Greetings, and welcome to Union Pacific's Third Quarter 2025 Earnings Call. 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 is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. Thank you, Mr. Vena. You may now begin your presentation.

Thank you very much, Rob. Listen, thanks everyone for joining us. It's a beautiful 36-degree day here in the morning in Omaha, Nebraska, absolutely perfect day to be railroading this type of data that I love, not too hot, not too cold. It's just a slam dunk so Eric and the team should continue to deliver what they've delivered this past quarter, and we'll get into that in a minute. So here with me, we're going to review the third quarter 2025 numbers. Here with me is Jennifer, our Chief Financial Officer; Eric, our Operations Chief; Marketing Sales Chief, Kenny Rocker. As you'll hear from the team this morning, our third quarter results serve as proof that we are successfully executing on our strategy. We are focused on driving continued improvements in our pursuit of what's possible. Now let's dig into our results on Slide 4. Union Pacific reported 2025 third quarter earnings per share of $3.01, excluding $41 million of merger-related costs, our adjusted earnings per share of $3.08 increased 12% versus last year. Core pricing gains and continued operational efficiencies drove the strong financial results in the quarter. Freight revenue excluding fuel grew for the sixth consecutive quarter and set a best-ever record. In addition, we set best-ever quarterly records in workforce productivity, fuel consumption, terminal dwell, and train line. As a result, our third quarter adjusted operating ratio was 58.5%, a 180 basis point improvement versus last year. Importantly, our safety and service results also improved, demonstrating the team's commitment to our goal of running the safest and most reliable railroad in North America. Next, the team will walk through the third quarter in more detail, and then I'll come back and wrap it up before we go to Q&A. And with that, Jennifer Hamann, you are up.

Thank you, Jim, and good morning, everyone. I'll begin with a walk down of our third quarter income statement on Slide 6, where our operating revenue of $6.2 billion increased 3% versus last year. Digging into the top line further, freight revenue totaled $5.9 billion, up 3%. Volume was down slightly in the quarter, driving a 25 basis points reduction in freight revenue. Fuel was also a modest headwind with surcharge revenue of $602 million, down $33 million, as lower fuel prices impacted freight revenue by 50 basis points. Strong core pricing, combined with a more favorable business mix, drove a 350 basis point improvement in freight revenue versus 2024. Importantly, our ability to yield pricing dollars net of inflation that are accretive to our operating ratio is directly supported by a consistent and reliable service product. Wrapping up the top line, other revenue declined 2% to $317 million. Lower revenue from the transfer of Metro operations was partially offset by a favorable comparison to a onetime contract settlement of $12 million in 2024. Switching to expenses, our appendix slides provide more detail, but I'll walk through the highlights. Operating expense increased only 1% to $3.7 billion. Compensation and benefits decreased 1% as 4% lower workforce levels and record productivity more than offset the impact of wage inflation. Compensation per employee increased 2.5% versus last year, and we expect full-year compensation per employee to be around 3%, which is consistent with the increase we've seen year-to-date. Fuel expense grew 1% driven by a 3% increase in gross ton-miles, partially offset by a 2% decrease in fuel prices from $2.60 to $2.56 per gallon and a 1% improvement in the consumption rate. In fact, our fuel consumption rate set a best-ever record in the quarter as we yielded benefits from our fuel initiatives. Purchased services and materials expense increased 6% due to merger-related costs, and equipment and other rents declined 11% driven by favorable contract settlements of $13 million, improved cycle times, and lower fleet costs were partially offset by higher state and local taxes. Reported operating income grew 6% to $2.5 billion. Below the line, other income grew 10% to $96 million on real estate gains. Our reported net income totaled $1.8 billion with earnings per share of $3.01. When you exclude the $41 million of merger costs in the quarter, our adjusted earnings per share totaled $3.08, and our adjusted operating ratio came in at 58.5%. Overall, really great quarterly financial results enabled by successfully executing on our strategic priorities. Turning to cash generation and the balance sheet on Slide 7. Third quarter cash from operations totaled $7.1 billion, up 6% or $381 million versus last year. As we discussed when we announced our merger with Norfolk Southern, we have paused our share repurchase program. We are prioritizing the reduction of debt and paid down $1 billion in long-term notes during the third quarter. With that, our adjusted debt-to-EBITDA ratio finished the quarter lower at 2.6x. Our cash balance ended at just over $800 million after funding our capital program and paying the increased third-quarter dividend, our 19th consecutive year of providing our shareholders with an annual dividend raise. As we close out 2025, we expect our cash balance to steadily grow with our strong cash generation. Looking now to the remainder of the year on Slide 8. With just over 2 months left in the year, we are proud of how we have executed on our strategy this year. We've handled volume growth while improving our service and efficiency. Notably, the third quarter continued this trend as we handled the highest absolute volumes of the year while setting several best-ever operating records. Meanwhile, some of the key economic indicators like automotive sales and housing starts are generally softer than when we established our Investor Day targets last September. Against that backdrop, we have achieved very solid results with reported year-to-date EPS growth of 8% and 80 basis points of operating ratio improvement. For the fourth quarter, volumes are currently running down 6% as international intermodal volumes reflect the tough comparison against last year's strong growth. This level of decline, plus merger costs and paused share repurchases, obviously creates a headwind to earnings and margin expansion compared to last year's record fourth quarter. The team understands the task and is working hard to drive more volume to the railroad in a safe, efficient manner. Despite the somewhat challenging close to the year, we still expect to achieve our 3-year EPS CAGR view of high single to low double-digit growth. We also are reaffirming our view on accretive pricing, industry-leading operating ratio, and return on invested capital. It is an exciting time at Union Pacific as we execute on our strategy and deliver for our customers in a way that I have not seen us do.

As Jim mentioned, we set a best-ever quarterly record. Eric and the operating team continue to deliver excellent service, enabling our commercial team to lead with confidence and deliver strong pricing results. Let's jump right in and talk about the key drivers for each of these business groups. Starting with our bulk segment, revenue for the quarter was up 7% compared to last year on a 7% increase in volume. Strong core pricing gains were partially offset by lower fuel surcharges and business mix. Strength in coal was driven by strong customer demand due to favorable natural gas pricing and the continuation of Lower Colorado River Authority shipments, which started in April. Lower domestic grain demand was more than offset by strength in export-led shipment and business development in Mexico, along with increased volumes from new grain products facilities. Lastly, increased potash shipments drove favorable year-over-year volumes in the fertilizer market. Turning to Industrial, revenue was up 3% for the quarter on a 3% increase in volume and a 1% increase in average revenue per carload. Strong core pricing gains were partially offset by business mix and lower fuel surcharges. Demand and business wins increased in petrochemicals, construction, and metal shipments. However, these gains were partially offset by decreased volume in our energy and specialized markets. Premium revenue for the quarter declined 2% on a 5% decrease in volume and a 3% increase in average revenue per car, reflecting business mix and lower fuel surcharges. Overall, intermodal volumes were challenged by lower West Coast imports, resulting in a 17% decrease in international volumes. However, our domestic segment delivered record-breaking volumes this quarter, driven by exceptional service and business lines; reduced auto parts production and OEM quality holds contributed to lower automotive volume. Turning to Slide 11, we expect continued strength in some of our bulk and industrial segments, which is encouraging. However, it will be outweighed by lower international volumes and tough comparisons. The commercial team's focus on the first 9 months of the year has been on year-over-year challenges with soybean exports. Moving to Industrial, we're positioned to finish strong in our petrochemicals market. That's driven by the investments we've made in our Gulf Coast franchise and the strength of our service product, which continues to help us win with new customers. In fact, we recently won new petrochemical business that began earlier this month. It's a meaningful addition that reinforces our competitive position in the region. We also anticipate solid performance in the metals and minerals markets, where our team is laser-focused on business development to outperform the market. On the other hand, our energy and specialized markets are expected to remain challenged, primarily driven by fewer petroleum shipments as we continue to balance volume at the right margin. Our strategy is clear, and our confidence is grounded in our outstanding service performance whether it's powering growth in bulk, driving wins in industrial, or unlocking new opportunities in premium. Execution is what sets Union Pacific apart. Together, we are building a stronger, faster, and more competitive railroad, and we're just getting started. And with that, I'll turn it over to Eric.

Thank you, Kenny, and good morning. Starting on Slide 13, our results do an excellent job demonstrating the team's unwavering focus on our strategy to lead the industry in safety, service, and operational excellence. Our vision is clear, and fundamentally, the railroad is operating exceptionally well, showcasing robust fluidity, consistency, and reliability. Most importantly, we are achieving these results safely. Our safety-first mindset is delivering measurable progress as both personal injury and derailment rates continue to improve versus our 3-year rolling average. Rail is the safest land-based freight transportation method, and we will continue doing our part to make it even safer through ongoing investments in our network, employees, technology, and communities. Freight car velocity, the best measure of fluidity on the railroad improved 8% to 226 miles per day, a third quarter record. Further, September marked our best-ever monthly performance at over 230 miles per day. Driving the performance was a record terminal dwell of just over 20 hours, increased train speed, and the continued reduction of daily car touches across our network. These improvements are not only driving strong productivity gains within our operations, but they also deliver significant efficiencies to our customers, reducing equipment costs and accelerating the delivery of their products to market. On the service front, both intermodal and manifest service performance improved year-over-year to 98% and 100%, respectively. These strong results reinforce our strategic approach and underscore the importance of maintaining a proactive buffer of resources. As Kenny and his team bring business to the railroad, we aren't waiting weeks to react. We have the locomotives, crews, and freight cars prepositioned and ready to provide the high quality of service we promised to our customers. Now let's review our key efficiency metrics on Slide 14. Strong network fluidity is continuing to drive productivity across our railroad, and that's evidenced by the results on this slide. Locomotive productivity improved 4% versus last year, reflecting the continued benefits associated with our efforts to reduce locomotive dwell time. Last quarter, our team set a goal to reduce locomotive dwell below 15 hours. This quarter, we delivered, achieving a record 14.9 hours. This underscores our dedication to maximizing asset efficiency. Workforce productivity, which includes all employees, improved 6% and marked an all-time quarterly record. Our active train engine and yard workforce decreased 4% against flat volumes versus last year. We remain focused on effectively leveraging technology to optimize our workforce while also recognizing the importance of balancing our resources as we plan for the future. Train length in the quarter grew 2% versus last year to just over 9,800 feet, an all-time quarterly record, a remarkable accomplishment when you consider the mix headwinds associated with softer international intermodal shipments, which were down 17% year-over-year. We will continue adapting our transportation plan as we harness technology and infrastructure investments to safely generate mainline capacity for future growth. Operationally, the team continues to raise the bar, delivering exceptional results quarter after quarter. It's the perpetual dissatisfaction that I've spoken about before. That's our mindset. It's imperative we continue driving efficiency while demonstrating consistent and reliable service. This enables Kenny and his team to be more competitive in the marketplace with a new long-term business. While we do have a historic opportunity ahead, the focus remains on today, further optimizing the best rail franchise in North America. I'm confident we'll continue improving in our pursuit of industry-leading safety, service, and operational excellence. Jim?

Eric, Jennifer, Kenny, thank you very much. Okay. I think you did a great job. But why don't we just turn to Slide 16? I'd just like to wrap it up before we get to the questions. So first, as you heard from Jennifer, we are executing our strategy of driving strong financial results. In the third quarter, we handled the highest absolute volumes of the year while setting several best-ever quarterly operating records. Kenny highlighted how the team is focused on outperforming our markets while pricing to the value we're providing our customers. Eric and team have the network operating extremely well as evidenced by our record operating results. Over the past several quarters, we've demonstrated agility with our buffer of resources. We will continue driving efficiencies while providing consistent and reliable service to win with our customers. To wrap it up, we are confident in our ability to lead the industry in safety, service, and operational excellence. In the upcoming weeks, we will hold our special meeting and shareholder vote. We will also be filing our merger application with the STB. At that time, we will provide more details on the opportunity with Norfolk Southern to create America's first transcontinental railroad. Our results today demonstrate we are focused on the day-to-day business of optimizing the great Union Pacific franchise. And with that, we're ready to take your questions.

Thank you, Mr. Vena. We'll now be conducting a question-and-answer session. Our first question is from the line of Tom Wadewitz with UBS.

I wanted to see if you could offer some more thoughts on just how you see the merger application, the process of building support from shippers and unions. Just how that process is progressing? I think the deal you had with SMART, the agreement was a nice win for you. I don't know if you expect any more of those coming or if you expect kind of any gains on the shipper side? Or is it more like we're in a waiting period for the filing? And then you mentioned a couple of weeks for the filing, any more kind of just expectations of when that filing will come with STB?

Well, Tom, listen, you're a smart guy. I think you covered just about everything to do with the merger in one question. We could be up here for 15 minutes. But let's just quickly summarize where we are. When we started at Union Pacific looking at what we would do next and what the future looks like, we needed to ensure there were certain things fundamentally where Union Pacific was as a railroad and how our business was. And we needed to have a service level that was high enough that customers could see what we could do and that they were assured that when we merged, we would be able to provide a real high level of service. The entire team, and I give Eric as the leader and everybody from the operating department at Union Pacific, and it takes more than that. It takes fundamentally spending the right money and making the right decision. So it truly is a company we are delivering at levels of service close to 100%, okay? You can never get to 100%. You're always going to have some problems, but close to 100%. So we have that as a foundation, Tom. On top of that, we wanted to ensure financially we have a company that's in a good place. You could see, as Jennifer said, we paid back $1 billion of debt in the third quarter, and we're down to a 2.6 multiple, which is great, and we'll continue to use the cash or store it instead of buying back shares. So when you put the foundation of who we are on safety, we don't like to talk about it on a time and place number, but I'm going to give you a number. We're down to around the 0.6 range this year, which is industry-leading at this point and the best safety numbers for people that come to work and go home. Our accident numbers have dropped substantially. We need to be financially in a good place, and then we needed to move ahead. I think what you've seen from the people that truly understand railroading, they understand the value of what we're proposing. The value is we look at it not only on what the STB tells us we have to do and what we have to present, but we feel it is better for our customers. And absolutely, for the majority of our customers, it is going to improve with the speed and how many assets they're going to have to have and how fast we can move. Anytime anybody crosses that today, we hand off a huge percentage of our originations to somebody else to do the final mile or vice versa. It’s good for our customers. Our customers understand that we are competing against the world, Tom. This is not just competing against Canadian ports. There are going to be several trains that come across Canada that should be handled by U.S. ports, but instead, they're handled by Canadian ports and Canadian railroaders across the country to drop into the U.S. If we can become more efficient, more fluid, and be able to have a different product, we can move some of that traffic. We will have more American jobs and more people working for Union Pacific, the combined company. When I look at everything, we've guaranteed jobs for every unionized employee on the day the merger closes. Why would we do that? We are absolutely sure we can grow the business because of the watershed area of the United States that's underserved and a railroad that is seamless. When I look at it, even though UP has a great franchise coming out of Chicago and a great way to get to Mexico, nobody can beat and compete, and they're going to have to compete hard to win with our single line where we don’t have to hand off to somebody else. When we talk about the SMART-TD agreement, it just formalized what we had in place that we had already guaranteed. We're in discussion with other unions to formalize it, and I'm more than willing to formalize it. We're willing to put it on paper and say what we're going to do with our unionized employees. We'll work through that. Tom, as for timing, it certainly won't take us into January to get this done. We're into getting the deal done as soon as possible. If you ask Jim Vena, I want it in before the 1st of December, the application. If you talk to some people on the team, they're saying, Jim Vena, would you give us a little bit of time? The answer is no. I'm hoping that we can do everything we can to have it in by the end of November or the latest in early December so that we can have the application in and get that process moving. Hopefully, I answered everything.

Is there any new information on the shipper side? That's the only point you didn't address. Thank you for your insights.

Yes. I just want to reaffirm what you said, Jim, about 40% of our business either comes in or moves out of Union Pacific that we're competing globally. Absolutely, we have over 1,200 stakeholders. Those are ports, government officials, and they're short lines. If you just look at the customers, we've got over 400 customers that have sent in a letter of support, and there's still a pipeline behind that. They represent all the industries that we serve.

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

So Jen, you talked a little bit about sequential OR or I guess, fourth quarter, you threw out some initial thoughts there. Can you talk to the puts and takes? You mentioned the favorable equipment settlements, the lower mix impact, your revenue thoughts. So maybe just talk about all the puts and takes that we should expect in the fourth quarter. If we're starting with volumes down mid-single digits, ultimately, should we see earnings flat, down, or up year-over-year in the fourth quarter?

So thanks for the question. And I know this won't surprise you, Ken, but I'm not going to give you specific guidance about the quarter, but I can give you context around it. You hit many of the high points. So when you think about the top line, right now, volumes are down 6%. It's really mostly that international intermodal piece that we've been talking about and quite frankly, expecting all year when we knew against the tough comp we had last year. With that, though, we do expect to have a better mix rotation with the international intermodal coming down. We do still have coal, which is below the system average arc, that is going to be very strong in the quarter. We like all our business, you know that, Ken, and we're diligent in making it all profitable, but there are some that contribute more to that top line than others when you're looking at the arc. Then, below the line, talk about expenses. We'll continue to have merger costs, probably not quite to the level that we had in the third quarter, but that will be there. Eric and his team, as you've heard, are running very well. We feel very good about the ability to be productive, although productivity, as you know, is also challenged when you have volumes coming down. So when we look at it, would we like to have volumes up and blue skies? You bet. But we will have some challenges. That's going to make it tough when you think about stacking it up against what was a record quarter for us in the fourth quarter. But when you peel all that back and look at how we're running fundamentally, the railroad is running extremely sound fundamentally, and that will absolutely continue in the fourth quarter.

And then specific to the rent question?

We just had a couple of small contract settlements totaling $13 million, which were specific to the third quarter.

Our next question is from the line of Brandon Oglenski with Barclays.

Since you guys announced your merger agreement, it seems like your competitors are maybe collaborating a lot more than they have in the past. Do you view this as potentially a risk, especially as you're going through a pretty complicated process with the STB here?

No. In fact, that proves our point about competition. When you have a competitor that you know is going to be stronger and is going to give a better service product, probably at a better price, because of fewer touchpoints, what I find surprising is that it took us announcing a merger for other people to say that they were going to do special moves and cooperate. I think it bolsters our position in front of the STB. The STB needs to take a look at enhanced competition, and this merger provides enhanced competition, as evidenced by how the railroads are reacting. Nobody would react in business if it was bad for the railroad that was merging and good for themselves. We’re competitive. If anyone thinks that another railroad would come out and be all, 'no, UP better not merge' if it was actually worse for them, let’s put that on the table. So there's only one reason that railroads are complaining, a couple of them, and that is because they see the competition and they need to step up. I'm looking forward to this as we go through and work on the merger. We are covering every point on the merger, and we're very comfortable the STB will see how good it is for America and how it changes the paradigm of railroad versus truck.

Thank you, Jim.

Our next question is from the line of Jonathan Chappell with Evercore ISI.

Thank you. Good morning, everyone. Eric, Jennifer just noted in one of her prior answers, productivity is challenged and the volumes are coming down. In your prepared remarks, you said you had the locomotives and the labor position for new business wins. We look at Kenny's outlook slide, and there's actually more minus signs than positive signs for 4Q. When we think about your ability to be nimble, your productivity or efficiency, as you're going through kind of a choppy macro backdrop but all eyes on UP and your service during this merger review process, can you be as nimble and reap as much productivity if volumes continue to be weaker than expected? Or do you need to have a little bit more slack in the system at the present time?

Yes. Thanks, Jonathan, for that question. So you're right in your characterization of what Jennifer mentioned. When we are faced with temporary volumes being down, we know that playbook, and it's important that all of you understand that. You start with what you won't do. And what we won't do is sacrifice anything related to our buffers, whether that's locomotives, crews or railcars. Could we be a little bit more conscious about that? Honestly, I don't think so, because we do that every single day. We focus on making sure all three buffers are intact and prepositioned across the railroad. Now what do we do? Of course, we will react to the markets. We will act promptly. You first start with your transportation plan, making adjustments that typically drive productivity in the areas of train starts and crew starts. Then from there, you go to your locomotive fleet, ensuring you've rightsized it for the volume and mix you have on the railroad. You adjust your car fleet and you've seen us do that many times. We do that several times every single year due to the seasonality of intermodal business. Then you go to your hiring and you look carefully. That process occurs each month. I’m personally involved in that process. If we see volume being weaker in certain markets or geographic areas for a prolonged period, we would make adjustments to hiring. So I could keep going through the rest of the playbook. I know it so well, and so does the team. We will make adjustments to continue to provide the great service we're providing, but also at the lowest cost, so we keep Kenny and the team competitive in the market as they go and win volume.

Thanks, Eric.

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

So maybe just, Jim, like to ask it more directly: there are railroads that seem to be publicly opposed to the merger. In the past, maybe that has mattered. Do you think that rail opposition matters today, given all the other sort of puts and takes as it relates to this merger? And then maybe just separately, if I can, Jennifer, the yields ex-fuel were up 3.5%. I know there's maybe a little bit of mix here. But it feels like we're like now more clearly in a positive price-cost backdrop? Does that continue? Any reason to think that is not sustainable looking ahead?

I’ll begin, and then Jennifer can add her thoughts. Thanks for the two-part question, Scott. Let's focus on the other railroad you mentioned, specifically BN. BNSF is an excellent company with a strong franchise and a long-standing history, and we compete with them daily. If I were in their position, as the leader of either BNSF or Union Pacific, I would be reaching out to the top executives to advocate for collaboration beneficial to both the country and our companies. That's what other railroads are attempting to do—finding ways to benefit. The challenge for them is that this situation truly demands a comprehensive solution; it’s not merely about existing overlaps. Hence, that narrative doesn't apply here. Moreover, as an industry, we have historically been too cautious. For instance, we hesitated to open a coffee shop inside Starbucks because we were afraid to invest in our own. If you grasp the intricacies of railroading, you realize that reducing touchpoints is key. Currently, we’re averaging 19.9 hours per month, and we're making significant changes to enhance our product and provide alternatives that focus on quality and speed. Our goal is to deliver substantial value to our customers, which is a mutual agreement we have recognized. This is why I engage in discussions with those who share our objective of creating better choices for all.

No, that was great.

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

I have a quick question for Kenny and then a follow-up for Jim. Kenny, regarding intermodal, it seems there is some share shifting between your company and other Western competitors based on originated data. I understand there are many factors at play with international and domestic operations, but I wanted to confirm if that interpretation is correct. Jim, you noted that customers are showing a lot of support, particularly the chemical shippers in the Gulf Coast, who have been quite vocal about wanting more competition. Is that something you can address directly, or will that require the involvement of the STB? How should we think about the progression of this issue, considering its significance and the strong opinions of that group?

Yes. We've seen a little bit of a market degradation for sure. Those are tough comp comparisons. We did see quite a bit that pulled ahead earlier in the year. At the same time, with all the investments that we've made in our intermodal market, the new markets for international and Arizona and Twin Cities and some other areas in the service product we have, we're going to ensure that if we move the volume, it's going to move at the margins that reflect both the service and the investments in the infrastructure that we've made and the overall products. So that's what you're seeing. You're seeing both of those right now.

So as for the associations, the chemical association that you mentioned, last I checked, they don’t pay any of our bills. They don’t have a direct relationship with us, and we are dealing with our customers. That for me is really important. We have to understand what the associations are saying and what they’re doing in Washington, D.C., but at the end of the day, they’re only voicing requests, mostly unfounded, related to policy. Our focus stays in dealing with customers directly, and we will sit down with those associations to express the benefits our merger will provide. When we explain what we're doing to the political and regulatory people, they start to see that we are offering a faster service — that’s reducing their costs significantly. If we don't move ahead, the associations will find themselves in a place where they’ll be asking us railroads to do what we’re doing without their push. Therefore it is imperative we collaborate with customers directly. It’s complicated, but I don’t know what’s behind their loud objections.

Thank you very much. We'll move on to the next question from the line of Stephanie Moore with Jefferies.

Thank you. Good morning. When you look at your service metrics, as you noted, they're about the best they've ever been or 100%. Can you talk about your level of confidence and the steps you can take to implement your service best practices to Norfolk Southern post-merger? And Jim, just the timeline, do you think realistically for some of these world-class levels to convert over?

Eric, why don’t you take this? But real simple is I think we have a history of doing this. I've been in this industry for a long time. You can answer it.

Absolutely. You're correct. Our results are best in the industry. Being able to take that over and partner with NS inside the merger, that's what we do every day. It doesn't matter if I'm looking at a terminal or service at an interchange point. Every day, we look for what are the issues or the opportunities dissecting performance. It’s just a broader scale. I've been working with NS nearly 15 years; they're good railroaders. Their network knowledge combined with ours aligns with moving cars faster in the most efficient way to be competitive in the market. That's our job, and we will succeed.

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

I totally get the perpetual dissatisfaction comment, but hopefully, you guys can take a day to enjoy some very solid results for the quarter. My question is going to be on yields, but Jennifer is going to actually be happy that I'm not looking for guidance here. How should we think about your ability to sort of directionally change domestic intermodal yields if the market starts to inflect on the truckload side, given all the governmental actions taken against foreign drivers right now? And also, when we look into ag, can you help us sort of frame up how to think about near-term ag RPU? And how does export RPU compare historically versus domestic ag RPU?

Let me start off here, Jason. When you talk about the intermodal side of the world, as you know, when we expanded our portfolio of domestic partners, we did some market-based pricing there. When we see that truck market improve, that will have a direct impact on us. We've been successful in converting business even in a weak truck environment, doing that in a way that has been positively contributing to our bottom line, and we feel great about those partnerships. The ag side of things really comes down to the length of haul. With some of that business, particularly when it goes to the PNW, that's a good length of haul. We’re seeing more export today go to Mexico, and that's a good length of haul. The only caveat to any of that is, particularly when business goes into Mexico versus PNW, that does slow the cycle times down somewhat when you think about the turns on those cars bringing them back. Kenny, anything you want to add?

I can't get into the actual contracts. What we’re really looking at is what's happening with truck production. Truck production is down about 28%. We’re waiting for that to turn. We remember this since we added these new portfolio of customers, we've been in a flat market. I've said this now for three years. We haven't seen any uplift. And when we do, we’re going to take advantage of it. The last thing, Jim, we've had a record intermodal revenue on the domestic side.

I appreciate it anyway. Take care, guys.

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

Maybe sticking with Ken, I guess I was curious about sort of the pricing environment as we move into next year. So I guess, do you think as you go through contracting at the end of the year that pricing is kind of better in '26 than '25? Is it kind of the same? I know the backdrop from intermodal really kind of the trucking environment hasn't done much here just yet? And then just kind of curious or generally speaking, the response from customers, I don't know if the conversation tones have changed in the last couple of months? Or are they still relatively constructive as you think about next year? So just any thoughts around pricing would be great.

Yes. It starts with a strong service product. We'll lead with the metrics both to and from industry and over-the-road industry as we’re working through those contract renewals. We’re very clear about the pricing levels that reflect the service that we're delivering and sold to customers. We're confident because the service product is so strong. The question about what we're hearing from customers is that they're still looking for a little more clarity in the market. When we talk to our customers and when we look at our business, we're looking at the current metrics that are out there and judging ourselves based on how we perform against those. Regardless of what they're seeing, we look at whether we are outperforming in those key markets.

Good characterization of the service product. Appreciate it, guys.

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

So Kenny, a couple of months ago, UP and Norfolk put out some marketing material around enhanced collaboration in the network. I was wondering if you could maybe just talk a little bit about how those changes are being made and how that level of integration compares to maybe a post-merger world. And then if you have any comments on what you're thinking about doing with the UMAX program longer term, we'd love to hear some more perspective from you on that.

Yes. We have alliances that we’re working with all the rail players, including Falcon with Canadian National and the same lanes and markets that we do with CSX. But I want to make sure that's clear, and we aren't doing anything prior to the merger taking place. At the same time, we are looking at new markets out there. We talked about markets into Louisville. That’s aimed at over-the-road traffic that we’re trying to win. We have the same approach with all the rails. As for UMAX, absolutely, we have a commitment to offering that product as a strong, viable option for our customers.

Thank you very much. Thanks for the question.

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

Thanks for the detail today. I just want to double-click a little bit on next year. And I know, Jennifer, you don't have guidance out there, but you do have that S4 document that we normally wouldn't have this time of year, and the numbers are below. You reiterated your high single-digit, low double-digit multiyear guide today. Those numbers are notably below range. I guess my question here is whether you can give us some context on how we characterize what you put in that document, what's changed or what's different from the assumptions that underpin them again because you did reiterate the guide and those numbers are below Street. So I'd love to hear any color you can provide there.

One of the things that is stated very explicitly in the S4 is that those numbers are not guidance. Those are our guidelines, particularly when you look at the out years, they are what I would call unstressed financials. We are looking at market indicators and run rates those types of things. It is by no means a detailed look at how we can drive greater productivity. It’s directional, but beyond that, I would not try to extrapolate from that S4 numbers.

The next question comes from the line of Richa Harnain with Deutsche Bank.

So Jim, you said that no one is really talking about this world-class quarter. I guess after that, a couple of people did, but maybe we can tie a bow on it. This past quarter results were pretty remarkable. You managed 12% EPS growth with virtually no volume help. Labor productivity continues to be a strong driver. I think you had another 3.5% drop in headcount. You're coming out ahead on comp per employee. I think you said 3% for the year. In the last quarter, you guided at 3.5%. Eric, you talked about the overall records and various measures of productivity. Is this really the pricing lever starting to kick in that you've talked about in earnest in the past around repricing contracts like the work you're doing to reflect the good service you guys are introducing? And if yes, what inning are we in there? And then just like why shouldn't the high end of your long-term high single-digit to low double-digit EPS target be more appropriate, especially into 2026? That 12% on 0% volume growth really stands out.

Thanks. You did a great job summarizing our quarter and some of our very strong results. When we laid out our targets back in September of last year, we put some baseline macroeconomic numbers that underpin that. If we reach those numbers from a macro standpoint, we expect it to be kind of at the low-end. So at the high single, and that it would take a better macro environment to be at the double-digit side. Unfortunately, a lot of those macro indicators, I called out the housing starts and the auto sales on the call have actually gotten a little bit worse. The good thing about UP and our great franchise is the way we are running today and executing on the fundamentals is helping us take advantage of every opportunity that comes our way. That's our mindset, and that’s what we’ll keep doing. But there is a macro backdrop that underpins that, and we're fighting against it a little bit right now.

Thank you very much for the question. Appreciate it.

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

One for Jennifer here. You've got a little over $2 billion of debt maturities between now and the first half of '27, call it, $10 billion to $15 billion in debt to raise to fund the deal when it hopefully is approved and closes. And you don't have a potential on financing, so you're on the hook to go through that no matter how the capital markets play out between now and then. How do you think about sort of hedging your bets on managing the balance sheet for that capital need between now and in 2027? If you could just kind of walk us through debt pay down and do it all at once versus kind of opportunistically chip away at that over time, I think that would be helpful.

There's a number of things that we're looking at and planning towards over the next year as we progress through the application period and move towards having the merger approved. You mentioned paying down debt; we’re certainly going to do that as debt comes due, that is our intent. We will do that with the available cash that we're generating. We're also looking at what we can do to protect ourselves on the interest rate side, what can we do in terms of facilities to be ready to access the cash because you have to consider different blackout windows; we cannot control exactly when the timing is. We're planning for that and ensuring our cash is available to close that while structuring it to quickly pay down some of that debt so we can get back into a position when we're in the market and repurchasing shares. We believe that we'll be able to do that sometime in year 2, which we think will be in 2028. That's how we're looking at it, and we feel very comfortable about our ability to execute that.

Thanks for the question, Bascome.

The next question is from the line of Ari Rosa with Citigroup.

Team, congrats on the strong network performance, really, really impressive to see UP running so well. So Jennifer, you were talking about some of the weakness in some of these macro indicators, housing starts and other things. I'm just curious to hear your perspective on the overall economy, where you see risks? Specifically, I wanted to hear, is there any kind of level of deterioration in the macro that would cause you to either reassess your synergy targets for NS or even in kind of extreme scenarios or any level of deterioration where you would think about walking away from the deal?

You always have markets that are going to be up and down. We look at what the consumer overall is doing. So far, the consumer is staying in a pretty good place so we're very comfortable. Now there are some specific markets underneath. Automobile and parts have gone up and down; whether that’s positive or not, there’s going to be changes with what's happening as far as where production is going to happen — that's going to change. At the end of the day, we’re very comfortable, and we don’t see anything that changes our idea of what’s possible at Norfolk Southern. We think the merged company will have huge potential to drive productivity and value for the combined company just because of its overall network. Jennifer, Kenny, anything to add?

Because of our franchise, there are some natural benefits when you combine that with a strong service product to win in key networks, whether it’s our petrochem network or everything we’re doing to invest in intermodal. That gives us a lot of confidence. Remember, we’re trying to penetrate and create our own wins, whether it’s building new facilities or selling where we’ve invested.

The last question is from the line of Brady Lierz with Stephens.

Kenny, in your fourth-quarter volume outlook slide, the word business win or contract win or just really win in general is used a couple of different times. Can you help us understand what's driving these wins, particularly at a time of economic and trade uncertainty? And how does your pipeline of wins look as we start to turn our attention to 2026? Do you think these wins can drive volume growth in '26 even without help from the macro? Just any clarity there would be helpful.

Yes. Some of those wins are actually wins that occurred a few years ago; we’re realizing them as you have plant expansions. We had a couple of plant expansions that took place in the last part of 2024 that have helped us in 2025. We’ve had a few this year that have come on. Some are immediate just wins that we've gone out because we have a very strong network and infrastructure. The team has done a great job of adding new facilities onto our network. In some mature markets, like the grain markets, over the last couple of years, we've added 20 new facilities on the renewable side. That's how we're creating that value and revenue. As we look ahead at the pipeline, we're still seeing a strong pipeline of facilities that are set to come on in the future.

Thank you very much.

Thank you. This will conclude our question-and-answer session. I'll turn the call back over to Mr. Vena for closing comments.

Great. Listen, Rob, thank you very much. Pretty exciting times here at Union Pacific. I love the fundamentals of what everybody delivered, and I have to give our team the accolades. It's not one person; it’s the entire team that delivers. Operationally, on marketing sales, I know I like pushing Kenny, but he does need to go get us more business. But at the end of the day, everyone's done a great job. Some key dates and what we see coming up. The fourth quarter is what it is; we’ll deliver as good a quarter as we possibly can with what’s in the mix. Next year, we truly have an opportunity to put together a franchise with the great team at Norfolk Southern. I’ve spoken to Mark George a few times. We need to legally keep it high level. I never tell them what to do. They are focused. They know what they have to do—generate cash and operate effectively so we can showcase what our combined railroad will look like. The next big date is on November 14, our special meeting with shareholders. We’re confident that the vote will support this; there’s no reason shareholders will have any problem with it.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines, and have a wonderful day.