Union Pacific Corporation

Union Pacific reported second-quarter operating revenue of $6.9 billion, up 12% year over year, and freight revenue of $6.5 billion, also up 12%. Net income totaled $2 billion, reported EPS was $3.36, and adjusted EPS excluding merger costs was $3.41. Operating expenses were $4.1 billion, operating ratio was 59.2%, cash from operations was $5.5 billion (up 21%), and free cash flow was $1.8 billion. Fuel was a major swing factor: fuel surcharge revenue added roughly $460 million, fuel expense grew 63%, average fuel price rose from $2.42 to $3.86, and management said fuel created a 120 basis point OR headwind. For 2026, the company raised full-year reported EPS growth guidance to the high single-digit range, while saying it still expects operating ratio improvement despite fuel pressure. It also said comp per employee is now expected to rise around 6% for the full year.

Jim Vena struck a confident, upbeat tone, describing the quarter as a record result driven by strong execution, pricing, and 2% volume growth. He emphasized that core improvement remains visible after stripping out fuel and one-time items, and he repeatedly framed the business as a growth story. On the CN merger agreement, he said it expands customer optionality, supports competition, and reinforces the case for the transcontinental deal.

Jennifer Hamann focused on the financial bridge behind the quarter: 12% revenue growth, 13% expense growth, and operating ratio of 59.2%. She highlighted $5.5 billion of cash from operations, $1.8 billion of free cash flow, $1.5 billion of long-term debt paydown, and an adjusted debt-to-EBITDA ratio of 2.5x. On guidance, she said the company is raising full-year reported EPS growth to the high single-digit range, expects continued OR improvement, and noted that comp per employee is now expected to increase around 6% because wage inflation and health-and-welfare costs are running hotter than expected.

Analysts pressed on how Union Pacific can raise EPS guidance while also raising comp-per-employee expectations; management said the upside comes from stronger-than-expected volumes, continued productivity, and efficient handling of growth. Questions on the CN agreement centered on revenue synergies, concessions, and whether more arrangements could follow; management said the deal is a reasonable, growth-oriented expansion that does not change the overall merger thesis. On STB timing and additional commitments, management said supplemental information will be filed Monday, that the customer feedback drove some added optionality, and that the statutory clock is being treated as having started when the application was accepted.