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Omaha-based Union Pacific's principal operating company, Union Pacific Railroad, serves 23 states.

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Union Pacific is the parent company of Union Pacific Railroad, which specializes in shipping products across the U.S., especially by rail. The company ships products such as fertilizer and grain products but also finished automobiles and various types of merchandise in special intermodal containers. Union Pacific has a long history, having been founded in 1862 as part of the Pacific Railway Act approved by President Abraham Lincoln, which led to the creation of the first transcontinental railroad. In modern times, the company services 23 western U.S. states, not just with transportation via rail but also intermodal shipments.

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Union Pacific (UNP): Company Profile, Stock Price, News, Rankings

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Union Pacific

union pacific

Greetings. Welcome to the Union Pacific's First Quarter twenty twenty five Earnings Call. At this time, all participants are in listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded and the slides for today's presentation are available on Union Pacific's website.

At this time, it is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. Mr. Vena, may now begin.

Good morning, Rob, and thank you. Good morning, and thank you for joining us today to discuss Union Pacific's first quarter results. I'm joined in Omaha by our Chief Financial Officer, Jennifer Hayman our Executive Vice President of Marketing and Sales, Kenny Rocker and our Executive Vice President of Operations, Eric Geringer. As you'll hear from the team, we had a solid start to the year. Our reported operating ratio was 60.7% flat compared to last year even with a 90 basis point headwind from fuel and leap year.

We delivered record first quarter operating performance. Further, we had the strongest carload growth of the Class 1s as we work closely with our customers to meet their needs in an uncertain environment. Now let's discuss first quarter results starting on slide three. This morning, Union Pacific reported twenty twenty five first quarter earnings per share of $2.7 which reflects a $0.19 or 7% headwind from fuel and leap year. Our reported twenty twenty five first quarter net income of $1,600,000,000 was essentially flat versus last year.

Reported first quarter twenty twenty five operating income was flat at 7% volume growth, robust core pricing gains and strong productivity were offset by business mix, fuel and the leap year. Freight revenue grew 1% versus last year. And if you exclude the impact from fuel surcharge, freight revenue increased 4% both first quarter records. Looking to the rest of 2025, we will continue to execute our strategy that emphasizes safety, service and operational excellence. Building on the strong foundation with our record first quarter operating performance, we are positioned to deliver.

I'll let the team walk you through the quarter in more detail and then come back and wrap it up before we go to Q and A. With that, Jennifer, first quarter financials.

All right. Thanks, Jim, and good morning, everyone. I'll begin with a walk down of our first quarter income statement on slide five, where operating revenue of $6,000,000,000 matched last year's level even with lower quarterly fuel surcharge revenue, a reduction in other revenue and the leap year comparison. Freight revenue of $5,700,000,000 increased 1% despite the roughly $70,000,000 impact of having one less day in the quarter. Digging into the freight revenue drivers further, our strong volume growth in the quarter added six fifty basis points to freight revenue.

Fuel surcharge revenue of $565,000,000 declined $100,000,000 as the impact of lower year over year fuel prices more than offset the higher volume, reducing freight revenue two seventy five basis points. Core pricing was very strong and reached the highest quarterly level in the past ten years. Further, pricing dollars net of inflation were accretive to our operating ratio. Despite these robust results, quarterly business mix combined with price for a two fifty basis point drag on freight revenue. In addition to volume growth and our lower average revenue per car business lines such as intermodal and coal, we had the additional dynamic of lower volumes in our higher arc businesses like petroleum, soda ash and finished vehicles.

Wrapping up the top line, other revenue declined 19% to $336 Included in the year over year change are several items including some that we have discussed previously such as last year's intermodal equipment sale and the Metro transfer. Quarterly results were also challenged by reduced auto parts shipments at a subsidiary and lower accessorial revenue. And finally, you'll recall that first quarter twenty twenty four included a one time favorable contract settlement of $25,000,000 Switching to expenses, operating expense of $3,700,000,000 equalled last year as solid productivity gains and lower fuel costs offset volume related costs inflation and depreciation. Digging deeper into a few of the expense lines, compensation and benefits expense improved 1% versus last year as reduced workforce levels were partially offset by wage inflation. Record quarterly workforce productivity enabled us to limit first quarter cost per employee to only a 2% increase.

First quarter fuel expense declined 8% on an 11% decrease in fuel prices from $2.81 to $2.51 per gallon. We also improved our fuel consumption rate 1% during the quarter as we continue to leverage optimization tools such as energy management systems on our locomotive fleet, enhancing train handling while reducing consumption. Purchased services and materials expense increased 3% versus last year, driven by inflation, volume related costs and a favorable 2024 item partially offset by lower costs at a subsidiary. Equipment and other rents increased 12% driven by increased car hire for automotive racks, inflation and demand in intermodal and other traffic that utilizes foreign freight cars. Finally, other expense increased 1% as higher costs associated with destroyed equipment were partially offset by lower bad debt expense and environmental remediation costs.

First quarter operating income of $2,400,000,000 was consistent with last year. Below the line interest expense declined 1% on lower average debt levels partially offset by a slightly higher effective interest rate. First quarter twenty twenty five net income totaled $1,600,000,000 and earnings per share came in at $2.7 both essentially flat versus twenty twenty four despite the $0.19 EPS impact from fuel and leap year. Similarly, fuel and leap year had a 90 basis point unfavorable impact on our reported quarterly operating ratio of 60.7%. All in, the UP team produced a good quarterly performance and start to 2025.

Before I go on, a couple of housekeeping items I want to mention. First is that we now estimate our other revenue will total about $325,000,000 per quarter reflecting our expectations for lower revenue. And a reminder that in the second quarter of twenty twenty four our results included a $46,000,000 benefit in other expense from the sale of intermodal equipment and we have now lapped that transaction. Turning to shareholder returns and the balance sheet on slide six. First quarter cash from operations totaled $2,200,000,000 up 4% versus last year.

In February, we initiated an accelerated share repurchase program for $1,500,000,000 And through the quarter, we made open market purchases of an additional $220,000,000 as we more recently took advantage of very attractive share prices. That cash return plus our industry leading dividend payout enabled us to return $2,500,000,000 to our shareholders in the first quarter. In the quarter, our net debt increased $1,700,000,000 as we issued $2,000,000,000 of long term debt and paid maturities totaling $350,000,000 and this resulted in our adjusted debt to EBITDA ratio of 2.8 times at the end of the quarter as we continue to be A rated by our three credit rating agencies. Turning to the remainder of 2025 on slide seven. As we look to the next three quarters, it is likely going to be a bumpy ride.

In preparation, we've worked through scenario planning and we'll remain agile. Importantly, we will continue executing our strategy and are maintaining the three year targets set at our Investor Day last September. In particular, 2025 EPS growth will be consistent with attaining our three year EPS CAGR view of high single to low double digit growth. Similarly, our views on accretive pricing, industry leading operating ratio and ROIC as well as capital deployment plans still hold. Obviously, there's uncertainty in the marketplace, but the year is off to a good start and we are delivering value for our shareholders.

In fact, April volumes and service metrics were quite strong heading into the Easter weekend. Our focus on safety, service and operational excellence prepares us for whatever lies ahead and we're confident in our ability to perform. I'll now turn it over to Kenny to provide you an update on the business environment.

Thank you, Jennifer, and good morning. Freight revenues totaled $5,700,000,000 for the quarter, which was up 4% excluding fuel surcharges due to increased volume. Despite unfavorable mix, we saw strong core pricing gains, which as Jennifer mentioned was the highest absolute quarterly level over the past ten years. This is a testament to our deliberate focus on maximizing price. Let's jump right in and talk about the key drivers for each of these business groups.

Starting with our Bulk segment, revenue for the quarter was up 1% compared to last year on a 2% increase in volume and a 1% decrease in average revenue per car as business mix and lower fuel surcharge revenue was more than offset by core pricing gains and volume. Coal saw strong customer demand due to favorable natural gas pricing. Grain products volume was up for the quarter driven by increased demand for feedstocks. Locating new customers on our railroad ensures long term ratable demand and the newest facilities located in Nebraska and Kansas are now running at full capacity. Lastly, food and beverage volume declined in the quarter, primarily driven by consumer preference.

Turning to Industrial, revenue was down 1% for the quarter on a 1% decrease in volume. Strong core pricing gains were offset by business mix, lower fuel surcharges and volume. Petroleum shipments decreased during the quarter due to business shifts, while soda ash was impacted by weaker global demand. This was partially offset by increased rock shipments driven by strong customer demand coupled with favorable weather conditions compared to last coupled Premium revenue for the quarter was up 5% on a 13% increase in volume and a 7% decrease in average revenue per car, reflecting the mix impact of increased intermodal shipments and lower fuel surcharges.

Intermodal volumes remained strong based on international West Coast import demand. Additional positive domestic intermodal growth was further supported by business development efforts. Automotive volumes experienced a decline due to reduced OEM production. Turning to Slide 10, here is our 2025 outlook as we see it today for the key markets we serve. We've had a solid start to the second quarter with AAR carloadings currently up just over 7% compared to last year.

Now, starting with bulk, continued challenges for food and beverage is expected primarily based on weakness in The U. S. Beer market. We anticipate coal volumes to remain strong in the near term. However, there is always volatility in natural gas prices, so we'll remain agile as we move into the second half of the year.

Lastly, we expect grain exports into Mexico to remain strong. For grain products, our intense focus on business development results is expected to mitigate market uncertainties in renewable fuels and associated feedstocks. Moving to industrial, we anticipate petroleum volume to remain challenged due to business shift and our commitment to balance the volume at the right margin. Our industrial chemicals and plastics markets will remain favorable based on customer plant expansions and our ability to win incremental volume in the marketplace. For example, we are excited to support Dow's expansion later this year at their Poly seven facility in Freeport, Texas.

And wrapping up with premium, while tariff uncertainty remains a concern for automotive, we are closely aligned with our customers providing guidance and solutions every step of the way. On the intermodal side, we anticipate a slowdown in international intermodal as we move through the second quarter and we expect decreased volume in the second half of the year due to the higher comparisons as customers diversify back to East Coast and Canadian ports. However, we remain optimistic about growth in domestic intermodal driven by our over the road conversions because of our strong service product and multiple channels to win. We are keeping a watchful eye on the market and potential tariff changes that could further impact overall consumer spending. While we navigate the trade policies and face difficult comparisons in the latter half of the year, our team has proactively taken action and hustling to overcome these obstacles.

Specifically, earlier this month, we began moving volumes with Lower Colorado River Authority and will continue to ramp up throughout the month. The team's focus on business development is yielding positive results as we see incremental volume from new and expanding facilities across multiple segments like grain products and petrochemicals. In fact, we actively maintain an open pipeline of 200 construction projects, so business development through growth and expansion is always a priority. The team is also setting the stage for future growth. Hyundai Steel Corporation recently joined the Union Pacific Rail network announcing their first ever U.

S. Steel mill in Louisiana. Construction won't be complete for a few years, but this is a positive result of our current business development efforts. With our strong service product, I am confident that we will continue business and take trucks off the road. And as I stated last quarter, our commercial team is crystal clear on acceptable pricing levels based on the service we've sold, which is driving strong core pricing gains.

I'm proud of the team's ability to deliver a 4% increase in freight revenue excluding fuel. The team is focused and I'm very comfortable with our current position. And with that, I'll turn it over to Eric to review our operational performance.

Thank you, Kenny, and good morning. Moving to Slide 12. In the first quarter, we continued to see meaningful improvements across nearly all of our metrics. This is a testament to our strategy and our steadfast focus on providing industry leading safety, service and operational excellence. Starting with safety, which is the foundation of everything we do.

Both personal injury and derailment rates continue to improve versus their three year rolling average. In fact, we achieved a first quarter personal injury rate that tied a quarterly record dating back to 2016. Our number one priority remains returning all employees home safely each and every day. Freight car velocity, the best measure of fluidity on the railroad, improved 6% to two fifteen miles per day, a first quarter record. The primary driver was further reductions in terminal dwell, which improved 6% year over year and also set a new first quarter record.

We are turning our customers' assets faster, a win win, as we support their growth initiatives while simultaneously generating future growth capacity within our terminals. On the service front, manifest SPI was 93%, a six point improvement, while intermodal SPI at 94% was essentially flat. Our buffer of resources coupled with improved fluidity I mentioned earlier continues to translate into a very high level of service for our customers. And customers are seeing the benefit rewarding Union Pacific with new business. As Kenny mentioned, we have successfully onboarded our new coal customer while also adding incremental growth coal sets beyond what we had originally planned coming into the year.

On the intermodal front, we continue to handle historically high international intermodal volumes, all while delivering a service we sold our customers. Now let's review our key efficiency metrics on Slide 13. Throughout the quarter, the team was effective in our approach to asset management, leveraging our buffer of resources to inject assets only as we needed them. That approach paid off as you see improved efficiency metrics across the board. Locomotive productivity improved 1% compared to first quarter twenty twenty four.

Notably, our active locomotive fleet only increased 3% against the backdrop of a 7% volume growth and normal winter weather challenges we historically experienced this time of the year. While the increased fluidity of our network enabled the performance, we also see the continued benefits from our work on locomotive dwell. Workforce productivity, which includes all employees improved 9%. More specifically, our active train engine and yard workforce decreased 1%, demonstrating excellent operating leverage against the 7% volume growth. We will continue to support our training pipeline and provide the capacity buffer necessary to navigate an ever changing environment.

Train length in the quarter grew 2% compared to first quarter twenty twenty four. Further, we delivered improved train length sequentially despite lower intermodal volumes, which generally provide greater density to drive gains in train length. We will continue to leverage proprietary technologies like Precision Train Builder to safely grow train length while generating mainline capacity for current and future growth. Wrapping up, I'm very proud of the team and the results we delivered. We efficiently leveraged our resources to handle volume growth manner.

As we progress throughout the year, we will remain agile and in constant communication with our customers as they analyze their supply chain options. I'm very confident in our ability to control what we can control, whether it be our service product, buffer of resources, asset utilization, etcetera. We are prepared. And as we move forward, I'm certain you will see our resiliency on display. Jim?

Just caught me having a sip of coffee. You were way too fast closing that off, Eric. I thought you still had a couple of lines. Listen, thank you very much. And why don't we turn to slide 15.

Before we get to your questions, I'd like to quickly summarize what you've heard from our team. First, as you heard from Jennifer and Kenny, there are still a lot of unknowns related to volumes and the economy. But what I do know is that we are driving efficiency throughout our network and pricing for the strong value we provide our customers. Eric walked you through the records we are setting across safety, service and operational excellence. The network is fluid and we are meeting the demands of all our customers.

We are in a good position and we will be agile and responsive We remain committed to the long term guidance that we laid out at our Investor Day last September and we are confident we will be the industry leader as we drive value for our shareholders. We have the right strategy, right team and the right focus on the fundamentals, all supporting our ability to unlock the great value of the UP franchise. With that, we're now ready to take your questions. Rob?

Thank you, Mr. Vena. We'll now be conducting our question and answer session. Thank you. And our first question will be coming from the line of Chris Wetherbee with Wells Fargo.

Good morning. I guess I wanted to talk a little bit about 2025 guidance. So obviously uncertainty is building here with concerns about maybe some slowing activity particularly on the West Coast. You guys have talked about sort of growth this year consistent with the long term targets. And I think that could kind of take a couple of different meanings.

So I was kind of curious if you wanted to maybe put a little bit of a finer point, kind of think about what the potential outcomes could be either from an earnings perspective, maybe from an operating ratio perspective. Just wanted to see if you can put some framework around what you think 25% might look like just given the uncertainty that's out there?

Well, Chris, that's a great question and a great way to start off. So at this point, there is a lot of things, tariffs, economy, what the consumer does, what interest rates are, what's going to happen with interest rates, what's going to happen with the tax package or the packages that the Congress is looking at doing. So all those things are up in the air. What we look at, at this point in time, we are very comfortable that we are standing by our guidance that we provided last year. Now is it a little muddier at this point than it was when we gave it last year?

Absolutely. But at this point, what we're seeing and that's why Jennifer mentioned, our carloads are pretty strong so far in April. And the mix is pretty strong. So we like what we see and we just don't want to get because everything is so fluid, we'd be remiss to start talking about what's going to happen as we move through the rest of the year. For us though, what we look at and it's very key.

Fundamentally, we have a railroad that's operating and we're able to be able to take a look at how we spend money on the railroad and what we're doing in a very efficient manner. And Eric took you through the details of how we're doing and how we're looking at things. And I think we've shown over the last few quarters and especially the first quarter what's possible with this railroad. If you come in with a fundamental railroad that's operating in a very well in a good manner, what happens is you can build from that. The reaction is what happens with all these items that I these vectors that I've talked about coming in at us.

At the end of the day, I'm comfortable. If we need to react, we will react. But at this point, I think it's so fluid. I woke up this morning to see when I woke up when I normally do. Went to bed last night at midnight after watching that bad hockey game that my team lost real bad.

And woke up this morning to see what the news was the latest. And at this point, it's a day to day, week to week reaction of what's happening marketplace. So that's why, Chris, we're sticking to our three year guidance. We think if everything comes to a normal, a much more normal situation, I think we will deliver that and we're very comfortable that we have the opportunity to do that. Jennifer, anything you want to add?

No. I mean, I think you hit all the right points Jim. And we are looking at it a number of different ways both in terms of what we think is going to happen on the demand side. But obviously Eric and his team has to be prepared in terms of if demand does fall, what are the levers that we can pull. And so when we look at that in totality, we feel comfortable that we've got the right strategy.

We're well positioned. And obviously, we want to take advantage of carloads when they're there. And I think we're doing

a really good job of that today. You very much. Appreciate it. Thank you. Our

next question comes from the line of Tom Wadewitz with UBS. Please proceed with your question.

guess this is a question along the same theme, which you'll probably get even more after mine. But when we think about your framework for this year and kind of volumes are strong in April, but there are a number of segments that there might be pre shipping or fall off. So I guess if you say in that kind of three year guide and call it high single digits earnings growth at the low end, Is there like a revenue growth or a volume growth assumption that you say, hey, we kind of need to be in this range in order to achieve that? And I guess, I don't know if that's a low single digits revenue growth. And then I guess just from a year over year perspective, if you're flat in earnings in 1Q, but you do full year high single digits, what's the lever that accelerates?

Is it just easier comps? Is it kind of volume accelerates? Just I guess a couple more things of how we understand the frame. Thank you.

Well, Tom, it's an interesting question. You know there's a lot of puts and takes. If you take a look at our first quarter, the headline, you would say it was a flat year. But if you look at it underneath with the impact of fuel and what we had, we had a pretty good first quarter especially for a first quarter for Union Pacific that is one of our highest expense side with a lot of things that come in. Fundamentally, we are good.

We like the business mix that we have. We like the way the quarter has started off. I am absolutely not sure what's going to happen. And if anybody tells you at any point that they know what's going to happen over the next few weeks, let alone for the rest of the year completely. And I think we'd be remiss to start changing our guidance.

The easy thing would have been to come in this morning and just say, listen, there's so much noise. We're pulling our guidance. But we have a job to do and our job is to react to whatever is thrown at us. At Union Pacific, we've been doing that for a long time. And I do have nobody sees it, but I do have a few gray hairs.

So I have been around for a while and I have seen the ups and downs. I think I have never bet against The United States economy or The United States in general. So at the end of the day, I think we end up in a good place, whether that's in a few weeks or whether that's in six months. But fundamentally, if we can operate the way we are, Kenny and the team are building long term partnerships with customers and we have the franchise that we have that handles so many products that Americans use every day. I'm very comfortable, Tom, and we are not going to come off of our how we do it.

How do we deliver that high single digit, low double digit? Absolutely, it's how we price, volume, how efficient we are, everything that's in the mix that we can control. And I think we've shown over the last few quarters how whether we're doing a good job or not. I rate the team because I'm a hard marker. I'm like Walter a little bit.

We're average and I think there's more left for us to do. But I'm very comfortable of where we are right now.

I guess any thoughts on like threshold revenue growth or volumes to get there or not?

Tom, first few weeks in April, we're saying listen we see a little bit of impact with everything that's going on. But at the end of the day, it's been pretty strong for us. Our industrial, our bulk, even the intermodal is pretty strong. But and I like to see the bulk in industrial where it is because as you know, it's a different margin business. But I really can't tell you.

And Tom maybe you have a better idea. Fill me in if you can because I can't tell what's going to happen here in the next couple of weeks. But I think at the end of it we'll see a reasonable position for The United States Of America when it comes and will not impact. The worst thing that can happen is it starts to impact what consumers are doing and their thought process and how they spend money. We haven't seen that at this point, but that would be a worry.

But at this point, we haven't seen it. Thanks, Tom.

Our next question is from the line of Fadi Chamoun with BMO Capital Markets. Please proceed with your question.

I have a quick question. Yes, good morning, Jim. So a quick question on the pricing. You mentioned the strongest in ten years for Q1. How much of that is reflecting maybe the lag impact from the inflation we saw in the last couple of years?

And how much is driven by the better service performance of the network in the last year? If you can give some color about kind of what's underlying the strong pricing and how sustainable that is?

Yes, Fadi. Thanks for that question. I'll start it off and then kick it over to Kenny. I do think it's important to recall back at our Investor Day where we laid out our vision that we were going to have accretive pricing going forward. And in that we talked about the fact that we had some catch up to do that we had the opportunity to touch more of our long term contracts and that that was part of what gave us the confidence that we were able to stand before you all in September and say that the pricing was going to be accretive.

Certainly, Eric's service product helps support that when the team is going in and having those conversations. But this is consistent with what we were seeing and what we were expecting to see back in September. And we just believe there's more of that coming forward. So that's where you're seeing that confidence.

Yes. So you look at it, as Jennifer mentioned last year, we were price accretive. We're starting off price accretive today. And it's really that we have as a commercial team. Eric is and his team is providing us with a strong service product.

We also have quite a few investments that we're making into the network. That gives us all the ability to really price to the service that we're sold and we're pretty dogged on that. And so that's what you're seeing. You're seeing the results of that play out.

Thanks, Patti. Next question is from the line of Brandon Oglenski with Barclays. Please proceed with your question.

Hi, good morning. Thanks for taking the question. Kenny, I know everything is volatile right now, but obviously we have pretty sizable tariffs on Chinese goods here. I mean, I think our Treasury Secretary is calling it a de facto embargo on trade with China. And we can see that there are going to be some higher blank sailings into like LA Long Beach, which has been a pretty big source of volume for you guys.

So I guess maybe a two part question. A, have you heard from your international customers or any of your customers about plans for dealing with these very large tariffs? And then maybe just quickly for Eric, like how would you deal with potentially a big air pocket in demand on certain parts of your network even if you're seeing growth domestically? Thank you.

Brandon. Thanks for the question. So first of all, it starts with staying close to the customers. I've been talking to customers this week. It stays staying close with Eric, and it's all about the agility.

We've shown improved that in the quarter. We were able to handle that business. You're asking a specific question about China. And yes, we do see, and Jim used the word normal patterns, we expect as we move throughout the quarter to see a little bit more softness and then we have some tougher comps. The best thing we can do during that time is just have all the products that we have with the ramp, the match back and the service product and stay close to our customers because we've been seeing these supply chain patterns change at the drop of a hat.

And Brandon, related to how we continue to maintain volume variable plus, for us, we're very prompt to being able to do that. When we think about what are we physically doing, what does it look like on the railroad, it's really your five critical resources with emphasis mostly on three of them. You adjust the amount of locomotives you have, the amount of cars you have and you adjust the amount of crews that you have. Now you do that inside of our transportation plan, which over the last year, we've got a big plus that we've added to that with a tool that we have that's called adaptive planning. That's taken our playbooks and made us even faster at how we're able to make those decisions.

What used to take multiple days or weeks, now we can do in a matter of hours or even up to maybe at most a couple of days. So we have the ability to adjust. You've seen us demonstrate that many times over our history and that's exactly what we'll do.

Our next question is from the line of Scott Group with Wolfe Research. Please proceed with your question.

Hey, thanks. Good morning, guys. So if I take a step back and we have the best pricing in ten years and volumes up seven and headcounts down three, I would have thought it could have been like the perfect storm of like record kind of margin improvement, when you just think about those three things and margins are flat. Is this just mix in fuel? And so what does this look like going forward, maybe if the volume slows, but maybe now the mix turns positive, hopefully, fuel headwind isn't the same magnitude.

Should we start to see a lot more margin improvement just given this price, as we get through maybe some of this mix headwind?

It's an interesting way to look at it is that we have you're saying if we have less revenue but the mix is better, we end up with better margins. I look at it a little bit different. Yes, that's a win. But I'd rather have more revenue and drive to make sure that the margin is in the right place. We like all the business that we have.

And the reason we are Union Pacific is because of the top 100 customers that we have that we move everything that people use every day in either the manufacturing or at the end. So Scott, yes, could say that if intermodal came down because of what's happening at the West Coast or the imports that would help us margin wise. But for me, I'd rather remember, we don't give OR specifics on purpose. If somebody would tell me that I could be a 55 operating ratio railroad and our revenue went down by X, I'd rather be a 57 operating ratio railroad with our revenue going up by X. So that's the way I look at it.

Yes. I just would on the mix part, I obviously mix price together and mix with record price together being down two fifty basis points, that gives you an indication of the impact of mix to the quarter. And we also gave you what the impact was to the OR and EPS from fuel. So to your point, as we look ahead, mix should moderate. I don't know when it will turn positive, but probably should turn positive as we move into the back half of the year.

We'll see how second quarter plays out. As Jim talked earlier, there's just a lot of wildcards on how that's going to play, but should improve nevertheless. You look at fuel, we see that as something that moderates through the year as well. And when we get to the end of the year, fuel prices stay kind of where they're at, I think you look back and you say fuel was kind of a nonevent for us overall for the year. So I think you're looking at it right.

The only thing I would say is don't underestimate the mix impact to our margins in the first quarter.

Thanks Scott. The next question is from the line of Ken Hoexter with Bank of America. Please proceed with your question.

Hey, great. Good morning. So, Jen, maybe just taking that to another step and I know you don't give specific guidance, but if I think about maybe just historical averages, right, so first quarter to second quarter, maybe you could talk about what kind of level improvement you've historically seen. I think it's been about 100 basis points. So I just want to understand just to get to the EPS target that you're talking about.

Do we have to see outsized seasonal performance given, I don't know whether it's the leap day and fuel impact you were talking about? Maybe I'll start with that. Thanks.

Well, Ken, I love the question. You know that you were you asked me because you thought for sure Jennifer would say I don't give any guidance. But yes, we're historically we're going to historically see that improvement. At this point, we see it already with three weeks in the books that we look like we'll have that historical change that happens normally first quarter to second quarter and maybe even a little bit better because of how well we're operating. But still too early in the quarter to say anything specific about what it looks like.

Yes. No, I mean the first quarter is where you typically have your worst margins for the year and it typically improves second and third quarter because you've got kind of your beginning of the year cost out of the way. You see your volume improve and you're away from the winter weather. And so you've got that kind of mud behind you if you will in the first quarter that helps propel you in the second and third quarter as you see volume growth. Obviously, as we're talking today, volume is going to be the wildcard, but we're not going to use that as an excuse to not improve.

Union Pacific (UNP) Q1 2025 Earnings Call Transcript

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