Andre Kelleners

Andre Kelleners inquired about the $2 billion in targeted net revenue gains from the expected merger, specifically asking about the variability of the $4 billion gross traffic number based on planning assumptions. He also asked for more details on how Union Pacific projects the associated costs of handling this new traffic, noting that it implies a healthy EBITDA margin for the potential new business.

Answer

Jim Vena, CEO, expressed confidence in the conservative 2 million carload growth estimate, which was validated by experts. He clarified that this volume translates to approximately 38,000 carloads, and given that intermodal trains carry multiple containers, the actual number of additional movements is not as large as perceived. Eric Gehringer, EVP of Operations, added that the combined entity would see a 6% increase in operating inventory, which can be managed by leveraging existing buffer capacity, prior capacity investments by both Union Pacific and Norfolk Southern, and their ability to operate longer trains (14,000-18,000 feet).

Andre Kelleners inquired about the $2 billion targeted net revenue gains from the expected merger, specifically the variability of the $4 billion gross traffic number and the projection of associated costs for handling new traffic, which implies a healthy EBITDA margin.

Answer

Jim Vena, Chief Executive Officer, confirmed confidence in the conservative 2 million carload growth estimate, clarifying that it translates to approximately 38,000 carloads due to intermodal counting and that the network can handle it efficiently. Eric Gehringer, Executive Vice President of Operations, added that this represents a 6% increase in operating inventory for the combined entity, leveraging existing buffer capacity, past capacity investments since 2023, and operating longer trains (14,000-18,000 feet).