Union Pacific Reports All-Time Quarterly Records

Diluted Earnings per Share up 21 Percent

News provided by

Union Pacific

Jul 24, 2014, 08:00 ET

OMAHA, Neb., July 24, 2014 /PRNewswire/ -- 

All-Time Quarterly Records

  • Diluted earnings per share of $1.43 improved 21 percent.
  • Operating revenues totaled $6.0 billion, up 10 percent.
  • Operating income totaled $2.2 billion, up 17 percent.
  • Operating ratio of 63.5 percent improved 2.2 points.

Union Pacific Corporation (NYSE: UNP) today reported 2014 second quarter net income of $1.3 billion, or $1.43 per diluted share, compared to $1.1 billion, or $1.18 per diluted share, in the second quarter 2013.

"Union Pacific achieved record quarterly financial results, leveraging the strengths of our diverse franchise to handle strong demand in the face of challenging operating conditions," said Jack Koraleski, Union Pacific chief executive officer.  "We were pleased to see strong volume growth which, combined with solid core pricing, drove more than a two-point improvement in our Operating Ratio to a record 63.5 percent for the quarter."

Second Quarter Summary

Operating revenue increased 10 percent in the second quarter 2014 to $6.0 billion, versus $5.5 billion in the second quarter 2013.  Second quarter business volumes, as measured by total revenue carloads, increased 8 percent compared to 2013.  Volume increased in agricultural products, intermodal, industrial products, automotive and coal.  Chemicals volumes declined slightly versus 2013 as a reduction in crude oil shipments more than offset growth in base chemicals.  In addition:

  • Quarterly freight revenue increased 10 percent compared to the second quarter 2013, driven by volume growth and core pricing gains.
  • Union Pacific's operating ratio of 63.5 percent was an all-time quarterly record, 2.2 points better than the second quarter 2013 and 1.3 points better than the previous all-time quarterly record set in the third quarter 2013.
  • The average quarterly diesel fuel price of $3.10 per gallon in the second quarter 2014 was flat compared to the second quarter 2013. 
  • Quarterly train speed, as reported to the Association of American Railroads, was 23.9 mph, down 7 percent versus the second quarter 2013. 
  • The Company repurchased 8.3 million shares in the second quarter 2014 at an average share price of $96.84 and an aggregate cost of $806 million.

Summary of Second Quarter Freight Revenues

  • Agricultural Products up 19 percent
  • Intermodal up 16 percent
  • Industrial Products up 16 percent
  • Chemicals up 3 percent
  • Automotive up 2 percent
  • Coal up 1 percent

2014 Outlook

"We are optimistic about the second half of the year," Koraleski said.  "As always, we are closely monitoring the economic landscape, along with the major drivers across all of our business segments, including the potential impact of weather on grain and coal.  As the economy gradually continues to improve, the power of our diverse franchise provides business growth opportunities in all of our commodity groups.  The men and women of Union Pacific are committed to safely improving our network performance, allowing us to provide customers with the excellent service they deserve, while rewarding our shareholders with increasing returns."

About Union Pacific

Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2004-2013, Union Pacific invested approximately $30 billion in its network and operations to support America's transportation infrastructure.  The railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific  serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.

Investor contact is Mike Staffenbeal, (402) 544-4227.

Media contact is Stephanie Serkhoshian, (402) 544-0100.

Supplemental financial information is attached.

This presentation and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the statements regarding the Corporation's expectations with respect to economic conditions, the potential impact of weather on certain segments of our business, and its ability to improve network performance, provide quality customer service, and provide returns to its shareholders.  These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.  Forward-looking statements also generally include, without limitation, information or statements regarding:  projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance;  and management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved.  Forward-looking information, including expectations regarding operational and financial improvements and the Corporation's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement.  Important factors, including risk factors, could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements.  Information regarding risk factors and other cautionary information are available in the Corporation's Annual Report on Form 10-K for 2013, which was filed with the SEC on February 7, 2014.  The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).  

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made.  The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements.  References to our website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Income (unaudited)










 Millions, Except Per Share Amounts and Percentages,

2nd Quarter

Year-to-Date

 For the Periods Ended June 30,

2014

2013

%


2014

2013

%

 Operating Revenues












      Freight revenues

$

5,661

$

5,153

10%

$

10,947

$

10,137

8%

      Other revenues

354

317

12


706

623

13

 Total operating revenues

6,015

5,470

10


11,653

10,760

8

 Operating Expenses












      Compensation and benefits

1,246

1,185

5


2,500

2,401

4

      Fuel

923

863

7


1,844

1,763

5

      Purchased services and materials

636

585

9


1,243

1,142

9

      Depreciation

470

438

7


934

872

7

      Equipment and other rents

316

302

5


628

615

2

      Other


228

219

4


454

456

-

 Total operating expenses

3,819

3,592

6


7,603

7,249

5

 Operating Income

2,196

1,878

17


4,050

3,511

15

      Other income


22

23

(4)


60

63

(5)

      Interest expense

(138)

(133)

4


(271)

(261)

4

 Income before income taxes

2,080

1,768

18


3,839

3,313

16

 Income taxes


(789)

(662)

19


(1,460)

(1,250)

17

 Net Income

$

1,291

$

1,106

17%

$

2,379

$

2,063

15%














 Share and Per Share*












      Earnings per share - basic

$

1.43

$

1.19

20%

$

2.63

$

2.21

19%

      Earnings per share - diluted

$

1.43

$

1.18

21

$

2.62

$

2.20

19

      Weighted average number of shares - basic

901.5

930.6

(3)


904.8

933.1

(3)

      Weighted average number of shares - diluted

905.0

935.3

(3)


908.7

938.1

(3)

      Dividends declared per share

$

0.455

$

0.345

32

$

0.91

$

0.69

32














 Operating Ratio

63.5%

65.7%

(2.2)

pts 

65.2%

67.4%

(2.2)

pts 

 Effective Tax Rate


37.9%

37.4%

0.5

pts 

38.0%

37.7%

0.3

pts 

*

On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)


2nd Quarter 

Year-to-Date 

 For the Periods Ended June 30,

2014

2013

%


2014

2013

%

 Freight Revenues (Millions)











 Agricultural

$

934

$

784

19%

$

1,844

$

1,568

18%

 Automotive


545

534

2


1,033

1,021

1

 Chemicals


913

890

3


1,806

1,763

2

 Coal

989

975

1


1,950

1,911

2

 Industrial Products


1,130

977

16


2,141

1,893

13

 Intermodal


1,150

993

16


2,173

1,981

10

 Total

$

5,661

$

5,153

10%

$

10,947

$

10,137

8%

 Revenue Carloads (Thousands)











 Agricultural

243

209

16%


482

421

14%

 Automotive

208

197

6


396

381

4

 Chemicals

283

287

(1)


553

558

(1)

 Coal

417

414

1


847

816

4

 Industrial Products

356

317

12


670

606

11

 Intermodal*

924

822

12


1,757

1,632

8

 Total

2,431

2,246

8%


4,705

4,414

7%

 Average Revenue per Car











 Agricultural

$

3,833

$

3,750

2%

$

3,824

$

3,721

3%

 Automotive

2,619

2,715

(4)


2,606

2,683

(3)

 Chemicals

3,230

3,098

4


3,267

3,160

3

 Coal

2,369

2,353

1


2,301

2,341

(2)

 Industrial Products

3,175

3,079

3


3,195

3,124

2

 Intermodal*

1,246

1,210

3


1,237

1,214

2

 Average 

$

2,329

$

2,295

1%

$

2,327

$

2,297

1%

*       Each intermodal container or trailer equals one carload.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Financial Position (unaudited)



June 30,

Dec. 31,

 Millions, Except Percentages


2014

2013

 Assets



      Cash and cash equivalents

$

1,537

$

1,432

      Other current assets


2,966

2,558

      Investments

1,369

1,321

      Net properties


44,901

43,749

      Other assets

789

671

 Total assets

$

51,562

$

49,731





 Liabilities and Common Shareholders' Equity



      Debt due within one year

$

458

$

705

      Other current liabilities

3,319

3,086

      Debt due after one year


10,385

8,872

      Deferred income taxes


14,301

14,163

      Other long-term liabilities

1,659

1,680

 Total liabilities

30,122

28,506

 Total common shareholders' equity

21,440

21,225

 Total liabilities and common shareholders' equity

$

51,562

$

49,731





 Debt to Capital

33.6%

31.1%

 Adjusted Debt to Capital*

39.4%

37.6%

*

Adjusted Debt to Capital is a non-GAAP measure; however, management believes that it is an important measure in evaluating our financial performance. See page 8 for a reconciliation to GAAP.


 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Cash Flows (unaudited)







 Millions,

Year-to-Date

 For the Periods Ended June 30,

2014

2013

 Operating Activities




      Net income

$

2,379

$

2,063

      Depreciation


934

872

      Deferred income taxes


155

365

      Other - net


(247)

(82)

 Cash provided by operating activities


3,221

3,218







 Investing Activities




      Capital investments


(2,068)

(1,730)

      Other - net


(110)

(9)

 Cash used in investing activities


(2,178)

(1,739)







 Financing Activities




      Debt issued

1,895

944

      Common shares repurchased

(1,450)

(833)

      Dividends paid


(776)

(646)

      Debt repaid


(640)

(139)

      Other - net


33

(23)

 Cash used in financing activities


(938)

(697)







 Net Change in Cash and Cash Equivalents


105

782

 Cash and cash equivalents at beginning of year


1,432

1,063

 Cash and Cash Equivalents End of Period

$

1,537

$

1,845






 Free Cash Flow*




      Cash provided by operating activities

$

3,221

$

3,218

      Cash used in investing activities

(2,178)

(1,739)

      Dividends paid

(776)

(646)

 Free cash flow

$

267

$

833

*

Free cash flow is a non-GAAP measure; however, management believes that it is an important measure in evaluating our financial performance and measures our ability to generate cash without additional external financing.







 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Operating and Performance Statistics (unaudited)



2nd Quarter

Year-to-Date

 For the Periods Ended June 30,

2014

2013

%

2014

2013

%

 Operating/Performance Statistics 







      Gross ton-miles (GTMs) (millions)

252,500

235,396

7%

492,669

463,084

6%

      Employees (average)

47,052

46,787

1

46,608

46,612

-

      GTMs (millions) per employee

5.37

5.03

7

10.57

9.93

6









 Locomotive Fuel Statistics







      Average fuel price per gallon consumed

$ 3.10

$ 3.10

- %

$ 3.11

$ 3.16

(2)%

      Fuel consumed in gallons (millions)

290

271

7

577

543

6

      Fuel consumption rate*

1.145

1.151

(1)

1.170

1.173

-









 AAR Reported Performance Measures







      Average train speed (miles per hour)

23.9

25.7

(7)%

24.2

26.1

(7)%

      Average terminal dwell time (hours)

29.8

26.6

12

30.3

27.0

12









 Revenue Ton-Miles (Millions)







      Agricultural

23,088

18,796

23%

46,811

38,255

22%

      Automotive

4,340

4,088

6

8,298

7,936

5

      Chemicals

18,850

19,069

(1)

37,664

37,670

-

      Coal

45,573

45,992

(1)

90,256

89,712

1

      Industrial Products

22,592

19,813

14

43,017

38,572

12

      Intermodal

21,320

19,656

8

41,260

39,232

5

 Total

135,763

127,414

7%

267,306

251,377

6%

* 

 Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands. 











 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Income (unaudited)



2014

 Millions, Except Per Share Amounts and Percentages

1st Qtr

2nd Qtr

Year-to-Date

 Operating Revenues







      Freight revenues

$

5,286

$

5,661

$

10,947

      Other revenues

352

354

706

 Total operating revenues

5,638

6,015

11,653

 Operating Expenses







      Compensation and benefits

1,254

1,246

2,500

      Fuel

921

923

1,844

      Purchased services and materials

607

636

1,243

      Depreciation

464

470

934

      Equipment and other rents

312

316

628

      Other


226

228

454

 Total operating expenses

3,784

3,819

7,603

 Operating Income

1,854

2,196

4,050

      Other income

38

22

60

      Interest expense

(133)

(138)

(271)

 Income before income taxes

1,759

2,080

3,839

 Income tax expense

(671)

(789)

(1,460)

 Net Income

$

1,088

$

1,291

$

2,379









 Share and Per Share*







      Earnings per share - basic

$

1.20

$

1.43

$

2.63

      Earnings per share - diluted

$

1.19

$

1.43

$

2.62

      Weighted average number of shares - basic

908.1

901.5

904.8

      Weighted average number of shares - diluted

912.5

905.0

908.7

      Dividends declared per share

$

0.455

$

0.455

$

0.91










 Operating Ratio

67.1%

63.5%

65.2%

 Effective Tax Rate

38.1%

37.9%

38.0%

*

On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)







2014


1st Qtr



2nd Qtr

Year-to-Date

 Freight Revenues (Millions)







 Agricultural

$

910

$

934

$

1,844

 Automotive

488

545

1,033

 Chemicals

893

913

1,806

 Coal

961

989

1,950

 Industrial Products

1,011

1,130

2,141

 Intermodal

1,023

1,150

2,173

 Total

$

5,286

$

5,661

$

10,947

 Revenue Carloads (Thousands)







 Agricultural


239

243

482

 Automotive

188

208

396

 Chemicals

270

283

553

 Coal

430

417

847

 Industrial Products

314

356

670

 Intermodal*

833

924

1,757

 Total

2,274

2,431

4,705

 Average Revenue per Car







 Agricultural

$

3,815

$

3,833

$

3,824

 Automotive

2,591

2,619

2,606

 Chemicals

3,307

3,230

3,267

 Coal

2,236

2,369

2,301

 Industrial Products

3,218

3,175

3,195

 Intermodal*

1,227

1,246

1,237

 Average

$

2,324

$

2,329

$

2,327

*      Each intermodal container or trailer equals one carload.

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES



 Non-GAAP Measures Reconciliation to GAAP









 Debt to Capital*






June 30,

Dec. 31,

 Millions, Except Percentages

2014

2013

 Debt (a)

$

10,843

$

9,577

 Equity

21,440

21,225

 Capital (b)

$

32,283

$

30,802

 Debt to capital (a/b)

33.6%

31.1%

*

Total debt divided by total debt plus equity. Management believes this is an important measure in evaluating our balance sheet strength and is important in managing our credit ratios and financing relationships.






 Adjusted Debt to Capital, Reconciliation to GAAP*







June 30,

Dec. 31,

 Millions, Except Percentages

2014

2013

 Debt

$

10,843

$

9,577

 Net present value of operating leases

2,943

3,057

 Unfunded pension and OPEB

150

170

 Adjusted debt (a)

13,936

12,804

 Equity

21,440

21,225

 Adjusted capital (b)

$

35,376

$

34,029

 Adjusted debt to capital (a/b)

39.4%

37.6%

*

Total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation divided by total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation plus equity. Operating leases were discounted using 5.5% at June 30, 2014, and 5.7% at December 31, 2013. The discount rate reflects our effective interest rate. Management believes this is an important measure in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations.

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SOURCE Union Pacific

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