Union Pacific Corporation (NYSE:UNP) Q4 2022 Earnings Call Transcript

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Lance Fritz: Yeah. Ari, this is Lance. So I am going to start — I am going to focus my commentary on 2023 and then I will turn it over to Kenny to broaden that out. Clearly, what you are seeing from us is a perspective that says there’s a lot of uncertainty as we enter 2023. You could see it in some of the macroeconomic indicators that Kenny shared but you can hear it and see it across the Board in many markets right now and so while we are confident we can outperform Industrial production, which is an underlying driver for a fair amount of what we ship, going beyond that and becoming more granular just is it’s a little too early in the year given all the uncertainty that we see, so hard to stop on that.

Kenny Rocker: Yeah. So, Lance, I want to hit hard for those on the call, the mindset of this management team and the commercial team is really to drive business development and so that’s one thing that we can control. There are some markets out there that we really want to go after that we think are right. Renewable diesel is one of them and we feel good and confident about the wins there. If you look at finished vehicles, both the finished vehicle side and also the auto parts side is an area that we feel good about. There are some expansions that are coming along our line that we won in the petrochem area with plastics and Industrial chem. And then also, we have talked and been very bullish about metals as we have seen some wins come up there. So very focused on the things we can control and been encouraged that car velocity has been improving along the way.

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

Tom Wadewitz: Yeah. Good morning. So I wanted to touch a little bit on some of the price commentary. Can you say like kind of broad brush, what you are assuming on Intermodal revenue per car and coal revenue per car. What are you assuming when you talk about pricing dollars above inflation? And then maybe if you can just offer a comment and kind of broader pricing, is the dynamic changing in rail competition? You have won a bunch of business over the last, I don’t know, 18 months. Is that having an effect on the competitive dynamic or would you say things are pretty stable?

Jennifer Hamann: So, Tom, let me take the first part of that question, and then I will let Kenny address the second part. We are not going to give comments on directional guidance for RPU for various line items. You know the factors that are going to drive that. It’s certainly the pricing but also fuel surcharge and then the mix of the business within that line. So those will all be things that will play into what that turns out to for 2023.

Kenny Rocker: Yeah. Let me lead again with something Lance mentioned that we feel very confident that we will be able to price over the inflation dollars. So I want to say that, our commercial team has done a great job of articulating the need to price to the market. When we talk about price into the market, we have talked about some of those dynamics. Inflation is one our customers are facing that, too. They understand that. But we also talk pretty broadly about investment. When I say investments, part of what I am talking about is what Eric is doing with our capital plan. The other part is making sure that we are resourced the hill of growth. So we are down in on that, we are having those conversations with customers and we are articulating that.

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