourth quarter of 2023 [6] - Management plans to repurchase approximately $1.5 billion in shares in 2024 and forecasts capital expenditures of $3.4 billion for the year [6]

Union Pacific (UNP) reported $6.09 billion in revenue for the quarter ended September 2024, representing a year-over-year increase of 2.5%. EPS of $2.75 for the same period compares to $2.51 a year ago.The reported revenue represents a surprise of -1.58% over the Zacks Consensus Estimate of $6.19 billion. With the consensus EPS estimate being $2.76, the EPS surprise was -0.36%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determi ...

Exhibit 99.1 Union Pacific Reports Third Quarter 2024 Results ● Third quarter earnings per diluted share of $2.75, up 10% ● Third quarter operating income up 11% ● Third quarter net income up 9% Omaha, Neb., October 24, 2024 – Union Pacific Corporation (NYSE: UNP) today reported 2024 third quarter net income of $1.7 billion, or $2.75 per diluted share. This compares to 2023 third quarter net income of $1.5 billion, or $2.51 per diluted share. "Our third quarter results demonstrate the success of our strateg ...

I focus on long term growth and dividend growth investing. I follow both the US and the European stock markets, looking for undervalued stock and/or for high quality dividend growing companies that provide me with cash to reinvest. Over time, I have come to realize that profitability is a much safer driver of gains than low valuation. As a result, I give utmost importance to margins, free cash flow stability and growth, and returns on invested capital. I research stocks within my areas of competence and whe ...

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed b ...