Quarterly Results
Union Pacific reported that fourth quarter 2025 results were impacted by 30 million in merger−related costs. These expenses, associated with the acquisition of Norfolk Southern, resulted in a $0.05 reduction in diluted earnings per share (EPS). The reported operating ratio for the quarter reached 60.5%, which included a 0.5-point unfavorable impact from these transaction costs. Management indicated that the team continues to navigate the regulatory process necessary to complete the transaction.
Annual Performance Context
For the full year 2025, total merger-related expenses reached 72 million. These cumulative costs reduced the full−year diluted EPS by $0.12. On an adjusted basis, which excludes these acquisition costs and other one-time items, the company’s net income was $6.9 billion, and diluted EPS was $11.66. The full-year adjusted operating ratio of 59.3% excludes a 0.3-point impact from the merger expenses.
Business and Operations Update
The proposed acquisition, referred to as “the Transaction,” is designed to create the first transcontinental railroad in the United States. During the current pendency period, the company has identified several operational risks, including the diversion of management’s attention from ongoing business opportunities to merger-related matters. There is also a risk of disruption to business operations and potential adverse reactions from customers, labor unions, and suppliers due to the announcement.
Forward Outlook
Financial assumptions for 2026 include estimated merger costs of approximately $25 million per quarter. The company targets mid-single-digit EPS growth for the coming year as it works through the regulatory requirements. Completion of the merger remains subject to Surface Transportation Board (STB) approval and other closing conditions. The combined company’s future performance will depend on the successful integration of operations and the ability to implement strategic initiatives across the expanded network.
Performance Summary
Union Pacific has identified several factors that could cause actual results to differ from projections, including the risk that expected synergies, cost savings, and growth from the transaction may not be realized. Integration of the two entities may prove more difficult or expensive than anticipated. Additionally, the transaction involves the issuance of additional shares of common stock, which will result in shareholder dilution. Other risks include potential credit rating downgrades and the imposition of regulatory conditions by the STB that could adversely affect the expected benefits of the combination.