Union Pacific(US:UNP)2025-10-23 19:42Financial Performance - The company reported earnings of $3.01 per diluted share on net income of $1.8 billion, with an operating ratio of 59.2% in Q3 2025, compared to earnings of $2.75 per diluted share on net income of $1.7 billion and an operating ratio of 60.3% in Q3 2024[100]. - Operating income rose by 6% to $2.5 billion in Q3 2025, reflecting top-line growth and productivity gains, while the operating ratio improved by 1.1 points[102]. - The company experienced a 3% increase in total operating revenues for the nine months ended September 30, 2025, reaching $18.425 billion compared to $18.129 billion in the same period of 2024[103]. - Other income increased by 10% in Q3 2025, driven by higher real estate income[121]. - Total debt as of September 30, 2025, increased to $31,807 million from $31,192 million as of December 31, 2024, while net income rose to $7,052 million from $6,747 million[133]. - Adjusted debt to adjusted EBITDA ratio improved to 2.6 as of September 30, 2025, compared to 2.7 as of December 31, 2024, with adjusted EBITDA increasing to $12,459 million from $12,159 million[134]. Revenue and Freight Metrics - Freight revenues increased by 3% to $5.927 billion in Q3 2025 from $5.768 billion in Q3 2024, driven by core pricing gains and a more favorable business mix[103]. - Average revenue per car increased by 3% to $2,740 in Q3 2025 compared to $2,662 in Q3 2024[109]. - Coal, industrial chemicals and plastics, and grain and grain products saw increased carloads, while international intermodal carloads declined by 17% in Q3 2025[100]. - Freight revenues from fuel surcharge programs decreased by $33 million to $602 million in Q3 2025 compared to $635 million in Q3 2024, due to the lag impact on fuel prices[106]. - Premium freight revenues decreased 2% in Q3 2025 compared to 2024, driven by a 5% lower volume[112]. - Mexico-related freight revenues increased 4% to $752 million in Q3 2025, supported by 4% volume growth[113]. Operating Efficiency - The company achieved record performance in key operating metrics, with freight car velocity increasing by 8% and terminal dwell improving by 9%[101]. - Workforce productivity improved by 6% and locomotive productivity improved by 4% in Q3 2025 compared to Q3 2024[101]. - Gross ton-miles increased by 3% in Q3 2025 compared to 2024, while revenue ton-miles increased by 5%[125]. - Freight car velocity improved by 8% in Q3 2025, attributed to better terminal dwell and train speed[127]. - Operating ratio improved by 1.1 points to 59.2% in Q3 2025, driven by productivity initiatives and core pricing gains[132]. - Average train speed increased by 4% in Q3 2025 compared to 2024[125]. Expenses and Investments - Total operating expenses slightly increased by 1% in Q3 2025 compared to 2024, influenced by inflation and acquisition-related expenses[114]. - Compensation and benefits expense decreased 1% in Q3 2025 due to lower employee levels, despite wage inflation[115]. - Purchased services and materials expenses increased 6% in Q3 2025, driven by acquisition-related expenses and inflation[116]. - Cash used in investing activities increased to $2,791 million in the first nine months of 2025, compared to $2,426 million in 2024, driven by capital investments[139]. - The company plans to maintain a capital plan of approximately $3.4 billion in 2025, consistent with 2024, focusing on growth strategy and infrastructure modernization[143]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2025, was $7,065 million, up from $6,684 million in the same period of 2024[137]. - Free cash flow for the nine months ended September 30, 2025, was $1,856 million, slightly up from $1,855 million in 2024[148]. - Cash used in financing activities increased to $4,472 million in the first nine months of 2025, primarily due to increased share repurchases[144]. - As of September 30, 2025, the company had $808 million in cash and cash equivalents and $2.0 billion available under its revolving credit facility[151]. - The company is in compliance with its debt covenants and has sufficient liquidity to sustain operations during lower volume periods[149]. Future Outlook and Risks - The pending acquisition of Norfolk Southern is noted, with further details available in the financial statements[142]. - The company emphasizes that forward-looking statements are subject to risks and uncertainties that could cause actual performance to differ materially from expectations[159]. - The company plans to update risk factors as necessary in future filings, including Form 10-Q and Form 8-K[160]. - There were no material changes to the quantitative and qualitative disclosures about market risk compared to the previous annual report[164].