EX-99.1 2 a2025-01x238xkex991earning.htm EX-99.1

Exhibit 99.1

Union Pacific Reports Fourth Quarter and Full Year 2024 Results

•Fourth quarter earnings per diluted share of $2.91, up 7%

•Fourth quarter operating ratio of 58.7%

•Full year earnings per diluted share of $11.09, up 6%

•Full year operating ratio of 59.9%

•Full year return on invested capital of 15.8%

Omaha, Neb., January 23, 2025 – Union Pacific Corporation (NYSE: UNP) today reported 2024 fourth quarter net income of $1.8 billion, or $2.91 per diluted share. These results include $40 million of labor expense related to the ratification of a crew staffing agreement. This compares to 2023 fourth quarter net income of $1.7 billion, or $2.71 per diluted share.

Reported net income for full year 2024 was $6.7 billion, or $11.09 per diluted share. These full year results compare to full year 2023 net income of $6.4 billion, or $10.45 per diluted share.

“Our strong fourth quarter results represent a great capstone to a very successful year for Union Pacific,” said Jim Vena, Union Pacific Chief Executive Officer. “The team has fully embraced our strategy to lead the industry in safety, service, and operational excellence. That commitment has produced industry leading financial results in 2024, punctuated by our strong finish to the year. We will carry this momentum into 2025 as we seek to unlock the full potential of the UP franchise.”

Fourth Quarter Summary: 2024 vs. 2023

Financial Results: Strong Service and Efficient Performance Enabled Volume Growth; Fourth Quarter Records for Operating Income and Net Income

•Operating revenue of $6.1 billion was down 1% driven by lower fuel surcharge revenue, unfavorable business mix, and lower other revenue, partially offset by increased volume and core pricing gains.

•Revenue carloads were up 5%.

•Operating ratio was 58.7%, an improvement of 220 basis points. This includes an unfavorable 70 basis point impact from the ratification of a crew staffing agreement.

•Operating income of $2.5 billion was up 5%.

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Operating Performance: Improved Network Fluidity Amid Volume Growth; Fourth Quarter Record for Workforce Productivity

•Quarterly freight car velocity improved 1% to 219 daily miles per car.

•Quarterly locomotive productivity declined 3% to 136 gross ton-miles (GTMs) per horsepower day.

•Quarterly workforce productivity increased 6% to 1,118 car miles per employee.

•Fuel consumption rate improved 1% to 1.078, measured in gallons of fuel per thousand GTMs.

Full Year Summary: 2024 vs. 2023

Financial Results: Higher Operating Revenue Driven by Volume and Core Pricing Gains

•Operating revenue of $24.3 billion was up 1% driven by increased volume and core pricing gains, partially offset by lower fuel surcharge revenue, unfavorable business mix, and lower other revenue.

•Revenue carloads increased 3%.

•Operating ratio of 59.9% improved 240 basis points.

•Operating Income of $9.7 billion was up 7%.

•Union Pacific’s 2024 capital program totaled $3.4 billion.

•The company repurchased 6.3 million shares in 2024 at an aggregate cost of $1.5 billion.

Operating Performance: Strong Improvement Across Safety, Service, and Operational Excellence; Full Year Record for Workforce Productivity

•Union Pacific’s reportable personal injury and reportable derailment rates both improved.

•Freight car velocity improved 2% to 208 daily miles per car.

•Locomotive productivity improved 5% to 135 GTMs per horsepower day.

•Workforce productivity improved 6% to 1,062 car miles per employee.

•Fuel consumption rate improved 1% to 1.082, measured in gallons of fuel per thousand GTMs.

2025 Outlook: On Track with Investor Day Targets

•Volume impacted by mixed economic backdrop, coal demand, and challenging year-over-year international intermodal comparisons

•Pricing dollars accretive to operating ratio

•Earnings per share growth consistent with attaining the 3-year CAGR target of high-single to low-double digit

•Industry-leading operating ratio and return on invested capital

•No change to long-term capital allocation strategy

◦Capital plan of $3.4 billion

◦Share repurchases of $4.0 to $4.5 billion

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Fourth Quarter 2024 Earnings Conference Call

Union Pacific will provide a webcast for its fourth quarter 2024 earnings release presentation live at https://investor.unionpacific.com and via teleconference on Thursday, January 23, 2025, at 8:45 a.m. Eastern Time. Participants may join the conference call by dialing 877-407-8293 (or for international participants, 201-689-8349).

ABOUT UNION PACIFIC

Union Pacific (NYSE: UNP) delivers the goods families and businesses use every day with safe, reliable, and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com.

Union Pacific Investor contact: Diana Prauner at 402-544-4227 or dprauner@up.com

Union Pacific Media contact: Clarissa Beyah at 402-957-4793 or cbeyah@up.com

Supplemental financial information is attached.

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This news release and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the potential impacts of public health crises, including pandemics, epidemics and the outbreak of other contagious diseases, such as the coronavirus and its variant strains (COVID); the Russia-Ukraine and Israel-Hamas wars and other geopolitical tensions in the Middle East, and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volume and carloadings; expectations as to general macroeconomic conditions, including slowdowns and recessions, domestically or internationally, and future volatility in interest rates and fuel prices; closing of customer manufacturing, distribution, or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications (including those in response to increased traffic); expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to business, financial, and operational results, future economic performance, and planned capital investments ; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; estimates and expectations regarding potential tariffs; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyberattacks or other matters. These statements are, or will be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements also generally include, without limitation, information, or statements regarding: projections, predictions, expectations, estimates, or forecasts as to the Company’s and its subsidiaries’ business, financial, and operational results, and future economic performance; and management’s beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information, including expectations regarding operational and financial improvements and the Company’s future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement. Important factors, including risk factors, could affect the Company’s and its subsidiaries’ future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Information regarding risk factors and other cautionary information are available in the Company’s Annual Report on Form 10-K for 2023, which was filed with the SEC on February 9, 2024. The Company updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made. The Company assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References to the Company’s website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)

Millions, Except Per Share Amounts and Percentages, For the Periods Ended December 31,			4th Quarter																		Full Year
			2024						2023						%						2024						2023						%
Operating Revenues
Freight revenues			$	5,789					$	5,801					-		%				$	22,811					$	22,571					1		%
Other revenues			332						358						(7)						1,439						1,548						(7)
Total operating revenues			6,121						6,159						(1)						24,250						24,119						1
Operating Expenses
Compensation and benefits			1,261						1,169						8						4,899						4,818						2
Purchased services and materials			619						645						(4)						2,520						2,616						(4)
Fuel			581						759						(23)						2,474						2,891						(14)
Depreciation			606						589						3						2,398						2,318						3
Equipment and other rents			248						229						8						920						947						(3)
Other			281						361						(22)						1,326						1,447						(8)
Total operating expenses			3,596						3,752						(4)						14,537						15,037						(3)
Operating Income			2,525						2,407						5						9,713						9,082						7
Other income, net			68						108						(37)						350						491						(29)
Interest expense			(312)						(331)						(6)						(1,269)						(1,340)						(5)
Income before income taxes			2,281						2,184						4						8,794						8,233						7
Income tax expense			(519)						(532)						(2)						(2,047)						(1,854)						10
Net Income			$	1,762					$	1,652					7		%				$	6,747					$	6,379					6		%
Share and Per Share
Earnings per share - basic			$	2.92					$	2.71					8		%				$	11.10					$	10.47					6		%
Earnings per share - diluted			$	2.91					$	2.71					7						$	11.09					$	10.45					6
Weighted average number of shares - basic			604.2						608.9						(1)						607.6						609.2						-
Weighted average number of shares - diluted			605.2						609.9						(1)						608.6						610.2						-
Dividends declared per share			$	1.34					$	1.30					3						$	5.28					$	5.20					2
Operating Ratio			58.7					%	60.9					%	(2.2)		pts				59.9					%	62.3					%	(2.4)		pts
Effective Tax Rate			22.8					%	24.4					%	(1.6)		pts				23.3					%	22.5					%	0.8		pts

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

For the Periods Ended December 31,			4th Quarter												Full Year
			2024			2023			%						2024			2023			%
Freight Revenues (Millions)
Grain & grain products			$	1,061		$	986		8		%				$	3,828		$	3,644		5		%
Fertilizer			199			194			3						811			757			7
Food & refrigerated			253			264			(4)						1,085			1,041			4
Coal & renewables			351			494			(29)						1,483			1,916			(23)
Bulk			1,864			1,938			(4)						7,207			7,358			(2)
Industrial chemicals & plastics			582			538			8						2,345			2,176			8
Metals & minerals			507			540			(6)						2,081			2,194			(5)
Forest products			324			335			(3)						1,326			1,347			(2)
Energy & specialized markets			679			665			2						2,688			2,521			7
Industrial			2,092			2,078			1						8,440			8,238			2
Automotive			581			600			(3)						2,452			2,421			1
Intermodal			1,252			1,185			6						4,712			4,554			3
Premium			1,833			1,785			3						7,164			6,975			3
Total			$	5,789		$	5,801		-		%				$	22,811		$	22,571		1		%
Revenue Carloads (Thousands)
Grain & grain products			234			216			8		%				850			798			7		%
Fertilizer			51			47			9						213			191			12
Food & refrigerated			40			42			(5)						177			175			1
Coal & renewables			175			217			(19)						702			867			(19)
Bulk			500			522			(4)						1,942			2,031			(4)
Industrial chemicals & plastics			170			161			6						672			645			4
Metals & minerals			179			189			(5)						719			793			(9)
Forest products			52			52			-						213			213			-
Energy & specialized markets			154			153			1						607			582			4
Industrial			555			555			-						2,211			2,233			(1)
Automotive			197			197			-						824			820			-
Intermodal [a]			911			782			16						3,357			3,028			11
Premium			1,108			979			13						4,181			3,848			9
Total			2,163			2,056			5		%				8,334			8,112			3		%
Average Revenue per Car
Grain & grain products			$	4,532		$	4,580		(1)		%				$	4,505		$	4,567		(1)		%
Fertilizer			3,918			4,085			(4)						3,809			3,962			(4)
Food & refrigerated			6,152			6,174			-						6,104			5,929			3
Coal & renewables			2,012			2,281			(12)						2,113			2,211			(4)
Bulk			3,723			3,712			-						3,710			3,623			2
Industrial chemicals & plastics			3,445			3,353			3						3,493			3,374			4
Metals & minerals			2,820			2,860			(1)						2,893			2,765			5
Forest products			6,210			6,326			(2)						6,229			6,310			(1)
Energy & specialized markets			4,412			4,347			1						4,426			4,335			2
Industrial			3,771			3,742			1						3,818			3,689			3
Automotive			2,952			3,061			(4)						2,976			2,955			1
Intermodal [a]			1,376			1,515			(9)						1,404			1,504			(7)
Premium			1,656			1,824			(9)						1,714			1,813			(5)
Average			$	2,677		$	2,822		(5)		%				$	2,737		$	2,782		(2)		%

[a]For intermodal shipments each container or trailer equals one carload.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)

Millions, Except Percentages			Dec. 31, 2024			Dec. 31, 2023
Assets
Cash and cash equivalents			$	1,016		$	1,055
Short-term investments			20			16
Other current assets			2,985			3,077
Investments			2,664			2,605
Properties, net			58,343			57,398
Operating lease assets			1,297			1,643
Other assets			1,390			1,338
Total assets			$	67,715		$	67,132
Liabilities and Common Shareholders' Equity
Debt due within one year			$	1,425		$	1,423
Other current liabilities			3,829			3,683
Debt due after one year			29,767			31,156
Operating lease liabilities			925			1,245
Deferred income taxes			13,151			13,123
Other long-term liabilities			1,728			1,714
Total liabilities			50,825			52,344
Total common shareholders' equity			16,890			14,788
Total liabilities and common shareholders' equity			$	67,715		$	67,132

Return on Average Common Shareholders' Equity			42.6		%	47.3		%
Return on Invested Capital as Adjusted (ROIC)*			15.8		%	15.5		%

*ROIC is a non-GAAP measure; however, management believes that it is an important measure in evaluating efficiency and effectiveness of our long-term capital investments. See page 9 for a reconciliation to GAAP.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)

			Full Year
Millions, for the Periods Ended December 31,			2024			2023
Operating Activities
Net income			$	6,747		$	6,379
Depreciation			2,398			2,318
Deferred and other income taxes			28			117
Other - net			173			(435)
Cash provided by operating activities			9,346			8,379
Investing Activities
Capital investments*			(3,452)			(3,606)
Other - net			127			(61)
Cash used in investing activities			(3,325)			(3,667)
Financing Activities
Dividends paid			(3,213)			(3,173)
Debt repaid			(2,226)			(2,190)
Share repurchase programs			(1,505)			(705)
Debt Issued			800			1,599
Other - net			77			(156)
Cash used in financing activities			(6,067)			(4,625)
Net change in cash, cash equivalents, and restricted cash			(46)			87
Cash, cash equivalents, and restricted cash at beginning of year			1,074			987
Cash, cash equivalents, and restricted cash at end of period			$	1,028		$	1,074
Free Cash Flow**
Cash provided by operating activities			$	9,346		$	8,379
Cash used in investing activities			(3,325)			(3,667)
Dividends paid			(3,213)			(3,173)
Free cash flow			$	2,808		$	1,539

*Capital investments include locomotive and freight car early lease buyouts of $143 million in 2024 and $57 million in 2023.

**Free cash flow is a non-GAAP measure; however, we believe this measure is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Operating and Performance Statistics (unaudited)

For the Periods Ended December 31,			4th Quarter												Full Year
			2024			2023			%						2024			2023			%
Operating/Performance Statistics
Freight car velocity (daily miles per car)*			219			217			1		%				208			204			2		%
Average train speed (miles per hour)*			23.9			24.9			(4)						23.6			24.2			(2)
Average terminal dwell time (hours)*			21.8			22.7			(4)						22.6			23.4			(3)
Locomotive productivity (GTMs per horsepower day)			136			140			(3)						135			129			5
Gross ton-miles (GTMs) (millions)			218,558			214,570			2						847,386			837,502			1
Train length (feet)			9,462			9,413			1						9,469			9,356			1
Intermodal service performance index (%)			89			96			(7)		pts				90			88			2		pts
Manifest service performance index (%)			96			91			5		pts				89			85			4		pts
Intermodal car trip plan compliance (%)**			79			85			(6)		pts				80			78			2		pts
Manifest car trip plan compliance (%)**			73			70			3		pts				68			65			3		pts
Workforce productivity (car miles per employee)			1,118			1,051			6						1,062			1,000			6
Total employees (average)			29,789			30,559			(3)						30,336			31,490			(4)
Locomotive Fuel Statistics
Average fuel price per gallon consumed			$	2.41		$	3.16		(24)		%				$	2.64		$	3.09		(15)		%
Fuel consumed in gallons (millions)			236			234			1						917			911			1
Fuel consumption rate***			1.078			1.091			(1)						1.082			1.088			(1)
Revenue Ton-Miles (Millions)
Grain & grain products			23,207			21,166			10		%				84,302			77,717			8		%
Fertilizer			3,291			2,960			11						13,204			12,031			10
Food & refrigerated			4,313			4,586			(6)						18,547			18,286			1
Coal & renewables			17,126			21,876			(22)						72,106			88,604			(19)
Bulk			47,937			50,588			(5)						188,159			196,638			(4)
Industrial chemicals & plastics			7,457			7,040			6						30,436			28,837			6
Metals & minerals			8,013			8,712			(8)						32,793			36,121			(9)
Forest products			5,369			5,447			(1)						21,967			22,447			(2)
Energy & specialized markets			10,690			10,349			3						41,925			39,286			7
Industrial			31,529			31,548			-						127,121			126,691			-
Automotive			4,452			4,369			2						18,425			18,080			2
Intermodal			20,506			18,438			11						76,011			71,890			6
Premium			24,958			22,807			9						94,436			89,970			5
Total			104,424			104,943			-		%				409,716			413,299			(1)		%

*Surface Transportation Board (STB) reported performance measures.

**Methodology used to report is not comparable with the reporting to the STB under docket number EP 770.

***Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited)

Millions, Except Per Share Amounts and Percentages,			2024
			1st Qtr						2nd Qtr						3rd Qtr						4th Qtr						Full Year
Operating Revenues
Freight revenues			$	5,616					$	5,638					$	5,768					$	5,789					$	22,811
Other revenues			415						369						323						332						1,439
Total operating revenues			6,031						6,007						6,091						6,121						24,250
Operating Expenses
Compensation and benefits			1,223						1,187						1,228						1,261						4,899
Purchased services and materials			613						644						644						619						2,520
Fuel			658						625						610						581						2,474
Depreciation			594						596						602						606						2,398
Equipment and other rents			216						219						237						248						920
Other			355						336						354						281						1,326
Total operating expenses			3,659						3,607						3,675						3,596						14,537
Operating Income			2,372						2,400						2,416						2,525						9,713
Other income, net			92						103						87						68						350
Interest expense			(324)						(319)						(314)						(312)						(1,269)
Income before income taxes			2,140						2,184						2,189						2,281						8,794
Income tax expense			(499)						(511)						(518)						(519)						(2,047)
Net Income			$	1,641					$	1,673					$	1,671					$	1,762					$	6,747
Share and Per Share
Earnings per share - basic			$	2.69					$	2.75					$	2.75					$	2.92					$	11.10
Earnings per share - diluted			$	2.69					$	2.74					$	2.75					$	2.91					$	11.09
Weighted average number of shares - basic			609.2						609.4						607.6						604.2						607.6
Weighted average number of shares - diluted			610.2						610.3						608.6						605.2						608.6
Dividends declared per share			$	1.30					$	1.30					$	1.34					$	1.34					$	5.28
Operating Ratio			60.7					%	60.0					%	60.3					%	58.7					%	59.9					%
Effective Tax Rate			23.3					%	23.4					%	23.7					%	22.8					%	23.3					%

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenue Statistics (unaudited)

			2024
			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Full Year
Freight Revenues (Millions)
Grain & grain products			$	943		$	901		$	923		$	1,061		$	3,828
Fertilizer			201			203			208			199			811
Food & refrigerated			285			278			269			253			1,085
Coal & renewables			388			339			405			351			1,483
Bulk			1,817			1,721			1,805			1,864			7,207
Industrial chemicals & plastics			572			593			598			582			2,345
Metals & minerals			515			530			529			507			2,081
Forest products			338			342			322			324			1,326
Energy & specialized markets			679			658			672			679			2,688
Industrial			2,104			2,123			2,121			2,092			8,440
Automotive			611			659			601			581			2,452
Intermodal			1,084			1,135			1,241			1,252			4,712
Premium			1,695			1,794			1,842			1,833			7,164
Total			$	5,616		$	5,638		$	5,768		$	5,789		$	22,811
Revenue Carloads (Thousands)
Grain & grain products			210			200			206			234			850
Fertilizer			47			62			53			51			213
Food & refrigerated			46			46			45			40			177
Coal & renewables			177			158			192			175			702
Bulk			480			466			496			500			1,942
Industrial chemicals & plastics			164			169			169			170			672
Metals & minerals			170			184			186			179			719
Forest products			53			55			53			52			213
Energy & specialized markets			154			147			152			154			607
Industrial			541			555			560			555			2,211
Automotive			207			218			202			197			824
Intermodal [a]			739			798			909			911			3,357
Premium			946			1,016			1,111			1,108			4,181
Total			1,967			2,037			2,167			2,163			8,334
Average Revenue per Car
Grain & grain products			$	4,494		$	4,493		$	4,498		$	4,532		$	4,505
Fertilizer			4,271			3,311			3,872			3,918			3,809
Food & refrigerated			6,231			5,943			6,099			6,152			6,104
Coal & renewables			2,189			2,156			2,101			2,012			2,113
Bulk			3,787			3,692			3,641			3,723			3,710
Industrial chemicals & plastics			3,486			3,507			3,534			3,445			3,493
Metals & minerals			3,030			2,885			2,847			2,820			2,893
Forest products			6,297			6,249			6,157			6,210			6,229
Energy & specialized markets			4,416			4,462			4,415			4,412			4,426
Industrial			3,886			3,825			3,791			3,771			3,818
Automotive			2,947			3,033			2,968			2,952			2,976
Intermodal [a]			1,468			1,421			1,365			1,376			1,404
Premium			1,792			1,766			1,657			1,656			1,714
Average			$	2,855		$	2,768		$	2,662		$	2,677		$	2,737

[a]For intermodal shipments each container or trailer equals one carload.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP (unaudited)

Debt / Net Income
Millions, Except Ratios			2024			2023
Debt			$	31,192		$	32,579
Net income			6,747			6,379
Debt / net income			4.6			5.1

Adjusted Debt / Adjusted EBITDA*
Millions, Except Ratios			2024			2023
Net income			$	6,747		$	6,379
Add:
Income tax expense			2,047			1,854
Depreciation			2,398			2,318
Interest expense			1,269			1,340
EBITDA			$	12,461		$	11,891
Adjustments:
Other income, net			(350)			(491)
Interest on operating lease liabilities**			48			58
Adjusted EBITDA (a)			$	12,159		$	11,458
Debt			$	31,192		$	32,579
Operating lease liabilities			1,271			1,600
Adjusted debt (b)			$	32,463		$	34,179
Adjusted debt / adjusted EBITDA (b/a)			2.7			3.0

*Adjusted debt (total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other post-retirement benefit) obligations) to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on present value of operating leases) is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the Company’s ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company’s credit rating. Adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At December 31, 2024 and 2023, the incremental borrowing rate on operating leases was 3.8% and 3.6%, respectively. Pension and OPEB were funded at December 31, 2024 and 2023.

**Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP (unaudited)

Return on Average Common Shareholders' Equity
Millions, Except Percentages			2024						2023
Net income			$	6,747					$	6,379
Average equity			$	15,839					$	13,476
Return on average common shareholders' equity			42.6					%	47.3					%
Return on Invested Capital as Adjusted (ROIC)
Millions, Except Percentages			2024						2023
Net income			$	6,747					$	6,379
Interest expense			1,269						1,340
Interest on average operating lease liabilities			55						58
Taxes on interest			(308)						(315)
Net operating profit after taxes as adjusted			$	7,763					$	7,462
Average equity			$	15,839					$	13,476
Average debt			31,886						32,953
Average operating lease liabilities			1,436						1,616
Average invested capital as adjusted			$	49,161					$	48,045
Return on invested capital as adjusted			15.8					%	15.5					%

*ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the efficiency and effectiveness of our long-term capital investments. In addition, we currently use ROIC as a performance criterion in determining certain elements of equity compensation for our executives. ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is return on average common shareholders’ equity. The tables above provide reconciliations from return on average common shareholders’ equity to ROIC. At December 31, 2024 and 2023, the incremental borrowing rate on operating lease liabilities was 3.8% and 3.6%, respectively.

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