UNION PACIFIC CORP Q1 FY2025 earnings call

Financials: First quarter earnings per share were $2.70, net income was $1.6 billion (essentially flat vs last year). Operating ratio was 60.7%, flat. Freight revenue grew 1% (4% excluding fuel surcharge), with core pricing reaching the highest quarterly level in the past ten years. Operational: Safety improved, with personal injury and derailment rates better than the 3-year rolling average. Freight car velocity improved 6% to 215 miles per day, terminal dwell decreased 6%. Manifest SPI was 93%, intermodal SPI was 94%. Locomotive productivity increased 1%, workforce productivity rose 9%, and train length grew 2%. Business Development: Onboarded new customers like Undi Steel Corporation, won volumes with Lower Colorado River Authority, and had an open pipeline of 200 construction projects.

Operating Revenue: Totaled $6 billion, matching last year's level. Freight revenue was $5.7 billion, up 1% versus the prior year, with a 4% increase excluding the fuel surcharge impact. Other revenue decreased 19% to $336 million. Expenses: Operating expense was $3.7 billion,持平 year-over-year. Compensation and benefits expense improved 1%, fuel expense declined 8%, purchase services and materials expense increased 3%, equipment and other rents rose 12%, and other expense increased 1%. Segment Performance: - Bulk: Revenue increased 1% on a 2% volume growth, with core pricing gains offsetting business mix and fuel surcharge drags. - Industrial: Revenue decreased 1% due to a 1% volume decrease, with core pricing gains partially offset by business mix, fuel surcharge, and volume factors. - Premium: Revenue increased 5% on a 13% volume growth, with mix impact from intermodal and lower fuel surcharges.

Maintained three-year targets set at Investor Day 2024, including high single to low double-digit EPS compound annual growth rate (CAGR). First quarter carloads were up over 7% in April, but uncertainty remained due to market volatility. Committed to executing strategy for service and operational excellence, with confidence in delivering long-term guidance.

Uncertainty in volumes and economy, including potential impact from consumer spending, trade policies (tariffs, cross-border Mexico volumes), and market shifts due to trade wars. Volatility in fuel prices, business mix changes, and potential downturns in specific segments like petroleum, soda ash, and finished vehicles.

Q: About 2025 guidance and uncertainty A: Jim Vena and Jennifer Hamann stated they stick to three-year guidance, noting fluid market conditions but confidence in reacting and delivering as per guidance.

Q: Pricing strength and sustainability A: Jennifer Hamann and Kenny Rocker mentioned strong pricing is due to catch-up on long-term contracts, service product support, and commercial team mindset, with expectation of sustainment.

Q: Intermodal and Mexico volumes A: Kenny Rocker discussed intermodal volume trends, bid season wins, and Mexico volumes influenced by service fundamentals and network utilization.

Q: Share repurchases and capital return A: Jennifer Hamann said first quarter has returned ~$1.7 billion, with guide of $4-$4.5 billion for full year, flexible based on market changes.