Union Pacific Reports Best-Ever Quarterly Results

Diluted Earnings per Share up 13 Percent

News provided by

Union Pacific

Jul 18, 2013, 08:00 ET

OMAHA, Neb., July 18, 2013 /PRNewswire/ --

Best-Ever Quarterly Records

  • Diluted earnings per share of $2.37 improved 13 percent.
  • Operating revenues totaled $5.5 billion, up 5 percent.
  • Operating income totaled $1.9 billion, up 9 percent.
  • Operating ratio of 65.7 percent improved 1.3 points.

Union Pacific Corporation (NYSE: UNP) today reported 2013 second quarter net income of $1.1 billion, or $2.37 per diluted share, compared to $1 billion, or $2.10 per diluted share, in the second quarter 2012. 

(Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)

"Union Pacific achieved record financial milestones this quarter," said Jack Koraleski, Union Pacific chief executive officer.  "We managed our network efficiently and continued to show the agility of our strong franchise.  When combined with solid core pricing gains, we more than offset the slight shortfall in volumes to generate best-ever quarterly earnings and operating ratio performance."

Second Quarter Summary

Despite lower carloadings, operating revenue increased 5 percent in the second quarter 2013 to $5.5 billion versus $5.2 billion in the second quarter 2012.  Second quarter business volumes, as measured by total revenue carloads, decreased 1 percent compared to 2012.  Volume declines in agricultural products and intermodal shipments more than offset growth in chemicals and automotive shipments.  Volumes for industrial products and coal shipments were flat versus 2012.  In addition:

  • Quarterly freight revenue increased 5 percent compared to the second quarter 2012, driven by core pricing gains.
  • Union Pacific's operating ratio of 65.7 percent was a best-ever quarterly record, 1.3 points better than the second quarter 2012 and 0.9 points better than the previous best-ever quarterly record set in the third quarter 2012. 
  • The average quarterly diesel fuel price of $3.10 per gallon in the second quarter 2013 was down 3 percent compared to the second quarter 2012. 
  • The Customer Satisfaction Index of 93 tied the second quarter 2012 record.
  • Quarterly train speed, as reported to the Association of American Railroads, was 25.7 mph, down 3 percent versus the second quarter 2012. 
  • The Company repurchased nearly 3.1 million shares in the second quarter 2013 at an average share price of $151.42 and an aggregate cost of $463 million.

Summary of Second Quarter Freight Revenues

  • Automotive up 12 percent
  • Chemicals up 12 percent
  • Coal up 12 percent
  • Industrial Products up 7 percent
  • Intermodal down 1 percent
  • Agricultural down 8 percent

2013 Outlook

"As we move into the second half of the year, the economic outlook remains uncertain, but we're hopeful that we'll see some economic improvement in the months ahead," Koraleski said.  "Union Pacific is well positioned with our diverse franchise and strong value proposition.  We'll continue focusing on reinvestible pricing; attracting new, profitable growth opportunities; and running a safe, efficient, and reliable network that generates greater value for both our customers and shareholders going forward."

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 links 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2007-2012, Union Pacific invested $18 billion in its network and operations to support America's transportation infrastructure, including a record $3.7 billion in 2012.  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 Michelle Gerhardt, (402) 544-4227.

Media contact is Tom Lange, (402) 544-3560.

Supplemental financial information follows.

This press release 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 general economic conditions, future economic improvement, and business growth and its ability to capitalize on any future economic improvement; obtain reinvestible pricing; develop new business; provide safe, efficient and reliable service; and generate value for our customers and 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 2012, which was filed with the SEC on February 8, 2013.  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,

2013

2012

%

2013

2012

%

 Operating Revenues










      Freight revenues

$

5,153

$

4,913

5%

$

10,137

$

9,736

4%

      Other revenues

317

308

3

623

597

4

 Total operating revenues

5,470

5,221

5

10,760

10,333

4

 Operating Expenses










      Compensation and benefits

1,185

1,151

3

2,401

2,362

2

      Fuel

863

882

(2)

1,763

1,808

(2)

      Purchased services and materials

585

542

8

1,142

1,068

7

      Depreciation

438

433

1

872

860

1

      Equipment and other rents

302

299

1

615

595

3

      Other


219

190

15

456

406

12

 Total operating expenses

3,592

3,497

3

7,249

7,099

2

 Operating Income

1,878

1,724

9

3,511

3,234

9

      Other income


23

21

10

63

37

70

      Interest expense

(133)

(135)

(1)

(261)

(270)

(3)

 Income before income taxes

1,768

1,610

10

3,313

3,001

10

 Income taxes


(662)

(608)

9

(1,250)

(1,136)

10

 Net Income

$

1,106

$

1,002

10%

$

2,063

$

1,865

11%












 Share and Per Share












      Earnings per share - basic

$

2.38

$

2.11

13%

$

4.42

$

3.92

13%

      Earnings per share - diluted

$

2.37

$

2.10

13

$

4.40

$

3.89

13

      Weighted average number of shares - basic

465.3

473.8

(2)

466.6

475.8

(2)

      Weighted average number of shares - diluted

467.6

477.2

(2)

469.1

479.3

(2)

      Dividends declared per share

$

0.69

$

0.60

15

$

1.38

$

1.20

15












 Operating Ratio

65.7%

67.0%

(1.3) pts

67.4%

68.7%

(1.3) pts

 Effective Tax Rate


37.4%

37.8%

(0.4) pts

37.7%

37.9%

(0.2)pts
























 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)



2nd Quarter

Year-to-Date

 For the Periods Ended June 30,

2013

2012

%


2013

2012

%

 Freight Revenues (Millions)












 Agricultural

$

784

$

854

(8)

%

$

1,568

$

1,712

(8)

%

 Automotive


534

475

12


1,021

905

13

 Chemicals


890

795

12


1,763

1,563

13

 Coal

975

869

12


1,911

1,864

3

 Industrial Products


977

917

7


1,893

1,780

6

 Intermodal


993

1,003

(1)


1,981

1,912

4

 Total

$

5,153

$

4,913

5

%

$

10,137

$

9,736

4

%

 Revenue Carloads (Thousands)












 Agricultural

209

233

(10)

%

421

467

(10)

%

 Automotive

197

190

4


381

370

3

 Chemicals

287

261

10


558

502

11

 Coal

414

412

-


816

907

(10)

 Industrial Products

317

316

-


606

606

-

 Intermodal*

822

846

(3)


1,632

1,624

-

 Total

2,246

2,258

(1)

%

4,414

4,476

(1)

%

 Average Revenue per Car












 Agricultural

$

3,750

$

3,665

2

%

$

3,721

$

3,665

2

%

 Automotive

2,715

2,505

8


2,683

2,449

10

 Chemicals

3,098

3,044

2


3,160

3,111

2

 Coal

2,353

2,109

12


2,341

2,055

14

 Industrial Products

3,079

2,907

6


3,124

2,941

6

 Intermodal*

1,210

1,185

2


1,214

1,177

3

 Average 

$

2,295

$

2,176

5

%

$

2,297

$

2,175

6

%

*

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


2013

2012

 Assets



      Cash and cash equivalents

$

1,845

$

1,063

      Other current assets


2,698

2,551

      Investments

1,272

1,259

      Net properties


42,911

41,997

      Other assets

300

283

 Total assets

$

49,026

$

47,153





 Liabilities and Common Shareholders' Equity



      Debt due within one year

$

733

$

196

      Other current liabilities

3,092

2,923

      Debt due after one year


9,076

8,801

      Deferred income taxes


13,477

13,108

      Other long-term liabilities

2,124

2,248

 Total liabilities

28,502

27,276

 Total common shareholders' equity

20,524

19,877

 Total liabilities and common shareholders' equity

$

49,026

$

47,153





 Debt to Capital

32.3%

31.2%

 Adjusted Debt to Capital*

39.6%

39.1%





*

Adjusted Debt to Capital is a non-GAAP measure; however, we believe that it is important 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,

2013

2012

 Operating Activities




      Net income

$

2,063

$

1,865

      Depreciation


872

860

      Deferred income taxes


365

274

      Other - net


(82)

(223)

 Cash provided by operating activities


3,218

2,776






 Investing Activities




      Capital investments


(1,730)

(1,816)

      Other - net


(9)

(66)

 Cash used in investing activities


(1,739)

(1,882)






 Financing Activities




      Debt issued

944

695

      Common shares repurchased

(833)

(833)

      Dividends paid


(646)

(575)

      Debt repaid


(139)

(193)

      Other - net


(23)

(4)

 Cash used in financing activities


(697)

(910)






 Net Change in Cash and Cash Equivalents


782

(16)

 Cash and cash equivalents at beginning of year


1,063

1,217

 Cash and Cash Equivalents End of Period

$

1,845

$

1,201






 Free Cash Flow*




      Cash provided by operating activities

$

3,218

$

2,776

      Cash used in investing activities

(1,739)

(1,882)

      Dividends paid

(646)

(575)

 Free cash flow

$

833

$

319






*

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










 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Operating and Performance Statistics (unaudited)




2nd Quarter

Year-to-Date

 For the Periods Ended June 30,

2013

2012

%

2013

2012

%

 Operating/Performance Statistics








      Gross ton-miles (GTMs) (millions)

235,396

234,483

-

%

463,084

474,967

(3)

%

      Employees (average)

46,787

45,797

2

46,612

45,720

2

      GTMs (millions) per employee

5.03

5.12

(2)

9.93

10.39

(4)

      Customer satisfaction index

93

93

-

pts

93

93

-

pts










 Locomotive Fuel Statistics








      Average fuel price per gallon consumed

$ 3.10

$ 3.21

(3)

%

$ 3.16

$ 3.22

(2)

%

      Fuel consumed in gallons (millions)

271

265

2

543

544

-

      Fuel consumption rate*

1.151

1.132

2

1.173

1.146

2










 AAR Reported Performance Measures








      Average train speed (miles per hour)

25.7

26.6

(3)

%

26.1

26.5

(2)

%

      Average terminal dwell time (hours)

26.6

25.5

4

27.0

26.0

4

      Average rail car inventory (thousands)

261.6

268.6

(3)

262.7

272.0

(3)










 Revenue Ton-Miles (Millions)








      Agricultural

18,796

21,212

(11)

%

38,255

43,121

(11)

%

      Automotive

4,088

3,860

6

7,936

7,517

6

      Chemicals

19,069

16,793

14

37,670

32,838

15

      Coal

45,992

46,322

(1)

89,712

100,701

(11)

      Industrial Products

19,813

18,455

7

38,572

36,143

7

      Intermodal

19,656

19,987

(2)

39,232

39,016

1

 Total

127,414

126,629

1

%

251,377

259,336

(3)

%











* 

 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)



2013

 Millions, Except Per Share Amounts and Percentages

1st Qtr

2nd Qtr

Year-to-Date

 Operating Revenues








      Freight revenues

$

4,984

$

5,153

$

10,137

      Other revenues

306

317

623

 Total operating revenues

5,290

5,470

10,760

 Operating Expenses








      Compensation and benefits

1,216

1,185

2,401

      Fuel

900

863

1,763

      Purchased services and materials

557

585

1,142

      Depreciation

434

438

872

      Equipment and other rents

313

302

615

      Other


237

219

456

 Total operating expenses

3,657

3,592

7,249

 Operating Income

1,633

1,878

3,511

      Other income

40

23

63

      Interest expense

(128)

(133)

(261)

 Income before income taxes

1,545

1,768

3,313

 Income tax expense

(588)

(662)

(1,250)

 Net Income

$

957

$

1,106

$

2,063










 Share and Per Share








      Earnings per share - basic

$

2.05

$

2.38

$

4.42

      Earnings per share - diluted

$

2.03

$

2.37

$

4.40

      Weighted average number of shares - basic

467.8

465.3

466.6

      Weighted average number of shares - diluted

470.5

467.6

469.1

      Dividends declared per share

$

0.69

$

0.69

$

1.38










 Operating Ratio

69.1%

65.7%

67.4%

 Effective Tax Rate

38.1%

37.4%

37.7%


 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)







2013


1st Qtr



2nd Qtr

Year-to-Date

 Freight Revenues (Millions)







 Agricultural

$

784

$

784

$

1,568

 Automotive

487

534

1,021

 Chemicals

873

890

1,763

 Coal

936

975

1,911

 Industrial Products

916

977

1,893

 Intermodal

988

993

1,981

 Total

$

4,984

$

5,153

$

10,137

 Revenue Carloads (Thousands)







 Agricultural


212

209

421

 Automotive

184

197

381

 Chemicals

271

287

558

 Coal

402

414

816

 Industrial Products

289

317

606

 Intermodal*

810

822

1,632

 Total

2,168

2,246

4,414

 Average Revenue per Car







 Agricultural

$

3,694

$

3,750

$

3,721

 Automotive

2,648

2,715

2,683

 Chemicals

3,225

3,098

3,160

 Coal

2,329

2,353

2,341

 Industrial Products

3,174

3,079

3,124

 Intermodal*

1,219

1,210

1,214

 Average

$

2,299

$

2,295

$

2,297

*      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

2013

2012

 Debt (a)

$

9,809

$

8,997

 Equity

20,524

19,877

 Capital (b)

$

30,333

$

28,874

 Debt to capital (a/b)

32.3%

31.2%





*

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

2013

2012

 Debt

$

9,809

$

8,997

 Net present value of operating leases

3,038

3,096

 Unfunded pension and OPEB

629

679

 Adjusted debt (a)

13,476

12,772

 Equity

20,524

19,877

 Adjusted capital (b)

$

34,000

$

32,649

 Adjusted debt to capital (a/b)

39.6%

39.1%





*

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 5.6% at June 30, 2013 and 6.0% at December 31, 2012. The discount rate reflects our effective interest rate. Management believes this is an important measure to management and investors in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations.

SOURCE Union Pacific

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