UNP - Earnings call transcript Q2 2024 | Union Pacific Corporation

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Operator

Greetings. Welcome to the Union Pacific Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website.

It is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. you. Thank Mr. now may begin. you Vena,

Vincenzo Vena

today Rob, morning our Rocker; Eric joined to and by Vice nice Pacific's Executive us come Executive our Kenny Chief Jennifer President good all Thanks, thanks quarter from Hamann; Gehringer. I'm joining Omaha, Vice and Sales, you in a to here of and Operations, Union and Officer, and our beautiful results. discuss of to Financial President for second morning Marketing

discussion the operating drive into we success. drive dive the the few second has another that we As challenges easy, strong how hear you'll of It is provides right pleased proof outdoors months room to quarter, results. manage those with past point to these financial strategy but that not been I'm our

second net of quarter income quarter second starting share. This XXXX results, reported share. X. compares or per on or net Pacific Union This $X.XX income let's to And $X.X quarter discuss billion morning, $X.XX XXXX per of billion $X.X Slide second

normalizing in was operating was fuel were volume the X% pricing core and gains negative quarter as if solid change revenue versus up increased Second by And you're revenue. mix yearly and slightly a surcharge fuel, business lower freight reduced X%, XXXX. for up revenue

were onetime for we've in adjust a experienced fuel. year-over-year very impressive environment, offset pressure inflationary when work and This you expenses down Reported is to flattish X%. high by the the team items even volume

XX.X% and despite some showed Our sequential still improved basis year operating last challenges, second XXX quarter ratio points of we versus improvement.

let team quarter the industry to Q&A. step towards operational walk solid you go detail, goal wrap we in excellence. then in before quarter back and more leading and the was come for up of this another Overall, through safety, service the a I'll our

So second with and Jennifer quarter we'll the Jennifer? financials. start

Jennifer Hamann

morning, and Jim, Thanks, good everyone.

versus last the revenue Slide volumes. positive $X year on X% X with where operating on our walk of income billion quarter of statement, slightly increased start down Let's second

and Kenny against was top backdrop weak this gains of line wins business will pricing solid highlight, the performance demand. As strong supported by coal

revenue mix, gain. revenue Second freight totaled basis business pricing components, by unfavorable added freight quarter billion, into a to gains, XXX Digging partially strong an revenue. points the $X.X offset core X%

the revenue volumes X%, quarter in million international fuel basis and the added overall positive contributor intermodal in the $XXX to growth basis average XX Double-digit in volume revenue lastly, freight fuel to XX further was per business. mix industrial our primary by dynamic revenue as freight declined car negative higher And decline an Slightly of points points. lower impacted revenue. prices surcharge compounded

revenue revenue other Excluding faster of team intermodal as continues fuel declined up growth than surcharge, revenue Wrapping auto demand Loop less parts shipments and accessorials to for a the freight at our volume. lower X% pace the top as grew X%, subsidiary. result line,

to Switching expenses.

Second quarter we XXXX, most versus $XXX across operating expense of cost as million drove $X.X categories. billion decreased productivity

me We details the but have appendix, of in drivers. performance let highlight more some the

reduced as declined generated X% and productivity. expense and Compensation versus benefits positive year we X% last headcount

more last as The to ratification to impact the to employees million organization. the compared increased we focus and new service the $XX a as reduced XXXX, continue training onetime X% of expenses in labor significantly our decreased And Although remainder train as workforce and agreements. offset train buffer is delayering year's pushing down a X% payment. we of carry recall, operations our work continue on included to you'll pipeline employees for as service

Metro highlighted an item in at our month, completed first last on we Chicago. employees around quarter we mechanical XXX report, up the of to Following transfer

our $XX will other revenue lower million expenses a both and transfer by Going quarter. roughly forward, this

efficiency. overcame we $X.XX payment, prices onetime Excluding continue gallon in expense Fuel increased to the as $X.XX second in locomotive decrease declined the from times a productivity. reflecting and X% rate X% better X%, expense, and business freight environment consumption a fuel and employee Equipment overall other per on our by gallon. in cycle challenging labor quarter XX%, less mix. We operating declined per quarter for lower improved offset fuel-efficient mix per rents largely cost year's improve to lease last drive partially X%, by to fuel

we expense Finally, other of as the onetime items couple quarter. decreased X%, recorded a in

recognized On $XX expense added a remediation million gain site. additional intermodal environmental Conversely, sale. from a the $XX we at million legacy side, positive California an equipment of we

operating income quarter billion Second $X.X of versus year. last X% increased

interest lower result average claims, tax income declined other levels. debt interest of Below increased as line, refund expense XX%, while on the received on a X%

income Second X% share versus $X.X XXXX. both of billion quarter improved earnings per $X.XX net of and

Our improved basis XXX year-over-year. quarterly XX% of operating points ratio

As Key of created continuation OR these improvement points just past X of is we've several discussed, the puts momentum I This operations of and takes there great drove the growth quarters. EPS is here in a were year-over-year. core our that XXX basis quarter. $X.XX and

Turning on X. sheet the to returns shareholder on balance Slide

to quarter by Second XXXX free tax from operating last flow $X in increasing resulted and payments, labor higher million. Growth and from million income $XXX in cash year. payments, operations up agreement cash versus totaled operations up cash $XXX our income improvement, billion, partially XX% offset

late restarted the As share quarter. stated we in second back in April, repurchases

just returned up Combined through June. ramp in started slowly Although to million dividend our billion the with $X.X year-to-date. we with shareholders $XXX repurchased payments, we over plan repurchases year, to we've

we to credit finished debt-to-EBITDA quarter at adjusted Finally, agencies. X.Xx, X our by rating our A continue ratio rated and be the

Wrapping uncertainty second on point that forecasting. as recovery there X, up were many we've some the reached midway the half Slide of XXXX, about remains

much there that detail, driven definitely our of we're is are being by and markets development business where efforts. growth, seeing growth will Kenny As

markets, reflected margins. particularly Operationally, towards progress operational to coal. excellence. safety, and progress This in are service is team our long-term some safety the best including is also challenged great the be There making the metrics, in goals in our performance our and

step of to way can winning. where we quarter each indicative get is on to is our and trend term, the believe we long Importantly, a successive

We to volume of our in to confident in dollars, expect in XXXX. dollars ability excess ahead generate inflation price of pace are freight and still highly revenue

committed This includes XXth remain in higher we in expect we the capital repurchase $X.X drive a we We X% dividend week's last leverage. XXXX to around also returns in maintain as This announcement of share our to our increase row as of our allocation repurchases, our represents dividend a increase year With long-term owners. strategy. increases. annual to current billion

to I'd on the our lay Kenny, turn our our it in half in in and as second to thoughts to and performance future great continue September. Day second our franchise. I the potential strategy more our execute our of the Before over strong of Kenny? we out excited financial quarter unlock We're as at stronger long-term confidence summarize Investor

Kenny Rocker

good and Jennifer, you, Thank morning.

had was volume. fuel the a billion to you core up especially we lower excluding quarter, mentioned, if Jennifer strong Great aside solid quarter, and X% the for put volume which increase from second surcharges As totaled $X.X revenue pricing coal. due in slight a

gains talk car, right on volume positive key jump our mix increase of a for each Starting in year in Let's in X% per driven in a groups. was to X% with our the drivers X% last revenue pricing bulk and and compared down in a business about decrease solid Revenue the core and by traffic. quarter average segment.

up exclude year-over-year X% if by X%. you However, quarter and bulk volume the coal, was revenue grew for

and the of XX% export comps market, natural inventory secular prices from in down easier volume challenges with due from quarter along volumes potash the and levels. strong due gas for for the continued Canpotex Coal outage. to demand higher quarter Fertilizer XXXX decline customer ongoing lower a was increased to

demand renewable business due In addition, grain diesel, wins. for and products increased for was business ethanol demand strong to favorable new

Moving revenue and per gains X% to a X% and car. on in positive in by fuel average lower were up was quarter Industrial. the partially Strong X% core Revenue in increase a mix decrease volume offset traffic a for pricing surcharges.

Petrochemicals allowed petroleum grow in continued markets located industrial customers plastics to to efforts domestic us wins improved along volume Coast. development opportunities. the development chemicals business business from our strong and in capitalize to demand strong Gulf due in on Our

our rock volume. rainy South with challenges weather the in high inventories negatively However, and impacted

in X% lower quarter were surcharges to volume West truck due Volkswagen but Motors, a by with will General business market X% for especially due wins car strong positive part was domestic offset volumes and increase Automotive a segment. pressure. revenue the decrease X% on fuel revenue import auto Premium per our decreases to impacting and reflect mix, shipments. remain demand up and negative production in average unplanned Coast positive and in within development continue a market to Parcels volumes conditions, despite Intermodal growth

turning Slide Now XX. to

less competitive. of gas remain at markets the our for Coal Starting high to stay remain for serve. XXXX is natural expected Here make with the we that levels coal outlook futures bulk. challenged as inventories balance is and key

export For here to a the and next although over grain, healthy, sales better as off several have look the we look we'll conditions a start. sit Crop weeks. slow markets are read good, today, stable and global

we business. production addition, we products to California capture renewable new online remain grain In diesel see coming as incremental continue positive and expect to in

Industrial. to Turning

laid the last we remains as outlook call. Our same our during out earnings

our not record year's will market volume. expect rock We last match

the both supported on investments However, business petrochemical our focus in by petroleum and development, due Gulf favorable markets remain to will Coast. our

of product, in side, But we're And side, for wrapping overall development present strength service back along on increased have domestic our opportunities to asset seen market. to while year-over-year with in up remains owners term. Union some IMCs, the business And when soft. the the we and And on our Pacific with for improved themselves. still we the intermodal expect softening pockets expecting near private of more set drive due the premium, growth continued diversified market imports despite at wins, see demand, provide automotive, imports

the summary, their to seeing I'm commercial team we're volume focus of gap and the fill coal. from proud In

and achieving price consistent our that service to to side, we're sold inflation overcome solid and customers. the we the delivering results price efficient On

we our half head the year, the I into great with provide, confident As ability to win franchise, we and diverse am the the offerings along marketplace. our that in compete of product customers second gives the

working allows rail us to leaders customers with and are business and operating both over-the-roll commercial Our the more actively grow. team win to to convert that

turn it I'll that, over performance. review with Eric operational to to our And

Eric Gehringer

Kenny, Thank and good morning. you,

XX. Slide to Moving

As excellence resources as Southern restore acted trip flooding operational safely across you quickly contingency heard both impactful adjusting make focus deploying delivered operations. temporary and mitigate Leveraging quarter, we throughout intense from here weather on not Nature Northern plans, plans many experienced excuses. to Mother by and team to we're the events powerful regions. But the the our detailed Jim, impact to our and buffer

recoverability to very customer restored of they impact. proud our to There repair worked repaired our versus efforts debris. tirelessly and countless trees the damage major countless remains demonstrating and cleared levels their infrastructure examples being wake performance quarter are our of and track, for That disruptions. employees bridges I'm second as network highlighting who minimize said, in of weather XXXX, frontline the the strong, miles service

foundation our safety. with of Starting

of We drive on the quarter. continue to momentum the improvements, building first

both personal quarter, rates second injury derailment the For improved and year-over-year.

the of employee proud am ones not team for every I goes their progress, making every While to home safe until we this day. loved rest will

in terminal to second was weather-impacted the train network. The performance the quarter offset were drive Freight flat stronger touches velocity here by compared car by to improvements dwell as is dwell car removing opportunity unnecessary across in XXXX, even terminal speeds.

auto the On points as and improved Intermodal SPI front, X remained service flat. SBI manifest

the on impact we hard customers our felt particularly worked we Although those to areas. the located in service affected know weather on minimize product, impact,

and on cost on focused our XX. throughout remains investments control, efficiency to other review Slide drive operation. metrics key let's The Now technology productivity highly leveraging our team

I to strategy team our last and to as in is it enables the it As Kenny marketplace. the quarter, imperative mentioned compete

fleet readily across the X% the improvements year-over-year compared have been second we quarter, efficiently to saw available adjust of improved to to quarter first and improved all metrics. Similar units able productivity our network utilization. flex levels. locomotive Throughout our fluidity XXXX, to Locomotive volume driven to asset varying by year, we with

employees, Workforce productivity, which include versus does X% improved all XXXX.

to improved technologies precision increased implement levels quarter labor employee safety X% to like our yard with X% and train active second train Train agreements. we as builder. intermodal increased usage of length volume, sequentially While new the combined overall XXXX compared employees decreased, due engine and

over In continue generate X,XXX record, and fact, result capacity team for a the remarkable This as our future June first by second month is the marked they quarter a growth. ever mainline train length to was feet. achievement quarterly with

Investor These open our as continue analytics, up. new throughout and forward we It's note, new new we for important processes. and looking technology also to to operation, our by to capabilities Wrapping September. automation customers. our such are at I'm Day in powered implement sharing Union building processes, examples Pacific real-time

back it Jim. turn to So that, with I'll

Vincenzo Vena

you, Thank Eric.

Turning to Slide XX.

Before from what we summarize I'd get to like to team. your heard quickly questions, our you've

from achieved environment, the heard a despite you we Jennifer, quarter. financial strong challenging in as results First,

into the provide a good to the continue team price the commercial for drive value we and job We done efficiency has network, customers. generating our

you laid with out of volumes thoughts year. the for quarter some the provided Kenny second updated the overview remainder an and of

that worth freight our that stating business total volume was bring in quarter. tough think railroad. with customers it's This to environment, you when the coal, I winning are new remove up second a even in we demonstrates to the X% our

Lastly, Eric In we're a we metrics the year, progress you our way the making the service to of safety and go. walked improved, excellence. first safety, through half still across but operational have

improvements its to Look, recover, in presented continuing with we but challenged and was do we're challenges, pleased very quarter more good in excellence. but the operational results efficiently, things service Our the quarter, achieved. making pleased to our I'm the with I'm ability

going From are I trend straight demonstrated outdoor again right too an when expect a just improvement There the quarter. be this be line. the will many beginning, you I and that factory. we wasn't in variables to the direction, operate line said But

this the path mid-September. on possible right Investor Over company build on XX at a for theme we've will our what's Pacific, months, redefining in Union the past Day put to

With take that, your now questions. we're ready Rob? to

Operator

And Barclays. from Oglenski Brandon is Instructions] the of today question [Operator line with first the

Brandon Oglenski

if and went. Jim, you CEO. year it a that So said And things I recall, then look was let's me publicly, give back year, almost how you like, ago appointed a judge got I think

in coal were to? network and quarter. you think I the maybe But the headwinds year most performance, customer of at you growth, would just in think I look how past guess, clearly terms articulated operational the alluding which importantly, you I improvement, then

Vincenzo Vena

Brandon, question, Yes, and on. the appreciate you're right I

join announcement the I We to the think came agreed company going and they last that year announced I me was XXth. on this up.

a it's year. So what, guess

Bottom XXth how we actually I doesn't make on the if weeks quarter, until didn't look very, at work a railroad. very but line okay. that's with start Now very, I August, difference. the of couple happy of A I'm Brandon, progressed is, this

above And we If great the and an we inflationary with entire knew the to that Kenny we something do a that done team you had above knew signed. and had start job have line, pressures we revenue the of, contracts as we you And we we in the can the job. see against line, and think that volume I see we've that where great the go to our done a were continue growth. year. And through and will comes continue

So I'm very comfortable with that.

able Kenny -- facilities developed a Business have of development, I across his to and spends entire looking personally we And time time. spent be and have more we've customers expanded capital been with new opportunity. group of for team lot leadership spent handle and our the lot entire network to business. a and facilities

we of But able line, work isn't together the To it's to is, more Operationally, very the to it today discussion move service to, service do how our is that best part we ahead. first comfortable. about the level below point -- be to is you present car providing are. numbers very the see things where are agreed those fast the and we terminals, to that the every crew velocity, I'm are we dwell, to comfortable where don't we're day, how that are, and the of changes able of our on see the we and you number well numbers people how that operate takes locomotive all

it's that We'll can with were sequentially ratio we of to this everything to ratio that see a do. -- continue I operating quarter, testament operating we give never ratio, I'm don't number this with also for And I happy very a But you result operating what greater improvement that customer. our have is improve a do and impacted stopping. with small XXX-basis-point everything a we last have and a because year-over-year

a are We not team excuses. that makes

to to our we more XX% us have. strength complain that say to, be to hear drop our doing network in we lead going a FXE, But to and network. We we going this Mexico percent had as what won't coal You leverage we're coal the to to growth in of problem. XX-plus we volume that's just goes with we're show think ownership coal. going to leverage able you and We're about ahead, move of increase, when our actually is

place. I'm So Brandon, good real in a

because hopefully, next I'm while So few of where we'll in company, do. aren't world and some are. today, I'm guys this markers look we you this the leading overall, can But with how I happy forward sometimes the to toughest you we everybody what are show years, very and

Operator

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

Scott Group

thoughts on want your higher back I relatively on of you, Any the yield the in -- of then swing is And negative. in if adjust inflation. mix positive half So I Jennifer mix, can right? for the I mix picture, the a bigger based year? still outlook Even growth on volume know just muted context

And so I asked I it's before, keep I've asking because I think critical. so know just this

guys plus having like versus get pricing? like do I like sustained improvement. opinion, the I inflation plus pricing? dollars my that's you I like margin in when to of to think mean key truly And think we like sort Because back the mean in confidence and -- margin-accretive inflation Like don't dollars,

any So thoughts.

Jennifer Hamann

of there, a Scott. things so Well, couple

is at in going to of the as lot here side look the is our drivers we volumes a ahead, mix quarter Coal weaker. the were be staying second intermodal quarter. things, third On into the strong. of in present least that present are International

got of softness there. industrial just great there's portfolio, little we've a our portion while opportunities, The business development

side. that, if going so have probably on that impact to dynamic to to an you mix, assume continue negative that's continues, And the our

be at the into ahead see our gauge of kind some those guys that, you trends of that's expectation week, our as to we particularly XQ. us, and get able that how third you'll what's quarter, mean and but move we'll see look intermodal into going-in of I -- So every volumes

relative and is they work Jim team the and and actively of it touch to mentioned In terms driving doing, critical accretion, price can front the customers. in the when that's I sitting price. price the job of the service of in think, where driving of question customers you're areas with price very good aspect it, a the

to what's we'll and And improvement ahead. by margin solid by not point. still that we more thing I'm that, you very know point. we're I'm a give we'll But going looking that to for is date encouraged the without that so get very get driving to encouraging is which going

So that's what continue ability we to to just focus as would contracts, that's I to give more more And forward. going on. get upside and going access us more

Operator

line Our Jason next the TD of Seidl Cowen. question is with from

Jason Seidl

Nice to say. quarter. a some on focus want the something, bit the guys you see to of recover little I that from in Kenny, weather you in

were mentioned not planned You some business. projects looking infrastructure ground. of was in sort weakness at off you hearing on that part Is that's of are there some been behind are the the what that Or rock the of that? your We've marketplace? the really getting weakness

Kenny Rocker

We've have second the that is overall in down weather, right been demand, delayed just haven't that products haven't we lot best the you're Gulf Jason, of roll. Yes, seen LG a had seen also some in that on. or quarter. in And it and slow

So it yes, is.

this, looking and car to Eric's at that We're team you every there. maximize though, is capture tell out to Jason, adding volume everything every is efficiency. doing they can train will to the I

of advantage So opportunities we're there, it. are as the taking

Jason Seidl

Kenny, And into a wait Or be these sort the it makes things see? look 'XX? and sort there on of projects, delayed any is as expectation of we is That sense. lifted to for

Kenny Rocker

It's wait a us and it's what contractors forecast customers hard the will see. go out. do for lot and play how of the think and to I will out

is be we best just bet which prepared, Our are. to

Operator

comes Chappell Evercore of question ISI. next from Jon Our the with line

Jonathan Chappell

of tailwind a point clearly, some the in Jim, And locomotives do do without environment? some at you new and we hit do to volume, volume to a hit a in been tenure flat a But able and ceiling what happening call. these workforce improvements understand in you've without point? get productivity your that here start where we volume pretty of you've on course, impressive. the to It's made ceiling what's

Vincenzo Vena

don't I see No, No. that.

our we've can't to I against our structural done at a I plateaued. Everything this. expect and improve, volume we big that us way we're flat. think not shown negatives don't is more volume that are some can that That's have working we've I even control. see pretty we the that to with improvement be increase

on So you is have lot a you an it able to cars the add it we're doing a easier a makes technology easier. we're able to, to to change increase us in be speed plan be or train the forward that implementing, going volume? But when and that train manifest Yes, another our moving on our intermodal volume, efficiency. able even we're will be flat help what to improve X

we So comfortable ahead, even a as flat. be more -- I'm very will there with move on

Operator

Stephanie Our with next from Moore Jefferies. question comes of the line

Stephanie Benjamin Moore

Continuing cost and year the the that the here, headwinds a as question, of terms Can performance kind just prior mix seasonality as the the year. on talk a progresses? in first of lot OR really and on you and half nice should the of puts maybe of for kind some normal margin margins based what and the of little margin the initiatives for bit, mean takes of

Vincenzo Vena

of just Kenny. you sort pass this level about the at see, overall Kenny, how I on what high off how margin, move to I we Stephanie, I'm talk pricing, listen, we're looking answered going to but ahead.

Kenny Rocker

Yes. Thanks that, for Jim.

that out say this when to you more are before, all, and it's our me And team team the risk. at through So But our development, have our has there. some growth, it's has heard pricing also growth commercial you taken but look volume approach. been first of clear importantly, approach inflationary the all business articulate to very pressures of revenue

we coming can expansion. doing, we are are so do price up, And maximize or to as contracts margin these everything

our some some us at those price. really opportunities every those are -- good so at And contract, turn, with are Eric, maximize our to for every improving, service

can So there. do we're doing we everything

Stephanie Benjamin Moore

to really as nothing standpoint follow-up, about call progresses? the as out from a think a performance just we guess year seasonality really I So

Jennifer Hamann

about a at do if productivity speaking, you back seasonality, And jump comments that you your mean I the to growth, Jim's on that's where generally and to think I'll improvement, where performance, it volumes. to tend in here, margin we it volume get really strongest have volume greatest quarters lot with our when goes has the leverage and you volume look piece.

we've how said, come drive the network and over greater hard quite of good our I that. bit the really to a have that's That shown has little we kind that maybe on broke a in in And of team been last as and really sequential X think is can improvement big the trend we've underappreciated focus quarters. in terms margins that put it productivity frankly, achieve that, something how for across

Looking forward, emphasis volumes the really is and to Those and productivity are on our the going X the about be levers. continued it price. the

And I'd so the that's progresses, be determinant. thinking going you're sequentially really sequentially, as comparing to and how volume be that see

Operator

Brian of line with JPMorgan. the from is question Ossenbeck next Our

Brian Ossenbeck

Do for it a on talk been UP? and different you for that's Kenny. strong? to just happen international have that over some whether There's Yes. as expectations any domestic. couple into quite the Maybe good, was that intermodal, better thoughts Can and when for you about might spill been

end we multiyear Dallas. to We Maybe couple of underpinned Day about see And think all talk about we some the redefining of truckload quantify a we're what help when set growth that. expectations you take the couple I from possible, in maybe a you want team. conversion but who we markets, going hear help by you on months again, some in get this, the know secondly, just what about of on to strategy, to we a talked give Investor just us on then months, don't what's to as and expectations see level

Kenny Rocker

Yes.

take international the me Let first intermodal. one on

on we the side. we've And like first over have us because here in strong up of though the labor product growth want that places the grow that seen of on So we very phenomenon intermodal make some the development, domestic short-term Inland international some investments Canada. investment efficient on helping I issues meaning it's Empire And fact side. that a touch recently, in our yes, all, to intermodal the of seen yes, to even spill

We're we can intermodal the permanently. to take can in of the way not want that there. Twin take to advantage, development We terminal, pizza We're term. get just product it into our short and again, we business that's everything that's and doing going City out volume a the [indiscernible]

intermodal. that's international So

I talked a are the showing us little bit That's on are grow. about that, and side, fact bit that's products being a seeing our yes, domestic we the transloaded. quite helping up

our fact, business, was in quarter, and here domestic year-over-year when off pretty it the at look about we it where this In in started up, feel we good quarter.

specific So that's real you. some feedback for

Jennifer Hamann

do and Jim's have. franchise to challenge he back the ago a back the we that think look And what what and certainly look year achieve question don't ever frame terms together look about to that's what you've Investor what's a over this and done going in see at Day little that see is your team since going then been historically. Okay. forward you and of with really we're possible, came Don't great can we really best you is to here things how be

speak want don't of too want excited front-run share we're I So We Brian. to to with sure in to in, the opportunity message But things much and about September. the plans. to everybody our you, and folks make tune some

Operator

question America. Our from of with Hoexter next Bank of Ken the is line

Ken Hoexter

the challenged in So service quarter. weather by was the

guess have little of should you noted Jim, don't continue I forward? and I'll the see differently. to that ratio operating ability improvement we a going to question Should velocity then we storms an Stephanie's you showing just You're being going benefit, in cost see forward. recover. Now an ask car kind improved

the Given economic improve outlook, ratio can sequentially? hazy operating

Vincenzo Vena

to velocity And Well, talking We're a than improve. at this. is how car where always I take at start metrics is we to give continue we operationally, really me are we always that that think where want you real -- you focus lot XXX And the I on important. Ken, we that people look the think internally endpoint then if metrics, quarters should have And of a to to going need and course, operating about is tell But out look me we about there's I others important. quarters. better other there. we're Dwell this. and time do look of how need at to

one what that's end got and a we team. aligned. know are great So is. We've They goal piece, the

margins see that volume at are how inflation because hard I is railroad pricing pushing continue to by in we've everything and optimizing operate. ratio and and both growth, we bringing piece on also helps really at right get what of us operating So the we and had. better But the price revenue and

sabbatical So together, quarters X would come a look we as to some I'm straight like but you very because back have didn't much as it people those I never comfortable had I did this do as doesn't I line, put couple when very might as work. to things see improve it sequentially, it's where I from we came place comfortable. had Pacific, possible. drive at what a to what for here and years of on, a I'm Union away I'm to back operationally.

when XX the comfortable I'm first August more walked I year, was And front after than on the I back door. in even

on carload quarter at look look where a take what -- at second against growth. were did that our volume and it's take a but we happening those in with what's Ken, So translate in revenue we the on our metrics,

Ken. I at you the gives of it, frame look that hopefully, a better So way

Operator

from is with line question UBS. Tom next the of Wadewitz Our

Thomas Wadewitz

weaker of those of stronger things industrial. about about X ask little weakness and in you How talked do industrial on think I little getting think your some bit -- you a you kind to kind say wanted markets Are segments? a in bit consumer? or if overall, So just

And -- Kenny for then one more probably as maybe for well.

opportunity development great. is those there lot most which industrial business wins, opportunity couple the which or a new you customer most significant, give of for right? for the if us -- and times of new is you mentioned business could the You wins put think to in kind of give wins customer customer -- segments segments matter? buckets the where Are about Wondering some to a future

Kenny Rocker

Tom. Yes. Thank you,

aren't starts gas production, like helping macroeconomic and us either few industrial a got know are. Housing you've then strong. So you indicators where prices not natural

coal get is the to and rollover So it needs play we where be. not because dead don't

is commercial hustling there more and getting So team out business.

that. about to emerging about the been has that and of good I've business development from pitch point team excited out been us the It I allows and points. talk there with That's me that diesel, a start I'll destination market. perspective. areas origin feel really some Renewable catch. an Let growing

going premium term. our side, On out we've the that we new talk North-South it put seen up long about wins then it a ramp up products in term Eric is of of petrochemical getting and against corridor as talk side couple into into different petrochemical has coming over setting Mexico talked into Houston, able you've And will good there from about and the some One about in we then to and that Southeast, near Gulf, on that and the of really angles. the market in products quite I'll the to areas. expanding few get And the Midwest be that market. the the and up been Phoenix, a investments side, in a the getting continue products bought terms

in the cases, to have make our what that's So create seeing. markets to exactly we you're pie own and larger, some

Thomas Wadewitz

domestic that? When premium you products? you side, the premium do you say mean Or mean like intermodal how

Kenny Rocker

domestic international and intermodal. our Both

Thomas Wadewitz

the that back And to stronger or of you question, on like hard do economy kind it's Or weaker? say? getting just think is Okay.

Kenny Rocker

to a It's can, customers. I'm working for with mentioned we're go that still development going All and that and I'm make product we're where is. own markets where in I doing our it we and to the through forecast position telling us. unclear very out that is not

Operator

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

Christian Wetherbee

pricing side. Maybe, back the coming Kenny, guess of kind I on I'm just curious.

If more you're the in from seeing look 'XX. Operationally, here moving coal, little volume things bit are market well. a perspective, a supportive ex

bit? having you're maybe beginning reasonable the these to is incremental of it contract say a rate little renewals, that As pick increase to up is

sales we see just kind you're days of get you about kind to of numbers. curious of perspective was I'm we used just the any I thinking think How do are uptick that? sort if starting and curious actually type old when guess there? I same-store So of in to

Kenny Rocker

stronger is service unique. answer The to is bit every contract on inflationary yes. very a there. as the pressures is is seeing you're price talking We're out able unique. Every we're are always helping is We've company. been discussion little take What is to us. that product that as we're disciplined because a that now more that Every risk service A of our customers answer unique. side. with the short The long is customer mixing what's happening

Operator

from The Spracklin next of question line with Walter RBC. the is

Walter Spracklin

a different you think, low, ratio were sabbatical about is been So number. is you achieve not And is time mentioned XX.X%. your an an of might that I and quarter before able achievable how there's Jim, X to be in there, operating talk this lot

asking I'm there just work like really new like what permanent are those they not are or asking are of not trying objective before, any what prior asking factors? on Just to a -- you, factors -- a you, rather either you apples-to-apples structural ratio an there And put there is of that cyclical of achievement? more limiting it operating that kind to things volume that or level asking enough comparing any weren't compare different impairment but the So on -- rules? are the to target, get of XX, meaningful kind you that, -- are

Vincenzo Vena

were I that's Walter, to go before, and what XXXX it I I back exactly know question XXXX. look National need the in numbers Canadian that is was to when like delivered and could we've way because we at back at done the we to

get So to you how the the I deliver. able game to to there have and be and play know

and a are cost are will follow structurally things us. some to for Yes. collective impact there different? agreements Is with while an our The that

it, to a of mitigate Now tough we've it's done some pretty job mitigating great but of all. it

So that's a a with us that's to negative be while. going for

probably the agreements. railroad more we would few than some normally people have signed if had carry a collective last we'll of the not So

at ahead as move a very we to of have to picture and lot this But that's clear way. see our We I We're optimize structure. have -- railroad we a it the I that going look use a cost network that we efficient. mitigate can

how we will that and patterns help operate work implementing us. are We

all we also leveraging that's but but I'll bringing I Mexico, leveraging -- our you to So our be by customers. tell access more little of that, to it a able to can business and is access Kenny also we'll and you, mitigate think mitigate on don't with Jennifer, sometimes the reserve are market "Oh, this." we is Phoenix, think opened do? at what We have don't up have we some to there's the a there. going about there, we opportunity railroad And okay? when talk we discussions, problems look gee, we that it we a because have

us. spent Terminal, want up. Minneapolis, we the money to with [indiscernible] customers Intermodal opened Gulf and expanded. that We we it with working in be

say, CN the Walter, a my this as So you're long those. we term. is bad I call, a us know going stay our I'm the of to This I the everybody is I Canada. not quarters, tuned, of from a Walter. have everything quarter, have I done. I'm that you, not telling do this very basis And when I run, in OR best. hometown, with very and time were probably watch another And but listen, short-term that some that lot kind deliver others inflationary and first in improvement people go. was on impacted fix wish know points quarters, happy good both XXX of the we've that we're in fire But able there's of some in pressure. with you on, at short I hang the said we to

Operator

Our next Stifel. from line Nolan of is the question Ben with

Benjamin Nolan

forward, that more some there like think was that intermodal, was interested highest takes the you about assume, is were detrimental. it's been. to length, maybe the maybe I curious helpful think I and international coal puts is but as -- ever that, I I see said average you Yes. train was to if going that

think to improve? you beneficial see we across then more lengths And there's but go in there? OR Do to continue to board, is the everything train particular? room obviously, Can the that

Vincenzo Vena

than goal pass because over me a out the all let answer -- I've it I it's number it's but yours. there. you to Eric Eric. But Eric, got knows Well, different give can't a And

Eric Gehringer

we to answer your clear, very the grow to be question yes, can is, to continue Ben, it.

same hard X% want sequential Now do credit your quarter was and give X% in page, highest to June of sure month ever we've Union to improvement our to let's that. work Pacific We in comment, history we're lot a had, best the the That's make at quarter, X,XXX on to the the team. of improvement feet.

our to Now because down science. that has XXXX, train how That's mainline this conversations invest to XX%. got continue ourselves derailments we the continued of length, foundation our out. that's been and And we when be while also we have really technology XX%, to remind going about we keep length train since are up building in

identify difference on to using for railroad. continue builder as a mix precision getting with us, opportunities But a seeing but what the makes other volume Yes, difference. your our makes well that it. more things tailwind to intermodal. a point, That's more as train software for been of also to is do Like we're us

the we trains, largely fundamentally we've this the day-to-day, to bulk talked combo how see on on just about a railroad, still before, And run we then and opportunities side.

their forward that gains. up that. against So yes, teams opportunity I'm there's continued more to looking

Operator

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

Jordan Alliger

Just a couple demand-related questions, follow-ups.

had the think first I outlook you the commodity quarter, muted. was mentioned in

uncertain. it's Now

to some So I moved guess the positive first commodities bucket, part international question intermodal the of and like grains. is -- and

move terms year-over-year the back some though better So carload we on wondering -- been a are in of as to half there's better I'm the did trajectory even coal, can sort obviously, ago? of you of just you lot as feeling through give uncertain, the pressures? And quarter sense than of a pressure, feeling are you then but you year or it's specifically

Kenny Rocker

place. gas with natural a start I'll coal first then in. the all And and prices Yes, coal -- again, way is my over work back are

at look very go for lowest the throughout back the we and move June, up. And by that. on they to a were If as It's April, difficult record you they had years. quarter on out forecast based bounced few

talking is We team each preparedness. by everything there. that's each very sets. encouraged capture talking daily can to when But coal demand to team been with coal in talked we receiver, demand commercial that can our Eric's sure doing to about out We're the one can they we're I've there. make the one customer, see influence add we

on things. So One, a and overall demand, for international been side, let's about that's modal the just few a strength talk us.

quarter. there at that than see products about little seeing think bit for that on it a the up out from we're and out I grain. and the with that. the can't go will least that I stay to us talked we grow the have positives side I against further domestic earlier

engaging great You it what today. happens "Hey, I as market. stable. export But what domestic had perspective for those commercial a call receivers. is question area The now We'll look, about we export we the on development the see that also demand market, right are stands looks want. looks team is Mexico a our crop waiting grain. while business the And an from

happen. we some doing for just something can't to us wait out. We're something So it of around these markets and making help about

talked had we've where had We has products about us bridge opportunities. that Automotive, we've What about the thing. talked Eric same some land wins. I where had is out helped

overcome some and these of up the macroeconomic industrial side. on product specific to service very the actions other the really challenges again, and again So housing help

Operator

of Our Susquehanna. next is line Bascome from Majors with the question

Bascome Majors

contracts this of referring time pressure talked Jim talking and to the having get about I the And some past I purchased to you some mentioned agreement. Jennifer, in as the services both the you pressures. last year, you were past, about know of labor know inflationary well.

us you Can compare rule service? contractual How kind understand marketplace what that the and at X as sense what's tracking against understand blend years overall you the your you're you work with inflation X, to help where and of when rates today? steady the And and both some purchase state year? adjustments of the pricing labor today? of that does we're is last Like look really to where

Jennifer Hamann

question, the Bascome. Yes. Thanks for

thought X% we year, the we into be full inflation year our said that coming So would or so. around

in I bit to greater people more seeing of a seeing service some few little in tracking categories, to the we're pretty the marketplace, close think purchased acceptance We're that. coming a bid. in probably wins some

a of us that purchase So to an opportunity side on that's that's for get certainly, encouraging. the world. pricing little And services bit better

inflation, plays that does spend with our it important us, into certain big control right? around benefits the We're every our piece X% a year. both are the Comp would still and That to talked say, than OE. Same is level looking of at running a into to we that CapEx materials extent. that is expenses. to I probably very certainly to But costs more Obviously, turn. coming

The effective. we've as our all professionals. craft became for X X.X% know, one July wage got last a increase think negotiations I you in became round that this of effective

see that our in we're the that's areas productivity, about pressures lot It's and we general. that and mitigate where we and a task to have those So This Kenny trying team running just the find is. and can to we're through to the And we're some I changing going tough the railroad team that confident feel that. go up inflationary I have structure, doing is there, out very don't that, there. we the And conversations. are parts, These need cost just try into his and is facing. moving obviously, what's against our and either through pieces purchasing how

Bascome Majors

than And get still like to expectation we into it maybe the year, next that that X.X%, safer range a for point, if think time? X% to sounds saw a closer it's to we probably long X%

Jennifer Hamann

we that's boy, the look we'll my X% is those year this at number moving that. Bascome, but next indicators say, seems less to we're about as that hope like soon direction, in. too it's mean at move I It in Yes. right point. than a all talking are of But

to when about to look around going to think But was I used X. back to those don't to point, rate to back think though, an we're certainly, X%. talk levels. below down that push we get we're I your work historically, I inflation it going

Vincenzo Vena

lot a to market indicators happening tell what's that there's that a us The happening I overall what's happening job there's input and for only us. what's CPI, Bascome, cost change the to inflation, in would the thing add, inflation, is of

But view much we're I'd ago. a a than drop see the are next where things year were see. rather we We'll right So trending that those to way. going But have year? of how

Operator

Our with Morgan of line Stanley. Shanker next the question is Ravi from

Unknown Analyst

to McGarvey This is I the way. a question Ravi. development on conversation, ask wanted slightly circle to maybe back and for Christyne in the different business

seen guys changes maybe makeup curious pipeline have terms Just or the any in behavior? of more of you even the notable if customer particularly

about coming decision as with some thinking months agro to of how or start see pipeline on kind off be guys conversion political angle with is leaving and just Just there that's we paralysis about anything you there things. accelerate? curious that shippers conversion, developments could are in the wears that think Would that out

Kenny Rocker

Yes.

changed. about over is be know next where pipeline It I We The saw is strong. a the near recently on cars. the good Meaning the a an pipeline. here haven't customer said, term there. keep wasn't What if both eye pipeline, to years. We of is rates. "Hey, conversion and So It's rates going robust feel realization we as XXX that. it the cars." XXX high it's as couple

there, lot glass, those goes that's it We cement, roofing, the moves the the expect markets at products. rate in Halden improve, move. That's that that's would PVC, you also you all what, starts role that carpet looking we so potash know move, same realization a go we're to Again, of a play things. to And macroeconomic that's that's in if that indicators, as up.

out is efficiently do, creating we here business our the and markets, the happens. do theme and product And going it development again, own so are as as we going markets to can. that what we'll see markets possible the where doing development and are through But are that as to going

Operator

is the Daniel question next Stephens. line from of Our Imbro with

Daniel Imbro

from capital standpoint. one a efficiency Maybe

today? how do probably you you you could up I think about all down. go savings. obviously, but flex the there's assets Utilization have and always up, in the So could Jim, fleet prepared remarks mentioned guys longer-term the you feel

you refresh do from just the in are growth how some How environment look you to we this of thinking fleet? volume about balance more spending need of here? So as the potentially capital forward ahead

Vincenzo Vena

Yes.

don't need to comfortable very have do, see the build up built we've billion our plan. it think difference in $X.X capital And from we're with this substantial to we year. we plan bottom that always and we forward. what I see We any our capital moving

Now buying You talk heard back shares. do the us do $X.X capability? have about billion of we

heard us we're producing. cash that You've on the

we we there's fool spend to business we as the and fixed. need that really if around And with that. that. there spend, billion then also the $X.X to, railroad. We as need development money But we something do that's out we into built spend. to don't on, what if need was far drive What do the assets to can we'll plant, that So have we to more railroad, our

So think I the else about a ahead. should we don't move That's you I'm change very as anything wanted to see way it. big you Jennifer, comfortable. add?

Jennifer Hamann

it right. No, just hit you

Vincenzo Vena

Okay. you. Thank

Daniel Imbro

comment? flow Is the share cash So excess would way came stronger, be flow? the in of repurchases cash it interpret use right expected is Jim, free to that

Jennifer Hamann

very think, been, on. I'll the priorities Yes. I mean I for jump we've clear mean here. cash -- I in our so spending,

the week. into X% last we which, prioritize back then goes our increase to dollar just First, you is saw the then cash gave here the business, dividend, And shares. that again, excess we going

repurchase the put than we if been yes, historically -- have if billion. we've what into it's you So at greater our program, look $X.X share

to capacity. try cash. Some using of would We We leverage year. drive our put that's intend more that's to shares. sheet we're we leverage this feel good if to any to available, about been And balance going don't but it levels, add

Operator

David the with of Vernon is question from line last Bernstein. Our

David Vernon

the into quick sort sequentially of back seeing if weak. for how you're of I'm markets firming? one you remain on truck pricing a that half Or rates anything month-to-month intermodal Kenny, of So for the Obviously, domestic. the looks year? just direction wondering those

sort you, this I'd you have pulling bigger STB of kind that? question And might guys then to discuss what maybe the at a convene Jim, of the views a to say thing growth. wanting thoughts railroad regulators And council to some on you on of love think together? for early why picture you to your think get

Kenny Rocker

I'll Jim, the one. take David, first

And a to either or now, just months here today domestic forecast and where over at to staying we've going not bit intermodal going been to months been going XX down try bottom. sit when has pricing up. look, XX move the little it's So I'm

the XX quite it's been months I'm highlighting here. a time because

happens. what see we'll so And

year-over-year of a see Here growth you is I that, been lot here focus key got recently, of that a we've thing give intermodal. us that options. providers on domestic to is We've want private on some the of I group mentioned a to asset able lot

but so -- doubling that been as our I've on a not prepared. And we've change, going change, company, but that, they we'll development to product be and really, when will I'm down been things forecast

Vincenzo Vena

Listen, STB. on I the appreciate the question

have I think able to I exact actually huge think STB we on goal -- what done that's And we've that good the same a our to listen We some us and business even with our the headwinds, if are as grow growth. business. carefully quarter. markets want grow been we've pretty some you we've to said, giving a

hard headed. down, and carloads have so that working up that. where we you far with on month, to but this And We're pretty we're are watch the we if happy I'm going

And great to it it's of couple because need think I'm forward hearing. it. So and Dallas are a that between be before looking forward I right in personally is those we to when just days, can't make we us. to headed I'm looking of to Dallas. in I sort

looking to doing how that is represent who's Kenny forward present this we're everybody franchise able I'm and be even to with leverage in to to who to going going our all what and But challenges going Pacific guess have. the great to us grow and there. business, see we we're Union well, going, to He's is,

products say, have want in move place. are the price all other able also smart and So all available same the We to I'm that excited to we're the sure be us. and railroads I'm to hear to all be what to

So hearing. I'm to forward looking the

well. I'm sure Kenny, going really to this And represent you're

Kenny Rocker

I'm ready.

Vincenzo Vena

you very much question. You you. the for bet Thank

Operator

turn you. This Jim question-and-answer the session. the call for back closing comments. now to Thank over Vena concludes I'll

Vincenzo Vena

this listening everybody, Well, listen, thanks, in for morning.

shareholders And and to We challenges for we're been excited what underneath to able the operate we're are on and be as deliver to head-on even were very improvements able we've metrics that through for communities team to operate we been safety what operate excited and able how with our the that employees. ahead. we our a do deliver take showed that for been very we've both safer a the we've moving quarter and we able how that presented that

I I'm comfortable our like So where future. we very are.

am looking And a I think I to forward got Dallas. great truly we've railroad.

Day. to over or a little we'll spot the next in great at future and have a about the through And go it's our take Investor think more the X we Day, X I you Investor see all location, wonderful And foresee that substance years Pacific with I'm great for us, place for in next and can what Dallas. the you can that looking year spot of us. important forward in what deliver. Union seeing we make it to A

thank very you much, listening everybody, So for in.

Operator

Thank will This conclude your today's for you conference. participation.

lines, now may and You day. disconnect your have a wonderful

Union Pacific (UNP) 25 Jul 242024 Q2 Earnings call transcript