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Greetings. Welcome to the Union Pacific Corporation's First Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. A reminder, this conference call is being recorded and slides for today's presentation are available on Union Pacific Corporation's website. At this time, it is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific Corporation. Mr. Vena, you may now begin.

Good morning, Rob, and thank you. Good morning, and thank you for joining us today to discuss Union Pacific Corporation's first quarter results. I'm joined in Omaha by our Chief Financial Officer, Jennifer Hamann, Executive Vice President of Marketing and Sales, Kenny Rocker, and our Executive Vice President of Operations, Eric Gehringer. As you'll hear from the team, we had a solid start to the year. Our reported operating ratio was 60.7%, flat compared to last year even with a 90 basis point headwind from fuel and leap year. We delivered record first quarter operating performance. Further, we had the strongest carload growth of the Class 1s as we work closely with our customers to meet their needs in an uncertain environment. Now let's discuss first quarter results starting on Slide three. This morning, Union Pacific Corporation reported 2025 first quarter earnings per share of $2.70, which reflects a $0.19 or 7% headwind from fuel and leap year. Our reported 2025 first quarter net income of $1.6 billion was essentially flat versus last year. Reported first quarter 2025 operating income was flat as 7% volume growth, robust core pricing gains, and strong productivity were offset by business mix, fuel, and the leap year. Freight revenue grew 1% versus last year, and if you exclude the impact from fuel surcharge, freight revenue increased 4%, both first quarter records. Looking to the rest of 2025, we will continue to execute our strategy at service and operational excellence. Building on the strong foundation with our record first quarter operating performance, we are positioned to deliver. I'll let the team walk you through the quarter in more detail and then come back and wrap it up before we go to Q&A. With that, Jennifer, first quarter financials.

I'll begin with the walk down of our first quarter income statement on Slide five. Our operating revenue of $6 billion matched last year's level even with lower quarterly fuel surcharge revenue, a reduction in other revenue, and the leap year comparison. Freight revenue of $5.7 billion increased 1% despite the roughly $70 million impact of having one less day in the quarter. Digging into the freight revenue drivers further, our strong volume growth in the quarter added 650 basis points to freight revenue. Fuel surcharge revenue of $565 million declined $100 million as the impact of lower year-over-year fuel prices more than offset the higher volume, reducing freight revenue 275 basis points. Core pricing was very strong and reached the highest quarterly level in the past ten years. Further, pricing dollars net of inflation were accretive to our operating ratio. Despite these robust results, quarterly business mix combined with price for a 250 basis point drag on freight revenue. In addition to volume growth in our lower average revenue per car business lines such as intermodal and coal, we have the additional dynamics of lower volumes in our higher arc businesses like petroleum, soda ash, and finished vehicles. Wrapping up the top line, other revenue declined 19% to $336 million. Included in the year-over-year change are several items including some that we have such as last year's intermodal equipment sale and the Metro transfer. Quarterly results were also challenged by reduced auto parts and lower assetorial revenue. And finally, you'll recall that first quarter 2024 included a one-time favorable contract settlement of $25 million. Switching to expenses, operating expense of $3.7 billion equaled last year, as solid productivity gains and lower fuel costs offset volume-related costs, inflation, and depreciation. Digging deeper into a few of the expense lines, compensation and benefits expense improved 1% versus last year as reduced workforce levels were partially offset by wage inflation. Record quarterly workforce productivity enabled us to limit first quarter cost per employee to only a 2% increase. First quarter fuel expense declined 8% on an 11% decrease in fuel price from $2.81 to $2.51 per gallon. We also improved our fuel consumption rate 1% during the quarter as we continue to leverage optimization tools such as energy management systems on our locomotive fleet, enhancing train handling while reducing consumption. Purchase services and materials expense increased 3% versus last year, driven by inflation, volume-related costs, and a favorable 2024 item, partially offset by lower costs at a subsidiary. Equipment and other rents increased 12%, driven by increased car hire for automotive racks, inflation, and demand in intermodal and other traffic that utilizes foreign freight cars. Finally, other expense increased 1%, as higher costs associated with destroyed equipment were partially offset by lower bad debt expense and environmental remediation costs. First quarter operating income of $2.4 billion was consistent with last year. Below the line on lower average debt levels partially offset by a slightly higher effective interest rate, quarter 2025 net income totaled $1.6 billion and earnings per share came in at $2.70, both essentially flat versus 2024 despite the $0.19 EPS impact from fuel and leap year. Similarly, fuel and leap year had a 90 basis point unfavorable impact on our reported quarterly operating ratio of 60.7%. All in, the UP team produced a good quarterly performance and start to 2025. Before I go on, a couple housekeeping items I want to mention. First is that we now estimate our other revenue will total about $325 million per quarter reflecting our expectations for lower assetorial and subsidiary revenue. And a reminder that in the second quarter of 2024, our results included a $46 million benefit in other expense from the sale of intermodal equipment and we have now lapped that transaction. Turning to shareholder returns and the balance sheet on Slide six. First quarter cash from operations totaled $2.2 billion, up 4% versus last year. In February, we initiated an accelerated share repurchase program for $1.5 billion and through the quarter, we made open market purchases of an additional $220 million as we more recently took advantage of very attractive share prices. That cash return plus our industry-leading dividend payout enabled us to return $2.5 billion to our shareholders in the first quarter. In the quarter, our net debt increased $1.7 billion as we issued $2 billion of long-term debt and paid maturities totaling $350 million. This resulted in our adjusted debt to EBITDA ratio of 2.8 times at the end of the quarter, as we continue to be A-rated by our three credit rating agencies. Turning to the remainder of 2025, on Slide seven, as we look to the next three quarters, it is likely going to be a bumpy ride. In preparation, we've worked through scenario planning and will remain agile. Importantly, we will continue executing our strategy and are maintaining the three-year targets set at our Investor Day last September. In particular, 2025 EPS growth will be consistent with attaining our three-year EPS CAGR view of high single to low double-digit growth. Similarly, our views on accretive pricing, industry-leading operating ratio, and ROIC as well as capital deployment plans still hold. Obviously, there's uncertainty in the marketplace. But the year is off to a good start and we are delivering value for our shareholders. In fact, April volumes and service metrics were quite strong heading into the Easter weekend. Our focus on safety, service, and operational excellence prepares us for whatever lies ahead and we're confident in our ability to perform. I'll now turn it over to Kenny to provide you an update on the business environment.

Thank you, Jennifer, and good morning. Freight revenues totaled $5.7 billion for the quarter, which was up 4% excluding fuel surcharges due to increased volumes. Despite unfavorable mix, we saw strong core pricing gains which as Jennifer mentioned was the highest absolute quarterly level over the past ten years. This is a testament to our deliberate focus on maximizing price. Let's jump right in and talk about the key drivers for each of these business groups. Starting with our bulk segment, revenue for the quarter was up 1% compared to last year, on a 2% increase in volume and a 1% decrease in average revenue per car as business mix and lower fuel surcharge revenues were more than offset by core pricing gains and volume. Post off strong customer demand due to favorable natural gas pricing. Grain products volume was up for the quarter driven by increased demand for feedstock. Locating new customers on our railroad ensures long-term ratable demand and the newest facilities located in Nebraska and Kansas are now running at full capacity. Lastly, primarily driven by consumer preference. Turning to Industrial, revenue was down 1% for the quarter on a 1% decrease in volume. Strong core pricing gains were offset by business mix, lower fuel surcharges, and volume. Petroleum shipments decreased during the quarter due to business shift while soda ash was impacted by weaker global demand. This was partially offset by increased rock shipments driven by strong customer demand coupled with favorable weather conditions compared to last year. Premium revenue for the quarter was up 5% on a 13% increase in volume and a 7% decrease in average revenue per car reflecting the mix impact of increased intermodal shipments and lower fuel surcharges. Intermodal volumes remain strong based on international West Coast import demand. Additional positive domestic intermodal growth was Automotive volumes due to reduced OEM production. Turning to Slide ten, here is our 2025 outlook as we see it today for the key markets we serve. We've had a solid start to the second quarter with AAR car loadings currently up just over 7% compared to last year. Now starting with bulk, continued challenges for food and beverage is expected primarily based on weakness in the U.S. Beer market. We anticipate coal volumes to remain strong in the near term. However, there is always volatility in natural gas prices. So we'll remain agile as we move into the second half of the year. Lastly, we expect grain exports into Mexico to remain strong. For grain products, our intense focus on business development results is expected to mitigate market uncertainties in renewable fuels and associated feedstock. Moving to industrial, we anticipate petroleum volume to remain challenged due to business shift and our commitment to balance the volume at the right margin. Our industrial chemicals and plastics markets will remain favorable based on customer plant expansions and our ability to win incremental volume in the market. For example, we are excited to support Dial's expansion later this year at their Poly seven facility in Freeport, Texas. And wrapping up, with premium, while tariff uncertainty remains a concern for automotive, we are closely aligned with our customers providing guidance and solutions every step of the way. On the intermodal side, we anticipate a slowdown in international intermodal as we move through the second quarter. And we expect decreased volume in the second half of the year due to the higher comparisons as customers diversify back to East Coast and Canadian ports. However, we remain optimistic about growth driven by over-the-road conversions because of our strong service product and multiple channels to win. We are keeping a watchful eye on the market and potential tariff changes that could further impact overall consumer spending. While we navigate the trade policies and face difficult comparisons in the latter half of the year, our team has proactively taken action and hustling to overcome these obstacles. Specifically, earlier this month, we began moving volumes with Lower Colorado River Authority and will continue to ramp up throughout the month. The team's focus on business development is yielding positive results. As we see incremental volume from new and across multiple segments like grain products and petrochemicals. In fact, we actively maintain an open pipeline of 200 construction projects so business development through growth and expansion is always a priority. The team is also setting the stage for future growth. Undi Steel Corporation recently joined the Union Pacific Railroad Network announcing their first-ever US steel mill in Louisiana. Construction won't be complete for a few years, but this is a positive result of our current business development efforts. With our strong service product, I am confident that we will continue to win new business and take trucks off the road. And as I stated last quarter, our commercial team is crystal clear on acceptable pricing levels based on the service we sold. Which is driving strong core pricing gains. I'm proud of the team's ability to deliver a 4% increase in freight revenue excluding fuel. The team is focused, and I'm very comfortable with our current position. And with that, I'll turn it over to Eric to review our operational performance.

Thank you, Kenny, and good morning. Moving to slide twelve. In the first quarter, we continued to see meaningful improvements across nearly all of our metrics. This is a testament to our strategy, our steadfast focus on providing industry-leading safety, service, and operational excellence. Starting with safety, which is the foundation of everything we do, both personal injury and derailment rates continue to improve versus their three-year rolling average. In fact, we achieved a first-quarter personal injury rate that tied a quarterly record dating back to 2016. Our number one priority remains returning all employees home safely each and every day. Freight car velocity, the best measure of fluidity on the railroad, improved 6% to 215 miles per day, a first-quarter record. The primary driver was further reductions in terminal dwell, which improved 6% year over year and also set a new first-quarter record. We are turning our customers' assets faster. A win-win. As we support their growth initiatives while simultaneously generating future growth capacity within our terminals. On the service front, manifest SPI was 93%, a six-point improvement. While intermodal SPI at 94% was essentially flat. Our buffer of resources coupled with improved fluidity I mentioned earlier continues to translate into a very high level of service for our customers. And customers are seeing the benefit, rewarding Union Pacific Corporation with new business. As Kenny mentioned, we have successfully onboarded our new coal customer while also adding incremental growth coal sets beyond what we had originally planned coming into the year. On the intermodal front, we continue to handle historically high international intermodal volumes. All while delivering a service we sold our customers. Let's review our key efficiency metrics on Slide thirteen. Throughout the quarter, the team was effective in our approach to asset management, leveraging our buffer of resources to inject assets only as we needed them. That approach paid off. As you see improved efficiency metrics across the board. Locomotive productivity improved 1% compared to first quarter 2024. Notably, our active locomotive fleet only increased 3% against the backdrop of a 7% volume growth and normal winter weather challenges we historically experienced this time of the year. While the increased fluidity of our network enabled the performance, we also see the continued benefits from our work on locomotive dwell. Workforce productivity, which includes all employees, improved nine. More specifically, our active train engine and yard workforce decreased 1%. Demonstrating excellent operating leverage against the 7% volume growth. We will continue to support our training pipeline and provide the capacity buffer necessary to navigate an ever-changing environment. Train length in the quarter grew 2% compared to first quarter 2024. Further, we delivered improved train length sequentially despite lower intermodal volumes. Which generally provide greater density to drive gains in train lengths. We will continue to leverage proprietary technologies like Precision Train Builder to safely grow train length while generating mainline capacity for current and future growth. Wrapping up, I'm very proud of the team and the results we delivered. We efficiently leveraged our resources to handle volume growth in a service-focused manner. As we progress throughout the year, we will remain agile and in constant communication with our customers as they analyze their supply chain options. I'm very confident in our ability to control what we can control, whether it be our service product, buffer of resources, asset utilization, etcetera. We are prepared and as we move forward, I'm certain you will see our resiliency on display. Jim? Just coffee having a sip of coffee. You were way too fast closing that off, Eric. I thought you still had a couple of lines. Thank you very much. And why don't we turn to Slide fifteen? Before we get to your questions, I'd like to quickly summarize what you've heard from our team. First, as you heard from Jennifer and Kenny, we are still a lot of unknowns related to volumes and the economy. But what I do know is that we are driving efficiency throughout our network and pricing for the strong value we provide our customers. Eric walked you through the records we're setting across safety service and operational excellence. Network is fluid, and we are meeting the demands of all our customers. We are in a good position and we will be agile and responsive as we move forward. We remain committed to the long-term guidance that we laid out at our Investor Day last September and we are confident we will be the industry leader as we drive value for our shareholders. We have the right strategy, right team, and the right focus on the fundamentals, all supporting our ability to unlock the franchise. With that, now ready to take your questions. Rob?

Thank you, Mr. Vena. We'll now be conducting our question and answer session. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Due to the number of analysts joining us on the call today, limiting everyone to one question to accommodate as many participants as possible. Thank you. And our first question will be coming from the line of Chris Wetherbee with Wells Fargo. Please proceed with your question.

Good morning, guys. Hey, thanks. Good morning, guys. Good morning. I guess I wanted to talk a little bit about 2025 guidance. So, you know, obviously, uncertainty is building here with concerns about maybe some slowing activity particularly on the West Coast. You guys have talked about sort of growth this year consistent with the long-term targets, and I think that could kinda take a couple of different meanings. So I was kinda curious if you wanted to maybe put a little bit of a finer point, kinda think about what the potential outcomes could be either from an earnings perspective, maybe an operating ratio perspective. Just wanted to see if you can put some framework around what you 2025 might look like just given the uncertainty that's out there.

Well, Chris, that's a great question and a great way to start off. So at this point, there's a lot of things tariffs, economy, what the consumer does, what interest rates are gonna happen with interest rates, what's gonna happen with the tax package or the packages that the Congress is looking at doing. So all those things are up in the air. What we look at at this point in time, we're very comfortable that we're standing by our guidance that we provided last year. Now is it a little muddier at this point than it was when we gave it last year? Absolutely. But at this point, what we're seeing and that's why Jennifer mentioned our carloads are pretty strong. So far in April. And the mix is pretty strong. So we like what we see and we just don't want to get because everything is so fluid, it we'd be remiss start talking about what's gonna happen as we move through the rest of the year. For us though, what we look at and it's very key foundationally, fundamentally, we have a railroad that's and we're able to be able to take a look at how we spend money on the railroad what we're doing in a very efficient manner. And Eric took you through the details of how how we're doing and how we're looking at things. And I think we've shown over the last few quarters and especially the first quarter what's possible with this railroad. If you come in with a fundamental railroad that's operating in a very well in a good manner, what happens is you can build from that. The reaction is what happens with all these items that I've these vectors that I've talked about coming in at us. End of the day, I'm comfortable we need to react, we will react. But at this point, I think it's so fluid I woke up this morning to see when I woke up with when I normally do. Went to bed last night at midnight after watching that bad hockey game. That my team lost real bad. And woke up this morning to see what the news was the latest. And at this point, it's a day-to-day, week-to-week reaction of what's happening out to the marketplace. So that's why Chris we're sticking to our three-year guidance. We think if everything comes to a normal, much more normal situation, I think we will deliver that and we're very comfortable that we have the opportunity to do that. Anything you wanna add?

No. I mean, you I think you hit all the right points, Jim. And you know, we are looking at it a number of different ways both in terms of what we think is gonna happen on the demand side. But, obviously, Eric and his team have to be prepared in terms of if demand does fall, what are the levers that we can pull. And so when we look at that in totality, we feel comfortable that we've got the right strategy. We're well positioned. And obviously, we want to take advantage of carloads when they're there. And I think we're doing a really good job of that today.

Thank you very much. Appreciate it. Thank you.

Our next question comes from the line of Tom Wadewitz with UBS. Please proceed with your question.

I guess this is a question along the same theme, which you'll get even more after mine. But when we think about your framework for this year and kinda you know, volumes are strong in April, but, you know, there are a number of segments that might be pre-shipping or fall off. So I guess if you say in that, you know, kind of three-year guide and call it high single-digit earnings growth at the low end, is there like a revenue growth or a volume growth to assumption that you say, hey, we kinda need to be in this range in order to achieve that? And I guess I don't know if that's the low single digits revenue growth. And then I guess that just from a year-over-year perspective, if you're flat in earnings in one Q, but you do know, full-year high single-digit, what's the lever that accelerates? Is it just easier comps? Is it kinda volume accelerates? Just you know, I guess, a couple more things that's how we understand the frame. Thank you.

Well, Tom, you know what an it's an interesting question. It's as you know, there's a lot of puts and takes. If you take a look at our first quarter, the headline you would say it was a flat year. But if you look at it underneath, with the impact of fuel and what we had, we had a pretty good first quarter, especially for a first quarter for Union Pacific Corporation. That is one of our highest expense sides with a lot of things that come in. Fundamentally, we're good. We like the business mix that we have. We like the way the quarter has started off. I am absolutely not sure what's going to happen. And if anybody tells you at any point that they know what's gonna happen over the next few weeks, let alone for the rest of the year completely. And I think we'd be remiss to start changing our guidance. You know, the easy thing would have been to come in this morning and just say, listen. There's so much noise. We're pulling our guidance. But we have a job to do, and our job is to react to whatever's thrown at us. At Union Pacific Corporation, we've been doing that for a long time and you know, I do have nobody sees it, but I do have a few gray hairs. So I've been around for a while, and I've seen the ups and downs. I think I've never bet against the United States economy or the United States in general. So at the end of the day, I think we end up in a good place. Whether that's in a few weeks or whether that's in six months, but fundamentally, if we can operate the way we are, Kenny and the team are building long-term partnerships with customers and we have the franchise that we have that handles so many products that Americans use every day. I'm very comfortable, Tom, and we are not we are not going to come off of our how we do it. How do we deliver that high single-digit, low double-digit? Absolutely. It's how we price, volume, how efficient we are, everything that's in the mix that we can control. And I think we've shown over the last few quarters how whether we're doing a good job or not. I rate the team because I'm a hard marker. I'm like Walter a little bit. We're average, and I think there's more left for us to do. But I'm very comfortable with where we are right now.

I guess, any thoughts on, like, threshold revenue growth or volume to get there or or not?

Tom, first few weeks in April, we're saying, listen, we see a little bit of impact with everything that's going on at the end of the day, it's been pretty strong for us. Our industrial, our bulk, even the intermodal, is pretty strong. But and I like to see the bulk in industrial where it is. Because as you know, it's a different margin business. But I really can't tell you. And, Tom, maybe you have a better idea. Fill me in if you can because I can't tell what's gonna happen here in the next couple of weeks. But I think at the end of it, we'll see a reasonable position for the United States of America when it comes and will not impact worst thing that can happen is it starts to impact what consumers are doing and their thought process on how they spend money. Haven't seen that at this point. But that would be a worry. But at this point, we haven't seen it.

Thanks, Tom. Thanks for the time. Our next question is from the line of Fadi Chamoun with BMO Capital Markets. Please proceed with your question.

Yes. Good morning.

Good morning, Fadi.

Good morning, Jim. So quick question on the pricing. You mentioned the strongest in ten years for Q1. How much of that is reflecting maybe the lag impact from the inflation we saw in the last couple of years and how much is driven by the better service performance of the network in the last year? If you can give some color about kind of what's underlying this strong pricing and how sustainable that is?

Yeah, Fadi. Thanks for that question. I'll start it off and then kick it over to Kenny. I do think it's important to recall back at our Investor Day where we laid out our vision that we were going to have accretive pricing going forward. And in that, we talked about the fact that we had some catch-up to do, that we had the opportunity to touch more of our long-term contracts. And that that was part of what gave us the confidence that we were able to stand before you all in September and say that the pricing was going to be accretive. Certainly, Eric's service product helped support that. The team's going in and having those conversations. But this is consistent with what we were seeing and what we were expecting to see back in September. And we just believe there's more of that coming forward. So that's where you're seeing that confidence.

So you look at it as Jennifer mentioned last year, we were price accretive. We're starting off price accretive today. And it's really the mindset that we have as a commercial team. Eric is and his team is providing us with a strong service product. We also have quite a few that we're making into the network. That gives us all the ability to really price to the service that we're sold. And we're pretty dogged on that. And so that's what you're seeing. You're seeing the results of that play out.

Thank you.

Next question is from the line of Brandon Oglenski with Barclays. Please proceed with your question.

Hi, good morning. Thanks for taking the question. Kenny, I know everything is volatile right now, but obviously we have pretty sizable tariffs on Chinese goods here. I mean, think our treasury secretary is calling a de facto embargo on trade with China. And we can see that there are gonna be some higher blank sailings into, like, LA, Long Beach, which has been a pretty big source of volume for you guys. So I guess maybe a two-part question. You know, a, have you heard from your international customers or any of your customers about plans for dealing with these very large tariffs? And then maybe just quickly for Eric, like, how would you, you know, deal with potentially a big air pocket and demand on certain parts of your network even if you're seeing growth, domestically? Thank you.

Yeah, Brandon. Thanks for the question. So first of all, it starts with staying close to the customers. I've been talking to customers this week. It's they staying close with Eric, and it's all about the agility. We've shown improved that in the quarter. We were able to handle that business. You're asking a specific question about China and yes, we do see and Jim used the word normal patterns. We expect we move throughout the quarter to see a little bit more softness and then we have some tougher comps. The best thing we can do during that time is just have all the products we have with the ramp the match back, and the service product and stay close to our customers because we've been seeing these supply chain patterns change at the drop of a hat.

And, Brandon, related to how we continue to maintain volume variable plus. For us, we're very prompt to being able to do that. When we think about what are we physically doing, what does it look like on the railroad? It's really your five critical resources with emphasis mostly on three of them. You adjust the amount of locomotives you have, the amount of cars you have, and you adjust the amount of crews that you have. Now you do that inside of our transportation plan, which over the last year, we've got a big plus that we've added to that. With a tool that we have that's called adaptive planning. That's taken our playbooks and made us even faster at how we're able to make those decisions. What used to take multiple days or weeks, now we can do in a matter of hours or even a to maybe at most a couple days. So we have the ability to adjust. You've seen us demonstrate that many times over our history. And that's exactly what we'll do.

Thank you.

Our next question is from the line of Scott Group with Wolfe Research.

Good morning, Scott. Hey, thanks. Good morning, guys. So if I take a step back and we have the best pricing in ten years and volumes up seven and headcount's down three, you know, it I would've thought it could've been, like, the perfect storm of, like, record kinda margin improvement when you just think about those three things and margins are flat. Is this just mix and fuel? And so what does this look like going forward maybe at the volume slows, but maybe now the mix turns positive, hopefully, the fuel headwind isn't the same magnitude. Should we start to see a lot more margin improvement just given this price as we get through maybe some of this mix headwind?

Yeah. You know, that's a it's an interesting way to look at it. Is if we have you're saying if we have less revenue but the mix is better, we end up with better margins look at it a little bit different. Yeah. That's a win, but I'd rather have more revenue and drive to make sure that the margin is in the right place. We like all the business that we have. And the reason we are Union Pacific Corporation is because of the top hundred customers that we have that we move everything that people use every day in either the manufacturing or at the end. So Scott, yes, you could say that if intermodal came down because of what's happening at the West Coast or the imports, that would help us margin-wise. But for me, I'd rather remember, we don't give all our specifics on purpose. If somebody would tell me that I could be a 55 operating ratio railroad, and our revenue went down by x, I'd rather be a 57 operating ratio railroad with our revenue going up by x. So the way I look at it. Jennifer, anything else you want to?

Yeah. I should would on the mix part, I mean, obviously, mix price together and mix with record price together being down 250 basis points. That gives you an indication of the impact of mix to the quarter and we also gave you what the impact was to the OR and EPS from fuel. So to your point, as we look ahead, mix should moderate. I don't know when it will turn positive, but probably should turn positive we move into the back half of the year. We'll see how second quarter plays out. As Jim talked earlier, there's just a lot of wild cards on how that's going to play. But should improve nevertheless. You look at fuel, we see that as something that moderates through the year as well. And when we get to the end of the year, fuel prices stay kind of where they're at, I think you look back and you say fuel was kind of a non-event for us. Overall for the year. So I think you're looking at it right. The only thing I would say is don't underestimate the mix impact to our margins in the first quarter. Thanks, Scott.

The next question is from the line of Ken Hoexter with Bank of America. Please proceed with your question.

Good morning, Ken. Hey, great. Good morning. So, Jen, maybe just taking that another step and I know you don't give specific guidance, but if I think about maybe just historical averages, right, so first quarter to second quarter, maybe you could talk about what kind of level improvement you've historically seen. I think it's been about a hundred basis points. So I just want to understand just to get to the EPS target that you're talking about, do we have to see outsized seasonal performance given, I don't know, whether it's the LEAP day and fuel impact you were talking about?

Maybe I'll start with that. Thanks. Well, Ken, I love the question. You know that you were trying you asked me because you thought for sure Jennifer would say I don't give any guidance. But yes, we're historically we're going to historically see that improvement at this point. We see it already with three weeks in the book that we looks like we'll have that historical change that happens normally first quarter to second quarter and maybe even a little better because of how well we're operating. But still too early in the quarter to say anything specific about what it looks like. Jennifer?

Yes. No, I mean, the first quarter is where you typically have your worst margins for the year. Then it typically improves second and third quarter because you've got kind of your beginning of the year cost out of the way. You see your volume improve. And you're away from the winter weather. And so you've got that kind of mud behind you, if you will, in the first quarter that helps propel you in the second and third quarters as you see volume growth. Obviously, as we're talking today, volume is going to be the wildcard, but we're not going use that as an excuse to not improve. In fact, we believe we will improve. And that's the task that the team has, and we're absolutely committed to it.

Wonderful. And Jim, you mentioned your team lost bet. Was that the Oilers Canadians or are you really an Ottawa fan?

Well, listen. I'm a Edmonton Oilers fan. That was ugly. My dad's a Montreal Canadiens fan. He didn't like that. So there wasn't the a lot of positive. I went to bed last night after midnight and going, what the heck is this? Okay? Now I normally go to bed at midnight anyways. And I had to laugh I know this is a serious call, not a call about the NHL or NBA, but I think Kenny goes to bed at nine o'clock and Eric goes at eight thirty. So when I told him I was staying up till midnight to watch the game like I normally do, I think that just threw him right off. Jennifer said that's better. Okay. He only needs five hours sleep, so he's good. But, yeah, rough day, Ken. Rough day. Let me check. Sorry to divert. Thank you, guys. Yeah.

Thank you. Our next question is from the line of Brian Ossenbeck with JPMorgan. Please proceed with your question.

Good morning, Brian. Hey, good morning.

Thanks. Us back on track with something much more boring than this question. But well, I don't know if you appreciate it. Let me ask it first. But so maybe for Kenny, just the I know there's a lot of volatility with policies, but does seem like there there will be something on the section 301 related to China ship loading, and now they're talking about removing the harbor maintenance tax benefit from the Canadian port. So I wanted to see what your initial thoughts are on that since we've been through two iterations of that with with the US TR. Then, you know, the past trade war, we saw a big impact in general for the US export grain. Particularly soybeans. So I wanted to see if that's something we should also be considering here. Thanks.

Yes. Thanks for that, Brian. So first of all, we've talked with quite a few customers. And I'll tell you that they need a little bit more clarity and certainty candidly, we've seen the tariffs come on. We've seen them come off. We need a little bit more certainty. They need a little bit more certainty before they are gonna commit to making any significant changes in ports or traffic flows. I'd be remiss to say our commercial team is pretty intense or having pretty intense conversations about coming to the U.S. Especially with our network that we have, especially with the service. So that's a focus for us. But bottom line, we gotta make sure that these stick. Second part of your question on the grain piece, when you look back the first time Trump was in, we did see some of the traffic flows change. And we're seeing that as a positive today. Eric and the team have really done a great job of moving grain to areas like the gulf and areas like Mexico. So yes, the traffic flows may change. But we still are able to have an agile network. The last part of that is just the, what I'll call, fundamental growth in terms of the fuel side. So the biofuels, the renewable fuels, we still see that as a positive. We've been very aggressive, hyper-aggressive about landing new customers, landing new origins. Landing new destinations. We still think that that's a good emerging market that's going to be in place.

Thank you very much. Thank you, Kenny.

Next question is from the line of Jonathan Chappell with Evercore ISI. Please proceed with your question.

Good morning, Jonathan.

Good morning, Jim. Eric, question for you. We covered it a little bit, but I'm know, I don't think we know exactly what the outcome is gonna be, but I think with the blank sailings and know, some of the other comments around exports leaving China and what's gonna come into the West Coast. Kenny already mentioned international intermodal probably had some challenges in the back half of the year. But domestic, seems to be set up pretty well. So how do you kinda manage resources for volatility kinda within the intermodal cycle? Do you keep a level of resiliency in case things are kind of short-lived and kinda just focus on service and making sure you're prepared for the upturn? Or do you have to become a little bit more I guess, drastic with some of the resource decisions that you make in the short term?

That's a great question, Jonathan, and a timely one. Let's make thing make sure we're really clear about something. We always keep our buffer of resources. Right? We always maintain the railcars, the locomotives, and the crews that we need to operate to deliver the service product. That we sold our customers. Let's talk a little bit more lower in the weeds about how we do that on the railroad. And we can just start with really practical things, but they're really important things. So with the increase in international intermodal, we've obviously made changes to our transportation plan. Now you might think that that's just where we just add trains to the system. Not what we do. We first look at how do we fill any latent capacity we have on existing trains. Then we look to say how do we combo certain trains to be able to generate more capacity. And as a last resort, we add new symbols that being new trains that we run. When you're thinking about any type of reduction that may occur, you just work that in reverse. Alright? You first look at there any trains that we added to the entire system that the volume just doesn't support running anymore? Then from there, you look and say, can I still combo with other trains so that we can continue to be productive? And be volume variable plus. That's it's literally how we do it every single month when we look through our transportation plan and make adjustments to it. It's sounding like I'm oversimplifying it. A complex thing, and that's why we use so much technology to inform our decision-making that we can still deliver our service product, but do it in the most efficient manner.

Thank you very much. Great. Great insightful.

The next question is from the line of Stephanie Moore with Jefferies.

Good morning, Stephanie.

Good morning, everyone. This is Joe Hafling on for Stephanie. Eric, thanks for walking through that. That was very helpful, and I think helped know, answer a lot of those questions. I guess I maybe wanted to talk about something a little bit different. Under the surface, all the productivity initiatives you guys have been embarking on, if we think about 2025 what major projects do you guys have kind of under your barrel that you're working on? That we should we should be looking forward to and maybe just an obligatory how we should think about headcount throughout the year. Thanks.

Sure. So taking on your techno or your productivity question first, as we think about projects, right, you kind of naturally wanna trend towards talking about technology. Let's never forget, though, the biggest driver of our productivity is the fundamentals and how we operate this railroad day in day out. You saw that in the first quarter, right? 7% volume handled, that being 7% higher volume handled our operating expenses were actually down 2% excluding fuel. You saw that in the record train length, record workforce productivity, etcetera. You always wanna stay most focused on your fundamentals. Now from a project slash initiative place, now you really are getting into the technology. That technology Jennifer mentioned, on the fuel conservation side with energy management system, it's how we think about Mobile NX inside of our terminals as we work to automate portions of the terminals. Even the work that our engineering team is doing on how do you automate the distribution of materials. In total, we only have dozens and dozens of these initiatives in different phases. So we're in a great position to continue to build on that. Now as far as the hiring side, as we've discussed before, every single month, we go through our hiring plan. And when we do that, we're looking to consider all of the different variables that we have to take into account. Right? So those are things like attrition, then to your question, the positive impact we get from productivity changes in markets, and the list goes on and on. We've already made adjustments this year to our hiring plan based on the changes in different markets and we'll continue to do that. Joe, we're committed to make sure that as we look at our asset base, we continue to become continue to be volume variable plus.

Eric, the only thing I could add is, and I think you did a great job of describing make it sound easy, but it's very complex. But the end of the day, the way we look at it and the nice part about where we are right now is with us implementing net control and new dispatch system that allows us to dispatch at the highest level and react to things as they're moving on. Our new net control will allow us to actually react in a real fast manner. It's all about touch points for the cars. If we can touch the rail cars less, to get them from origin to destination, we're not a linear railroad. We're very complex. When you come out of the LA basin, have intermodal containers, both domestic and international, going to a across this network of ours, plus going east into the eastern part where is how can we use the technology that we've developed and the fundamental technology to be able to make decisions. So we remove touch points. If we can remove touch points, then we end up with a more efficient railroad and quicker and react to whatever is thrown at us. The nice part is we're hiring. We still have to hire, and Eric and the team did a great job when he talked about the headcount that we have in operations versus with the business that was increased. We were actually down. And we want to continue to be able to be as neutral as we can. And the first action we take always is we stop hiring or we slow down hiring if we need to if we see there's something changing. And we take full realization that it when we make a decision to hire, this is not a one day they show up and they're on the railroad as a conductor or as an engineering person or as a mechanical person. Or whatever. You know? Listen, in a headquarters, if we miss somebody one day, it's not that big of a deal. Somebody else work an extra hour, and we'll fill that in. But when it comes out in the field, you need those locomotive engineers conductors. So we make sure that we're very careful. But because we were hiring, we adjust that, and we'll adjust that down if we see things happen over the next few weeks on what we're gonna do. But we're hiring now for three months down the road. Three, four months down the road. So already started to slow that down. Just because we've become more efficient, and then we'll take a look at it as we go ahead. Sorry for the long answer, but I love operations. So I had to get in the middle of that. Sorry, Eric.

It was all very thoughtful. Thank you.

Thanks for the question. Our next question is from the line of Jordan Alliger with Goldman Sachs. Please proceed with your question.

Good morning, Jordan.

Good morning, everyone. Thanks for taking the time today. This is Andre on for Jordan. My question is somewhat conceptual trying to frame the downside risk to freight market that might be left out there in the respect that most of transportation has already been in a freight recession for three years now. You know, how much additional absolute downside risk is there left to volumes or yields if in a worst case we fall into a consumer-led GDP recession? Would a downturn be less pronounced in freight versus historical GDP slowdowns given the already extended slowdown in freight that occurred post-COVID? Or would that be fair to say you know, for some of your non-consumer facing businesses?

Yeah. So I'll take a stab at that one. I mean, I do think your point making some good points in terms of particularly when you think about the truck competitive part of our business, which we've been all talking about the fact that it's been in a down mode, maybe recessionary mode the last couple of years, and we've just been bouncing along the bottom there. Over that time, we've made tremendous strides to improve our service. We've filled out our stable of IMC partners. And so we do think we're extremely well positioned to be able to capture business that's out there. And when I think about the UP franchise, one of the best things about our franchise is the diverse, you know, so with that broad diversity, that broad scope, our reach across a number of markets, you know, we have historically felt that that insulates us a little bit from what happens in one market versus the other. And you've seen that. I mean, you've got things last year, our volumes were up 3% when our coal was down 20%. Now this year, we have coal up and you've got other markets that are down. So we'll deal with whatever the markets give us, whether it's a softer landing maybe for us just because of what's happened in the transportation space, the truck space the last few years or not. I think that still remains to be seen. Think the good news is we're agile, we're ready, and we'll respond. And with the work that Kenny and team have been doing in business development, service product that Eric's team is providing them, I think we'll capture our share in more. And we'll perform very well.

Thanks. Appreciate the thoughts.

Thank you. The next question is from the line of Daniel Imbro with Stephens.

Good morning. Hey, good morning guys. Thanks for taking the question. Kenny, I want to follow-up on the Intermodal, maybe volume and kind of revenue per carload outlook. I think you mentioned there's some international headwinds coming with the potential for more domestic strength from truckload conversions. I guess, how did those domestic conversions trend through the first quarter as the truck market began to soften? And then related to that, I guess, with the favorable mix of more domestic versus international, but maybe a softer truck pricing environment. How are you expecting to see intermodal revenue per carload? Through the back half of the year just as with the split and takes?

Yeah. So I'll just start off by just updating you on where we are through bid season. And call it a little bit more than a third going through the bid season. We're encouraged on where we are from a bid perspective. We're encouraged by the wins that are out there. Again, you hear me talk about the channels, the stable of private asset customers along with our own private box. We've seen wins in those sections. The over-the-road section part of our business is the one that we're most focused on. A strong service product will help you with that. We talked about six thousand loads with Uber that we won. That's all over the road. So that's how we're approaching that. From a price perspective, you know, we have mechanisms in place to go out there and price. With all of our customers. Again, with our rail asset, we're also able to compete in that marketplace. We've been in a lull that's Jennifer mentioned on our previous question. For a while, that has allowed us to go out there and win and compete business. During a challenging environment. As the market or if the market does improve we expect to move in a more positive direction on the revenue per car side.

Yeah. And the only thing I'll add there is if you think about which we talk about, mix within mix. So within intermodal, there are different mixes. We talked back in September that international intermodal is our lowest average revenue per car. And so if you see less international intermodal, or domestic, that can be positive within that mix on mix space. So another thing to take into consideration.

Next question is from the line of Ariel Rosa with Citigroup. Please proceed with your question.

Good morning, Ari.

Yes. Hey, good morning. So I just wanted to ask a clarifying question. When you talk about EPS growth consistent with attaining the three-year CAGR on EPS. Just help me understand. That is not specifically a target for 2025 to be up high single digits high single digits to low double digits. Just wanted to clarify that point. And then we've seen some strength in coal in second quarter to date. Just wanted to help understand what's underlying that strength and the extent to which you think it's sustainable. Thanks.

Sorry. I wish I could come here and tell you that what we see is a high single digit, low double digit for sure this year. There's just too many variables that we can't control going on right now. But we're very comfortable with the way the railroad is operating and that we continue we're standing by our guidance. That's the way I look at it.

Just on the natural gas is really the driver there when you look at our coal business. But the other part of that is being able to capture that business and Eric and the team have done a great job of being agile, getting the resources in place, we actually saw double-digit strength inside the quarter. So sequentially from February to March, we were able to capture that business. Year over year, you're talking sets that were added over 25%. So great job there. I'm excited because you look at the natural gas part of it, but you also look at the business win that we have and we've added those sets in and we're seeing those up and running. Natural gas is volatile. We've seen it move around in the month. But the ability to be agile is what we look at.

The next question is from the line of David Vernon with Bernstein. Please proceed with your question.

Hi, David.

Hey, good morning. Thanks for just fitting me in here. I wanted to ask maybe Kenny or Jennifer you know, when we're talking about the best pricing we've had in about ten years, can you help us sort of understand kind of how much it has improved kind of either sequentially or relative to where we were sort of last year. What specifically has changed to drive it? Are we starting to see the benefits of a better service product? Like or is this just, you know, you guys are being more effective on capturing price in cold, for example? And then what are you thinking about you know, the ability to sustain that best level of pricing in ten years as we go through the rest of this year? Thank you.

I start, and if you wanna jump in, Jennifer. So I'm gonna be a broken record here, but look, when you have a strong service product for what you sold to the customer, you can leave with that. When you have a strong service product plus the investments that you have, you can leave with that. We sit down with our customers share service performance index with them. And we know what acceptable levels of pricing are. So we leave with that. Now I'll tell you, I think there was a question about I think it was about mindset or will it the same. We will always have a mindset to go out there and price to the service that's sold. That won't change. The team is crystal clear on that. So there you have it.

Yes, Kenny, I really don't know that I can add to that. But when you walk through the drivers of our price, you hit on all of them. The only part of the market right now that's not supportive to our pricing is that truck piece, which we've been talking about. So if we can get a little bit of help from that, that could be further good news for us.

Go ahead. Sorry about that. But let me if you just give me a second here. And appreciate it. End of the day, what we've also done is we've invested in being able to give more markets for our customers. Whether it's what we did at the East End of the L.A. Basin at Colton with the new facility there, what we've done in Phoenix, what we're doing in Kansas City, but not just in Minneapolis, I could keep ongoing on that side of the business. But we've invested with our customers in the industrial base and in the bulk base. We've opened up new facilities. So pricing comes by being able to provide baseline service at a high level. And consistent, not just customers. And no one likes it if it's one week or a month. It has to be consistent. And I think we've been able to show that for the last few quarters that we're very consistent and we have a good handle of how to operate this railroad. We went through we didn't even talk about winter. Some people like to talk about winter. We had winter. We had storms. We had floods. At the end of the day, the resiliency and the way we operate the railroad and the puffer is real important to us. And the last thing is on the carload business, which is real important to us, especially when it comes to pricing and margin in the markets that they serve, is we've expanded our fluidity. We spent a lot of money in that Houston area to be able to improve our hump yard and we just about doubled the capacity of the place that removes touch points and that allows you to give better service and allows you to open more markets for our customers. So it's a complicated decision-making in what we've done. So just to add on to what was already said by Kenny and Jennifer, that's the way we look at it.

Alright. Thanks for that. And then maybe if I could just tack one more on here. Yeah. Do you guys seen any sort of change in cross-border Mexico volumes? Either Loreto or Eagle Pass as we've been dealing with some of these tariff and position. I'm just wondering if there's been any noticeable of shifts in that north-south volume.

Why don't you talk about what we've seen in the last sort of year or so and what we've seen sort of a balance against our competitor and then what we've seen more recently?

Yes. So if you look at it, and it does start with the fundamentals. It does start with the fact that we've got seven-day-a-week service that we've got best route, we've got shorter miles, we've got a faster route. But if you look at Mexico, when we talk to our customers and we've been there over thirty years, when we talk to our customers, yes, because I've just mentioned all those attributes, we know we can win and compete. But we're also selling the entire network. So it's not just one part of Texas or one lane that we're going in. We're moving and utilizing the entire network. You look at the last quarter, yeah, there were stop and start especially when you look at our automotive segment. Heard me saying my words. We really sat closely with our customers and focused on the fundamentals, which for us in Mexico is the service product, the interchange, making sure we have enough equipment. And where we see ourselves today we certainly don't try to manage our business to a market share, but we feel good about where we are. And we know we're up a few points as we look at our market share so far this year.

Thanks for the second question. Appreciate it.

Next question is from the line of Richard Germain with Deutsche Bank. Proceed with your question.

Good morning.

Good morning. So your execution this quarter was strong, all things considered. But clearly, just from the tone of some of these questions, there is a lot of fear out there. And, you know, a lot of that's related to your exposure. So maybe you can help pull those by sizing up your exposures a little bit, I was hoping. Like, for instance, with grain exports, appreciate Kenny you saying that it's very strong given you know, Mexico and speaking to the agility of your network. But can you tell us how much of that business is Mexico exports versus China? And just on international intermodal, you said that that's about 40% of total premium for 2024. Can you tell us how much is West Coast or China oriented? Thank you.

Yes. So we talked about the grain. I certainly unfortunately won't be able to give you any specifics and break out our grain network. What I'll tell you though is that mentioned the strength in grain. We've been growing there. I mentioned the rail and physical infrastructure that we have on the origin side to grow that market. We're focused on expanding the pie even if it means. And that's why I wanted to emphasize that we are moving into different markets like the Gulf and in the Mexico. There was a question on international and a model, I think where you wanted me to break out those numbers. And I'll stay away from doing that and just let you know that a strong service product along with the new products that we have. We inserted a new product, Jim talked about it in the Twin Cities. And last year, we were able to have get a good win that will still continue into this year. We're seeing a little bit more growth into the new market, new ramp. That we have on our in Arizona and the Phoenix area. And we've inserted new products going from the Gulf to other parts of our network. So we're going to be pretty aggressive about building out that network and not being dependent on one area.

Okay. I appreciate it. Thank you.

Next question is from the line of Jeff Kauffman with Vertical Research Partners.

Good morning. Thanks for squeezing me in. Jim, I liked your opening comment about how if you just look from ten thousand feet, revenues were flat, margins were flat, outlook's the same. You know, no changes. The reality was anything but. I'm just kinda curious. If we look at your forward outlook today for whether it's groups or pricing as you were talking about core pricing, things like that, what's different today than it was, say, three months ago when you gave us guidance that's kind of been a legitimate surprise?

Well, the biggest surprise is the old discussion of import exports tariffs and the effect on the business and like I said, to start off with, our biggest biggest worry and what we look at, and it's not a worry, it's just I don't worry. Okay? So that was a mistake by me. I don't worry. You have to react and be able to run the business and operate it in a smart manner. Is this what the consumer is going to do. So far, we haven't seen a huge impact. And if anything, we really haven't seen it. Our car loads are up. Across the board in most places still from where we were last year. That's the thing that we have to keep an eye on and it's a daily exercise. Every day we look at what's happening to the U.S. Consumer and the market because that's who the final customer is for us.

If I take out the intermodal uncertainty part of it or the international trade certainty and you just look more at the bulk or industrial groups what was the legitimate surprise there? Positive or negative?

Well, I think I don't like to think about it as a surprise. The things that we not being a surprise, we have done a we've done a great job this quarter. I give Eric and the entire team a pat on the back. They've done a great job. Jennifer's done a great job to set us up to handle financially anything that we need. You can see where our rating is, 2.8. Debt to EBITDA. You can see where our cash is. We're in a great position there. And Kenny and team have done a great job of pricing for the value of what we provide. The things that we can't control are the things that we have to look at very carefully. And just at this point, I think at the end of the day, we come to the right place as a country but I think there's gonna be some noise and we'll react to whatever noise is throwing at us.

Okay. Thank you.

You're welcome.

Our next question comes from the line of Oliver Holmes with Redburn Atlantic.

Good morning. Hi. Good morning. Thanks for having me on. Just a quick one. Is there a scenario perhaps maybe maybe you're already seeing it where Asia ex China and Mexico pick up share of the trade war with China continues. In essence, reducing the impact of Chinese tariffs. Maybe just a follow-up on that. Is this something you saw during 2019 when tariffs levied on China? Thanks.

Yeah. Thanks for that question. I think, Kenny, the question he's asking is are you seeing more in terms of shifts away from China to Vietnam, Korea? Yeah. Let me okay. Good. So there's some good public data out there, and you can see Oliver, over the last few quarters, a little bit of a change. We look at the IANA data and you can see a little bit of a change from China going into the Southeast Asia piece. It's held strong. Those volumes are held strong. We can see them coming up to us. We like the fact that there is diversity in that. And we're going to continue to take advantage of it.

Sure is a moving target. So and pressures of what's happening in the marketplace right now and what's happening to the trade will have an effect. It just takes a while for some of those things to settle down.

The next question is from the line of Jason Seidl with TD Cowen.

Nothing here. Jennifer, I think the question goes to you. You guys did a pretty good job of managing sort of salaries, wages, and benefits per employee in one Q. Wondering how we should think about that line item going forward. And then just to clarify, I believe you talked about that $46 million gain in last year's two Q, was that in other income?

Okay. So for the first part of your question, we laid out in January that we expected for the full year our comp per employee cost per employee to be up 4%. You're right. Did a great job in the first quarter only up 2%. At this point, we would stick with the 4%. Just because as we're looking ahead, we know that July first is another wage increase. We're obviously still negotiating with our unions but as you know, we accrue regardless if we started paying those wage increases or not. And then we also have we think this will be towards the back part of the year, but we also are working towards an agreement with our Smart TV, our conductor's union in terms of work rest for them. So that's why we're holding with that 4% in terms of the cost per employee in terms of the outlook on a full-year basis. In terms of your other question, that was in the other expense line. In terms of the $46 million where that flowed through as a good guy. Last year.

Perfect. Thank you very much. Appreciate the time.

Okay. Thank you. Thank you. Our final question is from the line of Hiren Nathan with Daiwa. Please proceed with your question.

Just on we talked a lot about what you can do on the cost side stuff, but I just wanted to understand on the balance sheet in terms of share repurchases, if things get long drawn or you see a bigger than bigger impact, how should we think of your capital return plan? Yeah. Like, between share repurchase or conserving cash.

Yeah. So thanks for that question. So off to a really strong start here in 2025. You know, our guide for the year in terms of share repurchases was $4 billion to $4.5 billion. At this point, I think we're at a little over $1.7 billion in terms of what we've returned so far, $1.5 billion through the accelerated share repurchase program and another $200 million in open market purchases. So in one quarter, almost halfway there, I'd say we feel very good about that range. Obviously, we'll watch it. If the situation changes, we can scale back. That is the flexible lever. We've got $1.4 billion on the balance sheet today. So again, we were reiterating the guide to the 4% to 4.5% and that's our view for the full year and feel confident in that. But if the world changes dramatically for us, we can flex that.

Thank you. This concludes the question and answer session. Now turn the call back over to Mr. Vena for closing remarks.

Well, listen, I think the questions were spot on. There were questions that we ask ourselves every day. I think we've shown as Union Pacific Corporation what we can do. How we can react and I think that's real important. At the end of the day, truly, it would be a boring job. I probably wouldn't be here you woke up every morning and everything was perfect. You get you see the quality of a company and you see the quality of the management when you see how they react to things. And I think the team did a great job first quarter. Very excited with the we have going on fundamentally. And in the long term, I like where Union Pacific Corporation is. And so with that, let's sign off. I know we have our annual general meeting happening in May, and we'll be talking to our owners then. Thank you very much, everyone, for taking the time to join us this morning. A good one.