Union Pacific (UNP) Baird 2024 Global Industrials Conference summary

Financial performance and strategy

• Achieved 11% operating income growth and 10% EPS growth in Q3, with Q3 2024 EPS at $2.75 and freight revenue excluding fuel at $5.1B, both up over prior year.

• Operating ratio improved by 3.1 points to 60.3%, with expenses down 2% due to productivity gains and lower fuel prices.

• Year-to-date free cash flow increased by $901M to $1,855M, supporting strong financial flexibility.

• Core pricing continues to outpace inflation, with expectations for pricing to become accretive to margins in 2025.

• Plans to return $4–$5 billion in share repurchases annually and maintain consistent dividend increases over the next three years, with a targeted payout ratio of approximately 45%.

Growth opportunities and operational improvements

• Pipeline of $1.6 billion in new revenue opportunities supported by 200 track construction projects.

• Focused on truckload conversion, Mexico cross-border growth, petrochemicals, and grain as key markets.

• Workforce productivity and train length reached all-time records, supporting volume growth and efficiency.

• Service improvements and operational efficiency gains enabled a 6% volume increase, with buffer resources leveraged for surges.

• Carload volumes, daily car miles per FTE, and freight car velocity improved, while dwell times at terminals decreased.

Technology and customer experience

• Implemented advanced tech platforms, including Salesforce and SAP S/4HANA, enabling rapid feature development.

• Launched Customer Vision, a visibility tool co-developed with 150 customers, to enhance shipment tracking and exception management.

• Over 200 customers now use bidirectional APIs, streamlining interactions and reducing friction.

• Plans to fully redesign the customer website for improved usability and experience.

• Technology investments are expected to drive $100 million in productivity gains over three years.