Union Pacific (UNP) UBS’s 2025 Global Technology and AI Conference summary

Merger progress, strategic positioning, and regulatory milestones

• Merger application with Norfolk Southern is nearly complete, with submission expected within two weeks and closing targeted by early 2027, aiming for a seamless national rail network and enhanced customer service.

• Boards and shareholders of both companies have unanimously approved the merger, which is valued at $85 billion and subject to Surface Transportation Board and other regulatory approvals.

• Financial and operational readiness was prioritized before pursuing the merger, ensuring strong cash flow, manageable debt, and high operational performance.

• The combined entity will maintain both brands' heritage, leverage strong employee cultures, and emphasize enhanced competition with minimal network overlap.

• An analyst conference call will follow the STB application filing.

Operational and financial performance

• Network performance is at record levels, with freight car velocity reaching an all-time high of 245 miles per day and year-to-date operating ratio improving to 59.1% by Q4 2025.

• Locomotive workforce productivity and train length increased by 3% and 2%, respectively.

• Fourth quarter volumes are down 4% year-over-year, with challenges in housing-related markets and unfavorable commodity mix impacting results.

• Merger-related costs of $30–$40 million and higher casualty expenses are expected to pressure fourth quarter earnings.

• Despite Q4 challenges, full-year results are projected to remain strong, with industry-leading operating ratio and return on invested capital.

Pricing, growth, and market strategy

• Pricing discipline remains a priority, with a focus on leveraging strong service to justify rate increases while balancing long-term market growth.

• Management is investing in new products and network expansion to drive volume growth, particularly in underserved markets.

• The merger is expected to unlock new intermodal and carload markets, especially in the Ohio Valley, Detroit, and Houston regions, by enabling more direct and efficient rail service.

• Enhanced competition will be delivered through faster service, reduced handoffs, and expanded pricing models to benefit both existing and new customers.

• The company is committed to keeping gateways open and partnering with other railroads to maximize network value and customer options.