Union Pacific at Wells Fargo Conference: Strategic Optimism Amid Challenges

On Tuesday, 10 June 2025, Union Pacific Corporation (NYSE:UNP) participated in the Wells Fargo Industrials & Materials Conference 2025, presenting a balanced strategic overview. The company highlighted its strong operational performance and growth in carloadings but also addressed challenges such as labor costs and intermodal volume declines. Despite potential economic slowdowns, Union Pacific remains optimistic about its long-term growth prospects.

Key Takeaways

• Union Pacific’s carloadings increased by 5% quarter-to-date, with a notable 35% surge in coal loadings.
• CEO Jim Bene sees potential benefits in a merger but acknowledges regulatory hurdles.
• CFO Jennifer Hayman emphasized the undervaluation of Union Pacific shares and ongoing share buyback efforts.
• Labor negotiations are a priority, with a focus on reaching mutually beneficial agreements.
• The company is confident in achieving its long-term earnings growth targets despite market challenges.

Financial Results

• Carloadings:

- Overall carloadings rose by 5% quarter-to-date.

- Bulk loadings increased by 12%.

- Coal loadings surged by nearly 35%, driven by higher natural gas prices and a new contract.

- Industrial sectors showed mixed performance, with strength in chemicals and plastics.

- Premium segments saw a decline, with automotive down 6% and intermodal volumes down 7% this week.

• Pricing:

- Pricing, net of cost inflation, is among the best in a decade.

- Approximately half of the business is on long-term contracts, with 75% repriced between 2022 and 2024.

Operational Updates

• Fluidity:

- Operations are fluid, with train speeds exceeding 20 miles per hour.

- Terminal dwell levels and crew changes are at or near record levels.

• West Coast:

- A slight increase in activity is expected, with international intermodal developments anticipated.

• Cost Side:

- Employees are compensated at the industry’s highest levels.

Future Outlook

• Volumes:

- A slight increase is expected from the West Coast, contributing to a strong second quarter.

• Full Year Guidance:

- Management is confident in meeting long-term earnings growth targets, focusing on operational efficiency and customer service.

• Coal:

- Coal volumes will depend on external factors and potential shifts in coal usage.

Q&A Highlights

• M&A:

- A merger could benefit the country and customers, though regulatory and political challenges exist.

• Labor:

- Union Pacific is negotiating independently for more favorable terms, with two contracts signed and another nearing ratification.

• Share Buyback:

- The company believes its shares are undervalued and is actively repurchasing them, with a buyback program valued at $4 billion to $4.5 billion for the year.

In conclusion, Union Pacific’s presentation at the Wells Fargo Conference underscores its strategic focus on operational excellence and growth, despite industry challenges. For a detailed account, please refer to the full transcript below.

Full transcript - Wells Fargo Industrials & Materials Conference 2025:

Unidentified speaker, Moderator: Exactly. Alright. Well, thanks, and good morning again, everybody. Very excited to be joined again, in the transport track by Union Pacific. From UP, we have Jim Bene, CEO Jennifer Hayman, CFO.

In the audience, we have Diana and Brandon from the IR team. So thanks everyone for joining us. Really appreciate your coming to the conference today.

Jim Bene, CEO, Union Pacific: Thanks for having me.

Unidentified speaker, Moderator: And we’re super. I think you guys have one slide. We only allowed you one slide. No more than that. We have lots of questions we wanna get to.

So we’re gonna turn it over to you for a couple of opening comments. We’re gonna dig right in after that.

Jim Bene, CEO, Union Pacific: Great. So listen. For for myself and Jennifer, questions are more important than us to speak for thirty, forty minutes. So let’s be quick. You can see the slide up, and I’ll talk about that in a minute.

But thing I always have to say is remember we’re gonna be making statements that are forward looking. And make sure that you if you will need more information, please go on to our website or call, call us at Union Pacific, and we’ll clarify or give you the information that maybe we, if you didn’t understand it completely or I did not explain it well enough, especially as I said earlier before we got on. So I wanna make sure that that’s there. is is when you’re operating a railroad and you’re managing a railroad, there’s a lot of moving parts. You know, there’s political, the regulatory, there’s the state and local local governments.

There’s what we do as far as interaction with the public. But the really, the foundation of everything that we do is is how well we can you operate. And if you ever make a mistake on that, then it truly affects everything. And if you think about it, if you’re not fluid, then you’re slow getting into rail yards in big cities. And guess what?

The communities understand that because they see the blocked crossings or the impact. If you’re slow getting trains over the railroad out there, you can see that. The effect is not just internally that the metrics aren’t good, you are actually impacting. So let me tell you about where we are at Union Pacific and this journey. I’ve been here just about two years.

There’ll be there is some people at Union Pacific that feel that the two years was actually only a year. You know, they Fay Gruber hasn’t been here for very long, and I’ve run into a couple people that said, is it are you just starting your year? And I’m going, wow. I didn’t have that much of an impact to them. And then there’s other people that go, wow.

Those those twenty two months feels like a decade. And and I’d rather have those people because that means we’re pushing and we’re trying to do things. So guess guess what’s real important is is what is it that we’re doing? Car velocity, key measure in the February. We are very fluid.

We are operating excellent. This morning, I looked, and this is one of those numbers that’s not yet public. In the last week, our our our train speed all in is is over 20 miles an miles per hour, which is pretty good for the railroads when you what how you work out that number. Remember, I don’t give a lot of lot of value to that number. It’s just a guide point or a point.

For me, car velocity is more important. So fluidity is good. The terminals are working at a dwell level that is, setting records. And but underneath the numbers that you don’t see that we look at is how long does it take us to change a crew when we when we have a crew change with the trains. Those are running just about a record levels, if not record levels.

So I could keep on going. And when we look at the report that I get every morning that there’s, you know, about 90 different metrics, but something that tells you how much revenue, where we are with the railroad, what the operation’s like, all those things. Love where we are. But real key is is is what’s the service like and what are the customers seeing? And in fact, Jennifer ran into a customer of ours that, was presenting here, fairly big customer of ours.

And, and Jennifer, a good CFO, says, how’s the service? Best he’s ever seen. So we’re in a good place, and we wanna continue to build on it. This is not the end. I remember some of you, maybe not in this room, but others because you guys were all all of you in here are too smart to ask me that question.

When I came back last time, is there anything left to do? Basically, I guess they must have thought I was gonna come in, put my feet on the desk, and and enjoy it. But in actual fact, there is, and there’s more we can do to make the place more resilient, faster recovery ability, speed is is of the essence, and service at a high level, and we think that drives us to win. So with that, I’m not gonna get into where our carloads are. You’re probably gonna ask the question.

Jennifer Hayman, CFO, Union Pacific: That’s my job.

Jim Bene, CEO, Union Pacific: That’s your job. So, let me pass that over to Jennifer, and she can give you a quick little discussion about that before we open it up to questions.

Jennifer Hayman, CFO, Union Pacific: And and I’ll be brief. But, you know, good second quarter in terms of our carloadings, up 5% quarter to date. I’m sure you all looked at carloads that came out yesterday, so, we’ve got them up on the on the slide as well. Our bulk loadings are up 12%. Certainly, the headline there, coal.

Our coal loadings are up almost 35% quarter to date. Very strong performance. And certainly part of that is attributable to higher natural gas prices. We have the contract win that started moving on us in April. But then the other thing that I think I have to point out and kind of going back to Jim’s comments on operations is giving props to to the operating team because they have been very nimble.

They have reacted. We weren’t forecasting plus 35% kind of coal volumes. And so the fact that they have been able to dedicate the resources, pivot and surge and handle that in a very efficient manner, I think, is a real plus, and it goes to that strong service product and what that does for us. Industrial, a little bit of a mixed bag, but still seeing strong performance on the industrial chems and plastics. If you look then at the premium line, that’s kind of a tale of two pieces.

You’ve got automotive, which is down quarter over quarter, down about 6%. You have intermodal, which is still up. But certainly, you saw in our our intermodal volumes this week in total down 7%. We’re hitting that air pocket that people have been looking for. I don’t think it’s been as dramatic maybe as some were expecting, but certainly, it’s it’s something that’s that’s giving a little bit of a a tail to our overall loadings right now.

From a mix perspective, and I know you’ll ask this question, Chris, it it does help the mix, the fact that you see less international intermodal on our business. But with that surge in coal, coal is still a little bit of a negative mix for us, so it doesn’t totally change change that trajectory at all. But, you know, again, net net, feel like we’re in a good place. We do you know, looking out ahead, I think there is gonna be a little bit of a rebound in those international intermodal volumes. ’ve got the ninety day pause.

We’ll see how quickly some of that turns around for us. But great setup for the quarter, strong performance when you think about how the operating team is running the railroad. Great to, again, see those volumes really again, you’ve heard me say this, changing the paradigm for for the industry and for ourselves in terms of improving the service, growing the volumes, and and that’s just a great setup and why we’re so bullish about UP right now.

Unidentified speaker, Moderator: It’s a great intro. Appreciate that. There certainly is the opportunity for folks in the audience to ask questions. So if you wanna ask a question, raise your hand. We’ll we’ll get it over to you.

This is a question they’re going to ask. I’m gonna ask it because we get it all the time now. And so things

Jim Bene, CEO, Union Pacific: that you’re gonna ask me about, how Carvelocity can get the $2.30?

Unidentified speaker, Moderator: I was actually gonna ask about where you got the tie, but but yeah. So things find their way into the press for various reasons. So, you know, there was an article a few weeks ago about potential m and a coming back into the space. Wanted to get your take on this. Is this something that we think is reality?

Is it a possibility? Is it something that UP would have interest doing?

Jim Bene, CEO, Union Pacific: Well, interesting. I was asked the question by a by a reporter, okay, with one of the trade magazines, and I answered the question. And, really, I don’t think I have anything further to add to that. It’s pretty straightforward. But let me summarize it because I don’t think it’s fair to just leave it at that.

Bottom line is is, do I, Jim Vena, think that a, merger would be beneficial for the country? Absolutely. It would be beneficial for the country. would it be beneficial for our customers? Absolutely.

Would it be beneficial for how we look at some of the, US forces and products that we move across the country? Absolutely. So there’s a lot of things that are positive. But on the other side, you have to deal with the regulatory, right, and the political side and how you could get it done. It’s not easy.

It’s complicated. And no one wants to get into something if you think you wanna wanna try it, but then you know that the possibility of you getting it is zero. So at the end of the day, that was that was the question I answered was, I think it’d be fantastic for our customers, fantastic for, competition, fantastic for, politically, and I think the regulators would have to deal with it if somebody went forward. So that’s where that’s the answer I gave. I I haven’t changed my mind.

If anybody’s been listening to me, I’ve said that for for years. I wasn’t against the logic behind it, but you also have to understand what the, rules are in place and how you would deal with it and how you’d move forward.

Unidentified speaker, Moderator: And I and I don’t wanna belabor this, so I’m not gonna ask a ton of follow ups on it. But just to be clear, you don’t feel like the probability is zero at this point?

Jim Bene, CEO, Union Pacific: You know what? Listen. I’m Jim Benna. There’s there’s a lot of people that would tell you when I joined the railroad that and I remember sitting in ’2 because history is real important on the character of the person. So in February, when I came to Union Pacific, I was asked by one analyst the question, and that’s why I still joke around about it, is is UP’s gone through this UP 2020, so they’re just about done.

Do you have anything to do? Are you gonna have your feet on the desk? And that was during the very quarterly call. And I sort of smiled to myself, and I said, well, no. I think there’s a few things for us to do.

And internally, it was the same way. The way we work at Union Pacific is we look at what’s possible. We don’t look at what is, just in front of us. We’re trying to build this company, and I think as a management team, we’re along that path a long ways, is this we don’t look at whether we can get we’ve got records on our crew change. We look at it, can we get it to fifty two minutes?

If that’s the way to look at it. So everything that we do, we look at it in that. But we’re also smart enough to say, we’re not gonna take something on that that degrades value for our shareholders. And that’s real important. Yeah.

Right? So everything that we do is about running a long term sustainable company that, adds value to our shareholders. And over the long run, they win, and they beat what they could do with their money somewhere else. That’s the way I think. So who knows?

At the end of the day, it’s a difficult one, and, we’ll we’ll take it. But all it was was an answer to a question. And son of a gun, I guess, and maybe in hindsight, I should have just said, I don’t really wanna talk about that. But at the end of the day, anybody that knows me, I’m honest and upfront. Last point, railroads always look at if unless you’re an idiot, unless your company’s stupid, you always look at everything that you can do to grow your business to see what you can do.

That’s the capitalist way, and I’m about as big a capitalist as you’ve ever seen. Okay? So that’s what it’s all about, Chris.

Unidentified speaker, Moderator: Appreciate that.

Jim Bene, CEO, Union Pacific: As simple

Unidentified speaker, Moderator: as that. Appreciate that. That’s That’s that’s very helpful.

Jim Bene, CEO, Union Pacific: You wanna add anything on that?

Jennifer Hayman, CFO, Union Pacific: I don’t think I can. Okay.

Unidentified speaker, Moderator: Sure? Yeah. Okay. Great. Well, listen.

So so let’s talk about the business Obviously, you noted 5% volumes quarter to date. You’re seeing strength in bulk and coal. Intermotals may be fading, so a little bit around the lull that you talked about. You guys sit on the West Coast, so let’s talk about that.

So there was discussion about the tariffs impacting the business and then maybe with China coming down from $1.45 to $30 potentially a surge. Where do you stand on that in terms of what you’re seeing? We’ve heard anecdotally that if the volume is going to start hitting in a bigger way, it would be kind of in the next week or two now that we’re you know, in June here. How are you guys looking at the next, you know, several weeks of activity, particularly

Jim Bene, CEO, Union Pacific: on the West Coast? Keeping that. Okay. No offense or buts. We can see what’s coming on the vessels.

So you you saw a a drop Yep. And you see a slight increase. You can’t see too far ahead because you don’t know exactly what the people that are purchasing weeks down the road versus what’s what was pulled ahead. So at the end of the day, we see a a slight change. But at the at the end of the day, we know at Union Pacific just because of forces that were outside of what we had, we had a real strong international intermodal in the half last year just because of the the issues with labor and, both the East Coast and in Canada and issues in Canada.

So we expect that this year to happen in the half, and and we’ll deal with it. Nice part about us, and then Jennifer jump in and give way more detail than I’m giving right now. At the end of the day, for us, it’s the originations that we have. And I think sometimes people miss that. But if you take a look at it’s not just the number of different markets that we’re in.

It’s the size of the markets. Our, on the bulk side, our grain and movements this quarter are substantially up. Mhmm. And they’re up because we’ve got the draw, and we also have built and spent money on capital to have the right facilities. And the markets that we serve, whether they’re export out of the Gulf or into Mexico or up and down the river before they get to the river to be using that, are all positive for us.

So, yes, we have some negative in some area, but lots of positive. And the intermodal piece, I don’t know. I like the industrial and the bulk business. And if I can grow that over the intermodal, I think, the railroads, the railroads have, have made some real strategic strategically impactful decisions on how they handle intermodal that are not helpful. So a little downturn on that in the half, and we can do more on bulk and industrial hurt me again.

Okay?

Jennifer Hayman, CFO, Union Pacific: But we but we do love all of our customers. So I wanna clarify that because all of our businesses Did

Jim Bene, CEO, Union Pacific: I didn’t say I didn’t love

Jennifer Hayman, CFO, Union Pacific: them? No. But I’m just wanna give a little love out to the intermodal crowd. You know, if you think about, just the international piece, which is kinda where you started, Chris, our April international loadings, I think, were up, call it, 18% or so. May, I think we were down about 4%.

So that really does show you what happened. We’ll see what happens here in June. But Jim, I think, appropriately called out, this is we’re starting to lap that time period where we really started to see international intermodal surge for us. So we may see, on an absolute level, see those car loads come back some. But when you’re looking at some of those week over week comps, it may still look a little challenged just because of some of that.

Unidentified speaker, Moderator: Got it. And on the coal side in particular, so a lot of strength there. Is there a way to kind of break apart what might be seasonal inventory type of stuff as opposed to more sustainable business opportunity for you as you go through the rest of the year? I guess, in other words, in the back half of the year, how do you think coal ultimately shapes up?

Jim Bene, CEO, Union Pacific: Well, a a lot of it is tied to what happens to outside forces. Yeah. But there has been a change in the way people look at coal and how fast people wanna get out of the that generation of electricity for coal. So I think there’s a change. On top of that, we had a some customers join us, okay, to be able to help us with the the amount.

So we think we’re in a good place there. We really are. We have the network built. Okay? The railroad was built for way more trains to handle it.

We have the locomotives. We add a few people, so it’s great business for us. And we like it, and we’ll do everything we can that’s smart to be able to do that. We’ve we’re trying to drive it more efficient. Size of the trains, make them way bigger, you know, add thirty, forty, 50% more on the size of the train.

We started that a few years ago. But for us, that was to be able to make sure that they’re competitive against other forms of of energy that can be so who knows what’s gonna happen with that? But I don’t know, Chris. If anybody can tell me what the tariff is gonna be on some product coming in The US in the next month, let me know because I sure don’t. So okay?

We’re still trying to figure that out. So I’ll

Unidentified speaker, Moderator: get back to you on that one. Don’t have a good answer yet. Let’s round out kind of the conversation on volume. Merchandise and industrial, you noted that. ISM has been kind of soft for an extended period.

We’re now kind of two plus

Jennifer Hayman, CFO, Union Pacific: looking for better performance in our construction products. So think about rock. Had a record year in 2023. 2024 was more challenged mostly because of weather. It wasn’t as much of a demand issue, but weather in in Texas just didn’t really cooperate much for us.

So we’re looking to be able to get back to some of those 2023 levels this year. So I think that’ll be a good news story. Lumber, kind of hanging in there, but without much housing demand, it’s it’s tough to see a a real upside to that. And then the metals, you know, we’ll see what happens maybe with some of the tariffs there. That could be a potential spark for for some of that business.

Jim Bene, CEO, Union Pacific: You know what? On the on the you can always look at things with a glass half full. I like where we are. I think we’ve done a great job of making the railroad as efficient as as it needs to be to win business. And we think our customers are gonna go out there and win business.

Some of the some of the markets, they can’t win at. You know, it’s just not in the right location, right time. There’s other other areas. So whether it’s soda ash, whether it’s coal, whether it’s potash, whether it’s lumber, whether it’s grain, whether it’s grain products, whether it’s it’s international domestic auto parts out of Mexico autos. We handle so much of what The US economy is, but what I like about it is, I think we win.

So we’re gonna have some ups and downs. Nobody can handle a long term effect of higher interest rates or something that affects the economy. But if the consumer keeps on spending, then from what I’ve seen so far and what all the metrics say, they’re spending. I like where we are. I really do.

I think we’ve done a great job of make of making sure we get value for the product that we provide customers, And we’ll continue to do that because value for us for what we’re doing is real important. But we get return value to our customers, and we see what we can do to grow in the marketplace with them. We have a a couple of 100 sites that we’ve set up to be able to grow our business. Some of them are already in Kansas City. There’s a reason why we wanna open up.

So here’s a little love for the international and domestic intermodal is is we think it’s a better mousetrap for us to be able to expand that market, whether it’s Phoenix, what whether what we’ve done at the East End Of The LA Valley. All those things are important for us because we wanna outgrow what we had last year and the year before. So, Chris, always puts and takes, but nice second quarter.

Unidentified speaker, Moderator: Is auto across coming across the border from Mexico, is that still flowing kinda I I think it paused for a moment after the tariffs were put in. Is that back to a reasonably normal level of activity at this point?

Jennifer Hayman, CFO, Union Pacific: Yeah. I’d say reasonably, although auto volumes are down year over year. I think I mentioned that. I think they’re down about 6%, and that’s both in finished vehicles and parts. But that’s really a demand issue, kind of going back to where Jim was at.

It’s less about, at least from what we can see at this point in terms of a true tariff impact, and it’s more that the consumers aren’t engaged with that level of And we’re also coming into the time of period where auto manufacturers are going to retool. They do that often around the July 4 period, so do some retooling. Some are shifting a little bit more production up into The US. So there’s opportunities for us there. Obviously, we have the best auto franchise kind of hands down when you think about all the auto facilities that we have, our our book of of auto customers that we work with, all the major major ones out there.

So we feel very good about that. So we’re positioned for growth when when that industry starts to get more engaged and people are out buying cars again.

Unidentified speaker, Moderator: So on the last call, I think you noted that price dollars, I think, net of cost inflation were amongst the best that you’ve seen in a number of years. A decade. Yeah. Decades. Ten years.

So can you talk a little bit about the price opportunity as the rest of the year progresses? Are we in the position where we’re starting to see catch up from some of the inflation that’s been embedded in the cost side of the rail industry for the last couple of years but hasn’t seen the price pick up? Is that where we are at this point?

Jennifer Hayman, CFO, Union Pacific: I think it’s a couple of things. I think and we talked about this back at our Investor Day. So if you look at our contracts, about half of our total book of business is on long term contracts. We repriced, call it, 75% of that book in 2022 to 2024. But in those early years, in 2022 in particular, we didn’t fully appreciate what was happening with inflation.

Some of those pieces of business were repriced before the PEB and before some of the big labor inflation started to roll through. So as we’re looking at that book of business, we definitely think the next time that comes available, we have an opportunity and especially with the service product that we’re providing as well. We’re providing real value to our customers. We’re giving them cost savings. Rail transportation is still a much more economic form of freight movement than than trucks is.

And so as we’ve improved the service, we’ve got a great safety track record, those are all things that give us, just very good confidence and conviction that we’re going to be able to continue to achieve strong pricing in those areas. So that’s why we end of the year last year, we started seeing price become more accretive. Certainly, we’ve said it’s gonna be accretive going forward for us from a margin standpoint. So there there’s good line of sight to that. The team understands what they needed to deliver, and it’s being backed up by a great operational performance.

Unidentified speaker, Moderator: So I think when we talked with the first quarter operating ratio, you guys thought that operating ratio, I think there’s seasonal improvement that’s normally expected 1Q to 2Q. I don’t know that you went a lot farther than that. But I guess as you think about putting some thoughts around operating ratio, whether it be for 2Q or as we move through the rest of the year, any reason to think that sort of normal seasonality isn’t playing out? I mean, carloads are up 5%. Like you said, things are seemingly moving in the right direction from a service perspective as well.

Jennifer Hayman, CFO, Union Pacific: Yeah. That’s very positive. The only thing that I would say I mean, I’m still trying to understand what normal seasonality is anymore. It feels like all of those things have have kind of gotten thrown up in the air a bit because we could well have a second quarter carloadings that are less than first quarter when you when you think about it, way the first quarter carloadings really surge. So we’re watching that.

But again, the network is running really well. We’re seeing an improvement in our mix of business. I would say not mixing to the positive because you do still have coal out there, but feel very good about it.

Jim Bene, CEO, Union Pacific: So, of course, Jennifer never wants to give a a operating number. Right, Chris? I’m looking at you from Yeah. Yeah. I got it.

Jennifer Hayman, CFO, Union Pacific: And I leave him to So

Jim Bene, CEO, Union Pacific: so bottom line bottom line is this, is take the noise out that you can’t truly control. So property sale, stuff like that Mhmm. Which we don’t put in our operating room. Put in ours. But at the end of the day, we think in fact, we don’t think.

We know that we we can be and have the capability with the management team we have. We don’t have the longest length of haul. There’s other people that have longer length of haul than us. But if you look at the way we operate and the way we do things and is is, yeah, is is we should have the best in the industry. I’ve also always said that everybody should be within, a 100 basis points.

So and, yeah, this quarter looks like could be okay. We don’t give numbers on purpose because there’s when we go to announce, there’s so much in and out that you have to play on, with what happens that if the headline says it’s x, everybody’s gonna say, Vela, you told me it was gonna be x minus two from 200 basis points from the first quarter. So for me, it’s the fundamentals are right, and I’m very comfortable about where we’re gonna end up, and that’s real important. You know, somebody asked me, how far can you get? There is a point of diminishing return value for what you’re doing, and you do that and you make a mistake on that, then it hurts you.

But I’m real happy where we are, and I’m looking forward to closing the next three weeks this week and announcing a good quarter in July. So let’s talk a

Unidentified speaker, Moderator: little bit about the cost side and maybe labor specifically. So we’ve seen some other headlines around preliminary contracts being signed. What is your thought on the opportunity with labor? Hopefully, we’ll see cost inflation continue to come down, but any expectations or thoughts around that?

Jim Bene, CEO, Union Pacific: Well, I’ll I’ll tell you, Chris. When we when we look at what happened after the last round, and you always learn and I remember when I came back to work, and the thing I did was go through these contracts that we had signed up. And, I was very disappointed at Union Pacific. I really was. We we made changes, and we provided things to our employees.

That’s and it’s always good. We pay our employees at the highest level in the industry. Okay? So we’re not cheap. We wanna pay them good, but we also expect them to work.

And what we did was is we actually with some of the agreements, even though they they had a wage increase, they’re just not working as much because we limited ourselves so much. And some of them are not happy. Some of them are happy, but some of them are not happy because their actually total take home pay is not making as much as they were. So I’m not I never make that mistake. You gotta give people the capability to to make the money that’s possible for them and what they want to live their lives.

So that’s why we moved off from having a to be part of the national deal. And there’s few things that we wanna tweak in those collective agreements that actually help both of us, our employees and ourselves, to compete with others in the marketplace and give better service to our customers, And that’s why we’re negotiating on our own. We’ve already signed two, and I think we’re close to signing the right away. The ones are basically ratified, so they’re good deals. The pattern was set on what the wage is, and it’s pretty tough to move away from that pattern.

And it was higher than what inflation. You can see what happened in Canada. The Canadians got an arbitrator that gave them a 3% wage increase. And here we are in The US giving people 4% because we didn’t have the patience to wait. So we’re negotiating on our own at Union Pacific.

I know I’m strong on this one here, Chris, because and you could see it. It’s irritating, But I can’t go back to change things. But moving forward, Union Pacific’s gonna make their own deals, what’s best for our employees and Union Pacific, not following some pattern that somebody else wants to make. Son of a gun, 3% in Canada versus 4%. Okay?

July 1 here in The US. That doesn’t make a particle of sense to me. And I know what people make in Canada and what their buying power and parity is. So, like, yes, you got me going on that one a little bit. Okay?

Unidentified speaker, Moderator: And I might ask you a follow-up on that. Is there the opportunity to do something different than 4%?

Jim Bene, CEO, Union Pacific: Listen. I don’t think so. I think if I was if I was a person that had a spreadsheet and I wanted to put in some numbers, what you won’t see is is the little tweaks that’ll help us sort of mitigate some of that. Sure. And we’ve been able to do a lot of that over the last two years on the number of people it takes because we’re switching more cars per person.

So, actually, you know, the full wage increase that that was put in last time, if you look at the total dollar spent, each individual employee might be up x amount percent that we signed the contract, but the total spend is down a little bit. And that’s what you wanna do is to be able to move that ahead. But, yeah, I think it’s pretty hard to once a a union in the same industry, and especially for some of the bigger ones, a deal made out that gives them 17.2 over five years, it’s pretty hard to move off of that. And I’m not into having a fight with our employees. Okay?

Our employees are real important for us. And for us, it’s it’s we’ll do the pattern. And give me a couple of things like on a a North Platte, I can work you both ways if I’m short people one way or the other. Not a huge amount, but those little tweaks allow you to react when there’s an issue on the railroad and what you wanna do that gives you better higher level of service. And then Kenny’s job and the team needs to go out and use that high service level to see what the market will drive for for value and be able to price for that value that we have so our customers because it’s competitive out there.

You know, I wish it it was easy. You just get up in the morning and tell everybody, give me 8%. But it’s competitive market, competitive customers, competitive railroad, and we need to be able to win in that marketplace. So, yeah, I I think I put it in. Sorry for the long answer, but that’s it gives you a feel of how we think.

And that’s real important is is who we are at Union Pacific and what we see that we have to do over the next few years. Is this high level of service, grow the business, our customers win, more customers wanna be with us, and we’ll take that two or 3% increase in railcars as we move ahead. Okay?

Unidentified speaker, Moderator: I want to make sure if there’s any questions for the audience, we’ll get you in here. We’re running a little short on time. They can think it over for a I wanted to ask you about the full year. So you talked about earnings growth kind of consistent with the full year target the longer term targets that you laid out at Investor Day. Obviously, that can mean a lot of different things as we’re here a little further into the year, almost halfway through, volume seems okay.

Obviously, there’s some puts and takes around tariff, there still is a lot of uncertainty, as you noted. So anything else to kind of add from a finer point on around the guidance for the full year?

Jennifer Hayman, CFO, Union Pacific: No, I don’t necessarily think so. I mean I think we laid those targets out in September. A lot of the world, to your point, has changed since then, and we still feel confident that we’re gonna be able to meet those. You know, it doesn’t necessarily mean we’re gonna be, you know, at some exact cadence or that it’s gonna be, you know, smooth and symmetrical through those three years, but certainly feel very confident that we have, with the service product we’re providing, with the diversity of our franchise, with the new business that we’re winning, feel very confident that we’re gonna be able to achieve those targets.

Jim Bene, CEO, Union Pacific: Yeah. And we have to have a good strong start. Right? We didn’t we didn’t come up with with a high single digit or low double digit because we thought it was a we shot a dart on a dartboard and came up with a number. We did a lot of work to to get there.

It’s and we’re very confident. So this year, I like where we are right now to deliver at the right level in that range this year to be on the lower end of it, but so what? But we have clear sight of what we’re doing this year, next year, and the following year to be able to deliver that. So that’s where we are. Jennifer doesn’t like it when I get a little too specific, but, and she talks about

Jennifer Hayman, CFO, Union Pacific: us being into their model. I got

Jim Bene, CEO, Union Pacific: it. But I’m here to deliver. I don’t know about

Unidentified speaker, Moderator: We we appreciate that.

Jim Bene, CEO, Union Pacific: I’m I’m not here to to just talk about it. I’m here to deliver. Okay?

Unidentified speaker, Moderator: One last specific question before we let you go here. Shares, not to hit a sore point, have underperformed some of your peers more recently. Do you see value in the stock? You guys bought a bunch in April. You talked about that on the call.

I don’t know how to think about the buyback program. I think it’s 4,000,000,000 to $4,500,000,000 over the course of the full year. So thoughts around that?

Jennifer Hayman, CFO, Union Pacific: Yes. I mean, I absolutely think our shares are undervalued, and so we are a buyer of our shares. We think it’s a great investment. We think everybody should be buying UP right now at these levels.

Unidentified speaker, Moderator: We’re buy rated, so there you go. Appreciate it. Thanks, everybody. Appreciate it. Thank you.

Thank

Jim Bene, CEO, Union Pacific: you very much. Chris, thank you.

Unidentified speaker, Moderator: Thanks, sir. Appreciate it. Always great.

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