10-QPeriod: Q2 FY2026

UNION PACIFIC CORP Quarterly Report for Q2 Ended Jun 30, 2026

Filed July 23, 2026For Securities:UNP

Summary

Union Pacific Corporation reported solid financial results for the second quarter and the first half of 2026, demonstrating resilience and operational strength. Total operating revenues saw a significant increase of 12% year-over-year for the quarter, reaching $6.9 billion, driven primarily by higher freight revenues across key commodity groups, notably Bulk, Industrial, and Premium segments. This top-line growth was fueled by a combination of higher fuel surcharge revenues, modest volume increases (2% for the quarter), and effective core pricing strategies, which collectively offset a slightly unfavorable business mix. Despite a challenging operating environment marked by increased fuel prices and inflationary pressures, the company managed its expenses effectively. Operating expenses rose 13% for the quarter, largely due to a substantial 60% increase in fuel costs and acquisition-related expenses. However, strong operational performance, including improvements in freight car velocity and terminal dwell, coupled with workforce productivity gains, helped mitigate some of these cost pressures. Net income for the quarter grew to $2.0 billion, a 6% increase from the prior year, leading to diluted earnings per share of $3.36, up from $3.15. The company's strategic capital investments continue to support network efficiency and growth, with a projected capital plan of approximately $3.3 billion for 2026.

Key Highlights

  • 1Total operating revenues increased by 12% to $6.9 billion for the three months ended June 30, 2026, compared to the same period in 2025.
  • 2Net income for the three months ended June 30, 2026, increased by 6% to $2.0 billion, resulting in diluted EPS of $3.36, up from $3.15 in the prior year.
  • 3Freight revenues grew 12% year-over-year for the quarter, supported by higher fuel surcharge revenues, 2% volume growth, and core pricing gains.
  • 4Operating expenses increased by 13% to $4.1 billion, primarily driven by a significant 60% rise in fuel costs and acquisition-related expenses.
  • 5Despite increased operating expenses, operating income grew by 9% to $2.8 billion due to robust revenue performance.
  • 6The company reported strong operational metrics, including a 5% increase in freight car velocity and a 7% improvement in terminal dwell time.
  • 7Union Pacific announced a projected capital plan of approximately $3.3 billion for 2026 to support growth strategy, network safety, and operational efficiency.

Frequently Asked Questions

The primary drivers of the revenue increase were higher freight revenues, which grew by 12% year-over-year. This growth was supported by increased fuel surcharge revenues due to higher fuel prices, a 2% increase in volume, and effective core pricing strategies across various commodity groups.

Operating expenses rose by 13% mainly due to a significant 60% increase in fuel costs, driven by supply chain pressures. Other contributing factors included general inflation, volume-related costs, higher depreciation, and acquisition-related expenses associated with the pending Norfolk Southern acquisition.

The acquisition of Norfolk Southern is progressing, with the companies having received STB approval on the revised application and holding shareholder approvals. The expected completion is in 2027. For the six months ended June 30, 2026, Union Pacific incurred $71 million in acquisition-related expenses. The transaction involves a mix of Union Pacific common stock and approximately $20 billion in cash consideration, expected to be funded by new debt and operating cash flow.

Union Pacific anticipates a capital plan of approximately $3.3 billion for 2026. These investments are strategically focused on supporting growth, enhancing network safety and resilience, improving operational efficiency, and modernizing its locomotive fleet and freight car acquisitions. Investments also include terminal and line expansion projects to boost capacity and productivity.