Union Pacific FY Conference Summary Company Overview - **Company**: Union Pacific (NYSE: UNP) - **Date of Conference**: November 11, 2025 Key Points Industry Context - Union Pacific operates in the transportation and logistics industry, specifically focusing on rail transport - The company is preparing for a merger with Norfolk Southern, which is expected to enhance its operational capabilities and market position [9][20] Operational Performance - Union Pacific has achieved a high service level, with service metrics reported in the high 90s, indicating strong performance in delivering agreed services to customers [11] - The company has the best operating ratio in the industry, showcasing operational efficiency [12] - A significant reduction in accident rates by over 20% has been noted, positioning Union Pacific as potentially the safest railroad in the U.S. [16] Financial Health - Union Pacific has good free cash flow and has strategically paused share buybacks, previously planned at $4.5 billion, to focus on debt repayment [12] - The company anticipates high single-digit to low double-digit growth over the next three years, with a current dividend of $2.44 [13] Merger Rationale - The merger with Norfolk Southern is framed as a strategic move to enhance service efficiency and reduce operational friction for customers [20][24] - The merger is expected to create a seamless coast-to-coast rail network, improving competitiveness against trucking and other railroads [21][22] - Union Pacific aims to eliminate unnecessary touchpoints in the supply chain, which currently add delays and costs for customers [32] Competitive Landscape - The merger is seen as a response to increasing competition, particularly from companies like Berkshire Hathaway and Canadian Pacific [35][39] - Union Pacific is focused on enhancing its service offerings to compete effectively in the domestic intermodal market [43] Technology and Innovation - The company is investing in technology to improve customer experience, including a unified billing system and enhanced visibility across the transportation network [28][29] - The implementation of new technologies aims to streamline operations and reduce the need for third-party logistics providers [32] Market Opportunities - Union Pacific identifies watershed markets, particularly around the Mississippi and Missouri rivers, as key areas for growth post-merger [33][34] - The merger is expected to allow for more economical pricing and reduced transit times, benefiting both the company and its customers [34] Conclusion - Union Pacific is positioned for growth through operational improvements, strategic mergers, and technological advancements, aiming to enhance its competitive edge in the rail transport industry [36][39]

BAIRD 2025 GLOBAL INDUSTRIALS CONFERENCE UNION PACIFIC CORPORATION JIM VENA – CHIEF EXECUTIVE OFFICER JENNIFER HAMANN – CHIEF FINANCIAL OFFICER Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be 1 Cautionary Information 2 3 Strategic Execution Driving Industry Leading Results SAFETY + SERVICE & OPERATIONAL EXCELLENCE 210 219 215 221 226 238 Q3'24 Q4'24 Q1'25 Q2'25 Q3'25 Q4'25** 86% 89% 94% 99% 98% 100% 89% 96% 93% 97% 100% 100% Q3'24 Q4 ...

Core Points - Union Pacific Railroad has recognized 16 customers and suppliers with its 2025 Sustainability Partner Awards for their commitment to sustainability initiatives [1][3] - The awards celebrate organizations that demonstrate measurable progress towards sustainability goals through innovation and collaboration [1][3] - Kenny Rocker, executive vice president of Marketing and Sales, emphasized the importance of environmentally responsible freight movement and the role of rail in reducing highway congestion [2] Award Details - The award program is in its third year and is open to Union Pacific's customers and suppliers [3] - Winners were selected based on their sustainability efforts, innovative practices, and collaboration with stakeholders [3] - The list of winners includes notable companies such as Dow Chemical, General Motors, and Toyota North America [3][4] Event Highlights - The award ceremony took place on November 6 at Lauritzen Gardens in Omaha, Nebraska, where winners shared their sustainability initiatives [4] - Companies interested in applying for next year's award are encouraged to contact their Union Pacific sales or supply representative [4] Company Overview - Union Pacific operates in 23 western states, providing safe and efficient freight services [5] - The company positions rail as the most environmentally responsible method for freight transportation, highlighting its efficiency in fuel usage [2][5]

Core Insights - Canadian National Railway (CNI) is a significant entity in the North American rail industry, providing freight transportation services across Canada and the United States, and is a competitor to Canadian Pacific Kansas City and Union Pacific [1] - CNI is expected to release its quarterly earnings on October 31, 2025, with analysts estimating an earnings per share (EPS) of $1.28 and projected revenue of approximately $4.15 billion [1][5] - Despite anticipated lower revenues, CNI is expected to report a year-over-year increase in earnings for the quarter ending September 2025, with the consensus estimate aligning with expectations [2] Financial Metrics - CNI has a price-to-earnings (P/E) ratio of approximately 18.04, indicating market valuation of its earnings [3] - The price-to-sales ratio stands at about 4.78, reflecting the company's market value relative to its sales [3] - The enterprise value to sales ratio is around 5.98, suggesting how the company's total value compares to its sales [3] - The enterprise value to operating cash flow ratio is approximately 15.34, indicating the company's valuation in relation to its cash flow from operations [4] - The earnings yield is about 5.54%, providing insight into the return on investment for shareholders [4] - The debt-to-equity ratio is approximately 0.96, showing the proportion of debt used to finance the company's assets relative to shareholders' equity [4] - The current ratio is around 0.82, indicating the company's ability to cover its short-term liabilities with its short-term assets [4]

Core Insights - Whales have shown a bullish sentiment towards Union Pacific, with 53% of trades being bullish and 38% bearish [1] - The projected price targets for Union Pacific range from $195.0 to $260.0 based on recent options activity [2] - The company generated $24 billion in revenue in 2024, primarily from various freight categories [9] Options Activity - A total of 13 trades were detected, with 7 puts amounting to $257,965 and 6 calls totaling $3,426,627 [1] - Significant options trades include bullish calls with a total trade price of $2.6 million at a strike price of $260.00 and bearish puts at a strike price of $195.00 totaling $66.2K [8] Market Performance - Union Pacific's current stock price is $216.37, reflecting a decrease of 1.67% [14] - Analyst ratings indicate an average target price of $264.0, with various analysts maintaining buy or neutral ratings [11][12]

Core Insights - Union Pacific Corporation reported better-than-expected earnings for Q3, with net income of $1.8 billion or $3.01 per diluted share, adjusted diluted EPS at $3.08, surpassing analyst estimates of $2.99 [1][2] Financial Performance - Operating revenue increased by 3% to $6.244 billion, slightly missing the analyst estimate of $6.245 billion [2] - The company reaffirmed its 2025 outlook for EPS growth, targeting a 3-year CAGR of high single to low double digits, with a capital plan of $3.4 billion [2] Market Reaction - Union Pacific shares fell by 2.3% to close at $220.04 following the earnings announcement [3] - Analysts adjusted their price targets post-earnings, with BMO Capital lowering the target from $277 to $275 while JP Morgan raised it from $265 to $267 [5]

Core Insights - Union Pacific Corporation reported better-than-expected earnings for Q3, with net income of $1.8 billion or $3.01 per diluted share, adjusted diluted EPS at $3.08, surpassing analyst estimates of $2.99 [1][2] Financial Performance - Operating revenue increased by 3% to $6.244 billion, slightly missing the analyst estimate of $6.245 billion [2] - The company reaffirmed its 2025 outlook for EPS growth, targeting a 3-year CAGR of high single to low double digits, with a capital plan of $3.4 billion [2] Market Reaction - Union Pacific shares fell by 2.3% to close at $220.04 following the earnings announcement [3] - Analysts adjusted their price targets post-earnings, with BMO Capital maintaining an Outperform rating and lowering the target from $277 to $275, while JP Morgan maintained a Neutral rating and raised the target from $265 to $267 [5]

Group 1 - The individual began trading on the Moscow Exchange in 2005 and transitioned to a financial markets analyst role in 2010, indicating a long-standing involvement in financial markets [1] - Experience includes working as an analyst in various brokerage firms in Russia and Ukraine, highlighting a diverse geographical expertise in financial analysis [1] - The analyst has a background in macroeconomics and general market trends, suggesting a focus on broader economic indicators and their impact on markets [1] Group 2 - The analyst has contributed to a leading financial media outlet in Ukraine, which emphasizes the role of media in disseminating market information to a regional audience [1] - The educational background includes economic studies at Yakutsk State University, complemented by self-directed learning, indicating a commitment to continuous professional development [1] - The move to Seeking Alpha represents a strategic shift from a regional to a global market perspective, aiming to share insights with a wider audience [1]

Core Insights - Union Pacific Corporation is a significant entity in the railroad industry, providing freight transportation services across the United States and operating a vast network of railroads, which is crucial for logistics and supply chain sectors [1] - The company faces competition from other major rail companies such as BNSF Railway and CSX Corporation [1] Financial Performance - On October 23, 2025, Goldman Sachs maintained a Neutral rating for Union Pacific, suggesting investors hold their positions, while raising the price target from $262 to $263, indicating slight optimism about the stock's future performance [2] - During the trading day on October 23, 2025, Union Pacific's stock decreased by 2.31%, dropping $5.20 to a low of $219.10, with a high of $225.94, reflecting volatility in its performance [4] - The company's market capitalization is approximately $130.5 billion [4] Trading Activity - The trading volume for Union Pacific on October 23, 2025, was 5,147,034 shares, indicating active investor interest [5] - The Q3 2025 earnings call featured key executives and attracted analysts from major financial institutions, highlighting significant interest in the company's financial health and strategic direction [3]

Financial 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].