Union Pacific third-quarter net income rises 16% to $2.1 billion as revenue climbs 15%

Union Pacific Corporation (UNP) reported third-quarter net income of $2.1 billion, up 16% from $1.8 billion a year earlier, the company said in a filing on Thursday. The company called the result a record for net income.

Diluted earnings per share were $3.49, up 16% from $3.01. Adjusted diluted EPS was $3.53, up 15% from $3.08.

Adjusted results exclude items the company says affect comparability. In the quarter, that was $22 million of acquisition-related expense.

Here's how the company did:

• Diluted EPS: $3.49 vs. $3.01 a year earlier
• Net income: $2,076 million vs. $1,788 million a year earlier
• Operating revenue: $7,197 million vs. $6,244 million a year earlier
• Operating ratio: 59.1% vs. 59.2% a year earlier

Operating revenue rose 15% to $7.2 billion. The filing attributes the gain to higher fuel surcharge, 6% volume growth, core pricing gains and increased other revenue, partly offset by business mix.

Freight revenue was $6,813 million, up 15%. Excluding fuel surcharge, freight revenue increased 6%.

Revenue carloads rose 6% to 2.3 million from 2.2 million. Average revenue per car was $2,971, up 8% from $2,740.

Intermodal freight revenue rose 27% to $1,517 million from $1,199 million. Premium freight revenue rose 21% to $2,188 million from $1,803 million.

Industrial freight revenue rose 14% to $2,509 million. Bulk rose 10% to $2,116 million, and automotive rose 11% to $671 million.

The reported operating ratio, or operating expenses as a share of revenue, improved 10 basis points to 59.1%. The adjusted ratio rose 30 basis points to 58.8%.

Higher fuel prices weighed on the operating ratio by 140 basis points, the company said in the filing. Fuel expense was $1,040 million, up 69% from $616 million.

The average fuel price per gallon consumed was $4.21, up 64% from $2.56 a year earlier.

Compensation and benefits rose 4% to $1,264 million. Depreciation was $643 million, up 4%, and interest expense fell 5% to $312 million.

Income tax expense was $650 million, up 23%. The effective tax rate was 23.8%, compared with 22.9% a year earlier.

Average total employees were 28,540, down 1% from 28,871.

Freight car velocity was 228 daily miles per car, up 1%. Average terminal dwell was 19.9 hours, a 2% improvement.

Workforce productivity rose 5% to 1,219 car miles per employee. The fuel consumption rate was 1.034 gallons per thousand gross ton-miles, a 2% improvement.

Chief Executive Officer Jim Vena framed the quarter this way. "Union Pacific's third quarter results demonstrate our ability to safely deliver the service we sold to our customers while efficiently handling six percent volume growth," said Vena.

"We executed at a consistently high level, enabling record financial results and further reinforcing our position as the industry leader," Vena said.

For the first nine months, operating revenue was $20,278 million, up 10% from $18,425 million. Net income was $5,770 million, up 9% from $5,290 million.

Diluted EPS for the nine months was $9.71, up 9% from $8.87. Cash provided by operating activities was $8,302 million, up from $7,065 million.

The company defines free cash flow as cash provided by operating activities less cash used in investing activities and dividends paid. On that basis, free cash flow was $2,362 million for the nine months, compared with $1,856 million a year earlier.

Share repurchases totaled $26 million in the first nine months, compared with $2,679 million a year earlier. Dividends declared were $1.42 per share in the quarter, up from $1.38.

On a trailing twelve-month basis, debt was 4.0 times net income at Sept. 30, compared with 4.5 times at Dec. 31, 2025. The ratio of adjusted debt to adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was 2.4, down from 2.7.

The company affirmed reported EPS growth of high-single digit for 2026. It said that is consistent with its three-year target of high-single to low-double digit growth through 2027.

The company also affirmed pricing dollars in excess of inflation dollars and consistent annual dividend increases. It affirmed an industry-leading operating ratio and return on invested capital.

Under updated items, the company said its operating ratio improvement comes from the core business, while the reported operating ratio is challenged by high fuel prices. It also gave a capital plan of $3.5 billion.

The filing does not give a numeric range for 2026 earnings per share.