Union Pacific Reports All-Time Quarterly Records

Third Quarter Diluted Earnings per Share up 23 Percent

All-Time Quarterly Records

Diluted earnings per share of $1.53 improved 23 percent.

Operating revenues totaled $6.2 billion, up 11 percent.

Operating income totaled $2.3 billion, up 19 percent.

Operating ratio of 62.3 percent improved 2.5 points.

Oct 23, 2014, 08:00 ET from Union Pacific Corporation

OMAHA, Neb., Oct. 23, 2014 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2014 third quarter net income of $1.4 billion, or $1.53 per diluted share, compared to $1.15 billion, or $1.24 per diluted share, in the third quarter 2013.

"Union Pacific achieved record quarterly financial results, leveraging the strengths of our diverse franchise to handle strong volume growth," said Jack Koraleski, Union Pacific chief executive officer.  "As we continue to focus on improving our service, we are encouraged by the accomplishments we achieved in the quarter, including a two and a half point improvement in our Operating Ratio to a record 62.3 percent."

Third Quarter Summary

Operating revenue increased 11 percent in the third quarter 2014 to $6.2 billion, versus $5.6 billion in the third quarter 2013.  Third quarter business volumes, as measured by total revenue carloads, increased 7 percent compared to 2013.  Volume increased in agricultural products, industrial products, intermodal, automotive and chemicals.  Coal volumes were flat versus 2013.  In addition:

  • Quarterly freight revenue increased 11 percent compared to the third quarter 2013, driven by volume growth and core pricing gains.
  • Union Pacific's operating ratio of 62.3 percent was an all-time quarterly record, 2.5 points better than the third quarter 2013 and 1.2 points better than the previous all-time quarterly record set in the second quarter 2014.
  • The average quarterly diesel fuel price of $3.01 per gallon in the third quarter 2014 was down 5 percent compared to the third quarter 2013. 
  • Quarterly train speed, as reported to the Association of American Railroads, was 23.8 mph, 10 percent slower than the third quarter 2013.
  • The Company repurchased more than 8.3 million shares in the third quarter 2014 at an average share price of $102.54 and an aggregate cost of $856 million.

Summary of Third Quarter Freight Revenues

  • Industrial Products up 19 percent
  • Agricultural Products up 19 percent
  • Intermodal up 15 percent
  • Chemicals up 6 percent
  • Automotive up 3 percent
  • Coal up 2 percent

2014 Outlook

"We are optimistic about the remainder of the year," Koraleski said.  "Assuming the economy and weather cooperate, we are well positioned to finish up the year with record results. We continue to see tremendous opportunity across our diverse franchise and remain focused on improving our network velocity and fluidity so that we can leverage these opportunities by safely providing our customers with excellent service and our shareholders with strong 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 Tom Lange, (402) 544-3560.

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 its operations;  and its ability to generate record financial returns, improve network performance and fluidity, 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,

3rd Quarter

Year-to-Date

 For the Periods Ended September 30,

2014

2013

%

2014

2013

%

 Operating Revenues

      Freight revenues

$

5,819

$

5,250

11%

$

16,766

$

15,387

9%

      Other revenues

363

323

12

1,069

946

13

 Total operating revenues

6,182

5,573

11

17,835

16,333

9

 Operating Expenses

      Compensation and benefits

1,287

1,196

8

3,787

3,597

5

      Fuel

882

866

2

2,726

2,629

4

      Purchased services and materials

650

588

11

1,893

1,730

9

      Depreciation

481

447

8

1,415

1,319

7

      Equipment and other rents

310

309

-

938

924

2

      Other

242

205

18

696

661

5

 Total operating expenses

3,852

3,611

7

11,455

10,860

5

 Operating Income

2,330

1,962

19

6,380

5,473

17

      Other income

20

28

(29)

80

91

(12)

      Interest expense

(144)

(138)

4

(415)

(399)

4

 Income before income taxes

2,206

1,852

19

6,045

5,165

17

 Income taxes

(836)

(701)

19

(2,296)

(1,951)

18

 Net Income

$

1,370

$

1,151

19%

$

3,749

$

3,214

17%

 Share and Per Share*

      Earnings per share - basic

$

1.53

$

1.25

22%

$

4.16

$

3.46

20%

      Earnings per share - diluted

$

1.53

$

1.24

23

$

4.14

$

3.44

20

      Weighted average number of shares - basic

893.2

923.5

(3)

900.9

929.9

(3)

      Weighted average number of shares - diluted

896.9

928.4

(3)

904.8

934.9

(3)

      Dividends declared per share

$

0.50

$

0.395

27

$

1.41

$

1.085

30

 Operating Ratio

62.3%

64.8%

(2.5)pts

64.2%

66.5%

(2.3)pts

 Effective Tax Rate

37.9%

37.9%

-pts

38.0%

37.8%

0.2pts

*

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)

3rd Quarter

Year-to-Date

 For the Periods Ended September 30,

2014

2013

%

2014

2013

%

 Freight Revenues (Millions)

 Agricultural

$

915

$

771

19%

$

2,759

$

2,339

18%

 Automotive

527

512

3

1,560

1,533

2

 Chemicals

936

883

6

2,742

2,646

4

 Coal

1,099

1,082

2

3,049

2,993

2

 Industrial Products

1,161

975

19

3,302

2,868

15

 Intermodal

1,181

1,027

15

3,354

3,008

12

 Total

$

5,819

$

5,250

11%

$

16,766

$

15,387

9%

 Revenue Carloads (Thousands)

 Agricultural

239

210

14%

721

631

14%

 Automotive

204

195

5

600

576

4

 Chemicals

288

282

2

841

840

-

 Coal

466

468

-

1,313

1,284

2

 Industrial Products

363

325

12

1,033

931

11

 Intermodal*

936

848

10

2,693

2,480

9

 Total

2,496

2,328

7%

7,201

6,742

7%

 Average Revenue per Car

 Agricultural

$

3,836

$

3,679

4%

$

3,828

$

3,707

3%

 Automotive

2,590

2,620

(1)

2,600

2,661

(2)

 Chemicals

3,249

3,134

4

3,261

3,151

3

 Coal

2,362

2,312

2

2,323

2,331

-

 Industrial Products

3,195

2,998

7

3,195

3,080

4

 Intermodal*

1,260

1,211

4

1,245

1,213

3

 Average 

$

2,331

$

2,255

3%

$

2,328

$

2,282

2%

*       Each intermodal container or trailer equals one carload.

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Financial Position (unaudited)

Sep. 30,

Dec. 31,

 Millions, Except Percentages

2014

2013

 Assets

      Cash and cash equivalents

$

1,887

$

1,432

      Other current assets

2,893

2,558

      Investments

1,384

1,321

      Net properties

45,553

43,749

      Other assets

851

671

 Total assets

$

52,568

$

49,731

 Liabilities and Common Shareholders' Equity

      Debt due within one year

$

460

$

705

      Other current liabilities

3,373

3,086

      Debt due after one year

11,045

8,872

      Deferred income taxes

14,421

14,163

      Other long-term liabilities

1,716

1,680

 Total liabilities

31,015

28,506

 Total common shareholders' equity

21,553

21,225

 Total liabilities and common shareholders' equity

$

52,568

$

49,731

 Debt to Capital

34.8%

31.1%

 Adjusted Debt to Capital*

40.2%

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 September 30,

2014

2013

 Operating Activities

      Net income

$

3,749

$

3,214

      Depreciation

1,415

1,319

      Deferred income taxes

289

637

      Other - net

(95)

(289)

 Cash provided by operating activities

5,358

4,881

 Investing Activities

      Capital investments

(3,226)

(2,635)

      Other - net

(99)

39

 Cash used in investing activities

(3,325)

(2,596)

 Financing Activities

      Debt issued

2,588

944

      Common shares repurchased

(2,312)

(1,432)

      Dividends paid

(1,186)

(968)

      Debt repaid

(678)

(217)

      Debt exchange

-

(288)

      Other - net

10

(21)

 Cash used in financing activities

(1,578)

(1,982)

 Net Change in Cash and Cash Equivalents

455

303

 Cash and cash equivalents at beginning of year

1,432

1,063

 Cash and Cash Equivalents End of Period

$

1,887

$

1,366

 Free Cash Flow*

      Cash provided by operating activities

$

5,358

$

4,881

      Cash used in investing activities

(3,325)

(2,596)

      Dividends paid

(1,186)

(968)

 Free cash flow

$

847

$

1,317

*

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)

3rd Quarter

Year-to-Date

 For the Periods Ended September 30,

2014

2013

%

2014

2013

%

 Operating/Performance Statistics

      Gross ton-miles (GTMs) (millions)

259,969

241,350

8%

752,638

704,434

7%

      Employees (average)

47,550

46,605

2

46,922

46,610

1

      GTMs (millions) per employee

5.47

5.18

6

16.04

15.11

6

 Locomotive Fuel Statistics

      Average fuel price per gallon consumed

$ 3.01

$ 3.17

(5)%

$ 3.08

$ 3.17

(3)%

      Fuel consumed in gallons (millions)

283

265

7

860

808

6

      Fuel consumption rate*

1.091

1.098

(1)

1.143

1.147

-

 AAR Reported Performance Measures

      Average train speed (miles per hour)

23.8

26.3

(10)%

24.1

26.1

(8)%

      Average terminal dwell time (hours)

29.7

26.3

13

30.1

26.8

12

 Revenue Ton-Miles (Millions)

      Agricultural

22,552

18,452

22%

69,363

56,707

22%

      Automotive

4,183

3,995

5

12,481

11,931

5

      Chemicals

19,159

18,541

3

56,823

56,211

1

      Coal

50,660

51,325

(1)

140,916

141,037

-

      Industrial Products

22,859

19,665

16

65,876

58,237

13

      Intermodal

21,192

19,305

10

62,452

58,537

7

 Total

140,605

131,283

7%

407,911

382,660

7%

*

 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

3rd Qtr

Year-to-Date

 Operating Revenues

      Freight revenues

$

5,286

$

5,661

$

5,819

$

16,766

      Other revenues

352

354

363

1,069

 Total operating revenues

5,638

6,015

6,182

17,835

 Operating Expenses

      Compensation and benefits

1,254

1,246

1,287

3,787

      Fuel

921

923

882

2,726

      Purchased services and materials

607

636

650

1,893

      Depreciation

464

470

481

1,415

      Equipment and other rents

312

316

310

938

      Other

226

228

242

696

 Total operating expenses

3,784

3,819

3,852

11,455

 Operating Income

1,854

2,196

2,330

6,380

      Other income

38

22

20

80

      Interest expense

(133)

(138)

(144)

(415)

 Income before income taxes

1,759

2,080

2,206

6,045

 Income tax expense

(671)

(789)

(836)

(2,296)

 Net Income

$

1,088

$

1,291

$

1,370

$

3,749

 Share and Per Share*

      Earnings per share - basic

$

1.20

$

1.43

$

1.53

$

4.16

      Earnings per share - diluted

$

1.19

$

1.43

$

1.53

$

4.14

      Weighted average number of shares - basic

908.1

901.5

893.2

900.9

      Weighted average number of shares - diluted

912.5

905.0

896.9

904.8

      Dividends declared per share

$

0.455

$

0.455

$

0.50

$

1.41

 Operating Ratio

67.1%

63.5%

62.3%

64.2%

 Effective Tax Rate

38.1%

37.9%

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

3rd Qtr

Year-to-Date

 Freight Revenues (Millions)

 Agricultural

$

910

$

934

$

915

$

2,759

 Automotive

488

545

527

1,560

 Chemicals

893

913

936

2,742

 Coal

961

989

1,099

3,049

 Industrial Products

1,011

1,130

1,161

3,302

 Intermodal

1,023

1,150

1,181

3,354

 Total

$

5,286

$

5,661

$

5,819

$

16,766

 Revenue Carloads (Thousands)

 Agricultural

239

243

239

721

 Automotive

188

208

204

600

 Chemicals

270

283

288

841

 Coal

430

417

466

1,313

 Industrial Products

314

356

363

1,033

 Intermodal*

833

924

936

2,693

 Total

2,274

2,431

2,496

7,201

 Average Revenue per Car

 Agricultural

$

3,815

$

3,833

$

3,836

$

3,828

 Automotive

2,591

2,619

2,590

2,600

 Chemicals

3,307

3,230

3,249

3,261

 Coal

2,236

2,369

2,362

2,323

 Industrial Products

3,218

3,175

3,195

3,195

 Intermodal*

1,227

1,246

1,260

1,245

 Average

$

2,324

$

2,329

$

2,331

$

2,328

*      Each intermodal container or trailer equals one carload.

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Non-GAAP Measures Reconciliation to GAAP

 Debt to Capital*

Sep. 30,

Dec. 31,

 Millions, Except Percentages

2014

2013

 Debt (a)

$

11,505

$

9,577

 Equity

21,553

21,225

 Capital (b)

$

33,058

$

30,802

 Debt to capital (a/b)

34.8%

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*

Sep. 30,

Dec. 31,

 Millions, Except Percentages

2014

2013

 Debt

$

11,505

$

9,577

 Net present value of operating leases

2,866

3,057

 Unfunded pension and OPEB

146

170

 Adjusted debt (a)

14,517

12,804

 Equity

21,553

21,225

 Adjusted capital (b)

$

36,070

$

34,029

 Adjusted debt to capital (a/b)

40.2%

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 5.4% at September 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 Corporation



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