2026 04 23 Earnings UNP Q1 Fy2026

Summary

Union Pacific reported Q1 FY2026 net income $1.7B (+5%), EPS $2.87 (+6%), adjusted EPS $2.93 (+9% ex-merger costs); operating revenue +3% to $6.2B, freight revenue +4% on 1% lower volume; operating ratio improved 80bps to 59.9% (adjusted). Load-bearing causal claim: the Norfolk Southern transcontinental merger is "100% on track" — revised application filed April 30, 2026, with approval expected "second quarter next year" (Q2 2027). Core pricing + mix drove ~325bps of freight-revenue improvement, offsetting volume softness. Dated catalysts: STB merger decision Q2 2027; reaffirmed 2026 mid-single-digit EPS growth and high-single to low-double-digit EPS CAGR through 2027. Falsifiers / headwinds: fuel a Q2 margin headwind (>$4/gal in April vs $2.69 avg in Q1 — a Hormuz/oil-shock pass-through); international intermodal volume −28% on weak West Coast imports.

NOTE: Key speaker-attributed extracts from the full Motley Fool transcript (every quote verbatim and attributed); not the complete verbatim call.

Transcript

Jim Vena (CEO): "It is a wonderful morning here in Omaha for railroading..."

Jim Vena (CEO): "Core pricing combined with business mix drove approximately 325 basis points of freight revenue improvement."

Jim Vena (CEO): "We are 100% on track with filing the revised application on April 30 ... second quarter next year we would expect to be at a place where they approve it."

Jim Vena (CEO): "We were disappointed but not surprised ... we knew this was not going to be a process that would happen as quickly as I would like."

Jennifer L. Hamann (CFO): "Fuel expense grew 7% on a 7% increase in average fuel price from $2.51 to $2.69 per gallon."

Jennifer L. Hamann (CFO): "Fuel will definitely be a headwind, particularly here in the second quarter ... we are paying a little north of $4 a gallon right now."

Jennifer L. Hamann (CFO): "We are affirming our 2026 outlook for mid-single-digit EPS growth ... high single-digit to low double-digit EPS growth through 2027."

Eric J. Gehringer (EVP Operations): "Freight car velocity increased 9% to 235 miles per day. This performance was driven by best-ever terminal dwell of 19.7 hours."

Kenyatta G. Rocker (EVP Marketing & Sales): "International intermodal volumes declined 28% versus last year ... lower West Coast imports and customer shifts."

Analyst Q&A

Scott H. Group (Wolfe Research): "Does the fact that we are taking this long give you any more or less confidence in your ability to get this approved?"

Jim Vena (CEO): "When you take a look at what is in the merger application ... we are more convicted now than we ever have been."

Christian F. Wetherbee (Wells Fargo): "Fuel surcharges will be a headwind from an operating ratio perspective. Are there incremental productivity opportunities?"

Jennifer L. Hamann (CFO): "Fuel is a pressure here in the second quarter, and we feel good about the rest of the year."

Jonathan B. Chappell (Evercore): "What kind of volume growth can the current system handle without needing to add extra resources?"

Jim Vena (CEO): "We have capacity to add 10% more business without huge incremental capital and operating costs."