UNION PACIFIC CORP — Call Transcript 2025

Moore, I'm the senior transportation analyst here at Baird. I'm part of the executive leadership team, a substantive part of the executive leadership team at Union Pacific that's joining us today. Very, very pleased to have you here. We're going to walk through some questions. I have a feeling it will have a way of taking it where it takes us, if history is any precedent. I wanted to start off just very big picture. Your arrival at Union Pacific several years ago as a consultant, and then ultimately as essentially Chief Operating Officer. Did you just call me a consultant? I think there was a period there where you were described as a consultant, which I never really agreed with that view. In any event, I'd be curious to just frame the Union Pacific, the opportunities that you saw when you arrived, the things you wanted to achieve, the things you did achieve, and where Union Pacific is today relative to your initial views. Just kind of a post view of Jim Vena, and his arrival at UP, and where we find ourselves today. OK. So listen, why don't we real quick, because I know we only have 30 minutes. Pardon me. We do have slideshow. No, no, no. We're going right to the bottom. That's right. If it takes us longer, Jennifer and I, than two minutes to tell you the story about the slides, then we do not know what we are talking about. This first one, you guys better read it. There are five pages of boilerplate now. It used to be one. Any time you go through a merger, there is somebody who wants to add about four pages. I think lawyers make a lot of money. Next page. Bottom line is, anybody that has followed us, best operating ratio, real good car velocity, real good operating ratio, number one in the industry for a while, service performance real high. Jennifer? My stuff is even quicker. Just a little timeline. Big week for us, though, this week on Friday is the shareholder meeting. It is for both us and Norfolk Southern. For Union Pacific, it is to approve our issuance of shares. After that, we will be working, obviously, we are already working on it. The next big milestone will be our application with the Surface Transportation Board. We are still expecting that to be early part of December, likely that first week. The process really begins then. We will be communicating with that. It is a very open process, so there will be a lot of opportunity for folks to understand what we are offering. Very convinced that it will be a strong, compelling case. Back to you. The question you asked was interesting in that you said, with the work that you did with Union Pacific before, where are we today? What do I sort of see moving forward? Was that just the question? In essence, as a standalone, not as a merged company. The journey of where you started and where you find yourself today. Right. Listen, I'd love people to be able to ask me questions, and Jennifer and I. That's why I come up to these things, is to get some questions asked. Let's pound through this as quick as we can. If you look at what we've done since I can only talk about when I showed up in 2019, I think Union Pacific operates at a way higher service level. In fact, our service numbers are very high. They're in the high 90s, and some of it at 100%. Remember, we measure what we sold the customer, not our own measure. It's, if we agreed to this, are we delivering that? Is there pockets that might have a problem? Yes. That sets us up pretty good as a standalone company. Operationally, we figured out a way to be able to have the best margin, the best operating ratio in the business. We actually have a pretty complicated, I've worked at another railroad, not as many grades, not as much disbursement of traffic the way it moves, everything else. I think we've done a really good job of using technology and how we move ahead. We're very good, comfortable of where we are. You put those two, good service, good operations, financially in a good place, where we have good free cash flow. We stopped our share buyback. At the end of the day, otherwise, we were going to do about $4.5 billion this year of share buyback. We did that on purpose. We just paid back $1 billion of debt that came up last quarter on purpose. It came up, and we had the cash to do that. Standalone, we stood to what we said at our analyst day that we were going to be high-single-digit to low-double-digit growth over the next three years. We had clear sight of that, no ifs, ands, or buts. That is who we are standalone. What we are standalone is high single digit. Let's just stay with that instead of the double digit. If we can be high single digit, our dividend this morning was at $2.44. You add the value of growth, EPS, plus what we have for I don't know. We're not a tech company. I think we're pretty good. We are a company that has assets, and heart, and value, and land, millions of acres of land. We were well set up all by ourselves. Why are we doing this? Is that the next question? There, I answered the first one. I'm going to stop there. Otherwise, I could go on for another question. You mentioned safety, though, because that's been a good one. Yes, absolutely. You have to be the three foundations. The foundations that we have to have is we also have to be safety. We are talking, we think the way the trend line is going this year, we are going to be the safest railroad in the United States of America when it comes to personal injuries. That is a heck of an improvement and a heck of a lot of work. We have dropped our accident rate down by over 20%. The trend line is accelerating. The slope is better. Good safety, in fact, great safety. Not that we are happy with exactly where we are. You always look for ways to improve it. Good fundamentals in the company financially. Good, great service. I would rate it as the best service in the industry. You can see it from our car velocity and everything else we talk about. Operationally, I think we do a good job of being very efficient on how we use our assets and money. Anything else you want to add? No, you're good there. Perfect. Operating metrics. You guys have got some great operating metrics. I think you've also shown yourselves to be really adaptive. I mean, you've worked through tariff policy, a tremendous amount of West Coast imports, been able to manage that really well. Coal volumes, up, down. I don't know that I've ever seen Union Pacific more adaptive, which probably puts you in a pretty good position to merge. That being said, we just maybe step back and talk a little bit about the rationale for the merger, the opportunity at 30,000 ft that you think it delivers, the network, customers, really the full value proposition that it offers. OK. Fundamentally, everything that I just talked about in the answer to the first question had to be there. If you were not a safe operating railroad, if you were not efficient operationally, if you did not have the right service level, it would be a non-starter. You would never get it through the different regulatory groups, the FRA, and the STB, and politically be able to do that. We needed to have that. I think we have done a good job. We have done that by saying you need to have a buffer. A buffer means on assets and on what the railroad capacity is to be able to handle the swings up and down. We have done that. We are good where we are. If you take a look at it and frame where we are as a railroad industry, there are no ifs, ands, or buts. The trucks are getting and going to be more efficient as they get more autonomous. They are testing them. This is not a pipe dream that you have pie in the sky and you think it might happen. It is happening. In the next few years, we are going to see that competition. The employee that drives the truck is a large piece of the cost that is tied to trucking. I am not saying that the railroads will replace everything a truck can do. In the markets that we are pretty good at right now, and the markets that we think we can grow, we need to be able to be better. That is why it is good for America. That is one. Two is, and we get, listen, I find it humorous. I really do that we get railroads that operate across their country from one end to the other and have 90% of the railroad business for two railroads would have a problem if the United States of America would have the same thing, seamless coast-to-coast movement. I truly find it, I find it disconcerting. It bothers me that some people would be that vocal against this. OK? At the end of the day, people can say whatever they want. That's a bit. That's a benefit. Think about it. I don't know how many of you flew into Chicago and went to Midway or O'Hare. If you had to go to L.A. and you had to get off at the airport here, change airport, go from Midway to O'Hare to go to L.A. as you came from the east somewhere, how many of you would love to do that? How many of you would have thought twice about, do I really want to go listen to these people? Think about the time and effort. I do not even want to ask you how many of you actually checked luggage because you were absolutely sure that that connection would have worked. OK? At the end of the day, it is good for America. We are able to compete better with the world. A lot of the products that we have that we move are not just competitive within the U.S. We are competing against others that have end-to-end network systems that want to move. We compete every day with ports in Canada. Last time I looked, there's hundreds and hundreds of containers that come to the Canadian ports, and some of them from Halifax, all the way into the U.S., and are able to be then handed off and trucked to final destination because there's an advantage in Canada from going end-to-end, and whether it's from Vancouver. What we're going to be able to do is place our business, our ports, our employees in a much more competitive position to be able to compete against others. That is why we want to do that. Financially, absolutely. If we were going to, if we went through all of this and all we ended up with was that we were going to be at high single digit growth, then why do it? We wouldn't do it. Makes no sense to go through this kind of transaction to end up with a railroad that's going to return to our shareholders exactly what the non-combined railroad is going to do. We see the benefit of this in long-haul moves and also moves from both sides of the Mississippi to open up markets for us to move. That is why we're doing this. I could keep on going for the other 17 minutes. One other point. It is good for America. Is it good for our customers? Absolutely. The more we dig into the details, it's truly amazing how many customers we remove touch points where we have to hand it off to somebody else, and they add 24 hours-48 hours to it. We can move not just intermodal, but the boxcar and the tank car business and the merchandise business quicker. And employees? If you guys can on the side, tell me about a railroad that guaranteed a job for every unionized employee when they're going through something like this. Please come up and tell me. Do not tell me about the one where the STB forced them to. Tell me about the ones that came out. I was not born naive. The reason we're doing this is we see the growth, and we see how we move ahead and grow the business, and we need the employees. We will use natural attrition if we have to sort of fix some of the bumps as we get more efficient. Good for customers, good for our employees, great for the country. It is, you know, when I talk to very senior people in the administration, and I tell them the story about what we're doing, they get it. They understand it. All politics aside, they see they cannot believe, Dan. They go, you mean you do not operate from one end of the country to the other? No. We go to Chicago. We go to Memphis. We go to New Orleans. You mean if we want to move something, if we want to move copper from Arizona to the east, you have to hand it off to somebody else? Yes. Really? There's a thousand trucks today that are going to move in Chicago from one railroad to the other by truck. When you tell them the facts and get away from the noise, right, people get it across the entire spectrum, even our customers. It is sort of fun. It is a great story. I cannot believe we did not do this 10 years ago. What do you think, Dan? We should have done it. You think it is a good idea, right? I guess I don't get to ask you questions, do I? You can ask me any question you want. It seems like it's well-timed, right people, right place, right time. You've hit on a lot of what I'm about to ask. Maybe just taking it a step further, we've argued that if we saw one M&A transaction, we would almost certainly see a second. We haven't seen a second at this point. We've also argued that a transcontinental rail delivers a value proposition, potentially a significantly lower landed cost over time, lower variable cost, capital efficiency, fixed cost. You also go to the market with a singular marketing strategy. It's hard to place a I don't know what that means because we've never seen it before. I'd love for you to talk to that. Technology is another thing, the seamless technology, the ability to have visibility over the entire network point to point. There is a lot here that we have not touched on, the watershed markets, the growth opportunities that exist. Can we take it one step further and talk about some of these other areas that should inherently be benefits that stem from the combination? Yeah, you bet. Let's start with if you have a railroad that goes across the United States of America and touches the coast. Let's start with technology. OK? From the customer side, the customer point of view, what the customer is going to be able to do is have one relationship with one bill, with one touch point, and be able to see if that cross-country gives them, which it will, a faster service that drops their asset costs and also is able to have them carry less inventory. That's there. We will take the best of Union Pacific and the best of what Norfolk Southern has and implement it. Our gate technology, where people today can get into our facilities, like some of them do not even have to stop. UP Go app, all the information in, go to one of our terminals where we're not talking about three trucks coming in. OK? They're streaming in. They walk right in. They know where they're going, where do they drop off, and they know where to come to pick it up. Those are all things we implemented net control a year ago, January. I joke around about it. I did say to them, why didn't you guys do that before I came back to work? Basically, they told me if they made a mistake, we were going to be in big trouble because you cannot turn the old system back on easily. OK? We did that because of all the work that the team did. We have the team that did. That is a big deal. That's the fundamental system that runs everything else off of it, collecting money, real important, paying bills, keeping track of the cars, making sure that the regulated commodities are in the right place on the train, you name it, that system did it. We did it with no noise. I rather laugh, and I do. I find it humorous that some railroad who had a problem on their merger are sitting there talking about, oh my god, what happens if Union Pacific? I think we're smart enough to be able to go through this. Other people talk about 1995 and the SP. Any of you want to see the picture? I brought one with me because I've told people that I had big black hair, black curly hair, and a mustache. OK? That is a lifetime ago. Today's Veterans Day. OK? Very important day for us to stop and think about everything that's happened in the 1900s. But son of a gun, do we still go back and think of what happened in 1914 or 1917? Yes, we should learn from it, and we should make sure we never make those mistakes again. But today, I think we understand at Union Pacific how we move ahead to do the things that are right. And I find it humorous but frustrating. But I guess if you don't have a good story, that's what my mother always told me. If you don't have a good story, try to tell another story that's a bunch of bunk and see if somebody else if it'll stick on the wall. OK? Jennifer, anything you want to add? Maybe one thing. No. Kind of piggybacking on the thing about you're reducing friction points for the customers. Right now, unfortunately, a number of our customers employ third-party logistics companies to have them stitch together that view of the end-to-end transportation, to have them review the bills that they're putting together end-to-end. We're eliminating that need. We're giving them the tools that they need, the one-stop shopping that they desire. That is why many go to trucking for short-haul moves or even spot moves, because it's much easier to just pick up that phone and call a broker and then have it handled end-to-end. We'll be able to do that now on an end-to-end basis that will give them the cost savings, the safety, the public benefits of rail that they're not able to access today as easily. It is a big deal. Watershed markets have been an area of focus. Could you just frame that one more time for us so we're clear on what the opportunity is for growth there? Yeah. When we talk about the watershed, we're really talking about that center part of the country where either side of the Mississippi or the Missouri, pick a river, whichever one you want, but where you're essentially being, if you're a customer who's in close proximity to one of those areas, one of the railroads is going to end up, we'll call it, short-hauling themselves. It might be a 200 mi move on UP's side, but maybe it's a 500 mi or 600 mi move on the NS today. You've got fixed costs on both railroads that need to be covered with that. It becomes very difficult economically for us to price that for that 200 mi move to cover our fixed costs. When you think about the interchange that has to happen in between there and the time for that, that's something else that is money for our customers because that time that that freight has to spend there, there's a cost to that. That's not free. You eliminate that time piece. You eliminate having the two sets of fixed costs. It becomes much more economical for us and for the shipper to do that. That's a big market opportunity that we see opening up for us as part of this merger. Right. Now, part of your question was about one merger or maybe going to another. At the end of the day, every company needs to decide what's the best for them and how they want to spend some capital and whether it's a good return. We've done the homework. And for Union Pacific, we're very comfortable. I think what we'll find when the votes all in this Friday and we announce it, I think our shareholders are going to understand what it is that we're doing and understand at a real high level from the preliminary numbers that we're getting that we're in a good place. At the end of it, do I think down the road the competition, what are we going to do to competition? We're going to be able to compete harder against Berkshire. We're going to be able to compete harder against CSX, against Canadian Pacific, and against Canadian National. If we can put, and we know we can do that, faster service, real low incident rate, real safe railroad. We're going to be able to show the value to our customers in that any time they cross the Mississippi, they're going to have fewer assets they need and less inventory. That saves them money. Even if we just increase the rates at the regular whatever number it is that the market sort of will allow us to do that, they're going to benefit from that. They know that. We're going to open up markets for customers that today it's tough for them, like Jennifer was saying, to go from one side to the other. We are going to do that. There's no if. This is not an if discussion. This is an absolutely that's there and possible. If anybody thinks I make up these, yes, we're going to do that, go listen to the first call in 2019 when I showed up in January. On the 14th January, sorry, 7th January, they announced me. I was on the first call. What I said was, this is what we're going to do. If somebody listened, go check those off. We are going to have the fastest service across the United States of America. We are going to have the least touch points where something can lose your luggage across the United States of America. We're going to allow customers to win in the marketplace and win against people like Brazil that are trying to sell more soybeans into Mexico or trying to get a foothill into the U.S. in the eastern parts of the U.S. We're going to compete harder and have our customers and the states and the people that work for Union Pacific win coming across moving products. That is all there. Up to Berkshire if they want to do something. They have the cash. I think last time I looked, my wife, I asked my wife this morning, how much cash are they carrying? Because she's been a longtime shareholder. They are a great company. They made some great decisions. They made a couple of bad ones. I think on this one here, I'll leave that alone. I'll let somebody else decide that one. Bottom line is they got $330 billion of cash available. If they wanted to buy something, they have it. It is up to them. As hard as they have come out of the gate telling things that are just completely like they put out a two-pager, and I have got it sitting in my bathroom wall next to the sink with the toothpaste. It is on the bathroom wall that says we are going to shut down 300 lanes. I go, really? Why would we shut off 300 lanes? First of all, we do not have 300 lanes like in Intermodal. There is not that many lanes, like one that goes north out of L.A., another one that goes to Chicago, another one that goes to Memphis, another one goes to Atlanta. Like, what the heck lanes do we have? I had to ask Kenny, are you hiding 290 lanes from me that I do not understand? They said we are going to shut down those many. I laugh. I find it interesting that Berkshire is coming after us that hard. In fact, why do I call them Berkshire? I will be honest so anybody can hear it. We are actually Union Pacific Corp and we own a railroad. I am the CEO of Union Pacific Corp and the CEO of Union Pacific Railroad. What is humorous about it is some people at Burlington Northern Santa Fe were taken aback that I would call them Berkshire. Last time I looked, that is the publicly traded company just like Union Pacific Corp. I have to have some fun too. OK. I have another question I want to ask, but I'd also like to present the gallery with an opportunity to ask a question if anyone would care to ask one. Fair enough. You know the way I think, Dan, and I've said this to the group, if all of you who heard me speak and have a little bit of fun, because we do have a little fun at Union Pacific. If you don't have any questions for me, you've agreed with everything I have to say. OK? I don't want to hear anybody write stuff that's against us going into it. Real quick, we've got two minutes left. One of the consequences of the proposed merger has been a flurry of joint service announcements, collaborations in the East from some of your competitors. Said differently, it seems like competition in the East is enhanced. Competition in the East has increased. What does that mean for the domestic intermodal market? What are the consequences of some of these announcements? How is Union Pacific responding to those announcements? That's all I got. It is a great question. The timing is perfect for them. They have sat down and looked at it. They said, what happens when Union Pacific and Norfolk Southern get together? How do we compete against that railroad? They are trying to do service agreements. They are good. Service agreements are good. You can see what happened with the service agreement that Norfolk Southern had with Canadian Pacific over the Meridian Speedway. Kansas City forever used to allow an 11,000-foot train to operate. All of a sudden, when Canadian Pacific took over, and in the last few months, they decided to cut back the train size that was always handled before the merger and even since the merger. At the end of the day, that is the problem with those. Kansas City is saying to us, you are going to have to run two trains at Union Pacific. We are going, if we have to, we will run two trains. That is the way it is. The first question we asked them was, why? What changed from five years of being able to run an 11,000-foot train from L.A. all the way into that market, and now you cannot? That is what you have to be careful with with some of those deals, is they break down and people look internally. Fair enough. I want to thank you for being here. Thanks for having us. Appreciate the opportunity to ask questions. I hope the rest of the conference goes well for you. Safe travels. Listen, thank you very much.

Speaker 1: Moore, I'm the senior transportation analyst here at Baird. I'm part of the executive leadership team, a substantive part of the executive leadership team at Union Pacific that's joining us today. Very, very pleased to have you here. We're going to walk through some questions. I have a feeling it will have a way of taking it where it takes us, if history is any precedent. I wanted to start off just very big picture. Your arrival at Union Pacific several years ago as a consultant, and then ultimately as essentially Chief Operating Officer. Moore, I'm the senior transportation analyst here at Baird. moore i'm the senior transportation analyst here at baird I'm part of the executive leadership team, a substantive part of the executive leadership team at Union Pacific that's joining us today. i'm part of the executive leadership team a substantive part of the executive leadership team at union pacific that's joining us today Very, very pleased to have you here. very very pleased to have you here We're going to walk through some questions. we're going to walk through some questions I have a feeling it will have a way of taking it where it takes us, if history is any precedent. i have a feeling it will have a way of taking it where it takes us if history is any precedent I wanted to start off just very big picture. i wanted to start off just very big picture Your arrival at Union Pacific several years ago as a consultant, and then ultimately as essentially Chief Operating Officer. your arrival at union pacific several years ago as a consultant and then ultimately as essentially chief operating officer

Speaker 3: Did you just call me a consultant? Did you just call me a consultant? did you just call me a consultant

Speaker 1: I think there was a period there where you were described as a consultant, which I never really agreed with that view. In any event, I'd be curious to just frame the Union Pacific, the opportunities that you saw when you arrived, the things you wanted to achieve, the things you did achieve, and where Union Pacific is today relative to your initial views. Just kind of a post view of Jim Vena, and his arrival at UP, and where we find ourselves today. I think there was a period there where you were described as a consultant, which I never really agreed with that view. i think there was a period there where you were described as a consultant which i never really agreed with that view In any event, I'd be curious to just frame the Union Pacific, the opportunities that you saw when you arrived, the things you wanted to achieve, the things you did achieve, and where Union Pacific is today relative to your initial views. in any event i'd be curious to just frame the union pacific the opportunities that you saw when you arrived the things you wanted to achieve the things you did achieve and where union pacific is today relative to your initial views Just kind of a post view of Jim Vena, and his arrival at UP, and where we find ourselves today. just kind of a post view of jim vena and his arrival at up and where we find ourselves today

Speaker 3: OK. So listen, why don't we real quick, because I know we only have 30 minutes. OK. ok So listen, why don't we real quick, because I know we only have 30 minutes. so listen why don't we real quick because i know we only have 30 minutes

Speaker 1: Pardon me. We do have slideshow. Pardon me. pardon me We do have slideshow. we do have slideshow

Speaker 3: No, no, no. No, no, no. no no no

Speaker 1: We're going right to the bottom. We're going right to the bottom. we're going right to the bottom

Speaker 3: That's right. That's right. that's right

Speaker 1: If it takes us longer, Jennifer and I, than two minutes to tell you the story about the slides, then we do not know what we are talking about. This first one, you guys better read it. There are five pages of boilerplate now. It used to be one. Any time you go through a merger, there is somebody who wants to add about four pages. I think lawyers make a lot of money. Next page. Bottom line is, anybody that has followed us, best operating ratio, real good car velocity, real good operating ratio, number one in the industry for a while, service performance real high. Jennifer? If it takes us longer, Jennifer and I, than two minutes to tell you the story about the slides, then we do not know what we are talking about. if it takes us longer jennifer and i than two minutes to tell you the story about the slides then we do not know what we are talking about This first one, you guys better read it. There are five pages of boilerplate now. this first one you guys better read it. there are five pages of boilerplate now It used to be one. it used to be one Any time you go through a merger, there is somebody who wants to add about four pages. any time you go through a merger, there is somebody who wants to add about four pages I think lawyers make a lot of money. i think lawyers make a lot of money Next page. next page Bottom line is, anybody that has followed us, best operating ratio, real good car velocity, real good operating ratio, number one in the industry for a while, service performance real high. bottom line is anybody that has followed us best operating ratio real good car velocity real good operating ratio number one in the industry for a while service performance real high Jennifer? jennifer

Speaker 2: My stuff is even quicker. Just a little timeline. Big week for us, though, this week on Friday is the shareholder meeting. It is for both us and Norfolk Southern. For Union Pacific, it is to approve our issuance of shares. After that, we will be working, obviously, we are already working on it. The next big milestone will be our application with the Surface Transportation Board. We are still expecting that to be early part of December, likely that first week. The process really begins then. We will be communicating with that. It is a very open process, so there will be a lot of opportunity for folks to understand what we are offering. Very convinced that it will be a strong, compelling case. Back to you. My stuff is even quicker. my stuff is even quicker Just a little timeline. just a little timeline Big week for us, though, this week on Friday is the shareholder meeting. It is for both us and Norfolk Southern. big week for us though this week on friday is the shareholder meeting. it is for both us and norfolk southern For Union Pacific, it is to approve our issuance of shares. for union pacific, it is to approve our issuance of shares After that, we will be working, obviously, we are already working on it. after that, we will be working obviously, we are already working on it The next big milestone will be our application with the Surface Transportation Board. We are still expecting that to be early part of December, likely that first week. the next big milestone will be our application with the surface transportation board. we are still expecting that to be early part of december likely that first week The process really begins then. the process really begins then We will be communicating with that. It is a very open process, so there will be a lot of opportunity for folks to understand what we are offering. we will be communicating with that. it is a very open process so there will be a lot of opportunity for folks to understand what we are offering Very convinced that it will be a strong, compelling case. very convinced that it will be a strong compelling case Back to you. back to you

Speaker 3: The question you asked was interesting in that you said, with the work that you did with Union Pacific before, where are we today? What do I sort of see moving forward? Was that just the question? The question you asked was interesting in that you said, with the work that you did with Union Pacific before, where are we today? the question you asked was interesting in that you said with the work that you did with union pacific before where are we today What do I sort of see moving forward? what do i sort of see moving forward Was that just the question? was that just the question

Speaker 1: In essence, as a standalone, not as a merged company. The journey of where you started and where you find yourself today. In essence, as a standalone, not as a merged company. in essence as a standalone not as a merged company The journey of where you started and where you find yourself today. the journey of where you started and where you find yourself today

Speaker 3: Right. Listen, I'd love people to be able to ask me questions, and Jennifer and I. That's why I come up to these things, is to get some questions asked. Let's pound through this as quick as we can. If you look at what we've done since I can only talk about when I showed up in 2019, I think Union Pacific operates at a way higher service level. In fact, our service numbers are very high. They're in the high 90s, and some of it at 100%. Remember, we measure what we sold the customer, not our own measure. It's, if we agreed to this, are we delivering that? Is there pockets that might have a problem? Yes. That sets us up pretty good as a standalone company. Right. right Listen, I'd love people to be able to ask me questions, and Jennifer and I. listen i'd love people to be able to ask me questions and jennifer and i That's why I come up to these things, is to get some questions asked. that's why i come up to these things is to get some questions asked Let's pound through this as quick as we can. let's pound through this as quick as we can If you look at what we've done since I can only talk about when I showed up in 2019, I think Union Pacific operates at a way higher service level. if you look at what we've done since i can only talk about when i showed up in 2019 i think union pacific operates at a way higher service level In fact, our service numbers are very high. in fact our service numbers are very high They're in the high 90s, and some of it at 100%. they're in the high 90s and some of it at 100% Remember, we measure what we sold the customer, not our own measure. remember we measure what we sold the customer not our own measure It's, if we agreed to this, are we delivering that? it's if we agreed to this are we delivering that Is there pockets that might have a problem? is there pockets that might have a problem Yes. yes That sets us up pretty good as a standalone company. that sets us up pretty good as a standalone company Operationally, we figured out a way to be able to have the best margin, the best operating ratio in the business. We actually have a pretty complicated, I've worked at another railroad, not as many grades, not as much disbursement of traffic the way it moves, everything else. I think we've done a really good job of using technology and how we move ahead. We're very good, comfortable of where we are. You put those two, good service, good operations, financially in a good place, where we have good free cash flow. We stopped our share buyback. At the end of the day, otherwise, we were going to do about $4.5 billion this year of share buyback. We did that on purpose. We just paid back $1 billion of debt that came up last quarter on purpose. Operationally, we figured out a way to be able to have the best margin, the best operating ratio in the business. operationally we figured out a way to be able to have the best margin the best operating ratio in the business We actually have a pretty complicated, I've worked at another railroad, not as many grades, not as much disbursement of traffic the way it moves, everything else. we actually have a pretty complicated i've worked at another railroad not as many grades not as much disbursement of traffic the way it moves everything else I think we've done a really good job of using technology and how we move ahead. i think we've done a really good job of using technology and how we move ahead We're very good, comfortable of where we are. we're very good comfortable of where we are You put those two, good service, good operations, financially in a good place, where we have good free cash flow. you put those two good service good operations financially in a good place where we have good free cash flow We stopped our share buyback. we stopped our share buyback At the end of the day, otherwise, we were going to do about $4.5 billion this year of share buyback. at the end of the day otherwise we were going to do about $4.5 billion this year of share buyback We did that on purpose. we did that on purpose We just paid back $1 billion of debt that came up last quarter on purpose. we just paid back $1 billion of debt that came up last quarter on purpose It came up, and we had the cash to do that. Standalone, we stood to what we said at our analyst day that we were going to be high-single-digit to low-double-digit growth over the next three years. We had clear sight of that, no ifs, ands, or buts. That is who we are standalone. What we are standalone is high single digit. Let's just stay with that instead of the double digit. If we can be high single digit, our dividend this morning was at $2.44. You add the value of growth, EPS, plus what we have for I don't know. We're not a tech company. I think we're pretty good. We are a company that has assets, and heart, and value, and land, millions of acres of land. We were well set up all by ourselves. It came up, and we had the cash to do that. it came up and we had the cash to do that Standalone, we stood to what we said at our analyst day that we were going to be high- single- digit to low- double- digit growth over the next three years. standalone we stood to what we said at our analyst day that we were going to be high- single- digit to low- double- digit growth over the next three years We had clear sight of that, no ifs, ands, or buts. we had clear sight of that no ifs ands or buts That is who we are standalone. that is who we are standalone What we are standalone is high single digit. what we are standalone is high single digit Let's just stay with that instead of the double digit. let's just stay with that instead of the double digit If we can be high single digit, our dividend this morning was at $2.44. if we can be high single digit our dividend this morning was at $2.44 You add the value of growth, EPS, plus what we have for I don't know. you add the value of growth eps plus what we have for i don't know We're not a tech company. we're not a tech company I think we're pretty good. i think we're pretty good We are a company that has assets, and heart, and value, and land, millions of acres of land. we are a company that has assets and heart and value and land millions of acres of land We were well set up all by ourselves. we were well set up all by ourselves Why are we doing this? Is that the next question? There, I answered the first one. I'm going to stop there. Otherwise, I could go on for another question. Why are we doing this? why are we doing this Is that the next question? is that the next question There, I answered the first one. there i answered the first one I'm going to stop there. i'm going to stop there Otherwise, I could go on for another question. otherwise i could go on for another question

Speaker 2: You mentioned safety, though, because that's been a good one. You mentioned safety, though, because that's been a good one. you mentioned safety though because that's been a good one

Speaker 3: Yes, absolutely. You have to be the three foundations. The foundations that we have to have is we also have to be safety. We are talking, we think the way the trend line is going this year, we are going to be the safest railroad in the United States of America when it comes to personal injuries. That is a heck of an improvement and a heck of a lot of work. We have dropped our accident rate down by over 20%. The trend line is accelerating. The slope is better. Good safety, in fact, great safety. Not that we are happy with exactly where we are. You always look for ways to improve it. Good fundamentals in the company financially. Good, great service. I would rate it as the best service in the industry. Yes, absolutely. yes absolutely You have to be the three foundations. you have to be the three foundations The foundations that we have to have is we also have to be safety. the foundations that we have to have is we also have to be safety We are talking, we think the way the trend line is going this year, we are going to be the safest railroad in the United States of America when it comes to personal injuries. we are talking we think the way the trend line is going this year we are going to be the safest railroad in the united states of america when it comes to personal injuries That is a heck of an improvement and a heck of a lot of work. that is a heck of an improvement and a heck of a lot of work We have dropped our accident rate down by over 20%. we have dropped our accident rate down by over 20% The trend line is accelerating. the trend line is accelerating The slope is better. the slope is better Good safety, in fact, great safety. good safety in fact great safety Not that we are happy with exactly where we are. not that we are happy with exactly where we are You always look for ways to improve it. you always look for ways to improve it Good fundamentals in the company financially. good fundamentals in the company financially Good, great service. good great service I would rate it as the best service in the industry. i would rate it as the best service in the industry You can see it from our car velocity and everything else we talk about. Operationally, I think we do a good job of being very efficient on how we use our assets and money. Anything else you want to add? You can see it from our car velocity and everything else we talk about. you can see it from our car velocity and everything else we talk about Operationally, I think we do a good job of being very efficient on how we use our assets and money. operationally i think we do a good job of being very efficient on how we use our assets and money Anything else you want to add? anything else you want to add

Speaker 2: No, you're good there. No, you're good there. no you're good there

Speaker 3: Perfect. Perfect. perfect

Speaker 1: Operating metrics. You guys have got some great operating metrics. I think you've also shown yourselves to be really adaptive. I mean, you've worked through tariff policy, a tremendous amount of West Coast imports, been able to manage that really well. Coal volumes, up, down. I don't know that I've ever seen Union Pacific more adaptive, which probably puts you in a pretty good position to merge. That being said, we just maybe step back and talk a little bit about the rationale for the merger, the opportunity at 30,000 ft that you think it delivers, the network, customers, really the full value proposition that it offers. Operating metrics. operating metrics You guys have got some great operating metrics. you guys have got some great operating metrics I think you've also shown yourselves to be really adaptive. i think you've also shown yourselves to be really adaptive I mean, you've worked through tariff policy, a tremendous amount of West Coast imports, been able to manage that really well. i mean you've worked through tariff policy a tremendous amount of west coast imports been able to manage that really well Coal volumes, up, down. coal volumes up down I don't know that I've ever seen Union Pacific more adaptive, which probably puts you in a pretty good position to merge. i don't know that i've ever seen union pacific more adaptive which probably puts you in a pretty good position to merge That being said, we just maybe step back and talk a little bit about the rationale for the merger, the opportunity at 30,000 ft that you think it delivers, the network, customers, really the full value proposition that it offers. that being said we just maybe step back and talk a little bit about the rationale for the merger the opportunity at 30,000 ft that you think it delivers the network customers really the full value proposition that it offers

Speaker 3: OK. Fundamentally, everything that I just talked about in the answer to the first question had to be there. If you were not a safe operating railroad, if you were not efficient operationally, if you did not have the right service level, it would be a non-starter. You would never get it through the different regulatory groups, the FRA, and the STB, and politically be able to do that. We needed to have that. I think we have done a good job. We have done that by saying you need to have a buffer. A buffer means on assets and on what the railroad capacity is to be able to handle the swings up and down. We have done that. We are good where we are. If you take a look at it and frame where we are as a railroad industry, there are no ifs, ands, or buts. OK. ok Fundamentally, everything that I just talked about in the answer to the first question had to be there. fundamentally everything that i just talked about in the answer to the first question had to be there If you were not a safe operating railroad, if you were not efficient operationally, if you did not have the right service level, it would be a non-starter. if you were not a safe operating railroad if you were not efficient operationally if you did not have the right service level it would be a non-starter You would never get it through the different regulatory groups, the FRA, and the STB, and politically be able to do that. you would never get it through the different regulatory groups the fra and the stb and politically be able to do that We needed to have that. we needed to have that I think we have done a good job. i think we have done a good job We have done that by saying you need to have a buffer. we have done that by saying you need to have a buffer A buffer means on assets and on what the railroad capacity is to be able to handle the swings up and down. a buffer means on assets and on what the railroad capacity is to be able to handle the swings up and down We have done that. we have done that We are good where we are. we are good where we are If you take a look at it and frame where we are as a railroad industry, there are no ifs, ands, or buts. if you take a look at it and frame where we are as a railroad industry, there are no ifs ands or buts The trucks are getting and going to be more efficient as they get more autonomous. They are testing them. This is not a pipe dream that you have pie in the sky and you think it might happen. It is happening. In the next few years, we are going to see that competition. The employee that drives the truck is a large piece of the cost that is tied to trucking. I am not saying that the railroads will replace everything a truck can do. In the markets that we are pretty good at right now, and the markets that we think we can grow, we need to be able to be better. That is why it is good for America. That is one. Two is, and we get, listen, I find it humorous. The trucks are getting and going to be more efficient as they get more autonomous. the trucks are getting and going to be more efficient as they get more autonomous They are testing them. they are testing them This is not a pipe dream that you have pie in the sky and you think it might happen. this is not a pipe dream that you have pie in the sky and you think it might happen It is happening. it is happening In the next few years, we are going to see that competition. in the next few years, we are going to see that competition The employee that drives the truck is a large piece of the cost that is tied to trucking. I am not saying that the railroads will replace everything a truck can do. the employee that drives the truck is a large piece of the cost that is tied to trucking. i am not saying that the railroads will replace everything a truck can do In the markets that we are pretty good at right now, and the markets that we think we can grow, we need to be able to be better. in the markets that we are pretty good at right now and the markets that we think we can grow we need to be able to be better That is why it is good for America. that is why it is good for america That is one. that is one Two is, and we get, listen, I find it humorous. two is and we get listen i find it humorous I really do that we get railroads that operate across their country from one end to the other and have 90% of the railroad business for two railroads would have a problem if the United States of America would have the same thing, seamless coast-to-coast movement. I truly find it, I find it disconcerting. It bothers me that some people would be that vocal against this. OK? At the end of the day, people can say whatever they want. That's a bit. That's a benefit. Think about it. I don't know how many of you flew into Chicago and went to Midway or O'Hare. If you had to go to L.A. and you had to get off at the airport here, change airport, go from Midway to O'Hare to go to L.A. as you came from the east somewhere, how many of you would love to do that? I really do that we get railroads that operate across their country from one end to the other and have 90% of the railroad business for two railroads would have a problem if the United States of America would have the same thing, seamless coast-to-coast movement. i really do that we get railroads that operate across their country from one end to the other and have 90% of the railroad business for two railroads would have a problem if the united states of america would have the same thing seamless coast-to-coast movement I truly find it, I find it disconcerting. i truly find it i find it disconcerting It bothers me that some people would be that vocal against this. it bothers me that some people would be that vocal against this OK? ok At the end of the day, people can say whatever they want. at the end of the day people can say whatever they want That's a bit. that's a bit That's a benefit. that's a benefit Think about it. think about it I don't know how many of you flew into Chicago and went to Midway or O'Hare. i don't know how many of you flew into chicago and went to midway or o'hare If you had to go to L.A. and you had to get off at the airport here, change airport, go from Midway to O'Hare to go to L.A. as you came from the east somewhere, how many of you would love to do that? if you had to go to l.a and you had to get off at the airport here change airport go from midway to o'hare to go to l.a as you came from the east somewhere how many of you would love to do that How many of you would have thought twice about, do I really want to go listen to these people? Think about the time and effort. I do not even want to ask you how many of you actually checked luggage because you were absolutely sure that that connection would have worked. OK? At the end of the day, it is good for America. We are able to compete better with the world. A lot of the products that we have that we move are not just competitive within the U.S. We are competing against others that have end-to-end network systems that want to move. We compete every day with ports in Canada. How many of you would have thought twice about, do I really want to go listen to these people? how many of you would have thought twice about do i really want to go listen to these people Think about the time and effort. think about the time and effort I do not even want to ask you how many of you actually checked luggage because you were absolutely sure that that connection would have worked. i do not even want to ask you how many of you actually checked luggage because you were absolutely sure that that connection would have worked OK? ok At the end of the day, it is good for America. at the end of the day it is good for america We are able to compete better with the world. we are able to compete better with the world A lot of the products that we have that we move are not just competitive within the U.S. a lot of the products that we have that we move are not just competitive within the u.s We are competing against others that have end-to-end network systems that want to move. we are competing against others that have end-to-end network systems that want to move We compete every day with ports in Canada. we compete every day with ports in canada Last time I looked, there's hundreds and hundreds of containers that come to the Canadian ports, and some of them from Halifax, all the way into the U.S., and are able to be then handed off and trucked to final destination because there's an advantage in Canada from going end-to-end, and whether it's from Vancouver. What we're going to be able to do is place our business, our ports, our employees in a much more competitive position to be able to compete against others. That is why we want to do that. Financially, absolutely. If we were going to, if we went through all of this and all we ended up with was that we were going to be at high single digit growth, then why do it? We wouldn't do it. Last time I looked, there's hundreds and hundreds of containers that come to the Canadian ports, and some of them from Halifax, all the way into the U.S., and are able to be then handed off and trucked to final destination because there's an advantage in Canada from going end-to-end, and whether it's from Vancouver. last time i looked there's hundreds and hundreds of containers that come to the canadian ports and some of them from halifax all the way into the u.s and are able to be then handed off and trucked to final destination because there's an advantage in canada from going end-to-end and whether it's from vancouver What we're going to be able to do is place our business, our ports, our employees in a much more competitive position to be able to compete against others. what we're going to be able to do is place our business our ports our employees in a much more competitive position to be able to compete against others That is why we want to do that. that is why we want to do that Financially, absolutely. financially absolutely If we were going to, if we went through all of this and all we ended up with was that we were going to be at high single digit growth, then why do it? if we were going to if we went through all of this and all we ended up with was that we were going to be at high single digit growth then why do it We wouldn't do it. we wouldn't do it Makes no sense to go through this kind of transaction to end up with a railroad that's going to return to our shareholders exactly what the non-combined railroad is going to do. We see the benefit of this in long-haul moves and also moves from both sides of the Mississippi to open up markets for us to move. That is why we're doing this. I could keep on going for the other 17 minutes. One other point. It is good for America. Is it good for our customers? Absolutely. The more we dig into the details, it's truly amazing how many customers we remove touch points where we have to hand it off to somebody else, and they add 24 hours-48 hours to it. We can move not just intermodal, but the boxcar and the tank car business and the merchandise business quicker. And employees? Makes no sense to go through this kind of transaction to end up with a railroad that's going to return to our shareholders exactly what the non-combined railroad is going to do. makes no sense to go through this kind of transaction to end up with a railroad that's going to return to our shareholders exactly what the non-combined railroad is going to do We see the benefit of this in long-haul moves and also moves from both sides of the Mississippi to open up markets for us to move. we see the benefit of this in long-haul moves and also moves from both sides of the mississippi to open up markets for us to move That is why we're doing this. that is why we're doing this I could keep on going for the other 17 minutes. i could keep on going for the other 17 minutes One other point. one other point It is good for America. it is good for america Is it good for our customers? is it good for our customers Absolutely. absolutely The more we dig into the details, it's truly amazing how many customers we remove touch points where we have to hand it off to somebody else, and they add 24 hours-48 hours to it. the more we dig into the details it's truly amazing how many customers we remove touch points where we have to hand it off to somebody else and they add 24 hours-48 hours to it We can move not just intermodal, but the boxcar and the tank car business and the merchandise business quicker. we can move not just intermodal but the boxcar and the tank car business and the merchandise business quicker And employees? and employees If you guys can on the side, tell me about a railroad that guaranteed a job for every unionized employee when they're going through something like this. Please come up and tell me. Do not tell me about the one where the STB forced them to. Tell me about the ones that came out. I was not born naive. The reason we're doing this is we see the growth, and we see how we move ahead and grow the business, and we need the employees. We will use natural attrition if we have to sort of fix some of the bumps as we get more efficient. Good for customers, good for our employees, great for the country. It is, you know, when I talk to very senior people in the administration, and I tell them the story about what we're doing, they get it. They understand it. If you guys can on the side, tell me about a railroad that guaranteed a job for every unionized employee when they're going through something like this. if you guys can on the side tell me about a railroad that guaranteed a job for every unionized employee when they're going through something like this Please come up and tell me. Do not tell me about the one where the STB forced them to. please come up and tell me. do not tell me about the one where the stb forced them to Tell me about the ones that came out. tell me about the ones that came out I was not born naive. i was not born naive The reason we're doing this is we see the growth, and we see how we move ahead and grow the business, and we need the employees. the reason we're doing this is we see the growth and we see how we move ahead and grow the business and we need the employees We will use natural attrition if we have to sort of fix some of the bumps as we get more efficient. we will use natural attrition if we have to sort of fix some of the bumps as we get more efficient Good for customers, good for our employees, great for the country. good for customers good for our employees great for the country It is, you know, when I talk to very senior people in the administration, and I tell them the story about what we're doing, they get it. it is you know when i talk to very senior people in the administration and i tell them the story about what we're doing they get it They understand it. they understand it All politics aside, they see they cannot believe, Dan. They go, you mean you do not operate from one end of the country to the other? No. We go to Chicago. We go to Memphis. We go to New Orleans. You mean if we want to move something, if we want to move copper from Arizona to the east, you have to hand it off to somebody else? Yes. Really? There's a thousand trucks today that are going to move in Chicago from one railroad to the other by truck. When you tell them the facts and get away from the noise, right, people get it across the entire spectrum, even our customers. It is sort of fun. It is a great story. I cannot believe we did not do this 10 years ago. What do you think, Dan? We should have done it. You think it is a good idea, right? All politics aside, they see they cannot believe, Dan. all politics aside they see they cannot believe dan They go, you mean you do not operate from one end of the country to the other? they go you mean you do not operate from one end of the country to the other No. no We go to Chicago. we go to chicago We go to Memphis. we go to memphis We go to New Orleans. we go to new orleans You mean if we want to move something, if we want to move copper from Arizona to the east, you have to hand it off to somebody else? you mean if we want to move something if we want to move copper from arizona to the east you have to hand it off to somebody else Yes. yes Really? There's a thousand trucks today that are going to move in Chicago from one railroad to the other by truck. really? there's a thousand trucks today that are going to move in chicago from one railroad to the other by truck When you tell them the facts and get away from the noise, right, people get it across the entire spectrum, even our customers. when you tell them the facts and get away from the noise right people get it across the entire spectrum even our customers It is sort of fun. It is a great story. it is sort of fun. it is a great story I cannot believe we did not do this 10 years ago. i cannot believe we did not do this 10 years ago What do you think, Dan? what do you think dan We should have done it. we should have done it You think it is a good idea, right? you think it is a good idea right I guess I don't get to ask you questions, do I? I guess I don't get to ask you questions, do I? i guess i don't get to ask you questions do i

Speaker 1: You can ask me any question you want. It seems like it's well-timed, right people, right place, right time. You've hit on a lot of what I'm about to ask. Maybe just taking it a step further, we've argued that if we saw one M&A transaction, we would almost certainly see a second. We haven't seen a second at this point. We've also argued that a transcontinental rail delivers a value proposition, potentially a significantly lower landed cost over time, lower variable cost, capital efficiency, fixed cost. You also go to the market with a singular marketing strategy. It's hard to place a I don't know what that means because we've never seen it before. I'd love for you to talk to that. You can ask me any question you want. you can ask me any question you want It seems like it's well-timed, right people, right place, right time. it seems like it's well-timed right people right place right time You've hit on a lot of what I'm about to ask. you've hit on a lot of what i'm about to ask Maybe just taking it a step further, we've argued that if we saw one M&A transaction, we would almost certainly see a second. maybe just taking it a step further we've argued that if we saw one m&a transaction we would almost certainly see a second We haven't seen a second at this point. we haven't seen a second at this point We've also argued that a transcontinental rail delivers a value proposition, potentially a significantly lower landed cost over time, lower variable cost, capital efficiency, fixed cost. we've also argued that a transcontinental rail delivers a value proposition potentially a significantly lower landed cost over time lower variable cost capital efficiency fixed cost You also go to the market with a singular marketing strategy. you also go to the market with a singular marketing strategy It's hard to place a I don't know what that means because we've never seen it before. it's hard to place a i don't know what that means because we've never seen it before I'd love for you to talk to that. i'd love for you to talk to that Technology is another thing, the seamless technology, the ability to have visibility over the entire network point to point. There is a lot here that we have not touched on, the watershed markets, the growth opportunities that exist. Can we take it one step further and talk about some of these other areas that should inherently be benefits that stem from the combination? Technology is another thing, the seamless technology, the ability to have visibility over the entire network point to point. There is a lot here that we have not touched on, the watershed markets, the growth opportunities that exist. technology is another thing the seamless technology the ability to have visibility over the entire network point to point. there is a lot here that we have not touched on the watershed markets the growth opportunities that exist Can we take it one step further and talk about some of these other areas that should inherently be benefits that stem from the combination? can we take it one step further and talk about some of these other areas that should inherently be benefits that stem from the combination

Speaker 3: Yeah, you bet. Let's start with if you have a railroad that goes across the United States of America and touches the coast. Let's start with technology. OK? From the customer side, the customer point of view, what the customer is going to be able to do is have one relationship with one bill, with one touch point, and be able to see if that cross-country gives them, which it will, a faster service that drops their asset costs and also is able to have them carry less inventory. That's there. We will take the best of Union Pacific and the best of what Norfolk Southern has and implement it. Our gate technology, where people today can get into our facilities, like some of them do not even have to stop. Yeah, you bet. yeah you bet Let's start with if you have a railroad that goes across the United States of America and touches the coast. let's start with if you have a railroad that goes across the united states of america and touches the coast Let's start with technology. let's start with technology OK? ok From the customer side, the customer point of view, what the customer is going to be able to do is have one relationship with one bill, with one touch point, and be able to see if that cross-country gives them, which it will, a faster service that drops their asset costs and also is able to have them carry less inventory. from the customer side the customer point of view what the customer is going to be able to do is have one relationship with one bill with one touch point and be able to see if that cross-country gives them which it will a faster service that drops their asset costs and also is able to have them carry less inventory That's there. that's there We will take the best of Union Pacific and the best of what Norfolk Southern has and implement it. we will take the best of union pacific and the best of what norfolk southern has and implement it Our gate technology, where people today can get into our facilities, like some of them do not even have to stop. our gate technology where people today can get into our facilities like some of them do not even have to stop UP Go app, all the information in, go to one of our terminals where we're not talking about three trucks coming in. OK? They're streaming in. They walk right in. They know where they're going, where do they drop off, and they know where to come to pick it up. Those are all things we implemented net control a year ago, January. I joke around about it. I did say to them, why didn't you guys do that before I came back to work? Basically, they told me if they made a mistake, we were going to be in big trouble because you cannot turn the old system back on easily. OK? We did that because of all the work that the team did. We have the team that did. That is a big deal. UP Go app, all the information in, go to one of our terminals where we're not talking about three trucks coming in. up go app all the information in go to one of our terminals where we're not talking about three trucks coming in OK? ok They're streaming in. they're streaming in They walk right in. they walk right in They know where they're going, where do they drop off, and they know where to come to pick it up. they know where they're going where do they drop off and they know where to come to pick it up Those are all things we implemented net control a year ago, January. those are all things we implemented net control a year ago january I joke around about it. i joke around about it I did say to them, why didn't you guys do that before I came back to work? i did say to them why didn't you guys do that before i came back to work Basically, they told me if they made a mistake, we were going to be in big trouble because you cannot turn the old system back on easily. basically they told me if they made a mistake we were going to be in big trouble because you cannot turn the old system back on easily OK? ok We did that because of all the work that the team did. we did that because of all the work that the team did We have the team that did. we have the team that did That is a big deal. that is a big deal That's the fundamental system that runs everything else off of it, collecting money, real important, paying bills, keeping track of the cars, making sure that the regulated commodities are in the right place on the train, you name it, that system did it. We did it with no noise. I rather laugh, and I do. I find it humorous that some railroad who had a problem on their merger are sitting there talking about, oh my god, what happens if Union Pacific? I think we're smart enough to be able to go through this. Other people talk about 1995 and the SP. Any of you want to see the picture? I brought one with me because I've told people that I had big black hair, black curly hair, and a mustache. OK? That is a lifetime ago. Today's Veterans Day. OK? That's the fundamental system that runs everything else off of it, collecting money, real important, paying bills, keeping track of the cars, making sure that the regulated commodities are in the right place on the train, you name it, that system did it. that's the fundamental system that runs everything else off of it collecting money real important paying bills keeping track of the cars making sure that the regulated commodities are in the right place on the train you name it that system did it We did it with no noise. we did it with no noise I rather laugh, and I do. i rather laugh and i do I find it humorous that some railroad who had a problem on their merger are sitting there talking about, oh my god, what happens if Union Pacific? i find it humorous that some railroad who had a problem on their merger are sitting there talking about oh my god what happens if union pacific I think we're smart enough to be able to go through this. i think we're smart enough to be able to go through this Other people talk about 1995 and the SP. other people talk about 1995 and the sp Any of you want to see the picture? any of you want to see the picture I brought one with me because I've told people that I had big black hair, black curly hair, and a mustache. i brought one with me because i've told people that i had big black hair black curly hair and a mustache OK? ok That is a lifetime ago. that is a lifetime ago Today's Veterans Day. today's veterans day OK? ok Very important day for us to stop and think about everything that's happened in the 1900s. But son of a gun, do we still go back and think of what happened in 1914 or 1917? Yes, we should learn from it, and we should make sure we never make those mistakes again. But today, I think we understand at Union Pacific how we move ahead to do the things that are right. And I find it humorous but frustrating. But I guess if you don't have a good story, that's what my mother always told me. If you don't have a good story, try to tell another story that's a bunch of bunk and see if somebody else if it'll stick on the wall. OK? Jennifer, anything you want to add? Very important day for us to stop and think about everything that's happened in the 1900s. very important day for us to stop and think about everything that's happened in the 1900s But son of a gun, do we still go back and think of what happened in 1914 or 1917? but son of a gun do we still go back and think of what happened in 1914 or 1917 Yes, we should learn from it, and we should make sure we never make those mistakes again. yes we should learn from it and we should make sure we never make those mistakes again But today, I think we understand at Union Pacific how we move ahead to do the things that are right. but today i think we understand at union pacific how we move ahead to do the things that are right And I find it humorous but frustrating. and i find it humorous but frustrating But I guess if you don't have a good story, that's what my mother always told me. but i guess if you don't have a good story that's what my mother always told me If you don't have a good story, try to tell another story that's a bunch of bunk and see if somebody else if it'll stick on the wall. if you don't have a good story try to tell another story that's a bunch of bunk and see if somebody else if it'll stick on the wall OK? ok Jennifer, anything you want to add? jennifer anything you want to add

Speaker 2: Maybe one thing. No. Kind of piggybacking on the thing about you're reducing friction points for the customers. Right now, unfortunately, a number of our customers employ third-party logistics companies to have them stitch together that view of the end-to-end transportation, to have them review the bills that they're putting together end-to-end. We're eliminating that need. We're giving them the tools that they need, the one-stop shopping that they desire. That is why many go to trucking for short-haul moves or even spot moves, because it's much easier to just pick up that phone and call a broker and then have it handled end-to-end. We'll be able to do that now on an end-to-end basis that will give them the cost savings, the safety, the public benefits of rail that they're not able to access today as easily. It is a big deal. Maybe one thing. maybe one thing No. no Kind of piggybacking on the thing about you're reducing friction points for the customers. kind of piggybacking on the thing about you're reducing friction points for the customers Right now, unfortunately, a number of our customers employ third-party logistics companies to have them stitch together that view of the end-to-end transportation, to have them review the bills that they're putting together end-to-end. right now unfortunately a number of our customers employ third-party logistics companies to have them stitch together that view of the end-to-end transportation to have them review the bills that they're putting together end-to-end We're eliminating that need. we're eliminating that need We're giving them the tools that they need, the one-stop shopping that they desire. we're giving them the tools that they need the one-stop shopping that they desire That is why many go to trucking for short-haul moves or even spot moves, because it's much easier to just pick up that phone and call a broker and then have it handled end-to-end. that is why many go to trucking for short-haul moves or even spot moves because it's much easier to just pick up that phone and call a broker and then have it handled end-to-end We'll be able to do that now on an end-to-end basis that will give them the cost savings, the safety, the public benefits of rail that they're not able to access today as easily. we'll be able to do that now on an end-to-end basis that will give them the cost savings the safety the public benefits of rail that they're not able to access today as easily It is a big deal. it is a big deal

Speaker 1: Watershed markets have been an area of focus. Could you just frame that one more time for us so we're clear on what the opportunity is for growth there? Watershed markets have been an area of focus. watershed markets have been an area of focus Could you just frame that one more time for us so we're clear on what the opportunity is for growth there? could you just frame that one more time for us so we're clear on what the opportunity is for growth there

Speaker 2: Yeah. When we talk about the watershed, we're really talking about that center part of the country where either side of the Mississippi or the Missouri, pick a river, whichever one you want, but where you're essentially being, if you're a customer who's in close proximity to one of those areas, one of the railroads is going to end up, we'll call it, short-hauling themselves. It might be a 200 mi move on UP's side, but maybe it's a 500 mi or 600 mi move on the NS today. You've got fixed costs on both railroads that need to be covered with that. It becomes very difficult economically for us to price that for that 200 mi move to cover our fixed costs. Yeah. yeah When we talk about the watershed, we're really talking about that center part of the country where either side of the Mississippi or the Missouri, pick a river, whichever one you want, but where you're essentially being, if you're a customer who's in close proximity to one of those areas, one of the railroads is going to end up, we'll call it, short-hauling themselves. when we talk about the watershed we're really talking about that center part of the country where either side of the mississippi or the missouri pick a river whichever one you want but where you're essentially being if you're a customer who's in close proximity to one of those areas one of the railroads is going to end up we'll call it short-hauling themselves It might be a 200 mi move on UP's side, but maybe it's a 500 mi or 600 mi move on the NS today. it might be a 200 mi move on up's side but maybe it's a 500 mi or 600 mi move on the ns today You've got fixed costs on both railroads that need to be covered with that. you've got fixed costs on both railroads that need to be covered with that It becomes very difficult economically for us to price that for that 200 mi move to cover our fixed costs. it becomes very difficult economically for us to price that for that 200 mi move to cover our fixed costs When you think about the interchange that has to happen in between there and the time for that, that's something else that is money for our customers because that time that that freight has to spend there, there's a cost to that. That's not free. You eliminate that time piece. You eliminate having the two sets of fixed costs. It becomes much more economical for us and for the shipper to do that. That's a big market opportunity that we see opening up for us as part of this merger. When you think about the interchange that has to happen in between there and the time for that, that's something else that is money for our customers because that time that that freight has to spend there, there's a cost to that. when you think about the interchange that has to happen in between there and the time for that that's something else that is money for our customers because that time that that freight has to spend there there's a cost to that That's not free. that's not free You eliminate that time piece. you eliminate that time piece You eliminate having the two sets of fixed costs. you eliminate having the two sets of fixed costs It becomes much more economical for us and for the shipper to do that. it becomes much more economical for us and for the shipper to do that That's a big market opportunity that we see opening up for us as part of this merger. that's a big market opportunity that we see opening up for us as part of this merger

Speaker 3: Right. Now, part of your question was about one merger or maybe going to another. At the end of the day, every company needs to decide what's the best for them and how they want to spend some capital and whether it's a good return. We've done the homework. And for Union Pacific, we're very comfortable. I think what we'll find when the votes all in this Friday and we announce it, I think our shareholders are going to understand what it is that we're doing and understand at a real high level from the preliminary numbers that we're getting that we're in a good place. At the end of it, do I think down the road the competition, what are we going to do to competition? We're going to be able to compete harder against Berkshire. Right. right Now, part of your question was about one merger or maybe going to another. now part of your question was about one merger or maybe going to another At the end of the day, every company needs to decide what's the best for them and how they want to spend some capital and whether it's a good return. at the end of the day every company needs to decide what's the best for them and how they want to spend some capital and whether it's a good return We've done the homework. we've done the homework And for Union Pacific, we're very comfortable. and for union pacific we're very comfortable I think what we'll find when the votes all in this Friday and we announce it, I think our shareholders are going to understand what it is that we're doing and understand at a real high level from the preliminary numbers that we're getting that we're in a good place. i think what we'll find when the votes all in this friday and we announce it i think our shareholders are going to understand what it is that we're doing and understand at a real high level from the preliminary numbers that we're getting that we're in a good place At the end of it, do I think down the road the competition, what are we going to do to competition? at the end of it do i think down the road the competition what are we going to do to competition We're going to be able to compete harder against Berkshire. we're going to be able to compete harder against berkshire We're going to be able to compete harder against CSX, against Canadian Pacific, and against Canadian National. If we can put, and we know we can do that, faster service, real low incident rate, real safe railroad. We're going to be able to show the value to our customers in that any time they cross the Mississippi, they're going to have fewer assets they need and less inventory. That saves them money. Even if we just increase the rates at the regular whatever number it is that the market sort of will allow us to do that, they're going to benefit from that. They know that. We're going to open up markets for customers that today it's tough for them, like Jennifer was saying, to go from one side to the other. We are going to do that. There's no if. We're going to be able to compete harder against CSX, against Canadian Pacific, and against Canadian National. we're going to be able to compete harder against csx against canadian pacific and against canadian national If we can put, and we know we can do that, faster service, real low incident rate, real safe railroad. if we can put and we know we can do that faster service real low incident rate real safe railroad We're going to be able to show the value to our customers in that any time they cross the Mississippi, they're going to have fewer assets they need and less inventory. we're going to be able to show the value to our customers in that any time they cross the mississippi they're going to have fewer assets they need and less inventory That saves them money. that saves them money Even if we just increase the rates at the regular whatever number it is that the market sort of will allow us to do that, they're going to benefit from that. even if we just increase the rates at the regular whatever number it is that the market sort of will allow us to do that they're going to benefit from that They know that. they know that We're going to open up markets for customers that today it's tough for them, like Jennifer was saying, to go from one side to the other. we're going to open up markets for customers that today it's tough for them like jennifer was saying to go from one side to the other We are going to do that. we are going to do that There's no if. there's no if This is not an if discussion. This is an absolutely that's there and possible. If anybody thinks I make up these, yes, we're going to do that, go listen to the first call in 2019 when I showed up in January. On the 14th January, sorry, 7th January, they announced me. I was on the first call. What I said was, this is what we're going to do. If somebody listened, go check those off. We are going to have the fastest service across the United States of America. We are going to have the least touch points where something can lose your luggage across the United States of America. This is not an if discussion. this is not an if discussion This is an absolutely that's there and possible. this is an absolutely that's there and possible If anybody thinks I make up these, yes, we're going to do that, go listen to the first call in 2019 when I showed up in January. if anybody thinks i make up these yes we're going to do that go listen to the first call in 2019 when i showed up in january On the 14th January, sorry, 7th January, they announced me. on the 14th january sorry 7th january they announced me I was on the first call. i was on the first call What I said was, this is what we're going to do. what i said was this is what we're going to do If somebody listened, go check those off. if somebody listened go check those off We are going to have the fastest service across the United States of America. We are going to have the least touch points where something can lose your luggage across the United States of America. we are going to have the fastest service across the united states of america. we are going to have the least touch points where something can lose your luggage across the united states of america We're going to allow customers to win in the marketplace and win against people like Brazil that are trying to sell more soybeans into Mexico or trying to get a foothill into the U.S. in the eastern parts of the U.S. We're going to compete harder and have our customers and the states and the people that work for Union Pacific win coming across moving products. That is all there. Up to Berkshire if they want to do something. They have the cash. I think last time I looked, my wife, I asked my wife this morning, how much cash are they carrying? Because she's been a longtime shareholder. They are a great company. They made some great decisions. They made a couple of bad ones. I think on this one here, I'll leave that alone. I'll let somebody else decide that one. We're going to allow customers to win in the marketplace and win against people like Brazil that are trying to sell more soybeans into Mexico or trying to get a foothill into the U.S. in the eastern parts of the U.S. we're going to allow customers to win in the marketplace and win against people like brazil that are trying to sell more soybeans into mexico or trying to get a foothill into the u.s in the eastern parts of the u.s We're going to compete harder and have our customers and the states and the people that work for Union Pacific win coming across moving products. we're going to compete harder and have our customers and the states and the people that work for union pacific win coming across moving products That is all there. that is all there Up to Berkshire if they want to do something. up to berkshire if they want to do something They have the cash. they have the cash I think last time I looked, my wife, I asked my wife this morning, how much cash are they carrying? i think last time i looked my wife i asked my wife this morning how much cash are they carrying Because she's been a longtime shareholder. because she's been a longtime shareholder They are a great company. they are a great company They made some great decisions. they made some great decisions They made a couple of bad ones. they made a couple of bad ones I think on this one here, I'll leave that alone. i think on this one here i'll leave that alone I'll let somebody else decide that one. i'll let somebody else decide that one Bottom line is they got $330 billion of cash available. If they wanted to buy something, they have it. It is up to them. As hard as they have come out of the gate telling things that are just completely like they put out a two-pager, and I have got it sitting in my bathroom wall next to the sink with the toothpaste. It is on the bathroom wall that says we are going to shut down 300 lanes. I go, really? Why would we shut off 300 lanes? First of all, we do not have 300 lanes like in Intermodal. There is not that many lanes, like one that goes north out of L.A., another one that goes to Chicago, another one that goes to Memphis, another one goes to Atlanta. Like, what the heck lanes do we have? Bottom line is they got $330 billion of cash available. bottom line is they got $330 billion of cash available If they wanted to buy something, they have it. if they wanted to buy something they have it It is up to them. it is up to them As hard as they have come out of the gate telling things that are just completely like they put out a two-pager, and I have got it sitting in my bathroom wall next to the sink with the toothpaste. as hard as they have come out of the gate telling things that are just completely like they put out a two-pager and i have got it sitting in my bathroom wall next to the sink with the toothpaste It is on the bathroom wall that says we are going to shut down 300 lanes. it is on the bathroom wall that says we are going to shut down 300 lanes I go, really? i go really Why would we shut off 300 lanes? why would we shut off 300 lanes First of all, we do not have 300 lanes like in Intermodal. first of all we do not have 300 lanes like in intermodal There is not that many lanes, like one that goes north out of L.A., another one that goes to Chicago, another one that goes to Memphis, another one goes to Atlanta. there is not that many lanes like one that goes north out of l.a another one that goes to chicago another one that goes to memphis another one goes to atlanta Like, what the heck lanes do we have? like what the heck lanes do we have I had to ask Kenny, are you hiding 290 lanes from me that I do not understand? They said we are going to shut down those many. I laugh. I find it interesting that Berkshire is coming after us that hard. In fact, why do I call them Berkshire? I will be honest so anybody can hear it. We are actually Union Pacific Corp and we own a railroad. I am the CEO of Union Pacific Corp and the CEO of Union Pacific Railroad. What is humorous about it is some people at Burlington Northern Santa Fe were taken aback that I would call them Berkshire. Last time I looked, that is the publicly traded company just like Union Pacific Corp. I have to have some fun too. OK. I had to ask Kenny, are you hiding 290 lanes from me that I do not understand? i had to ask kenny are you hiding 290 lanes from me that i do not understand They said we are going to shut down those many. they said we are going to shut down those many I laugh. i laugh I find it interesting that Berkshire is coming after us that hard. i find it interesting that berkshire is coming after us that hard In fact, why do I call them Berkshire? I will be honest so anybody can hear it. in fact why do i call them berkshire? i will be honest so anybody can hear it We are actually Union Pacific Corp and we own a railroad. we are actually union pacific corp and we own a railroad I am the CEO of Union Pacific Corp and the CEO of Union Pacific Railroad. i am the ceo of union pacific corp and the ceo of union pacific railroad What is humorous about it is some people at Burlington Northern Santa Fe were taken aback that I would call them Berkshire. what is humorous about it is some people at burlington northern santa fe were taken aback that i would call them berkshire Last time I looked, that is the publicly traded company just like Union Pacific Corp. last time i looked, that is the publicly traded company just like union pacific corp I have to have some fun too. i have to have some fun too OK. ok

Speaker 1: I have another question I want to ask, but I'd also like to present the gallery with an opportunity to ask a question if anyone would care to ask one. Fair enough. I have another question I want to ask, but I'd also like to present the gallery with an opportunity to ask a question if anyone would care to ask one. i have another question i want to ask but i'd also like to present the gallery with an opportunity to ask a question if anyone would care to ask one Fair enough. fair enough

Speaker 3: You know the way I think, Dan, and I've said this to the group, if all of you who heard me speak and have a little bit of fun, because we do have a little fun at Union Pacific. If you don't have any questions for me, you've agreed with everything I have to say. OK? I don't want to hear anybody write stuff that's against us going into it. You know the way I think, Dan, and I've said this to the group, if all of you who heard me speak and have a little bit of fun, because we do have a little fun at Union Pacific. you know the way i think dan and i've said this to the group if all of you who heard me speak and have a little bit of fun because we do have a little fun at union pacific If you don't have any questions for me, you've agreed with everything I have to say. if you don't have any questions for me you've agreed with everything i have to say OK? ok I don't want to hear anybody write stuff that's against us going into it. i don't want to hear anybody write stuff that's against us going into it

Speaker 1: Real quick, we've got two minutes left. One of the consequences of the proposed merger has been a flurry of joint service announcements, collaborations in the East from some of your competitors. Said differently, it seems like competition in the East is enhanced. Competition in the East has increased. What does that mean for the domestic intermodal market? What are the consequences of some of these announcements? How is Union Pacific responding to those announcements? That's all I got. Real quick, we've got two minutes left. real quick we've got two minutes left One of the consequences of the proposed merger has been a flurry of joint service announcements, collaborations in the East from some of your competitors. one of the consequences of the proposed merger has been a flurry of joint service announcements collaborations in the east from some of your competitors Said differently, it seems like competition in the East is enhanced. said differently it seems like competition in the east is enhanced Competition in the East has increased. competition in the east has increased What does that mean for the domestic intermodal market? what does that mean for the domestic intermodal market What are the consequences of some of these announcements? what are the consequences of some of these announcements How is Union Pacific responding to those announcements? how is union pacific responding to those announcements That's all I got. that's all i got

Speaker 3: It is a great question. The timing is perfect for them. They have sat down and looked at it. They said, what happens when Union Pacific and Norfolk Southern get together? How do we compete against that railroad? They are trying to do service agreements. They are good. Service agreements are good. You can see what happened with the service agreement that Norfolk Southern had with Canadian Pacific over the Meridian Speedway. Kansas City forever used to allow an 11,000-foot train to operate. All of a sudden, when Canadian Pacific took over, and in the last few months, they decided to cut back the train size that was always handled before the merger and even since the merger. At the end of the day, that is the problem with those. Kansas City is saying to us, you are going to have to run two trains at Union Pacific. It is a great question. it is a great question The timing is perfect for them. They have sat down and looked at it. the timing is perfect for them. they have sat down and looked at it They said, what happens when Union Pacific and Norfolk Southern get together? they said what happens when union pacific and norfolk southern get together How do we compete against that railroad? how do we compete against that railroad They are trying to do service agreements. They are good. they are trying to do service agreements. they are good Service agreements are good. service agreements are good You can see what happened with the service agreement that Norfolk Southern had with Canadian Pacific over the Meridian Speedway. you can see what happened with the service agreement that norfolk southern had with canadian pacific over the meridian speedway Kansas City forever used to allow an 11,000-foot train to operate. kansas city forever used to allow an 11,000-foot train to operate All of a sudden, when Canadian Pacific took over, and in the last few months, they decided to cut back the train size that was always handled before the merger and even since the merger. all of a sudden when canadian pacific took over and in the last few months they decided to cut back the train size that was always handled before the merger and even since the merger At the end of the day, that is the problem with those. at the end of the day, that is the problem with those Kansas City is saying to us, you are going to have to run two trains at Union Pacific. kansas city is saying to us, you are going to have to run two trains at union pacific We are going, if we have to, we will run two trains. That is the way it is. The first question we asked them was, why? What changed from five years of being able to run an 11,000-foot train from L.A. all the way into that market, and now you cannot? That is what you have to be careful with with some of those deals, is they break down and people look internally. We are going, if we have to, we will run two trains. That is the way it is. The first question we asked them was, why? we are going if we have to, we will run two trains. that is the way it is. the first question we asked them was why What changed from five years of being able to run an 11,000-foot train from L.A. all the way into that market, and now you cannot? what changed from five years of being able to run an 11,000-foot train from l.a all the way into that market and now you cannot That is what you have to be careful with with some of those deals, is they break down and people look internally. that is what you have to be careful with with some of those deals is they break down and people look internally

Speaker 1: Fair enough. I want to thank you for being here. Fair enough. fair enough I want to thank you for being here. i want to thank you for being here

Speaker 3: Thanks for having us. Thanks for having us. thanks for having us

Speaker 1: Appreciate the opportunity to ask questions. I hope the rest of the conference goes well for you. Safe travels. Appreciate the opportunity to ask questions. appreciate the opportunity to ask questions I hope the rest of the conference goes well for you. i hope the rest of the conference goes well for you Safe travels. safe travels

Speaker 3: Listen, thank you very much. Listen, thank you very much. listen thank you very much