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SEC filingUnion Pacific delivered a solid start to 2026 with revenue and earnings growth driven by pricing gains and productivity, partially offset by inflation and acquisition costs.
Operating income increased 3.7% to $2.5 billion, and operating margin improved to 39.5% from 39.3% in the prior year. The margin expansion reflects productivity initiatives and revenue growth outpacing cost increases. Net income grew 4.6% to $1.7 billion, and diluted earnings per share rose 6.3% to $2.87, benefiting from share repurchases.
Net cash provided by operating activities was $2.4 billion, up from $2.2 billion in the prior year. Capital expenditures totaled $937 million, resulting in free cash flow of $1.5 billion. The company continues to allocate capital toward dividends and debt reduction. As of March 31, 2026, the company had sufficient borrowing capacity to sustain operations.
Union Pacific is pursuing the acquisition of Norfolk Southern. The transaction is subject to regulatory approval, and a revised application with the Surface Transportation Board is expected by April 30, 2026. The company incurred costs related to the acquisition during the quarter.
Customer incentives, recorded as a reduction to operating revenues, are provided for shipping to specific locations or based on cumulative volume. The company's capital plan may be revised if business conditions warrant or if regulations affect returns on investments.