Union Pacific Corporation ((UNP)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Union Pacific Corporation’s recent earnings call reflected a strong financial performance, marked by record-setting freight revenue and improved operational metrics. However, the company faces challenges due to volume declines and difficulties in the intermodal and energy markets, compounded by softer economic indicators.
Strong Financial Performance
Union Pacific reported impressive Q3 2025 earnings per share of $3.01, excluding $41 million of merger-related costs. The adjusted earnings per share saw a 12% increase from the previous year, reaching $3.08. This growth was driven by core pricing gains and operational efficiencies, underscoring the company’s robust financial health.
Record Freight Revenue
The company achieved record freight revenue for the sixth consecutive quarter, excluding fuel. This milestone was supported by operational efficiencies, which also led to records in workforce productivity, fuel consumption, terminal dwell, and train line performance.
Improved Safety and Service
Union Pacific demonstrated its commitment to safety and reliability, with improved safety and service results. The company reported measurable progress in personal injury and derailment rates, reinforcing its status as a leading North American railroad.
Positive Cash Flow and Debt Management
The third quarter saw Union Pacific generating $7.1 billion in cash from operations, a 6% increase from last year. The company also reduced its long-term debt by $1 billion, improving its adjusted debt-to-EBITDA ratio to 2.6x.
Volume Declines
Despite the financial successes, Union Pacific experienced a slight decline in volume, resulting in a 25 basis points reduction in freight revenue. The fourth quarter is currently seeing a 6% decrease in volumes, highlighting ongoing challenges in international intermodal volumes.
Intermodal and Energy Market Challenges
The company faced a 2% decline in premium revenue due to a 5% decrease in volume. Intermodal volumes were particularly challenged by lower West Coast imports, leading to a 17% drop in international volumes.
Impact of Macro Economic Factors
Softer economic indicators, such as automotive sales and housing starts, have created headwinds for Union Pacific’s earnings and margin expansion, compared to last year’s record fourth quarter.
Forward-Looking Guidance
CEO Jim Vena emphasized the company’s strong financial performance, driven by operational efficiencies and core pricing gains. Despite a slight volume decrease, freight revenue grew by 3% to $5.9 billion, with operating revenue reaching $6.2 billion. Looking forward, Union Pacific anticipates continued strength in certain segments but acknowledges challenges due to softer economic indicators and lower international volumes.
In summary, Union Pacific Corporation’s earnings call highlighted a strong financial performance with record freight revenue and improved operational metrics. While the company faces challenges from volume declines and softer economic indicators, its strategic focus on safety and service positions it well for future growth.