With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-153-Union-Pacific

The widely known railroad company operates railroad systems across the U.S., including the Missouri Pacific Railroad, the Western Pacific Railroad, and the Southern Pacific Transportation Company.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-149-Union-Pacific

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

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

Fortune Global 500

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

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.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q2 2025

Q1 2025

Q4 2024

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

legacy

Union Pacific

union pacific

Thank you for accessing Union Pacific Corporation's 2025 fourth quarter earnings call, held at 8:45 A.M. Eastern Time on January 27, 2026, in Omaha, Nebraska. This presentation and the accompanying materials include statements that contain estimates, projections, or expectations regarding the company's financial results and operations and future economic conditions. These statements are forward-looking statements as defined by the federal securities laws. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. The materials accompanying this presentation include more detailed information regarding forward-looking information and these risks and uncertainties. In addition, please refer to the company's website and SEC filings for additional information about our risk factors.

Greetings! Welcome to the Union Pacific fourth quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone today should require operator assistance, please press star zero from your telephone keypad. As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website. At this time, it's now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. Thank you, Mr. Vena. You may begin.

Thank you, Rob. Appreciate... Let's get going this morning, but maybe let's just take a second before we get into the prepared remarks, and then I'm really looking forward to the questions and answers. I'm sure there won't be anything on mergers. It'll be all about how good Eric and the team are running the railroad, but thanks for joining us this morning. But I do need to call out the entire Union Pacific team. We've had a significant weather event that impacted a vast majority of the United States of America from one end to the other, and we felt it in the southern region. That is, that as these storms come through, but I'm telling you, it used to take us weeks to recover, and Eric and the team have done a spectacular job.

I wouldn't say that we're at 100% this morning recovered, but Eric's promised me by the time I look at the metrics on Thursday morning, we'll be back to normal. But so, Eric, listen, you and the team, you want to just give a quick update on some of the big impacts, what's left to do here in the next, so the customers that might be listening can understand exactly where we are.

Yeah, to your point, Jim, the team has done a heck of a job, and it really is in that Texas and really in the Louisiana, Arkansas area, and really where we are, we're pretty much 70% recovered, and that includes partnering with a lot of our customers who, when this weather happens, they have to make adjustments to their, to their operations as well. We welcome that. We work with Kenny's team to be able to do that, and like you said, when we wake up Thursday morning, we should be back.

Perfect. So, you know, listen, we're at Union Pacific and me specifically and the rest of the team with me, like, we like to deal with facts, not how people feel. You know, one of my favorite sayings, when somebody tells me, "I think this," I tell them, "Tell me what the facts are." And the facts are, the northern part of the railroad, which usually gets impacted with real cold weather, that did, has recovered really well. The western part of the railroad, you know, in LA, I'll have to admit, there wasn't very much of an impact. It was pretty clean, and they're operating like they should. And in that central, east and south part, they've done a spectacular job of recovering, where it would have taken us weeks to get us back to where we are.

Nice to see that the short time after a few days, and that speaks to the facts of who we are and what we do with buffer of resources, making sure we had locomotives in the right place that would help, and all the assets and the people that we need. And I've got to give the employees credit for coming out in weather that was pretty tough. Now, I always try to tell people I've done it before, but, yeah, that was a long time ago. You know, right now, the toughest thing I have to do is drive out of my garage and drive into another garage, so it's pretty easy. But, I appreciate all the hard work by everybody. So why don't we get going?

So, I already said good morning, and, thanks for joining us on the Union Pacific's fourth quarter and full year 2025 results. I'm joined in Omaha by Chief Financial Officer, Jennifer Hamann, Executive Vice President of Marketing, Kenny Rocker, and of course, Eric, who has already spoken. So nice to have the team with me here this morning. Let's dig into 2025. Throughout the year, we continued to build on what's possible. Quarter to quarter, we challenged ourselves and each other. The result, the Union Pacific team delivered our best ever full year across safety, service, and operating excellence. As we close out the year, it's clear the team is consistently delivering at the highest levels, and I am confident that's what we'll continue to do. Now, let's discuss the highlights further, starting on slide 4.

This morning, Union Pacific reported 2025 full-year reported net income of $7.1 billion, up 6%, and earnings per share of $11.98, up 8%. 2025 freight revenue, excluding the impact of fuel surcharge, grew 3% versus 2024 and set a best ever full-year record. Strong core pricing gains, combined with an additional 113,000 rail cars, more than offset business mix. Our annual operating expenses, after adjusting for merger costs and other one-timers, were roughly flat year-over-year, an excellent result against business growth as well as inflationary pressures. We remain disciplined, setting the best ever full-year record for workforce productivity as we utilized 3% fewer employees to move 1% more volume. And we further managed our costs by operating a very efficient network, removing car touches and reducing dwell.

We set best ever records in many areas: freight car velocity, locomotive productivity, terminal dwell, train length, fuel consumption. I'm going to stop there. Eric would like me to have another 10, but that's it. That's enough, to name a few. Importantly, we achieved these records while maintaining a buffer of resources as we safely delivered for our customers. Our 2025 full-year adjusted operating ratio improved 60 basis points to 59.3% versus 2024's result. Reported net income was another best ever full-year record in 2025, driven by increased other income and higher operating income from revenue growth and productivity. Other income grew in part from industrial parkland sales, demonstrating that we will take advantage of opportunities to monetize assets and maximize value to our shareholders.

Jennifer, how about you dig into the fourth quarter financials, and then Kenny and Eric will quickly walk you through the marketing and operating details. Then I'll come back for a quick wrap-up before we go to the Q&A. Jennifer?

...Let's begin with our fourth quarter income statement on slide 6, where operating revenue of $6.1 billion decreased 1% versus 2024, as freight revenue of $5.8 billion declined only 1% on 4% lower volume. Breaking down the drivers of freight revenue, the lower quarterly volume reduced freight revenue 400 basis points. Fuel surcharge revenue of $603 million increased $15 million, as higher year-over-year fuel prices added 75 basis points to freight revenue. Core pricing gains combined with business mix to drive 275 basis points of improvement to freight revenue. Although still strong, quarterly pricing and mix were impacted by the competitive and global market environment, particularly in agricultural. While we remain focused on selling our valuable service product at the right margins, we have to compete.

Fortunately, our strong operating efficiency and continuous drive to improve allow us to compete and still generate strong cash returns. Fourth quarter mix dynamic was slightly positive, although not as favorable as expected, due to lower volumes in some of our higher average revenue per car, or ARC, businesses, such as forest products, food and refrigerated, and energy and specialized markets, and higher volume in some of our lower ARC businesses, such as coal and rock. Wrapping up the top line, other revenue declined 2% to $326 million, driven by lower revenue from the transfer of Metra operations. Switching to expenses, our appendix slides provide some more detail, but let me discuss the key drivers as total operating expense increased 2% to $3.7 billion.

Reported compensation and benefits decreased 3%, driven by the favorable comparison to the $40 million crew staffing agreement we had in the fourth quarter of 2024. Our continued focus on operational excellence enabled record fourth quarter workforce productivity, with workforce levels 5% lower than 2024. Fourth quarter compensation per employee increased 5% as a result of wage inflation and higher guarantee. For 2026, we expect our all-in compensation per employee to be up around 4%-5% as we continue to identify opportunities to offset increasing wage and benefit inflation with process improvements, technology, and investments. Reported purchased services and materials increased 8%, driven by merger-related costs, higher inflation, and increased maintenance and repair costs.

Fuel expense grew 2%, driven by a 3% increase in fuel prices from $2.41 to $2.49 per gallon, partially offset by improved fuel consumption. Equipment and other rents declined 8%, driven by lower operating equipment leases and improved cycle times that reflect our strong network fluidity. Finally, other expense increased 22% to $344 million on higher casualty costs and rising property taxes, as well as the comparison to 2024's bad debt adjustment. Against our record fourth quarter 2024, operating income declined 5% to $2.4 billion. Below the line, other income was a best-ever quarter and increased $264 million, driven primarily by industrial park land sales, which Jim mentioned earlier.

Reported net income totaled $1.8 billion and was a fourth quarter record, with earnings per share of $3.11. Our adjusted earnings per share totaled $2.86, and adjusted operating ratio came in at 60%. Turning to shareholder returns and the balance sheet on slide 7, full year 2025 cash from operations totaled $9.3 billion, roughly flat to 2024, while our cash conversion declined 10 points as a result of higher cash capital and our significant gain on land sales at year-end. Cash return to shareholders grew 25% versus 2024, as we rewarded our shareholders by returning $5.9 billion in 2025 through both dividends and share repurchases.

Our adjusted debt to EBITDA ratio finished the year at 2.7 times, as we maintain a strong balance sheet and continue to be A-rated by our three credit agencies. Return on invested capital, excuse me, improved 50 basis points to 16.3%. As we've discussed, our goal is to have industry-leading operating ratio and ROIC, and I'm confident that when the dust settles after earnings season, we will remain the leader in 2025. In 2026, we expect our cash balances to steadily grow as we first prioritize paying off the $1.5 billion of long-term debt that comes due in the first half of the year, and then conserve cash in anticipation of the merger closing. Now I'll turn it over to Kenny, and I'll come back in a little bit to discuss our outlook. Kenny?

Thank you, Jennifer, and good morning. Before I dive into the fourth quarter results, I want to acknowledge the team's hustle and drive, which helped deliver a best-ever full-year record for freight revenue, excluding fuel. Now, turning to the fourth quarter on slide 9. Freight revenue was down slightly on a 4% decline in volume. Our strong service product allowed the team to offset that pressure with pricing. With fuel surcharges and business mix, we delivered a 4% increase in average revenue per car. Let's talk about the key drivers for each of these business groups. Starting with our bulk segment, revenue for the quarter was up 3% compared to last year on a 3% increase in volume, while business mix held average revenue per car flat. Strength in coal was driven by sustained demand and favorable natural gas pricing.

We're seeing smaller wins build momentum and provide incremental volume in a mature market. In grain, lower domestic demand and reduced soybean exports to China were partially offset by business development wins in Mexico. And as Jennifer mentioned, the competitive and global environment also impacted quarterly pricing and mix. Grain products growth in renewable fuels and associated feedstocks was tempered by uncertainty around the renewable fuel tax credit. Food and beverage volumes remained pressured, with softness in Mexico beer shipments. Fertilizer and sulfur finished the quarter strong, driven by increased phosphate shipments and higher sulfur demand from the mining industry. Turning to industrial, revenue was up 1% for the quarter on a 1% increase in volume. Average revenue per car was flat, as strong core pricing gains were offset by business mix.

Demand and business wins increased in petrochemicals and construction shipments, partially offset by decreased volume in our forest and petroleum markets. Premium revenue for the quarter declined 6% on a 10% increase in volume and a 5% increase in average revenue per car, reflecting business mix and higher fuel surcharges. Intermodal volumes were challenged by lower West Coast imports and customer shifts. Despite that, 2025 was the best-ever year for domestic intermodal, which also delivered another record-breaking quarter, driven by exceptional service and business wins. Automotive volumes declined due to reduced OEM production, driven by softer consumer demand and ongoing quality holds. Now, let's focus on 2026 and the macro indicators we're watching on Slide 10, based on S&P Global's January outlook. At the start of the year, the indicators point to a softer environment.

That said, it's still early in the year, and these forecasts can move as conditions evolve. We'll watch the data closely, but we'll stay focused on what we can control, delivering strong service, hustling to win and new business, and partnering with our customers to grow. Looking ahead on Slide 11. While we've been seeing volatility, we remain optimistic about coal's potential, with natural gas prices expected to remain favorable in the near term. Grain exports, mostly to Mexico and some to China, coupled with ongoing business development, should support growth. In grain products, we expect continued strength, supported by aggressive business development and expanding markets for renewable fuels and feedstocks. And as the policy for renewable fuels becomes clearer, we expect that too, further support growth. Moving to industrial, we're planning for a challenging backdrop.

Industrial production is forecasted to be flat, and housing starts are expected to decline by more than 2%. Our team is laser-focused on business development and leveraging our strong service product to close gaps. We expect our petrochemicals markets to remain strong, driven by investments we've made in our Gulf Coast franchise and winning with new and existing customers. Wrapping up with premium, we expect continued softness in international intermodal volumes in the near term as imports stay below last year's levels. Later in the year, comparisons ease, but the import environment remains fluid. On the domestic side, we see continued opportunity and growth from over-the-road conversions, enabled by our strong service product and multiple channels to win. Softening vehicle sales will pressure automotive volumes. That said, the team continues to hustle, and recent business development wins will help offset some of that softness.

Looking ahead, we're confident in our ability to compete. With a strong business development pipeline and a service product that continues to differentiate Union Pacific, we're focused on converting opportunities through strong customer relationships, commercial intensity, and consistent execution. With that, I'll turn it over to Eric to review our operational performance.

Thank you, Kenny, and good morning. Moving to Slide 13, where in the fourth quarter, we extended our safety performance, delivering meaningful improvement in both personal injury and derailment rates compared to our 3-year rolling average. Importantly, for the full year 2025, we achieved best-ever results in both areas, and we expect to lead the industry in employee safety. These outcomes reinforce our commitment to safety and demonstrate the effectiveness of our training programs and technology investments. Freight car velocity of 239 miles per day beat last year's record fourth quarter by 9% and set a best-ever quarterly record. This result was driven by record quarterly terminal dwell of 19.8 hours, increased train speed, and continued process and technology improvements to remove daily car touches.

Truly exceptional work as we build further momentum to operate a safer railroad and drive capacity for future growth. Our service product tracked ahead of what we sold our customers, as fourth quarter intermodal and manifest service performance both improved to finish at 100%. As a reminder, Service Performance Index will be rebased to our best monthly performance as we continue to raise the bar for success. We will remain agile and maintain our buffer of resources, positioning us to respond quickly to demand. Now, let's review our key efficiency metrics on Slide 14. Fourth quarter locomotive productivity improved 4% versus 2024. Additionally, our 2025 full-year results set a record, demonstrating the team's focus on further reducing locomotive dwell to maximize asset efficiency. Workforce productivity improved 3% and set a quarterly record for the sixth consecutive quarter....

We continue to enhance and automate our operations while improving the safety of how we work. Train length in the quarter improved 3% versus 2024, a strong result against the mix headwinds associated with softer international intermodal shipments, which were down roughly 30% year-over-year. All in, 2025 was a best-ever year for train length, averaging almost 9,700 feet, as we adapted our transportation plan for the business and leveraged targeted investments to generate mainline capacity. With that, let's review our capital outlook for 2026 on slide 15. Our capital plan is developed through a disciplined multi-year strategy to strengthen our infrastructure and generate strong returns. In 2026, we are targeting a capital spending of roughly $3.3 billion. As we've said before, our first capital dollars will support safe, reliable, and productive operations.

We are prioritizing our core infrastructure, modernizing our locomotive fleet, and acquiring freight cars to support both replacement needs and future growth. We're also investing in targeted capacity projects that align with our growth initiatives. These investments position us to capture additional volume opportunities and drive meaningful productivity improvements across the network. A few examples include the continuation of our siding construction and extension projects in the Pacific Northwest and along the Sunset Route in the Southwest. We're also making terminal investments for our manifest network in and around Houston and the Gulf Coast region. On the intermodal front, we're planning additional investments at Inland Empire and Phoenix to increase capacity and support growth in those markets. Our focus is on aligning the right resources in the right places at the right times, so we can grow with our customers and continue driving efficiencies across the network.

Before I pass it over to Jennifer, I want to express my gratitude to the UP team and their unwavering focus on safety and service. By staying disciplined on the fundamentals of railroading, we expect our team to continue this momentum in 2026 and beyond. So with that, I'll turn it back over to Jennifer to review our initial financial outlook for the year.

Thank you, Eric. Turning to slide 17, before I give our thoughts on 2026, let me just summarize what we achieved in 2025. The strong results we've reported today are on target with what we laid out last January. The path to achieving the results, however, was actually quite different. My point in highlighting that is pretty simple. We are executing our strategy of safety, service, and operational excellence, leading to growth at a very high level. That level of execution makes us more nimble as a company and enables us to both win in the competitive freight transportation market, as well as to take advantage of spot market opportunities, whether that be higher than expected coal demand, domestic intermodal moves, or opportunistic real estate sales. The entire Union Pacific team is collectively driving for excellence, and that's producing best-in-class industry returns.

As we apply that mindset to 2026, our current plans do not anticipate a significant economic upswing. We are, however, confident in our operational capabilities as our network is running better than ever. Our service product creates value for customers, and we are committed to outperforming the markets through our business development efforts. It's also important to note that since we laid out our three-year targets in September of 2024, several things have changed. Notably, S&P Global's 2026 economic estimates in key areas such as industrial production, housing starts, and auto sales have deteriorated. In addition, rail inflation is ticking up again. We expect slightly over 4% inflation in 2026. Our commitment to yielding price dollars that exceed inflation dollars has not changed, but price may not be a driver of our improving margins in 2026.

Of course, in September 2024, we did not anticipate the impact of merger costs and pausing our share repurchases. Despite this different backdrop, we remain committed to attaining our three-year CAGR of high single- to low double-digit EPS growth through 2027. Specific to 2026, our earnings outlook is in the mid-single-digit range as we continue to face volume and cost headwinds. As 2025 demonstrated, the year ahead will likely present some ups and downs, but I am confident that we can adapt and drive financial gains. We are planning $3.3 billion for 2026 capital improvements, and we will continue to deliver value to our shareholders with consistent annual dividend increases. Importantly, we fully expect to improve our operating ratio versus 2025 and remain the industry leader in operating ratio and return on invested capital.

The team's accomplishments in 2025 demonstrate the capabilities of our great franchise, and we look forward to making further improvements in 2026 as a standalone company and in 2027, when we merge with the Norfolk Southern. It is truly a great time to be at Union Pacific. With that, I'll turn it back to Jim to wrap things up.

Thank you, Jennifer. Turning now to slide 19. Before we get to your questions, I'd like to summarize what you've heard. First, Jennifer reviewed the fourth quarter financials. Rail car loads declined 4% in the quarter, driven by tough year-over-year international intermodal comparisons. We had strong core pricing gains and continued to drive productivity throughout our network. Kenny gave an overview of fourth quarter volumes and laid out initial thoughts for 2026. We are focused on pricing to the value we provide and competing in the marketplace. It's clear our service execution over the last two years plus is helping us win with our customers. We see opportunities in several areas, including chemicals and domestic intermodal, to name a few, to leverage our diverse franchise to further grow our business. Eric reviewed our record safety, service, and operational results.

From a safety perspective, we made strong improvements and expect that we will end the year as the industry leader in employee safety.

...On the service front, we have shown our customers what consistent, reliable service looks like and how it drives value through the supply chain. On operational excellence, we more than met the challenges. We set several quarterly and full-year fluidity, dwell, and productivity records, and the team is ready to drive further improvements in 2026. Lastly, Jennifer discussed our outlook for the upcoming year. Similar to 2025, we are focused on building on our safety performance, winning new business, and controlling our costs, all to generate improved financials. Our diverse franchise brings us challenges and opportunities every day, and our job is to maximize what's possible. As we continue to successfully execute on our strategy, we will remain the industry leader that keeps raising the bar as we drive value for our shareholders.

Before we open it up for questions, I'd like to make just a couple of comments on the merger. Job one for our team in 2026 is continue to improve and run a great railroad. I like where we are, I like what we have planned, and I love the way we've been able to increase productivity, and we've been able to adjust depending on where the business is and also what the impact of input costs are. Job two is working through the regulatory process to merge with Norfolk Southern. I'll be honest, myself, and we are disappointed that the STB determined we needed to provide more information after providing close to 7,000 pages and working with them and listening to them if they needed more information.

But this procedural step that we've seen in previous acquisitions, which were ultimately approved, let's be clear, this does not reflect the value of our combined railroad will provide America and our customers. We are confident that we've demonstrated our merger enhances competition is in the best interest of the public. Our combined railroad will move goods faster while removing millions of trucks off the congested highways in several large cities, and customers will benefit from faster, more reliable service that unlocks new markets. The STB's request is focused on three areas requiring clarification. Our response will take a few weeks to prepare, and then we will refile our application as soon as possible. We view this as a short-term blip and do not expect a significant change to the timeline, as we are still targeting closing in the first half of 2027.

We are following the process and doing our part to move forward with transparency and speed. We are delivering at the highest levels, so fundamentally, I like where we are and aligned on what it takes to win, driving safety, service, and operational improvements to support growth as we work toward combining with Norfolk Southern. So with that, Rob, we're ready to take questions, if there's any.

Thank you, Mr. Vena. We'll now be conducting a question-and-answer session. If you'd like to ask a question at this time, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Due to the number of analysts joining us on the call today, we'll be limiting everyone to one question to accommodate as many participants as possible. Thank you. Our first question comes from the line of Jonathan Chappell with Evercore ISI. Please receive your question.

Morning, Jim. I'm going to give you a break and go to Jennifer first today. Jennifer, I know there's a lot of moving-

I know there's a lot of moving parts, and you got, you know, where you, where you end up in 2025 in a different manner than you expected 12 months ago. But just help us understand a little bit. You said price may not be a driver of improving margins in 2026, given the accelerated inflation. You talked about 4% on the comp per employee. You're not expecting a macro recovery. So how do you get to OR improvement in 2026? Is this a function of headcount, productivity? And if there's any way to frame the magnitude based on what you see today and, you know, what Kenny laid out from a macro standpoint, that'd be helpful.

Yeah, thanks for that question, Jonathan. So you heard that right in terms of from what we're expecting today, at least as we sit here from a price standpoint, that while we absolutely believe that we will and have a plan to improve our operating ratio in 2026, we don't think that we're gonna get any help from price. Of course, that's an early look. And really, it's a function of a couple things. You know, we definitely benefited in 2025 from natural gas prices and strong coal pricing. While that may hold, we're just not gonna have that as a tailwind for us in 2026. And then you still have a pretty weak domestic intermodal market. And those two things really are what's reflected in that pricing commentary.

In terms of productivity, Eric and his team did a fantastic job in 2025, driving productivity, driving efficiency, and we have more ahead of us in 2026, and so that definitely will be a continued tailwind for us as we move into 2026. That's gonna be supportive of improving our margins. Then the last thing I'll mention is the business mix. You know, it should be a more favorable business mix for us in 2026 than in 2025. Now, we were a little off in 2025. I thought it was gonna be a better mix in 2025 than it ended up being, but you still saw us make margin improvements. That's where I think just the way that we're running and executing today is a huge benefit for us.

We are moving every available carload there is, and I anticipate we'll continue to do that in 2026. So that's really how we're looking at it.

Our next question comes from the line of Jordan Alliger with Goldman Sachs. Please receive your question.

It's it's Andre on for Jordan. Thanks for taking our question. Morning, Jim. Was just curious if you could dig a little more in on the $2 billion of targeted net revenue gains from the expected merger. I think about $4.2 billion of the increased traffic gains are being offset by $2.2 billion of costs associated with handling that traffic. The question is, how variable can that $4 billion gross traffic number be, based on your planning assumptions? And then could you just discuss a little more related to how you project the associated costs of taking on that new traffic, which altogether, I think it implies a pretty healthy EBITDA margin for the potential new traffic coming on board?

So if I have your question right, you're asking us when we put the merger application in, we talked about growth and the number of the carload growth, and you want to know if that's conservative or not, or where the market is, and you also want to understand whether how we're going to handle that business. So let's split that up in two pieces. You know, we had experts. We looked at it before, of course, before we decided to cross the bridge and merge with Norfolk Southern.

We did our own analysis of the traffic that's available, both long-haul intermodal, that today we have a lower percentage than the mid-length intermodal business, just because of the handoff, of what happens when you have to hand off from one railroad to the other, and it just does not open the market and penetrate it as well. So we're very comfortable that that 2 million that we've put into the application is there. And in fact, we are, and always have been, just like when we talked about price before, we're conservative. If anybody thinks we're going to let Kenny get away with being conservative internally, then dream on, and you don't know who I am, okay? So the same thing with this, we're very comfortable.

And then we had experts look at the market, and they wrote in their best guesstimate or estimate at this point on what we're going to do. Anytime you increase business, you get that added on the trains that you have and what you need to do. So it's always much more efficient than than running traffic that is in a decreasing position, where you have to try to figure out how to adjust your network. So bottom line is, I'm very comfortable that the business is out there. Now, there has been some talk about this business. It's $2 million, and my God, how much is that? Well, you know, if you do the math, it's just, it's around 38,000 carloads.

You have to remember the way we, all of us count intermodal, so you can just about cut some of that in half because there's two containers, at least on a, on a rail car. And, for us, we load up our trains. Also, we don't run 10,000-foot trains. We run our intermodal package because we have built the system to be able to do that somewhere between 14,000 and 18,000 feet. And we do that every day, and we've been doing it for now the last few years. So the total number of additional movements that we're going to have on the railroad that impact what capital we need to require is not as large as people think, and we know that it's not that large. Let me take one more step down if you take a look at the way we operate.

The way we operate is this morning when I looked, okay, like I do every morning, we have over 2,000 movements, foreign railroad, locals, trains running on our network. So if we add, you know, 10 more trains a day or 15 or 14 more trains a day, it's a pretty small rounding error on the impact to the network. So I'm very comfortable that when the merger gets finalized, which it will, just because of the enhanced product that we're offering our customers and just an end-to-end railroad from one end of the country to the other is enhanced all by itself. We're going to be able to provide seamless, faster service to our customers, let alone in the watershed.

So, Eric, do you have anything more to talk about how the network's going to handle this little bit of business that we're going to bring on, that we hopefully is more than 2 million?

Yeah, let's build on that, where you started. So really, we're talking about a 6% increase in our operating inventory, and we add the combined entity, and I want everybody to make sure you hear that 6%. So you have three things you do. Number one, you rely on the buffer of capacity we already have, all right? We talk all the time, internally and externally, about the fact that we keep a buffer of resources for locomotives and cars, but we also do that for terminal capacity and mainline capacity. We don't run terminals up to 100% capacity. Heck, when we get to about 80%, we're already making investments. Second thing, when you look at the application, the base year is 2023, so we've made capacity investments.

Independently, NS has made capacity investments as well in 2023, 2024 and 2025, and those are all tailwinds for us to utilize. Then Jim hit the last one, and I got to be honest with you, I totally agree with Jim. When I- I don't remember what railroad said it, but something about 10,000 feet, and I had a hard time computing that because we don't run trains at 10,000 feet. Here at Union Pacific, we've invested in our people and the technology that allows us to safely and reliably operate those trains to the length Jim mentioned. So I'm very comfortable with it. We're working through the integration process, and it'll be the most thoroughly planned and executed integration of two railroads.

Listen, sorry for the long answer. We'll try to be shorter so this thing doesn't go too long, but, great question. Thank you very much.

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

Hey, good morning, Jim and team. Great job on the ops. I guess just a quick one, just to clarify that the base rate for your mid-single digit growth, is that the 11.98 reported or is it the normalized? I'm just getting a lot of questions on that. And then pre-merger, you're now building to low single digit, mid-single digit into 2027. Maybe you could just kind of, are we really ramping that up for the 2027 outlook? And kind of what should expectations be? I know it's a year, two years ahead, but just because you've reiterated that target, just want to understand your thoughts there, in the face of $3.8 billion down to $3.3 billion CapEx. So why the reduction and what's getting pulled out? Thanks.

Well, for one question, Ken, you managed to hit a lot of points there. Let me see if I can hit them all. So, our guide of mid-single digits is off of the $11.98, our reported EPS, which was up 8% year-over-year in 2025. You also asked in terms of the CapEx piece at the end there. You know, we are sizing our CapEx relative to what the network needs, and Jim's talked about this before. CapEx isn't just a snapshot in time. It's not a single year. These are multiyear investments. Eric mentioned some of the investments that we're making in and around Houston. That's over $300 million in total, but that's going to be over many years. So we're looking ahead.

We're looking at what we have ahead of us in terms of what we need, and we feel very comfortable with that. What was your middle question? I missed that one.

Sorry, the middle part of it was the ramp into the low mid-single digits-

I mean, you're right. Mathematically, that does put a lot of pressure on 2027. Again, we're sitting here on January the 27th. It's tough to know exactly what's going to happen. The economic indicators don't look great, but if that's different, we're positioned, we have the resources, and we're going to capitalize on that. Absolutely. The market's not telling us that's available today, but the market's often wrong. And, you know, seeing ahead to 2027, again, continue to run well, and we feel very comfortable with the guide, even though that does mean if we're right in the mid-single digits for 2026, that puts a big lift on 2027 for us.

We stopped the share buyback of $4 billion-$5 billion, right?

$4-$4.5 billion this year. So just because we're, we're making sure that we have the cash, as Jennifer spoke about. And Ken, you should know me by now, and you should know this team. We'd rather be a little conservative in what we, what, how we look at it and make sure that, that we over-deliver on what we have, and that's our challenge all the time. So, so Ken, good question. Thank you very much.

Appreciate the time. Thanks, Jim. Thanks, Jim.

The next question is from the line of David Vernon with Bernstein. Please proceed with your question.

Hey. Good, good, good morning, Jim. So a bigger picture question for you around some of the access issues. Obviously, the regulator came out with a decision to maybe change some of the rules around switching. I'm not going to call it reciprocal because it's only reciprocal if two parties are involved. But if you think about the switching sort of regulation, moving away from maybe the Midtec Paper precedent, how does that change your perspective on the business? Or what kind of impact do you expect that to have as we think about, you know, a future, either with or without the merger, if we're going to maybe make it a little bit easier for shippers to petition for a switch, how does that change the UP business?

We've been getting a lot of questions on that from investors, and I'd love to get your thoughts on it. Thank you.

Yeah. Listen, I think it's a timely question, David. I appreciate it. Anybody who's heard me for the last son of a gun, okay, I was at CN 10 years ago, so if I was on calls 12, 13 years ago, I've been very consistent, and I haven't changed. I'm all about competition, and that's what I love about this merger. It's going to make everybody more competitive, and it's going to drive better results for our customers. But on that issue, I am not afraid to compete, and I think customers should have optionality. In general, the devil's in the details, okay, with what they've put out and we have to work through. But I am very supportive of, if you can't deliver for your customers, then customers should have optionality, and I have no issue with that.

Now, it needs to be across the whole industry, not just, okay, Union Pacific. It has to be for everybody. I would love to compete with some customers that are not getting the service level we're providing in the Western U.S., and when we have the merger in the Eastern U.S., or with the Canadian railroads that are running north-south, okay, through and into Iowa. We'd love to compete against them, and we have no issue opening some of our customers up or all of them up, as long as everybody does. So that's where I'm at with it. The devil's in the details, and let's make sure that whatever happens actually improves the customer experience. The worst thing you can do is have a system in place that is complicated. No one understands how the customer can win.

If you increase touch points and you make it complicated, then the customer actually sees the deterioration. They're going to have to carry more inventory and more assets to try to move through it. So as long as, you know, we protect the investments that we've made, okay, to provide service to our customers, you know, just in Englewood, $hundreds of millions to have the buffer in there to be able to recover as fast as we have. So I'm all for it. I like it. Let's get through the details, and I've told everybody, the regulators that wanted to listen to me, long before anybody put anything out, and this last one, that I would be supportive.

Now, I don't think everybody's on the same page, but if they are, it should be an easy fix to go ahead and get it done. I'm ready, and Union Pacific's ready to challenge ourselves, and the cream rises to the top when you have more competition. So, David, hopefully, I helped you with that answer, and you're clear about where we are on it.

You absolutely did. Maybe just as a quick follow-up, do you have a date for when the application is gonna be resubmitted? I'm not sure if that filing is in yet, but I think the STB had asked you guys to let them know when the resubmit was going on.

Okay, you know, I've been having an exciting morning watching the railroad recover. Then you ask me a question like that. I'm telling you, we got experts working on stuff and trying to get all these experts to give me all the detail. We're working on sort of a sliding scale right now. I don't like it. I wish it was in tomorrow, but they're working hard, and this is weeks. And this was why we started with trying to get the application in way before the full six months, because I was absolutely sure, even though we thought we had done a good job, that the STB was gonna find something, that they wanted us to look at it again. And I understand why. This is a big combination.

This needs to be done right, and I give the STB credit that they're gonna look at it. I think the three members, plus all the people at the STB, they have a responsibility to make sure that what we're doing is positive. They're gonna come to the same conclusion as I have, and the entire team here, and Norfolk Southern has, that it is positive. It is positive for customers, for our employees, for America, you know, taking trucks off the road. But at the end of the day, it's a process. Frustrating as it is, okay? Once in a while, I go home and I have a nice Irish whiskey to calm myself down before I go to bed, just to say, "Okay, I'm good with this." But, stay tuned.

As soon as we know exactly the date, I'll be the first one to announce it. I think we'll put a press release out that says that in March, on whatever date it's gonna come out. So sorry, I can't give you a definitive one this morning, but you know I'm pushing them hard to get this thing done.

The next question is from the line of Chris Wetherbee with Wells Fargo. Please proceed with your question.

I guess maybe as it relates to the merger and the competitive landscape, obviously, there's a lot of customer relationships that need to be addressed as you go through this process. I know it's relatively early, but with the application in, people have had a chance to look at it, get a sense of how you're thinking about it. You'll have, obviously, more comments to come, as you just noted, Jim. I guess maybe specifically on the intermodal side, can you talk to us about how that sort of discussion is developing? There's obviously some big partners, you know, that are not on your railroad in the West, but maybe would be on the combined railroad in the East. And just kind of get a sense of maybe how that discussion sort of looks right now, and maybe how we should think about those relationships evolving in 2026.

What's embedded in your outlook on volume?

Let me pass it over to Kenny here in one minute, but let me just say this. We've had discussions with customers, from bulk customers, from customers that are single car movers, customers that are that are chemical, customers that are moving you know industrial products that need to move. Every one of the customers that I've spoken with have—they understand it. They see the benefit. Are they concerned? What they're always concerned about is, is, is will Union Pacific, and they should be, okay? That should be a question they ask, and they've asked me that question, is, is: Are you gonna be able to keep the service level up with the combined railroad, and are you gonna impact me? Because they remember Canadian Pacific's schmozzle with their IT system.

And I tell them to listen, with NetControl, what we did was, we funded it. It's the fundamental base of everything that feeds into the railroad. We did it, and it was a non-event. I've also been railroading for 47 years, and at the end of the day, it's real important, and for me, it's real important. Whether it was when I was in Vancouver, and we were getting rid of those 4-hour quits that people were having, we did it in a way so that customers don't see the impact. So that's real important to me. And with that, I think the feedback is, if you can provide me good service, they see the benefit and they see the pressure this is gonna put on the other railroads to compete. And if... And Chris, it's pretty simple.

If you can't compete on service, if you can't win and be faster across the country and across, you know, when we extend by 200-300 miles, customers on east, the east side of the Mississippi and customers on the west side of the Mississippi, that can get further into the Ohio Valley, or people from the East can get into Texas easier or into California easier, they're gonna have to compete on price. So I think the pressure is not gonna be on customers. They're gonna see much more competition as we move ahead. But, Kenny, you've had lots of discussions with people, and why don't you give Chris a little bit of more background and color?

Union Pacific (UNP) Q4 2025 Earnings Call Transcript

Company Participants