Union Pacific at Bank of America Conference: Strategic Growth and Efficiency

On Wednesday, 14 May 2025, Union Pacific Corporation (NYSE:UNP) presented at the Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025. The company highlighted its strong start to the second quarter, emphasizing increased volumes and operational efficiency. While intermodal volumes showed signs of slowing, the company’s strategic investments in technology and infrastructure aim to bolster long-term growth.

Key Takeaways

• Union Pacific reported a 6% increase in total volumes, driven by coal and grain.
• The company plans to repurchase $4.0 to $4.5 billion in shares this year.
• Operational efficiency improved with a 9% increase in workforce productivity.
• Union Pacific is negotiating labor contracts with individual unions.
• The company is focused on safety and innovation, including autonomous track inspection.

Financial Results

Union Pacific’s financial performance in the second quarter was marked by notable volume growth and strong revenue. The company reported a 6% increase in total volumes, with coal carloads up by 36% and intermodal volumes increasing by 11%. Despite a deceleration in intermodal growth, revenue growth continues to outpace economic growth, supported by strong core pricing.

In terms of capital allocation, Union Pacific executed $430 million in share repurchases in April and aims for $4.0 to $4.5 billion in repurchases for the year. The company’s debt to EBITDA ratio stands at 2.8, reflecting a balanced approach to leverage.

Operational Updates

Union Pacific’s operational performance is underpinned by a commitment to service reliability and efficiency gains. Manifest and intermodal services achieved over 95% reliability, with car velocity being a key performance indicator. Workforce productivity increased by 9%, and locomotive productivity also improved.

The company’s network capacity can accommodate over 170,000 carloads per week, and headcount has decreased by 7% since CEO Jim Vena joined, equating to a reduction of about 2,000 employees. Union Pacific is also advancing technology and innovation, pursuing FRA waivers for autonomous track inspection systems.

Future Outlook

Looking ahead, Union Pacific anticipates potential fluctuations in intermodal volumes due to tariff changes but expects a surge in volumes afterward. The company remains committed to its long-term growth targets, focusing on price, productivity, and volume to drive profitability. Strategic priorities include continued investment in technology, infrastructure, and workforce development.

Labor Relations

Union Pacific is actively negotiating labor contracts with individual unions, with one agreement already ratified. The company seeks reasonable changes to work rules to enhance efficiency and service delivery.

For a detailed account of the conference call, please refer to the full transcript below.

Full transcript - Bank of America Industrials, Transportation & Airlines Key Leaders Conference 2025:

Ken Hoexter, Analyst, BofA: To the next part of of day two of our BofA Industrials Transportation and Airlines Key Leaders Conference. Certainly, a key leader is definitely a pro quo for our next our next panel. For those new to the room, I’m Ken Hoexter, BofA’s air freight and surface transportation and marine shipping analyst. Next up, we welcome Union Pacific CEO Jim Vena, his fourth time joining us here, CFO Jen Hayman for her third time presenting and many more attending from her IR role a decade ago, but I I I didn’t have I didn’t write those all down. So we could talk afterward and you catch me up.

They are joining the audience by Diana Browner from Investor Relations. UNP has been kind enough to participate in 20 of the twenty four years we’ve been hosting the event. We thank you for the commitment to the to the conference. Jim, I’ll I’ll start off. You know?

Edmonton is up three to one, so against the Vegas Knights. So you’ve you’ve had some late nights. Right? So so you’re you’re roaring to go. Good good start to the morning.

Jim Vena, CEO, Union Pacific: Yeah. So I hope they win, and one of these days, they’re playing somewhere else in the West Coast. Yeah. So better than what

Ken Hoexter, Analyst, BofA: I don’t know West Coast late nights.

Jim Vena, CEO, Union Pacific: But I’m okay. I go to bed at midnight and get up at six. So, really, it’s a a little bit of a late night, not a big deal.

Ken Hoexter, Analyst, BofA: So let me turn it over to you. Sounds like you’ve got some slides to get started with an update Off to a strong start with volumes up six and a half percent. It’s well ahead of our 4% full quarter target. RTMs are up over 10%, so well ahead of our flat target. But in your run through, Jen, as as you you wrap up, if you could also include three key takeaways that you want us to leave with here today.

Jim Vena, CEO, Union Pacific: So, of course, this is the cautionary information. I’ll give you guys a second to read it. Of course, we’re gonna present the information. And if you want any more go on our website but anything that we say I’ve got Diana in the room if I say something that is a little more than what’s public don’t worry about it she’ll have an eight ks out here in about 30 But I think I’ve been doing this for a while. I’m pretty comfortable on what we say.

And we’re talking about the things we’ve said publicly and talking about what we see at this point in time. And truly is a moving target at this point. But why don’t we frame where we are? Because I think that’s real important of who Union Pacific is and what we’re trying to do. And in this slide, must be that strong coffee, Kenny, I love it.

As long as I leave you speechless,

Ken Hoexter, Analyst, BofA: that’s all I care about.

Jim Vena, CEO, Union Pacific: So basically you want me to make sure I don’t go too long? No, I want you to going.

Ken Hoexter, Analyst, BofA: I want you to keep going.

Jim Vena, CEO, Union Pacific: I thought maybe I’d fill the whole thirty minutes. You won’t have chance for questions, but here I’ll go through it pretty quick. So fundamentally, what are we trying to do at Union Pacific? What’s a win? And we talk about safety, service and operational excellence.

And if we do those things well, then we drive growth because we know there’s markets out there across the board, just in intermodal and not just in trucks that we were absolutely sure that we can conquer, win and bring more of it onto the railroad with the customers we have and new customers. So if you take a look at our service product, whether how we measure, when I wake up in the morning, I look at a lot of operating metrics. It’s a standard I do seven days a week. It doesn’t matter where I am in the world, what I’m doing. I look at those operating and we represent a lot of it by saying how’s our car velocity.

And remember for people that don’t follow us closely, car velocity is the best metric because it gives you from the time a customer releases a car until you place it and where they released it to. And that’s a great measure to see how your fluidity is. So I use that as a reference and then you can break it up into the different. But just as important as service, the way we describe it is what we sold to the customer, what we agreed to. And some of them are handshake deals and some of them are formal deals, but at the end of the day, it’s what did we agree to?

And then we measure against that and to have both manifest and intermodal 95% plus changes the entire paradigm about the relationship on whether we are doing the right thing for the customer. What’s good is this is not a one week or one month or one quarter. We see this now for a number of quarters, probably since we put that measure together that we thought was the best example of how and would show how our service is. So the discussions with customers have changed. They talk about what we do moving forward and not so much about how well you’re performing the service and what they’re paying.

And it’s all about value. If we can present the value that Union Pacific provides them in faster car turns for the people that own their own cars or lease cars, dedicated service that they understand is gonna arrive when we said it was gonna arrive, and for the high requirement customers that we deliver exactly where they want in time. So we have a number of different things. I’m real proud of what the team’s done, and I think it sets the foundation of what we do. You can see the efficiency, whether it’s a few more cars on every train, therefore we can handle the ups and downs of what the normal business and normal week is in our business.

But the team’s done a fantastic job of building our train length against a very dynamic plan that we can change the plan quicker than we ever could before with some of the technology investments we’ve made. Workforce productivity, 9%. I remember when I came back to work after my sabbatical for a couple of years away from Union Pacific, I was asked, is there anything left? One of the analysts, it wasn’t you Ken, you were very smart. You didn’t ask me that question.

And I wouldn’t have come back if there was nothing to do. If I could put my feet up on the desk, I would have been doing other things. So you can see that we have line of sight that continue to improve productivity and continue to be able to make the railroad more efficient. And we do that with investing in technology, investing in our people, investing in our physical plant. So we continue to invest for the right things.

And locomotive productivity is one of those hundred numbers that I look at every morning to tell us how the operation is and that’s headed the right way. Now a win is you need freight revenue and you need to be able to have a operating ratio that allows you to drive more of it to free cash flow, more net income and go up that operating income. And for me, I love that bottom number, that free cash flow number at the end of the day. But as an industry, we’ve always looked at operating ratio. So if you take a look at the revenue growth, excluding fuel, I think we’ve done a fantastic job and you see the numbers.

We’ve outpaced what we said. We have always wanted to outpace what the economy gives us. So I think we’ve done a fantastic job of being able to drive that in ’twenty four and even in the first quarter of ’twenty five. Listen, I don’t want to be a braggart, but all I can say about the operating ratio is that’s what we said we’re going to do and that’s where we are. And operating ratio is not what drives it.

I see some of you smile when they heard me say braggart, but let me go back again. Yeah, I’m being a little bit of a braggart, so what? Okay? Is at the end of the day, I think we have the the team. We have the the railroad.

We have the physical plant. We’re smart about how we move, and we take decisive action in the right way. And I’m very comfortable where we are. I expect other people to take a run at us and probably sometimes beat us in operating ratio. This is not a game of who is operating ratio.

It’s about the fundamentals of what you do. So Jennifer, maybe I’ll turn it over to you.

Jen Hayman, CFO, Union Pacific: Sure, thanks. So maybe I’ll start off with our second quarter volume. So we’ve commented back in April at our earnings release that the quarter was off to a strong start. That’s continued for us. When you see the chart of the volumes on the upper right hand side there, it really highlights what we think is a great strength of UP, and that’s the diversity of our franchise.

So we manage it across three business teams. We got total volumes, Ken, you mentioned this, up 6%, really being leaded on the bulk side. So think coal and grain. Industrial, that’s kind of our mixed manifest type of business. It’s a bit of a mixed bag.

You’ve got some pressure on metals and minerals, forest products, but we’re seeing strength in plastics and industrial chemicals. And then the premium side, that’s where I’m sure we’ll spend a little bit more time today. That’s where we have our automotive as well as our intermodal and in particular, the international intermodal. Automotive is down, but our international intermodal is still up. Now you saw our quarterly or excuse me, our weekly volumes that we put out the other day that did show that intermodal, and this is both domestic and international, was up only three percent.

Still up, still growing year over year, but we are starting to see that tail down as we’re approaching that air pocket that that people are talking about. Obviously, we got some good news, on Monday in terms of of a change in the tariff policy, so we’ll see how quickly, that supply chain can reverse itself and and see some of that come back. The good news going back to where Jim was at is the network is running really, really well today. And so we’re in a very good spot to be able to react as as that changes. But it’s some of that uncertainty and that volatility, which is why, although we have been reiterating our long term targets, we haven’t given a lot of specific guidance in terms of 2025 and in terms of that, you know, not giving a specific EPS target for 2025 other than to say we will be able to achieve EPS growth that’s going to, you know, help support us on that that three year path.

So still very grounded in that, very comfortable in those things that we can control that we’re driving forward. The last thing I wanna mention is that international trade and and the look at what our total carloads look like in 2024 because, again, it’s very topical. Almost 60% of our business is domestically linked. So think US as production grows in The US, as manufacturing grows in The US, we are extremely well positioned to capitalize on that. 14% is Canada and Mexico.

That’s mostly some of our bulk commodities as well as industrial finished vehicles. And then the 30% is Asia and other. And so that does include China. The large bulk of that Asia and other is international intermodal business. And so the thing that I think is important to point out there is 30% volume does not equate 30% revenue.

There’s a very different revenue profile for international intermodal than, international, than the rest of our portfolio. In fact, we’ve said, and we’ve been talking about this since last fall when international really surged is that it’s 40 to 45% below our system average. So you really need to be thoughtful. We’ve seen that on the way up in terms of the volume growth. You’re also gonna see that as volumes start to tail off a bit on the international intermodal side.

So then, Ken, I’ll just wrap up on the three key takeaways for us. I’d say it’s the first thing that Jim talked about. The railroad’s hitting it out of the park right now in terms of how it’s operating, the service that we’re providing, and the productive way that we’re doing that. To me, the second point is is that we are shifting, changing really the rail paradigm in terms of being able to both grow volumes and at the same time improve our service product and improve our productivity. We’re doing that quarter over quarter.

That’s building confidence with our customers. And that really leads us to the third part is that’s gonna support our ability to sustainably grow long term. And that’s really what it’s all about. We’ve got three mechanisms to drive profitability in our business, price, productivity, volume. We’ve got a long track record on those first two, and now we’re hitting the third one.

Ken Hoexter, Analyst, BofA: It’s a great setup. Thank you. And and I know I’ve got you on stage, but I’m gonna start off with some of the minutia stuff, right, just because it’s it’s exciting to think about what’s what’s driving this near term. I mean, that bulk stands out, right, in terms of that that growth level out outstanding. So coal’s up 36% in carloads, which was double our target intermodal up 11.

I can’t believe we’re still talking about coal all these years later. Right? It’s gone from a quarter of of volumes down to was down to 7% of the low for the industry back up to 9%. So we we’ve seen that volatility kick in and we we thought we were done, you know, secular decline and it’s gonna continue to to fade away, but 36% increase is is significant, right? And especially given what it can mean profit profitable wise.

So what what’s driving the uptick? Is that just the Colorado contract or is there is this weather? Is there something more? Is it driving that?

Jen Hayman, CFO, Union Pacific: Yeah. So certainly the contract win that you’re referencing, Ken, is a big deal for us. We won that, started really in the second quarter. That’s one train a day incremental for us, so that’s a big deal. And then natural gas prices have stayed relatively high.

That’s what most of our coal producers are competing against in the grid. And as those natural gas prices have stayed high, that makes the coal more competitive, and so we’re seeing greater demand. And then the railroad’s running well. So we’re cycling those cars and getting really good utilization.

Ken Hoexter, Analyst, BofA: And then intermodal. You talked about the the air pocket. I wanna understand kind of from your viewpoint, do you think this is preshipping? We’ve got the inventory here so we can get through this air pocket. Now we know for for surety at least that it’s a couple of weeks long.

And then, you know, who knows what happens for ninety days? Do we do we get a preshipping rush and and a boom? So maybe what are your thoughts? You know, how Jim, how do you how do you prepare the rail for those kinda that kind of swing? And and do you think this air pocket that Jen talked about, are we gonna see a big pullback in intermodal for three weeks?

And then instead of the mother of all returns of volume, if we preship, does it just kinda get back to a normal level?

Jim Vena, CEO, Union Pacific: I think you just about answered the question yourself. So no ifs or buts that receivers across the entire US pulled what they could forward. So some of that moved in the first quarter. As soon as there was a discussion about tariffs, they were prepared. But of course, as we learned in after the pandemic, there’s only so much capacity to pull forward.

Once you fill the places, then what do you do? So I think that’s there. That happened and we would expect that to change how fast some of the buildup after this slowdown for the last couple of weeks once we have a different picture of where tariffs are. But for myself and for Union Pacific, the way we look at it is we think that yes, we had a little bit more business on the international front and a little bit because it translates to domestic, but we already are seeing the effect of what people were loading two weeks ago or three weeks ago or shipping or buying versus what they had in stock pile. And so now the next few weeks will be if everything else stays normal, if the consumer doesn’t change, if The US economy stays and still has some strength in it, which everything that we see from what’s happened to CPI and what consumer spend is, that we should come out of this in the next few weeks, we should see an increase back in the amount of imports coming to The U.

S. Okay.

Ken Hoexter, Analyst, BofA: So I would never have brought up the operating ratio, but since you put it on the slide, I guess I’ll jump there with my next question. So Jen, thinking near term, right, because that’s how we fly. But near term 1Q to 2Q normal operating ratio improvement is about a two seventy basis point, which would indicate getting into the 58% range. You had unfavorable fuel and weather in the first quarter and given this unseasonable strength in volumes in 2Q. I I think, Jim, you might have mentioned you could see a better than expected normal performance.

So if things have improved further, what’s what’s the setup?

Jen Hayman, CFO, Union Pacific: So, I mean, I think you’re right. It’s a very favorable setup. Obviously, we’re not gonna give a guide for that, other than we feel very good about how the operation is running. We’re halfway through the quarter. I think the key is gonna be what happens in the back half and how steep is the downfall in terms of of the intermodal.

And then do we see a snapback, and is that soon enough to influence the back half of the quarter? Yeah. We’ll we’ll just watch and see how that plays. I think the fact that we’re running as well as we are is extremely important, and we’ll see how volumes play out. I mean, when you look at things historically, I think you get skewed sometimes because there are normal seasonal patterns, which are are true, but this could be unusual.

We had a very strong first quarter, a hundred 65,000 seven day carloads. We’ll see where where the second quarter ends out. But regardless, I feel great about how the team is operating. The the fact that we’re continuing to get strong core price, which is important in the first quarter, we sure we’ll talk about that some more. So feel good about our ability to perform.

Ken Hoexter, Analyst, BofA: So, Jen, you think you ended with one of the the kind of return to your long term target, high single digit, low double digit after a a flat quarter in the the first quarter shaping up for could be double digit growth in the second quarter. I presume do do you think that’s how the second half of the year flows out? And and I guess I’m just trying to understand the the contracts, the ebb and flows of traffic and kind of what we think in in terms of earnings.

Jen Hayman, CFO, Union Pacific: Yeah. Well, to be clear, I mean, we said we haven’t given this precise target for 2025. We said it’ll be consistent with us hitting our long term targets. So, you know, with that, we’ll see what happens in the back half. We knew we were gonna have a have a difficult back half because of international intermodal and the strength that we had last year.

So how did the tariffs impact that? Do you maybe get more of a surge that could be a benefit? What’s the grain harvest look like? How does as Jim was talking about, how does the consumer stay engaged, and what does that do from the industrial side of the business? So we like where we’re at.

I think we’re in a great position, and we’re gonna move every piece of freight that’s available to us and go out and win new business. That’s an important part of what the team’s doing as well.

Jim Vena, CEO, Union Pacific: I like that Jim

Ken Hoexter, Analyst, BofA: keeps laughing when I keep asking these pinpointed questions like you’re going to change your mind and so I’m never virtually giving the exact quarterly guidance.

Jim Vena, CEO, Union Pacific: Well, I’m I’m waiting I’m waiting for Jennifer to break down one day. Okay? I was gonna say, okay. Let’s see what happens.

Ken Hoexter, Analyst, BofA: So, Jim, the the power of the rail just you know, it it keeps improving on the operating performance. That’s what, you know, everybody was looking for when you returned to UP was was what can you do? And so generating, Jen, you mentioned a 65,000 cars earlier this week this year, I think you showed the network can can handle a 70,000. Wasn’t what you wanted with with in terms of international intermodal be in terms of boosting things, but it showed the power of the network can handle that growth. And I think it it jumped, Jim, from when you joined maybe back down to a 50, hundred 50 five thousand, if I remember back a a couple quarters ago.

So, you know, increased confidence in that scaling. Are we gonna get you know, do we break through the 70,000? It it just obviously economic driven and and a lot of things in there, but the capability of the as you’ve set it up.

Jim Vena, CEO, Union Pacific: We’ve had some weeks where we were 169, one hundred and 70 thousand and we handled it. The business mix makes a difference on what you’re handling and what the impact is to the railroad. But what I really like is what the entire team is doing, the operating team and it takes more than the operating team. It’s truly how the marketing and operations work to make sure that they understand what the impact is to the railroad and the type of business that you and what the price should be for the business and how it impacts the railroad. So that’s really like a three stool that you’re sitting on and you make sure that you do the right things.

And the reason that’s important is you can do something that’s irresponsible from one piece of it and then drive the railroad not to be able to be efficient or you cause it. Little things like we’ll store containers for you for $2 a day forever, right? Or we do something like that that just doesn’t make sense for the railroad. So we’re clear eyed on what a win is. What clear eyed is this, is we have excess capacity, we have excess assets, and we have excess on the people and the capability to ramp it up so that we can handle those things.

Some of the some of those items we can react fairly quickly to Ken. We can react to locomotives very fast. We have 500 of them parked, ready to go. And every so often we’ll put a few of them in. But and so we’re ready to handle more.

The railroad itself is built to be able to handle substantially more than 170,000 railcars because customers as much as we love them because they pay the bills, they do not, okay. They did not tell us, and this is not a negative. Some people when I say this have said, Oh, Venna was surprised. No, we build the railroad for it, but we had a 30% increase in international intermodal last year and we handled it. So you build the railroad that has some capacity to be able to flex and that’s what we’ve done.

On the people side, we’ve been able to hire. Some of the issues that we had coming out of 2020 and 2021 where people had a problem hiring, we have not encountered that. So we’re able to hire people in, we’re in a good place. So that’s how we run the railroad is the most fundamentals make a difference. And productivity is like religion for us.

We look at ways to be able to make the railroad more efficient. This year, we’re able to switch more boxcars per person hour than we did last year because of the way we’ve invested in our yards and technology. We’re able to handle more cars on the same number of trains, our train length, because of the way we are able to flex our system differently than we did before. So those things add up to, listen, I think 170, I wouldn’t even blink. 175, I think I’d still have a real good nap.

If I needed one and one hundred eighty, one hundred 90, I’d start to think about maybe I got to get really involved.

Ken Hoexter, Analyst, BofA: On that, you mentioned the 500 Park locomotives, right? So I’ll throw on the CapEx, right? You’ve got your CapEx target of 3,400,000,000.0, but does that if you start getting to 180, is that are are you using the 500 in storage or are you going out and buying new in advance of that? What what’s your tipping point for start? Or what are you doing now?

Are you just doing mods now? Are you doing news?

Jim Vena, CEO, Union Pacific: Yeah. Listen. When it comes to assets, any asset, you have to decide whether something new is better than what you can operate, more fuel efficient, better reliability. And if you have to cross the bridge on that, then that’s what you do. You go over and decide what you need.

But when we are modernizing our locomotives, they come out like they’re brand new locomotives. It’s at a less, not quite as expensive as buying new. So we found that we’ve been able to rebuild number of locomotives and we will continue to redo that. So they just come out as if they’re brand new locomotives with the fuel side, with the reliability side. So that’s the way we’re looking at it.

And the 500, we have another thousand parked that would take us a little more than just one day to go out there and turn the key over to make them go from store to run. So the 500 are ready to go. We fuel them up, We take them to the shop, fill them up with oil, fuel them up, and they’re gone. Well, we get another thousand that are parked somewhere in our system.

Ken Hoexter, Analyst, BofA: That’s what I thought. I thought you had the thousand parked up. Yeah. Yeah. Yeah.

Let’s talk about employees. You threw out employees. You’ve got about 30,000 employees. I you mentioned it might be down year over year. I don’t know if if that changes with with your your thoughts now on on volume growth.

But in answering this, let me let me make it an even longer question because that’s what I do. This round of union negotiations has to be one of the strangest that I I think we’ve seen in a while just because the industry broke up. Right? In terms of you had CSX jump out, go early. They just signed with the engineers on on Friday, and and you’ve decided to to be able to and then Norfolk in Burlington jumped on board.

You said I want I wanna try and get some work rule changes before I just sign up front. So maybe just talk to us about what what is going on in terms of the progress from your point

Jim Vena, CEO, Union Pacific: of view with the unions while you answer the the also the employee question. Yeah. Listen. Talk about the unions. I’m not sure why anybody would give somebody else the responsibility to negotiate union contracts for our employees and work that as a group.

I can never figure that out because what you need to do is, first of all, have a relationship with your with your employees. You have to have a relationship with the the union leaders. And every railroad’s collective agreement is a little bit different in what their requirements are. We understand that a pattern is being set by some of the other railroads, and that pattern is sort of a line that says what a deal, how you can find a deal. But there’s things on Union Pacific that we see that we would like to tweak, and they’re not huge, that would allow us to become more efficient and provide better service for our customers and especially on the service piece.

So I’ve never been able to figure it out. I grew up working for Canadian National Railways for forty years and we always negotiated our own contract. We’d never said, okay, why don’t we get together? Because when you’re together, you give up some of your rights about what is right and wrong. Now, I wish some of the pattern deals would have waited a little bit because inflation has come down, prices have stabilized, but it is what it is.

So you need to work on it. And we’ve already signed up one of the unions and it’s been ratified. So that’s a great step. And now do we have a lot of negotiations? Yes, we have meetings weekly with, I think, 17 different units with subunits in it just for the conductors and locomotive engineers.

They’re broken up into four or five or six different general chairman that we have to negotiate with to get it. So it’s complicated. It is what it is. We’re being very reasonable. We want a reasonable deal.

We actually pay our employees more than any other railroad in North America on average. So there might be a little tweak here and there that somebody gets a little bit more on one of the other railroads, but overall, so we don’t mind compensating our employees. We want them to be productive, but we also need the rules that allow us so that we don’t get up on a Saturday night where we can’t go service a customer that pays us $150,000,000 a year to go service them because we can’t call a person that lives in the same community, but their contract rights tell them that they can only operate in one way versus the other. How silly is that? So those are the tweaks that we wanna fix.

The way we And you got me going on this one here, Eddie. The way we got to this place is as Union Pacific, I’m not gonna talk about the industry. We decided it was easier for us to negotiate as a group instead of negotiating ourselves. I don’t know about all of you. If I’m going to buy a house and getting a mortgage, I might like all of you in the room, but I’m not going together with you.

Okay? Because I think my I’m over 8 hundred, so I think I should get a better number than the rest of you in this freaking room. Okay? So that’s I’m not gonna negotiate as a group. I negotiate for myself.

Same thing on the railroad. Do you agree with me? 800. Does that make sense? I like it

Ken Hoexter, Analyst, BofA: 800. You want me to

Jen Hayman, CFO, Union Pacific: answer the headcount question?

Ken Hoexter, Analyst, BofA: Yeah. That’s I

Jim Vena, CEO, Union Pacific: didn’t think you wanted to tell him the 2,000 that were down since I joined, but go ahead. I was

Jen Hayman, CFO, Union Pacific: I was gonna give you some

Jim Vena, CEO, Union Pacific: props there.

Jen Hayman, CFO, Union Pacific: Since since Jim joined, our headcount is down 7%, about 2,000 employees, and we’re very much committed to being more than volume variable. You saw the workforce productivity number on the slide. We think there’s more opportunity there. Work safer, work more productive, and we feel very comfortable with where we’re at.

Ken Hoexter, Analyst, BofA: So the FRA seems to be issuing some some waivers right now. They’ve had a lot of things on their docket for a long time, and now it seems like you can make some headway. What what are the exciting things that that it is can be add really additive? You know, obviously, I think you’ve got some auto automatic automatic car inspection, track inspection. I mean, there’s things that Wabtec showed us on remote control locomotive operations.

What are what are the things that, you know, you become excited about reality near term, not not, you know, five years out, but but something you can start testing now and using?

Jim Vena, CEO, Union Pacific: I think the FRA today is looking at things in a very logical manner and they have the same goal as we do, and we have the same goal as them. We to operate the safest railroad system in the world, and we are, okay? As an industry, we are the safest ground transportation system in North America. Nobody can move products as safe as we do on the ground. So at the end of it, I think for the longest time, it was just it took a long time for the review, the regulators to give us the authority to actually put technology that’s been developed that helps us improve safety.

Humans are very good at a lot of things and you need humans to do things, but there is some of the autonomous track inspection systems that we have or signal inspection systems are way better. And we’ve invested in them and we’re ready to go. So what I’m really happy about is the way the FRA is looking at it and saying, listen, we’ll give you a waiver, go out there. And if their speed continues this way, again, it changes the paradigm and the way we look capability that we have on the railroad instead of doing it the old way from forty years ago. So I’m very happy with the way they’re looking at it right now.

Give them a lot of credit.

Ken Hoexter, Analyst, BofA: Is there anything you’ve jumped in and started putting into practice because of that? I don’t know if there was I think you were already testing kind of autonomous track inspection or or car inspection. Is there anything else, like the remote control? Or

Jim Vena, CEO, Union Pacific: Yeah. Listen. We have we we we’re do looking at a number of things, the way locomotives are handled, remote operations and everything else. And the day we received the authority, I think within twenty four hours, we’re starting. Got it.

Okay. We’re ready to go. So because some of these have been going on for a while.

Ken Hoexter, Analyst, BofA: The testing

Jim Vena, CEO, Union Pacific: for a Right. Okay. So it’s not like we’d have

Ken Hoexter, Analyst, BofA: to wait forever. Okay. Jen, you target $4,000,000,000 to $4,500,000,000 in share repurchases. You’ve accelerated the first quarter with a $1.7 all in, including the ASR accelerated share repurchase. How are you thinking about speeding up the buyback given where the stock is, given the volatility in the market?

Jen Hayman, CFO, Union Pacific: Yeah. So, obviously, we think the the stock is pretty attractively priced. In fact, and this was in our our 10 q that we issued, we bought about $430,000,000 worth of shares in the month of April. So continuing to to invest, continuing to return cash. As you said, our target for the year is four to four and a half billion.

We’re well on pace for that and and feel very comfortable with that, generating strong cash, and and look to deploy that.

Ken Hoexter, Analyst, BofA: Thoughts on leverage at at 2.8? Is that where you’re comfortable, debt to EBITDA?

Jen Hayman, CFO, Union Pacific: I mean, we I’m less concerned about hitting a specific number at the end of every quarter, at the end of every year. It’s really about maintaining a strong investment grade credit rating overall, which we have. We’re in in good dialogue with our rating agencies. We wanna have good access to the capital markets, and we’re just we’re very comfortable with where we’re at.

Jim Vena, CEO, Union Pacific: Okay.

Ken Hoexter, Analyst, BofA: Let’s see. Long term, how should we think about rail volumes? Right? We we started off the conversation talking about getting to a hundred 70,000 a week. Seems to be I don’t know.

Maybe the last couple of quarters, rails have finally gotten the mojo back, right? So it started growing again. I think we’re at six quarters now of rail growth. Certainly a lot of lost share coming out of the COVID opportunity there. But when you think about where the industry has been over, call it a decade or so, And I get that coal declined and we lost all the coal, but what do you think about the rail industry ability to regain some share?

Jim Vena, CEO, Union Pacific: Okay. So let’s see. I got fifty three seconds. Let’s see if we can do this justice. First of all, it’s a network business that we have, the railroads.

We hand off a lot of business to each other. So we need to make sure that we’re all operating at a real high level. And I think we, as an industry, we are better today than we have been in a long time. That helps so that you can originate business. Second is at Union Pacific, we’re able to provide our customers with a high enough service level that they are looking at investing.

So when we talk about 200 different options open that customers are looking at what we’re doing, those are people that wanna come on the railroad. So we continue to do that for future and we continue to win with the business that we handle today. I think we grow. If coal drops 35, 40 percent, it’s pretty hard to make up that whole number, but I love the trend line and I love where we are as an industry.

Ken Hoexter, Analyst, BofA: We still have another fifteen seconds. Jen, I just want to revisit one thing you kind of mentioned, I forgot to kind of hit on this. You mentioned pricing was the strongest in ten years in the first quarter. You know, we hear we heard a lot for years about pricing dollars. Now it looks like you’re talking about pricing percentage gains above cost.

Set me up the stage. No.

Jen Hayman, CFO, Union Pacific: We’re still talking price dollars above inflation.

Ken Hoexter, Analyst, BofA: Price dollars above inflation. Absolutely. Not percentage gain of pricing above percentage. Okay. No.

Price dollars. So we’ll just that I’ll open it up then. Just tell me about what what is the pricing market, how you view in core pricing. You know, we used to get from the rails for maybe a decade, the the level of core pricing to, you know, each quarter, your thoughts. So since we don’t get that anymore and there’s fuel, there’s mix, everything, talk to us about how what’s the environment underlying all that?

Jen Hayman, CFO, Union Pacific: Yeah. So the environment that’s underpinning everything is the service product that we’re providing to our customers and the value that they’re seeing from us. And with that, Kenny and his team are out there able to have discussions with our customers about that value instead of talking about a service issue that frees up the conversation considerably as well as the capital investments that we’re making. And so that’s where we feel very confident. Our pricing is gonna be accretive to our operating ratio.

We’re very confident about that. And you saw us start that in the fourth quarter of last year, did it again here in the first quarter. We had some catch up because of the way inflation really picked up in, call it, 2022 and 2023, a time when we weren’t providing as good of a service product. And so, we’re we’re now very much in a posture where we’re absolutely confident that we’re going to be able to get those price dollars above inflation dollars and above enough that it that it helps our margins and it becomes a tailwind.

Ken Hoexter, Analyst, BofA: Alright. So we ran through a lot of issues this morning. I know we are out of time. So so, Jim, if I were to try to sum up and and then look for you to add on what what I’m missing. But one, bulk is up 12%, so great coal and intermodal volumes can decelerate with the air pocket, but but still looking very strong on volume side.

Second, out of park on on the service levels as as you quoted. Third, growing volume because of improved service fourth, it sets you up for that long term growth that Jen mentioned fifth, the operating ratio, you’re going to outpace normal, but maybe some variability given the post the tariff changes. And sixth, employees will not grow in line with volumes. You’ll still show some improvement there. Anything else you’d want to highlight that I might have missed in summing up?

No. Listen, you did a

Jim Vena, CEO, Union Pacific: great job. But let me add one thing is is when we wake up at Union Pacific every day, what we look at is is how do we make the place better? How do we drive value for our customers so that it helps us when we go out to discuss price and how they can win in the marketplace. And if we provide those two things, which I think it’s clear that we’re providing today, I think we take advantage of what the economy gives us and we also go out and find things that add to what the economy gives us to be able to use this great network we have to be able to drive more volume and more revenue for this railroad and more to the bottom line. We understand who owns us and we understand there has to be a return for that investment.

Look at things on a quarterly basis because we have to, but we also view things on what’s going to happen next year and how we move ahead. So I’m very excited. Glad to be back at Union Pacific. Great team. And, Ken, thanks for hosting us this morning.

Ken Hoexter, Analyst, BofA: Thanks for joining us. Appreciate your time. Thank you.

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