All right. Morning, everyone. We're going to get going with our next session. We are now at the transport portion of the conference, starting with Union Pacific. I'm really happy to have Jim Vena, CEO, and Jennifer Heyman, CFO, back at our conference. Thank you guys for being here. Jim and Jennifer have a quick couple opening comments and some slides to show, and then we will get right into questions. So I'll pass it off to you. Thank you, Jim. Thank you, Jennifer.

Listen, I'm looking forward to the question, so let me see if I can get this done in one minute, okay? So, real quick, morning. We already ran into each other, Scott, so wonderful. Of course, Jennifer's here with me, and if we really run into trouble, Diana's here with us, okay? They always get me to tell you that we're going to make some forward-looking statements. If you need any more clarification of something that Jennifer has said is wrong, then just make sure that you give us a call, okay? And if we go to slide three, and this is real important, about the base of where we are. You can see our strong execution continues to deliver, industry leading across safety, service, and operational excellence. And we enter 2026 in a real strong, and the first quarter is very similar to what we did in 2025, so real happy. we led in the industry and return on invested capital and OR and did the same thing in the first quarter and in fact our nearest competitor is about 400 basis points behind us so that's a good place for us to be where we can provide service to our customers provide provide our investors a view of what we can do and how we move ahead so we're real happy with that and we're delivering at at a real high service level. In fact, to the point where Kenny and his team no longer have to worry about the first question being how our service is, they go out there and sell the business. And that's a good place to be as a company. A lot of hard work by a lot of people out in the field. And Jennifer, over to you.

I had you closer to two minutes than one, by the way.

I apologize, I'm telling you, I'm getting slow.

I'll make up time here, Scott. So just a quick business update for you. So, right now, according to date, our volumes are up about 1%, and that is certainly supported by the strong service product that Jim referred to, but it also gives you a picture of the great diversity of the UP franchise when you look at how we're broken out in terms of how business is shaping up for us today. So right now, up 1%, as I mentioned, but that's with bulk flat, so that's a little bit different than the first quarter. You still have grain and grain products that are up, call it 10%, 11%, but our coal volumes are actually down year-over-year here in the first quarter, down about 14%. And that's really driven by a couple things. Certainly, we've lapped on a year-over-year basis the contract win that we had last year with LCRA, but then you see kind of the normal shoulder season, a little bit milder spring You've had a few plant outages, the normal seasonal maintenance that's going on, and then lower natural gas prices impacting us on the coal side right now. We expect that to come back some as we get into the summer months, but that's the dynamic we have here in the second quarter. Industrial, really the heart and soul of the UP franchise, up 4%. That's great service, that's great business development, about 6% growth in industrial chemicals and plastics, low natural gas prices, stronger export demand. You also have metals and minerals up about 5%, strong construction business in the southern part of our network. And then on the premium side, down 1%, that's a bit of a mixed bag. You've got international and model, which everyone knows the story there, the comparison year over year, we're actually hitting kind of the lull point of that comparison. We're going to start seeing it get a little bit tougher here as we build through June and July, and then we'll look a little bit softer through the rest of 2026 in terms of that comparison. But then you've got continued strength on the domestic side. So as you heard Kenny talk about it, our first quarter earnings, three consecutive quarters of record domestic growth, having another very strong domestic quarter here in the second quarter, and finished vehicles are up. So a little bit of strength on the finished vehicle side as well. Last thing I'll just mention is fuel. So need to talk about fuel a little bit. It continues to have an impact. You saw a strong rise in fuel prices going from March to April. April prices we were paying around $4 a gallon. It's actually gone up some in May, closer to $4.25 a gallon. So that is a little bit of a headwind for us that we're facing certainly.

Perfect. Why don't we go to the next slide? You're a little slow this morning, Diana. Okay. And didn't you guys love it? I was directing people, empty seats. There's a couple more over here if you guys want to sit down, otherwise you can stand up. bottom line is is on the merger front just a quick update is as we we put the application in it's going through the process now what did we do in the application there's some key areas what the STB asked us to do the when we put the original application in and they gave us the feedback and said that we needed to work out some one was to take a look at at the how the traffic moved and competitive review, which we've done. In fact, before we were using a sampling of waybills and sampling information, and this time, because we were able to receive all the information from the other railroads, we actually ran it as a complete use-in-all-waybill data. And really, it didn't change very much. There was a little tweak on a few things, but overall, the sampling did a pretty good job of setting it up, so we answered that question. There was a question about the release in that 5.8 document, which talked about where, at what point, we at Union Pacific had the right to walk away from the deal if it truly became non-additive to our business. And that's what this is all about, is would it add to our business? Now, of course, we didn't put the highest number in there, and we negotiated at the right place so that we could then start talking about options if we had to. So we've put that out there. And then there was some smaller things like the TRRA, which is a not-for-profit switching railroad in St. Louis that a number of us own. And with the merger, we would have ended up owning over 50%. It also has the liability and the problem that it has bridges that go across the Mississippi. be so we actually you know they wanted us to answer a little clearer and we were black and white about it i thought we were black and white in the first but there was a lot of feedback from other railroads that said that we weren't black enough black and white enough so this time we're pretty black and white we're willing we will make sure that we will not get to 50 ownership so either turn back shares or turn them into non-voting shares whatever we need to do but you guys will find this real interesting and it sort of tells you about our competition our competition are the people other railroads that rode in that they weren't comfortable with that so when we put it in as soon as we received the feedback we actually called the special meeting of the board for the tr a and asked all the railroads to come in so that we could talk about how we could dispose of our shares or the NS shares if we close when we close on the deal I hate to tell you nobody showed up even though they were supposed to so at the end of the day you know we've answered it in the application but it goes to show you what we're up against trying to be reasonable to get to a place where the STB can actually look at the merger and look at the benefits the benefits haven't changed and in fact we're much more confident with the benefits now it is good for America it is going to allow us to offer our customers a seamless movement over the railroad from one end of the country to the other and that is not a small thing that enhances the capability of our customers to compete against the world in other countries and other companies and it also enhances their capability to be able to move things in a seamless faster manner across the United States of America so for us we see even better movement of products through we haven't backed off we think it was real important for us to tell our unionized employees that they have a job for life and of course listen anytime you're going through something like this, we expected it. Some unions were going to be positive about it and our largest union, Smart TD, actually came out real fast and said let's make a deal that talks about maybe what the mechanism and how it works. But the guarantee of a job was there already. In fact the way it works at our railroad, the Brotherhood of the Locomotive Engineer and Trainman who are part of the Teamsters is one of the parties that has not come on board to support this, but in actual fact their employees are already protected. If you're, because I'm a locomotive engineer, I'll tell you how it works. If you're a locomotive engineer, you came from the conductor's ranks, meaning that you were covered by Smart TD. So if somebody, if we had them, had to sort of adjust headcount in any place with the BLET, they actually would flow back to be a conductor and would be covered under the smart TD. So we don't really need a deal. So the majority, over 80% of our employees are covered with deals that we have with the unions. So the last thing is competition and how we can enhance it. There's no ifs, hands or butts that we're going to have a better product against trucks in the long-haul market. And we also are going to have a better product in the shorter market that is underserved So, we're very confident that we've shown and even more confident than when we put the first application in that, you know, we'll get this accepted and we'll go to the next step which is let's go make our case and analyze it and see what happens next. So I think I tried to cover everything off, Scott, so we could talk about our first quarter and where we are, but it's all back to you.

All right, fantastic. Thank you, Jim. So I'll start on some merger questions, then we'll get into the business. So you talked, you gave us a bunch there, Jim. So we'll get the decision from the board next week if the application is complete. So just two questions. You've obviously talked about what enhancements you made to the application anything from some of the comments from the other rails since you submitted that give you any pause for concern and then you know I'm sure you love hypotheticals but hypothetically if once again the merger is not complete where do we go from there so why don't

we start with what do we start with the comments that have gone in we answered the comments pretty straightforward and it truly is a game of lawyers now. Everybody's hired a whole bunch of lawyers and firms from across the country and a lot of them are here in New York and they go through and they tell you what they feel. Fundamentally, we answered the questions that the STB asked us to. You know, we didn't, on purpose, we didn't try to add another thousand items in there or more detail on some of the things and that's what people miss if someone tells you that this is the area you need to look at because we didn't accept it the first time for these three plus the issue you know a number of small little things then that's what we went and answered so at the end of the day we're pretty we're absolutely sure that the STB should take that we've answered those questions we've given them the answers that they wanted we've provided in the application and we expect it next week to be accepted. Will the STB come and ask us for more information? Absolutely. As we go through this process I'm absolutely sure that the STB will say Union Pacific can you do this, can you take a look at this for us, can you give us this flow, do we make to make sure that maybe they need to understand the piece of it. Remember it's not the other railroads that are going to make the decision. They are our competitor. They are, in most things in this world, a third party would not listen to a competitor. I think a competitor is going to look internal to their view in what they want, not what's the benefit of what a union pacific is doing and you can see that when i gave the example with the trra that they wanted us to answer the question and when we asked called the special meeting of the board at the trra berkshire owned burlington northern santa fe didn't show up and i could go on the rest of the railroad you guys know who owns it and it's a not-for-profit railroad so the STB they're smart okay from everything I've seen with Patrick and Michelle and Karen and the new person that's close to joining at the end of the day they're going to look at the facts of what we're presenting and we're pretty clear on what the facts are that it's a gain so I'm telling you I would be really surprised, okay, that the STB would, at this point, when we've answered their questions, I don't know, it'd be like going up to a teacher that said, you need to answer question one, two, and three for me, and you go answer question one, two, and three, and then they come up with question number four. Nobody would be happy. Your parents would go in and yell and scream

at the teacher. All right, so you feel confident about the application being deemed complete. You know, we were at our conference a year ago sort of dancing around the idea of M&A. Like, we've been talking about this for a year. We haven't even gotten to the part of the process where we actually talk about the merits of the merger itself. So that starts, you know, in theory starting next week, and that, you know, give or take is a year. So maybe, like, let's spend a minute or two there. So at its simplest form, right, you need to demonstrate two things. that it's in the public interest and that it enhances competition I think everything you've talked about with trucks and everything I think you've made a laid out others can disagree but I think you've laid out a case for why it's in the public interest I think you've laid out a case for why it enhances competition with truck right where I think there's probably more debate is does this enhance rail-to-rail competition and so I guess two questions one how does it enhance rail-to-rail competition and two do you have a sense from the board are they looking at competition or are they looking at competition meaning are they looking globally at competition globally truck or are they gonna look at just intramodal rail-to-rail what do they

care more about let's start let's start at a high level any agency in the United States of America, okay, federal or state, their primary goal should be how do you move business forward? How do you provide better service to people? How to move better competition? How to do things that are better? Nobody would ever get an agency to slice and just say, let's just look at it from one front okay and in this it would they would be remiss if the only thing the STB looked at was rail only really nobody wants trucks off of the highway really nobody wants to compete against the against the soybean producers in Brazil really nobody wants to make sure that the competition is out there to move products in a much more seamless faster method. Nobody in the U.S. should worry that the Canadians, and good for them, okay? People will ask me, you know, aren't you Canadian? I lead a U.S. company. It doesn't matter whether I lived in Canada. I hate to tell you, when you take the responsibility, and it's the stupidest question I ever get, aren't you Canadian? It's like, don't you feel something about, you know, don't you feel something about? No, we're in competition. And the Canadian government is spending $5 billion to expand intermodal facilities, ports, in Quebec and in the West Coast. And those products, the size of the expansion is not to move that product in Canada. It's to move it with jobs in Canada to come into the U.S. So should any agency look at the entire picture of what happens? Absolutely. And listen, some of the rules that were written go back to when the railroads were absolute. There was no highway, interstate highway system. They go back so far that people talked about the power of the railroad. We are low double digit. Movement of goods in the United States of America, even though every week at Union Pacific, we move 30 billion pounds. I tried to make that number big, so I multiplied it out, okay, to make it pounds. But we moved $30 billion, but we're still a fraction of what is moved by truck. So I'm not trying to be political on that. It just makes sense. It would be remiss. Now, on the rail-to-rail competition, what have you seen since we announced the merger? It's amazing. all these things that are going to happen that were already in the chute right cooperation and everything else it's amazing how many things were in the chute just waiting for us to announce the merger before they put trains on that would run from mexico to the east or from from the west coast to the east coast a little more seamless but what we're going to deliver that enhances what's the word enhance mean and i know there's people in this room that have written that i've read. They seem to not understand what the word enhanced is. Go in the dictionary, enhanced is to make it better. So what we're going to be able to offer is seamless at a less cost and less price for our customers. That enhances their capability to expand their markets. And why? You remove a touch point when we hand off the car to another railroad and that expense of picking up the rail car that's expensive that goes away we're able to offer it the rates you'll see it in our application single line rates are substantially less because of that so our customers should be able to have better rates because we set our rates not by some dart board in a room we set it with what the market and what the capability of the market that we can that we can move and understand the market we're moving that product so we're gonna enhance in speed that's better we're gonna enhance in touch points that's better if you remove touch points you actually become a safer railroad the less you have to touch a rail car switching it with a human and everything else at Union Pacific we have last year we were the safest railroad when it went in regards to people coming home and go coming to work and go home the same as they were before but our accident ratio dropped substantially and it's online you know people want to go find it fra has it we have it go ahead and take a look at that and how one of the pieces we've done is invest in technology but also it's removing touch points on cars anytime you can stop touching the car two or three times the rail car to get to from Houston to Minneapolis and you can do it seamlessly better and that's what we're going to offer so what's enhanced Scott I don't know about you guys you guys you guys must not think that being able to fly across the country for people that don't know the railroad industry real well okay but for those of you that want to fly across the country I guess you're okay with having only regional regional airlines because it can't be an enhancement to be able to fly from New York to LA you'd love to stop in Chicago get off buy a new ticket make sure your luggage makes the connection make sure that if you change terminal you're okay and of course the other airlines gonna wait for you when the first one was late so mamma mia like what are we talking about how much more enhancement can there be certainly GP and

open gateways that's thank you certainly part of what you're saying it sounds like is this is in the public interest which should be the most

important thing and enhanced like it's both let's get serious here okay so we both serve customers in the Houston area okay and if you want to move when the combined Norfolk Southern we're gonna give you a seamless move all the way to Philadelphia the other guy has to hand it off I don't know last time I looked that's an enhancement from what we're doing today they're gonna need less rail cars, less inventory to move it. Scott, I guess you can see I'm a little interested. I find it funny that people can't figure out that that is an enhanced product. And what are the competitors going to do? You're all businessmen in here. You're all smart. If you can't compete in service because you can't move it as fast and you can't compete okay in touch points what's your only option you have to compete on price now so you have to lower your price to be able to compete against the new Union Pacific that's what they're all worried about otherwise they wouldn't be speaking up your assuming application

deemed complete or agree with me on that last point I understand exactly what trying to say. Do you have any sense? Expert timeline from here or not? Is this 12 months,

15 months? Any quick thought on that? Well, the first timeline that we received from the STB would say that once they accept, it'll be close to a year. Okay? They get to that point. But we knew it was going to take a long time, Scott. If anybody, of course, i went out there and pushed hard to say i'd like to have it for my birthday which is in august 17th this year one of your yeah you could dream okay for what you want but uh when you don't control it it's uh it's like when i put my taxes on there about this thing with the irs you know sometimes

they surprise you the you've offered competitive gateway pricing guaranteed you know union jobs But some would say you didn't offer specific concessions around reciprocal switching, terminal access, whatever that may be.

We have been very clear on reciprocal switching. I can't believe that people don't get this. We said we are all for reciprocal switching. If we don't deliver for our customers, they should have an option. so somebody who doesn't have an option that today is a single origin person somewhere on our network that we would be more than willing to open it up all i ask is that everybody does that so it's not just union pacific and why why if you have the the highest level of service in the industry you're the fastest real good safety metrics right and the lowest or that allows you to make sure that you price in a smart way, I hate to tell you, I think we win. So absolutely, I've given that. The only problem I've had is I'm willing to sign it. If you have the rest of the CEOs in there, get them to sign a piece of paper. I'll sign at the bottom. Open reciprocal switching for anybody, okay, as long as it's the same. And the rules have got to be... He's right outside. Well, there's a whole bunch more than one person from Canada. Okay, you have to do it so that it's not so complicated that the lawyers have to deal with it. I like the system that they have in Canada. It works, it's set what the rates are, everybody knows it, and let's go. Let's go compete.

Do you sense there's any potential for that with any of the other rails?

I don't have the right to do that.

But that's what the board has proposed, and we filed comments in support of what the board proposed.

So we're good with that.

Jennifer, just a couple numbers questions on the application, if I can.

Let's go back to the concessions, because I sort of jumped on one, and you're trying to move on to another question, Scott. Okay, bottom line on concessions, this is an end-to-end merger. This is not a duplication. If it was a duplication, of course, we'd have to give access to a whole bunch of different properties and everything else. And we do understand that we're going to have three lines between St. Louis and Kansas City, and we're going to have to do something there. And we'll work through the process, and we're talking to a number of people to be able to get that done. But those things are complicated. It takes a while to get them done. But the rest of it, yes, you know, how do you handle the Belt Railroad? Pretty easy. We're 16% owners, and we don't really care. It's a not-for-profit railroad. We don't use it a lot, and we want to use it less because we want to handle it ourselves. So all those little things where we touch, but what is it that we want to give up? There's only five customers, and maybe somebody will find a sixth or a seventh somewhere, but any customer, but we're talking about a real low number out of the thousands of customers we have that are going to go from two to one, and we said anybody that goes from two to one customer location not even just customer that will open it up for another for another railroad to get in so plus committed gateway plus we said that we are going to keep every gateway open what else am i supposed to give like i you know listen if i was one of the other railroads i'd love to get access to uh to denver but i'm willing to trade that for access to toronto anytime they want, but I'm not going to give it away.

I understand.

And we'll walk away. Scott, let's get serious here. This deal has to be better for the company, for Union Pacific. It has to be able to grow the business and it has to be better for our investors. If it isn't, we're pretty good as a standalone company, and I'm not worried about walking away from it, okay?

Quickly, if you can, like, how do you think about what that comment you just made relative to the 750 million and the 5.8?

Well, we have to start somewhere. You know, when you're starting the process, you think about how the negotiation went. Okay, you're moving through anybody who's done an $85 billion deal. I've never done it before. So it's a big deal. I think it was the biggest deal last year in the U.S. So you identify a whole bunch of things pretty quick. because you want to get to the point, because otherwise the rumors start going out and you get a whole bunch of noise. And when we originally looked at it, we said, you know, worst case scenario, what's it look like? And some people internally at UP said it could be that much. And some of it was loss in business, right? It was going to be some business that moved over to CSX that was originally at Norfolk Southern. But when we actually went through it, when we put the application in the first time, we just couldn't come up to that number anymore. And that's why we said the concession number is way lower. Is it zero? No, it's not. But it's not 750.

Jennifer, quickly, if we can, the revenue synergies from the EBITDA synergies from revenue originally was $2 billion. now it's one eight just and then we went from 900 union jobs to 1200 but the cost energy stayed at a billion so just quick thoughts on those two things yeah so i mean on the revenue piece it's

mix of business so once we had the full waybill file and we're able to do the very complete analysis which is unique no other railroad's done that in a merger application so there was no sampling it's a complete analysis of all the waybill files for the railroads we saw that more the business was going to be coming off the truck more of it was going to be intermodal and that's just a mixed shift in terms of the the revenue ebitda so that's pretty easy to understand with that growth in traffic you need a few more train and engine people to to do that so that's the the difference in people the reason the synergies on the cost side didn't change is although you see a little growth on the labor cost as we've continued to look at this we continue to get more bullish about what the opportunities are and so there was more opportunities on the transportation side in terms of how we were going to flow traffic and run the network that we saw additional savings and those two just happened to net each other out

to be still in that billion dollar range and then just also quickly jennifer the um from your update on q2 just how is mix trending and then your comments about fuel being a little bit higher any sort of near-term thoughts about how to think about operating ratio in that light well on that

last part. I mean, fuel does pressure the operating ratio, and so we're certainly seeing that with fuel. You know, like I said, we're paying about $4.20 a gallon here. You know, we do have a little bit of a lag in our surcharge mechanisms, and so that will flow through, but just the way the math works, it pressures the margins. On the mix piece, you know, coal being down in the quarter, more growth on the domestic side, more short-haul rock business, that's going to probably pressure mix a little bit um but still feel positive uh overall helps on the helps on the eps side hurts

a little bit on the margin side right yeah and then i know we're going over just jim one just last question i just wanted to ask you you know you made a comment you know when kenny meets with customers he doesn't have to talk about service anymore service has been really good right um volumes have been good right um productivity trends have been really good you know to me like the one missing piece from the story has been price, that it's been fine, but it doesn't feel like maybe what it used to be. When do you think we get back there? Can we get back there? When do

you think we get back there? Well, if you take a look at the mix of traffic that we have, some of it is by tariff, some of it is by contract, some of them is multi-year contracts. So it takes a while for those things to come together. Also, there's been an impact. We have some contracts that are tied to what the costs are with some domestic trucking and everything else. So all those things make it a lot harder. I like where we are, though. You need to have the railroad on the fundamental right place so that you don't go in and have to worry about trying to explain why your service isn't delivering what you sold the customer. So I think I see positivity. Now, the best thing that can happen is the economy in the U.S. continues to grow. It continues to be able to have more capability. The worst thing that could happen is if we see a downturn, and that's not what we're seeing. For all the products that we move, and you name it, we touch it, okay? Whether it's auto parts and autos, even autos have bumped up a little bit for us. You can see that in the car loads. You can see the domestic business running. So the consumer is still out there selling. That will help us on price in how we move ahead, because I'm with you. You know, we have a lot of discussions and a lot of deep dives with Kenny and the marketing team to say, let's get serious. We don't think we're in the right place with price against what the level of service and what the customers have gained. And what have they gained with Union Pacific? If you can increase your car velocity by 15% or where we were, in 2019 when I showed up, we were in the 100 numbers. and now we're in the 200 numbers so you just you just were able to tell every customer that they have to have less rail cars because we're going to get them from origin to destination quicker we've removed touch points we're safer all those things add up to go so for us it's pretty simple is is price is not scott and i i agree with you we need to do a better job and kenny needs to do a better job to do that but let me finish off with this real quick point where is Union Pacific today Union Pacific has 20 as 25% less trains operating with more business than we had in 2019 we did not rip up track we did not rip up capacity in fact we spent billions of dollars in our terminals to make a more efficient so that they can handle real cars in a quicker manner and that's why you see the dwell being where it is at Union Pacific. So we're armed for any growth that comes to us. There's some pockets where, of course, we're going to invest to make it even more efficient, and we have that capability. So I'm pretty excited. Am I a little bit over on the next speaker?

You're a little over, so you're off the hook on the aren't you a Canadian question.

Go ahead, ask it. Okay, thank you very much, Scott.

Thank you, this was great.

Thank you very much, everybody.

Thank you, Jim. Thank you, Jennifer.