Q3 2024 Union Pacific Corp Earnings Call
Our third quarter results do it an excellent job of capturing the progress we've made under our strategy to lead the industry in safety.
Service and operational excellence.
And you're seeing how that leads to financial success I'm very pleased.
With where we sit today compared to where we started a little over a year ago.
Now, let's discuss third quarter results.
Starting on slide number three this morning Union Pacific reported 2024 third quarter net income of one $7 billion, a 9% improvement in.
And earnings per share of $2, 75% to 10% improvement third quarter operating revenue gained 3% the strong volumes and core pricing gains were impacted by our business mix and less fuel surcharge revenue, excluding fuel freight revenue increased 5% versus 2023.
Reported expenses year over year improved 2%, while fuel prices were a driver or a driver. The team did an excellent job generating productivity to control costs as we successfully handled a 6% increase in volume our.
Our third quarter operating ratio of 63 percentage improved 310 basis points versus last year further demonstrating our ability to be operationally excellent while maintaining their resorts bumper to handle unforeseen events.
Look it was another really good quarter I'm pleased with how we flex the handle the 33% increase in international intermodal volume during the quarter, while improving service metrics across our network and yes that mix of business pressured margins a bit but at the end of the day, it's about operating as efficiently as possible to drive increased.
Cost control with third quarter operating income of $2 $4 billion up 11% versus 2023.
Below the line other income decreased 19 million from lower real estate income, while interest expense declined 6% or $20 million on lower average debt levels income tax expense increased 23% driven by higher pretax income and state income tax reductions in 2023.
Third quarter net income of $1 7 billion increased 9% versus 2023, which when combined with a lower average share count resulted in double digit earnings per share growth to $2.75.
Our quarterly operating ratio of 63% improved 310 basis points year over year with nearly half of that coming from core operational improvement.
As we discussed in Dallas at our Investor Day operating ratio is an outcome of our strategy and not the goal. Our goal is to grow earnings and generate more cash for our shareholders, which we achieved even as our revenue growth and margins were impacted by mix.
Looking now at cash shareholder returns in the balance sheet on slide six year to date cash from operations totaled $6 $7 billion up $700 million versus last year, our cash flow conversion rate improved to 83% and free cash flow has almost doubled versus 2023 up over 900 million.
<unk> are driven by 'twenty twenty-three labor agreement payments and growth in operating income, partially offset by higher cash taxes year to date, our shareholders have received 3.2 billion through dividends and share repurchases, including third quarter repurchases of $738 million.
Finally, our adjusted debt to EBITDA ratio finished the quarter at two seven times as we maintain a strong balance sheet and remain a rated by all three credit rating agencies.
So wrapping up on slide seven with just over two months left in the year. The majority of 'twenty 'twenty. Four story has been written and it's been a good one we are executing on the fundamentals of railroading, which is critical to achieving the full financial potential of this franchise.
Ratable grain demand.
We expect ongoing strength in the Mexico export market as the U P continues to increase this share south of the border.
Additionally, we expect continued growth in the grain products tied to renewable fuels and their associated feedstocks. The team is focused on capturing business as production continues to ramp up at new facilities brought online such as Bartlett's crush facility and Chervil, Kansas.
Turning to industrial as we mentioned earlier, we expect the rock market will not match last years record volume.
Petroleum, we have tougher comps, but are building on our success with business development.
Petrochemicals is expected to outperform the market based on the strength of our Gulf Coast franchise, and we are excited to see incremental volume from <unk> expansion at plaque them in Louisiana.
And wrapping up with premium on the intermodal side, the surge of West Coast import volume will continue to drive for both our international and domestic markets for the remainder of the year.
In automotive we are seeing softness in the market, which will be partially offset by business development wins.
In summary, I'm proud of the commercial team, we're going to see the strongest volume year since 2029.
Diverse portfolio allows us to see positive momentum.
And our resource buffer puts us in a great position to manage increased volumes on the west coast.
The team is focused on our key growth markets collaborating with our customers and the operating team to find innovative solutions to grow and win together.
Speaker Change: And with that I'll turn it over to Eric to review our operational performance.
Speaker Change: Of the year you know that's why I made a point of focus on if you look at that bulk line doing everything we can to counter.
Speaker Change: Some of those challenges on the coal side with renewable fuels and with the grain network.
Eric: Thanks Kim.
Eric: Yes.
Speaker Change: Thank you. The next question is from the line of Chris Wetherbee with Wells Fargo. Please proceed with your question.
Chris Wetherbee: Yeah, Hey, thanks, good morning, guys.
Chris Wetherbee: So I guess I, just maybe wanted to understand a little bit about how you think about the intermodal outlook and maybe how that influences that comment around the fourth quarter. So we came off of what has been a remarkable sort of pre loaded peak season potentially in the third quarter, particularly for international do you see the mix starts to change a little bit, but maybe sort of work that into a little bit of that.
Chris Wetherbee: Drivers of that consistency in the fourth quarter it would be helpful.
Speaker Change: I'll start with that Chris and then Kenny can can weigh in relative to the volume I mean are we believe the mix pressures are going to continue into the fourth quarter. You also see just kind of that normal seasonality you have a little bit lower volume you've got the holidays tend to have a little bit of weather. So there's those things.
Speaker Change: The other thing that I think folks need to pay attention to is fuel on a on a year over year basis and even sequentially.
Speaker Change: Cause you have a much different dynamic from fuel we think our fuel surcharge is probably going to be 200 million or so less in the fourth quarter and when youre looking at how it contributed positively in the third quarter and is a drag on fourth quarter. There's a lot of puts and takes there that I think you need to pay attention to that.
Speaker Change: I think helped maybe fill in some of those blanks as well as just the mix impact Kenny yeah on a on a year over year basis, I think we could expect international intermodal to be.
Speaker Change: Elevated although as we go throughout the quarter and you can see that in some of the numbers now you're seeing it start to.
Speaker Change: To step down a little bit one of the things that I just want to highlight again is that.
Speaker Change: Repair and that's for the team to be able to.
Speaker Change: Except in anticipate that 33% increase.
Speaker Change: So we're very encouraged by that.
Speaker Change: Thank you.
Our next question is from the line of Walter Spracklen with RBC capital markets. Please proceed with your questions.
Walter Spracklen: Yeah. Thanks, Good morning, everyone. So Jim in your prepared remarks, you kind of alluded to the margins of perhaps what you were hoping.
Walter Spracklen: Is that to say that you know kind of the prior margin improvement that you achieved in your first year.
Walter Spracklen: Years ago.
Walter Spracklen: It is not possible in the current environment or is it just taking longer and I think and I just.
Walter Spracklen: Curious, whether your mention of an industry leading or.
Walter Spracklen: Do you think that that is in effect for next year in other words can you.
Walter Spracklen: And you have an industry, leading alert as early as next year.
Walter Spracklen: Because of our east coast ports issues the Canadian issues.
Speaker Change: Big question is how did we handle it and you know that when something happens that is thrown on you you start up you start moving intermodal equipment and you don't get the same speed and you don't get the same velocity and we knew we were not going to be able to maintain that but let's let's see where the successes.
Speaker Change: Or failure by the supply chain.
Speaker Change: <unk> are not being held out at L. A long beach, they are arriving and going on the way. They normally do with that kind of increase in business as far as the fluidity of our terminals. We're in great shape, we've been able to do that.
Speaker Change: The containers and the customers have done a fantastic job of pulling those containers off and delivering.
Speaker Change: The only place that our that the we'd love. It if we have been able to planet is we'd have faster velocity. If we could've been told that it was coming and seen it a little sooner. So we could place cars in the right place.
Speaker Change: Work on the other terminals that we have at the West coast, a little a little differently and be able to speed. It up I'm very proud of I think the customers have seen what L. A long beach can do and I think that they are it'll be part of their decision, making as they move ahead to say Ken L. A long beach handle an increase in business and I think it can.
Speaker Change: We've proven that point, it's a heck of a success story for us and I Love. The story I Love that you look at our metrics real goods and I'm sure that you've seen that are that were running over 220.
Speaker Change: Miles per day for our cars and that's what's really important to us as we keep the place fluid. So thank you very much great question David.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Tom <unk> with UBS. Please proceed with your question.
Speaker Change: Morning, Tom.
Speaker Change: Hey, Jim This is a this is Mike triano on for Tom.
Speaker Change: Okay. So if we look at our workforce productivity and locomotive productivity, they're both up mid single digits through September and they've been a driver of our improvement this year, despite the volume and the mix headwinds.
Speaker Change: If we look out to next year. The volume backdrop is still kind of murky, but volumes are kind of flat to up do you think you can get another mid single digit improvement in those productivity metrics.
Speaker Change: Well, we're sticking to our guidance for next year, which I think that's what.
Speaker Change: We set it out we thought about it it's a very very definitive about what we wanted to deliberate next year, so unless the economy implodes in the United States, we're very comfortable that it's that we're going to be able to deliver that so.
Speaker Change: I'm very proud of when you get that kind of a productivity number.
Speaker Change: We delivered this last quarter and we don't see any reason for us not to be able to take a look at what we're doing on the railroad to continue to be the.
Speaker Change: Improved productivity.
Speaker Change: We know that we're carrying the extra.
Speaker Change: People because of some of the collective agreements that we still have to implement from the last round. So we're being very prudent on that side, but you could see on the nonoperating side, what we've been able to do to still operate the railroad in a very efficient manner. So.
Speaker Change: We do that everyday take a look at it and I'm very comfortable that we're headed the right way to Jennifer anything bad.
Speaker Change: And that's really kind of what Eric talked about too when we look at it.
Speaker Change: All of the areas of expense and on the capital side, we have areas to improve our productivity and we have action plans against that for the rest of this year and going into 2025 and beyond so that's what really gives us the confidence to say you know there's there's certainly great runway ahead of us and we're very confident in our ability to perform.
Speaker Change: Yeah.
Speaker Change: Listen Thanks for the question and to say Hi to Tom for me. Thank you.
Speaker Change: Well there.
Speaker Change: The next question is from the line of Daniel <unk> with Stephens. Please proceed with your question.
Speaker Change: Yeah, Hey, good morning, everybody. Thank you taking my questions.
Speaker Change:
Daniel: Maybe I wanted to ask a broader one just from a competitive standpoint, I know, it's hard to know, but your western peers and more vocal about wanting to improve it there are I'm curious if you're noticing anything different when you're out there bidding on business are going head to head with them in the market and then in your prepared remarks, you mentioned merchandise pricing was positive just curious how you're seeing core merchandise pricing out there in the market if it's changing at all.
Daniel: Yeah, you know if you look at the size of the pie, but really competing against truck.
Speaker Change: We're putting together a service product to go out there and compete against truck against the worst then to a lesser degree against a barge. So we're doing what we can do to go out there and grow and win share and focus on Union Pacific and what we can control.
Daniel: That's at <unk>.
Daniel: Second part of your question look I'm proud of the team that would be able to go out and leave with the capital investments that we put into the network.
Daniel: For our customers to leave with the inflationary pressures that we can have the buffer resource at that Jim and Eric talked about and now we talk a little bit about the velocity.
Daniel: We tie it off of the service and we're aligning those pricing with the service product. That's there. So yeah. The team has been able to go out there and secure some strong pricing on that merchandise business of the freight.
Speaker Change: So Kevin the only thing I would add is this and I I think it's a valid point to make.
Speaker Change: I I want the entire industry to operate very efficiently I want the entire industry to be able to operate in a manner that allows us all to grow we interchange a lot of traffic not quite 50%, but around 40% touches.
Speaker Change: Railroad, whether its a short line or one of the other railroads in the United States. So the more we can all be efficient when we interchange traffic when we move it across the Mississippi, when we move it with our western competitor. So we love to compete.
Speaker Change: But theres a lot of traffic that we are if we're both efficient on we get to be able to move that from other modes of transportation now I've worked with people. If I I was smiling last night when I was thinking about this how many people that I've worked with or at other railroads.
Speaker Change: Whether it's C. P. K C now, even the Burlington, Northern Santa Fe, whether it's a C S X or whether it's Norfolk southern so we come from a culture all of US that have worked together that we operate railroads in an efficient manner and we move ahead. So that we want all of us want grow.
Speaker Change: And I'm not speaking for the rest of them I'm speaking for us at Union Pacific now given all of that.
Speaker Change: Listen I can control, what we do not what everybody else does and I'm very comfortable with where we are and what we can do and the kind of business mix that we have and you could see it this last quarter and what we've been able to deliver and what we see moving forward. So I'm excited I think the industry is in a better place now than it was 10 years ago.
Speaker Change: And five years ago, and I'm sure better than we were in 2022. So it's a wonderful place to be and will even continue to get better and a little competition with all the people. You know is the best thing you can have nothing better than beating all the people that you know and that's what we want to do.
Speaker Change: Understood. Thanks, Jim Thanks, Kenny.
Speaker Change: Welcome.
Speaker Change: Our next question is from the line of Jon Chapell with Evercore ISI.
Speaker Change: So with your question.
Speaker Change: Morning, John.
Good morning, Good morning, Jim Kenny I was going to ask this anyway, and maybe a pretty well timed follow up to the last one so the arc up 5% in both bulk and industrial obviously points to your pricing Jim says that.
Speaker Change: Customers have to see value in the service and you're seeing that with inflation conceptually coming down a little bit the volume headwinds remaining.
Speaker Change: To keep that type of pricing momentum. Despite the good service do you need a little bit of help from the volume side and the macro from demand to continue to push price or at a certain point is that kind of cap out without getting some volume tailwind.
Speaker Change: Yeah. So you know the macro is the macro in and those are things that are out of our control John we focus on them that work we focus on the service at that Eric is providing us the investments, we're making and you know we like that to the value of the pricing and we're very crystal clear.
Speaker Change: Here and how we articulate to our customers so.
Speaker Change: The way, we look at it we see it as something that will definitely continue to happen.
Speaker Change: Okay. Thanks, guys.
Speaker Change: Yeah.
Thank you very much.
Speaker Change: Our next question's from the line of Brian <unk> with Jpmorgan.
Speaker Change: With your question Brian.
Brian: Hey, good morning, Thanks for taking the question to.
Speaker Change: Jim maybe just to come back to that.
Speaker Change: Initial comments you had earlier here and then also something you said when you first came on board just going to take a little while to get over there.
Speaker Change: Labor challenges do you sort of inherited on the network. Obviously, we've seen mixing coal not help and then just a broader inflationary trend. So maybe just to help level set things little bit you said, it's going to take a while but can you offer any sort of context in terms of you know what the timing should be if it's going to be gradual or if there's some step change that we could be thinking of as we look.
Excuse me more broadly to getting over some of these hurdles and probably to a better place than what you started off with.
Speaker Change: Yeah.
Speaker Change: Yeah, Brian Thanks for the question. So if we are.
Speaker Change: I don't like to look backwards too much but I think we've done a great job at Union Pacific are all 30000 of us there'll be able to deliver where we are comparatively everybody else now growth is real important to us and we've done a great job of providing service at a high level.
Speaker Change: And remember a services what we sold the customer not other measures that are out there to talk about what services as we measure individually to every one of our customers about what level of service. So we sold them. So we put that in the mix and we had inflationary pressure.
Speaker Change: That's why we are we're very clear on what our three year expectation is Brian of what our results should be in what we think we can deliver so I'm very comfortable where we are.
Speaker Change: And I think we will see improvements in our AR, our operating ratio will see improvements over time over our net income and improvements in our EPS that drives that drives value for our shareholders. So very comfortable.
This was always at the very start I said, it was going to be a couple of years.
It's still a couple of years. So it was not going to be easy and it's not easy to get the to overcome some of the things, but I think we've done a good job with pricing.
Speaker Change: Both <unk> and coal coal is coal like coal is down 20% at the end of the day, if it wasn't down 20%, but that's not the way I look at the world. There's always challenges. If there was no challenges than I would've stayed retired and enjoying myself in Scottsdale, Arizona. This morning going for a hike the camelback I'm here, because I think there's something to do and we can get.
Speaker Change: This company moving forward, so I'm very excited Brian Thanks for the question.
Speaker Change: I appreciate it Jim Thank you.
Speaker Change: Our next question is from the line of Ben Nolan with Stifel. Please proceed with your question.
Ben Nolan: Thanks, a lot.
Ben Nolan: So the the service performance index for both intermodal and manifest has been turning up higher I'm just curious.
Ben Nolan: If if if you think there's a point where you know if if you arrive at a certain level or or if at a certain range, where you can really lean more heavily into pricing than maybe you already have or.
Ben Nolan: And maybe also just share gains versus competitors are versus our versus trucking is that is there like a magic number or at least a magic range, where you feel like no really you know we have a strong or a much stronger competitive advantage.
Ben Nolan: Yeah.
Speaker Change: Jim hit it a little bit earlier than you know what do we sell to our customer then how do we translate that into pricing and those discussions are no. There there's not a magical number but clearly as the service improves that gives us a better environment to to.
Speaker Change: To maximize price same is true on growth are more consistent.
Speaker Change: Reliable product and better service product, we go in and we ask for more business. When we're talking about customers. We asked to look at their truck a file we asked to look at you know talk to the more their receiver. So clearly as we improve and we've done a great job here in the third quarter on the service product it creates our own.
Speaker Change: Capacity it creates our own opportunities regardless of what happens in the macro environment.
Speaker Change: Do you think you're there now.
Speaker Change: Because I I hope not I mean, we always want to improve it.
Speaker Change: As a management team so no we're going to always strive to improve with with Theres No time, where we're gonna yell out we arrived.
Speaker Change: Gotcha, Alright I appreciate thank you.
Speaker Change: Good question.
Speaker Change: Next question is from the line of Brendan once he with Barclays. Please proceed with your question.
Speaker Change: Hey, Good morning. This is Eric Morgan on for Brandon. Thanks for taking the question I just wanted to come back to the mix discussion into the fourth quarter. I think you mentioned mix headwinds continuing in the quarter, maybe with some international intermodal volume growth moderating somewhat but can you just talk about some of the mix effects from other.
Speaker Change: The group's outside of intermodal.
Speaker Change: And in particular, maybe how you view margin contribution from call. It would be would be helpful. I think thank you.
Speaker Change: On that last part of your question, but if you just look at at our business teams. You know industrial is a group that has our highest average revenue per car is very strong contributions to our bottom line and that business has been down all year now there's always mix within mix, but with the continued pressures in the industrial economy.
Speaker Change: The continued outlook that those volumes are down year over year, that's an impact and that certainly contributes to the mix them. In addition to obviously seeing the growth come in some of the lower average revenue per car kinds of businesses like like the international intermodal on the bulk side Ah Yeah, Theres called set that aside you know.
Speaker Change: Grain strong grain into Mexico, which is great for us, we really enjoy that business, that's a little bit shorter length of haul than if we're taking it to export out through the west coast. So again, you have some of that what I'll call mix within mix Kenny I don't know if you want to add anything else.
Speaker Change: I just wanted to say, where we're not going to apologize for accepting the increase yeah, we'd love the 33% increase in what I would tell you that the management team here.
Speaker Change: They had a good job of preparing for it it's what we did with Phoenix that take trucks off the road, what we did to expand inland Empire. All of these things set up set us up for success for this unexpected amount of volume that's come on.
Speaker Change: Yes.
Speaker Change: So important it goes back to Jim's point on the fundamental that's why we need to be just diligent about how we're using our resources our workforce productivity and how we run. This railroad. So that we can absorb shocks from mix and still produce a very good quarterly result.
Speaker Change: Great. Thanks, Thanks for question.
Speaker Change: Our next question is from the line of Stephanie more with Jefferies. Please proceed with your question.
Stephanie More: Good morning, Hi, good morning, Thank you.
Stephanie More: You talked a lot about the strength in export grain to Mexico, but can you talk a little bit more broadly about your Mexico business. How do you see that going forward and you know any thoughts on geopolitical administrative administration changes as well would be helpful. Thank you.
Stephanie More: Yeah.
Stephanie More: First of all I, just want to step back as we're talking.
Stephanie More: No about our grain business and our grain network and differentiate renewable fuels and the actual facilities that we've landed there that we've discussed the same thing with our grain network facilities, meaning the 20 plus facilities that'll come on and the fact that that Cherry Hill.
Stephanie More: Kansas facility will help supply.
Stephanie More: And the Mexico, So let me just kind of.
Stephanie More: You know break that apart and let you know how we look at it but then yes broadly as we look at you know Mexico, clearly theres a lot of opportunity with over the road trucks. There are some markets like a finished.
Stephanie More: Nichols and also auto part we have a strong service product coming out there what differentiates us Stephanie is again.
Stephanie More: Fact that we have multiple partners that can get in that market. We have our own rail box that we can get in to that market and we have daily service into and out of Mexico, which we know we're the only one that has that so clearly again, a strong growth area for us we laid it out in Investor day.
Stephanie More: And as far as the administration.
Stephanie More: We've we we see that it's an environment that theyre going to be certainly pro business and support the freight environment, but we're excited about that.
Thanks for the question.
Speaker Change: Our next question is from the line of Scott Group with Wolfe Research. Please proceed with your question.
Speaker Change: Good morning, Scott.
Scott Group: Hey, Thanks, good morning, Jennifer any color on that comp per employee up 8% and how to think about that going forward and then I know someone else asked already about like what that sort of flat Q4 comment meant but I just I guess I'm not sure if that was still not.
Speaker Change: Sure if that was an earnings and margin a revenue comment so I don't know any color. Thank you.
Speaker Change: Okay, Scott So we'll start with the the comp per employee. So if you look at the 8% increase.
Speaker Change: All it rough numbers half of that was from the July 1st wage increase.
Speaker Change: Half is a combination of higher incentive comp year over year as well as higher guarantee payments, that's really associated with the work rest agreements as we've cut over more hubs through the year and also graduated more T N Y employees from training.
Speaker Change: Those are all the drivers that we see in there and you know for <unk>, it's probably going to look pretty similar maybe even up a little bit more as we continue to carry some of the extra resources to support them.
Speaker Change: The limitation of the work rest and so that's really why you've heard of stress the productivity piece today, because we do have those inflationary pressures and that's why that workforce productivity is just absolutely critical for us as well as how we're approaching labor going forward and making sure that we are.
Speaker Change: Getting good agreements in place.
Speaker Change: Can help us serve our customers in a very efficient manner, well compensating our employees fairly I'm going back to your other question about the consistent are.
Speaker Change: You know we said results.
Speaker Change: Fairly all encompassing word so you could call that any any number of measures.
Speaker Change: You know what the key ones are that you all look at EPS operating ratio operating income.
Speaker Change: It's going to look very similar in <unk> versus <unk>.
Speaker Change: Thanks, Scott Thank you guys.
Speaker Change: Our next question is from the line of Elliot Alper with TD Cowen. Please proceed with your question.
Speaker Change: Great. Thank you Mr Elliott on for Jason Seidl.
Speaker Change: I believe this is the first quarter of this year, where your domestic intermodal volume outlook is positive can you talk about what youre seeing in the domestic intermodal market in Q4, and I know you already talked about kind of a mixed headwinds in international growth and fuel, but we see.
Speaker Change: Intermodal growing into the quarter Kodak, maybe partially offset intermodal Rev per car in Q4, just trying to gauge the magnitude. Thank you.
Speaker Change: So you know we've been encourage on the domestic intermodal front.
Speaker Change: Even the.
Speaker Change: Late in the second quarter, we saw.
Speaker Change: That line be positive.
Speaker Change: Been positive in the third quarter now some of that has benefited from the international intermodal side and that's why I keep harping on the product that we have you know having a product like inland Empire helps us.
Speaker Change: <unk> some of that domestic intermodal and we've seen some strong demand there.
Speaker Change: I'll tell you as it looked at.
Speaker Change: We look at it for the fourth quarter again, we think we'll see a little bit more of a benefit.
Speaker Change: What's taken place on the international intermodal side, and we'll see what happens as we continued throughout the quarter.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you very much.
Speaker Change: Our final question is from the line of Arey Rosa with Citigroup. Please proceed with your question.
Speaker Change: Hi, good morning.
Speaker Change: Well, what's that Jim Im sorry.
Speaker Change: Good morning, and they put you last year.
Speaker Change: Yeah no that's.
Speaker Change: It happens it's okay. Thank you for fitting me in regardless.
Speaker Change: I just wanted to I know some other people have spoken about this already but I wanted to ask you about this the target to price above rail inflation.
Could you give us color just to be clear.
Speaker Change: Is that something that's being achieved currently and that we can expect for 2024, and then kind of given the looser capacity environment.
Speaker Change: Would you say that you've kind of gotten more pushback from customers as you have those pricing discussions or do you think service is sufficient currently to kind of compensate for.
Speaker Change: Or whatever the loose truck environment might might be doing or the kind of a softer demand environment might be.
Alright, good question Kenny Yeah, So I think you're talking specifically and only about a domestic intermodal you'll have to clear. It up if you can we've got you know and we've talked about this we've got pricing mechanisms for our customers that are in place to keep them competitive.
Speaker Change: Again, I talked to you about the fact that you.
Speaker Change: Now second quarter third quarter, we were up in domestic intermodal. So we look at that as a positive outcome for us we've gone from a trucking environment really since.
Speaker Change: 2022.
Speaker Change: Really been stagnant to downward in it.
Speaker Change: Flattish now.
Speaker Change: We'll see what happens.
Speaker Change: The next few months.
Speaker Change: But we feel good about where we're positioned and the ability of that asset capacity tightens, we're gonna see more value on the pricing side.
Speaker Change: Do you want to talk about the.
Speaker Change: Absolutely so to that point in terms of your question absolutely are pricing dollars today are exceeding our inflation dollars and they have throughout this inflationary period, whether you're talking about 2024, even gone back 2023 2022 we have been committed to that and we have achieved that I think the important point.
Speaker Change: Going forward and we talked about this at Investor day is it not only will we continue to have our price dollars exceed our inflation dollars that it will become accretive to our margins next year. So I feel very bullish on that front.
Speaker Change: So good question why don't I I'll, just wrap it up real quick and then I'm looking forward to our call in three months and looking forward to finished.
Speaker Change: Finishing off this year just the way we set it up and also delivering on what we said last year.
Speaker Change: If we if we look at our what we've been able to deliver as a team 10% increase.
Speaker Change: The increase in earnings.
Speaker Change: Earnings per share, 11% up in operating income, 9% up in net income productivity up 12%. Those are all numbers that make us very comfortable with how were we up but we are operating the railroad and how we're driving the business.
Speaker Change: We think that if we get the service level and it's very close where we are right now and to the right level and the discussion is how do we work together with our customers the win in the marketplace and not worried about what the whether the service is holding them back from winning in the marketplace. So with that let me just close off by thanking everybody for joining us this morning.
Speaker Change: I know there was competing calls and a nice to have you guys. All are with US This morning, and looking forward to more discussions as we move ahead. Thank you very much.
Speaker Change: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect. Your lines at this time and have a wonderful day.