Union Pacific Reports Best-Ever Quarterly Results

Third Quarter Diluted Earnings per Share Up 18 Percent

Oct 18, 2012, 08:00 ET from Union Pacific Corporation

OMAHA, Neb., Oct. 18, 2012 /PRNewswire/ --

All-Time Quarterly Records

  • Diluted earnings per share of $2.19 improved 18 percent.
  • Operating revenues totaled $5.3 billion, up 5 percent.
  • Operating income totaled $1.8 billion, up 13 percent.
  • Operating ratio of 66.6 percent improved 2.5 points.
  • Customer satisfaction index reached 94, up 3 points.

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Union Pacific Corporation (NYSE: UNP) today reported 2012 third quarter net income of $1 billion, or $2.19 per diluted share, compared to $904 million, or $1.85 per diluted share, in the third quarter 2011. 

"Despite a 12 percent decline in coal volumes and significantly weaker steel and scrap metal markets, we generated best-ever financial results across the board," said Jack Koraleski, Union Pacific chief executive officer.  "We achieved solid core pricing gains, managed our network efficiently and delivered on the benefits of our diverse franchise with growth in other markets."

Third Quarter Summary

Third quarter business volumes, as measured by total revenue carloads, were down slightly compared to 2011.  Volume growth in chemicals, automotive and intermodal offset declines in shipments of coal, agricultural products and industrial products.  Quarterly operating revenue increased 5 percent in the third quarter 2012 to $5.3 billion versus $5.1 billion in the third quarter 2011.  In addition:

  • Quarterly freight revenue increased 4 percent compared to the third quarter 2011, mainly driven by core pricing gains of 5 percent.
  • Union Pacific's operating ratio of 66.6 percent was an all-time quarterly best, 2.5 points better than the third quarter 2011 and a 0.4 point improvement from the previous record set in the second quarter 2012. 
  • Average quarterly diesel fuel prices were flat at $3.19 per gallon in the third quarter 2012 compared to $3.18 per gallon in the third quarter 2011. 
  • The Customer Satisfaction Index of 94 set an all-time quarterly record and was 3 points better than the third quarter 2011.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, increasing 6 percent compared to the third quarter 2011.  Severe drought conditions in the South negatively impacted train speed in the third quarter of last year.
  • The Company repurchased 3.1 million shares in the third quarter 2012 at an average share price of $122.13 and an aggregate cost of $378 million.

Summary of Third Quarter Freight Revenues

  • Chemicals up 17 percent
  • Automotive up 15 percent
  • Intermodal up 8 percent
  • Industrial Products up 2 percent
  • Agricultural down 4 percent
  • Coal down 5 percent

2012 Outlook

"As we look out over the next several months, the political and financial challenges in the U.S. and abroad have increased economic uncertainty," Koraleski said.  "In this environment, we'll continue to be agile as we were in the third quarter.  We'll adapt to changing market conditions and leverage our diverse franchise to provide excellent customer service and generate strong returns for our shareholders."

About Union Pacific

It was 150 years ago that Abraham Lincoln signed the Pacific Railway Act of July 1, 1862, creating the original Union Pacific. One of America's iconic companies, today, Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP), linking 23 states in the western two-thirds of the country by rail and providing freight solutions and logistics expertise to the global supply chain. From 2000 through 2011, Union Pacific spent more than $31 billion on its network and operations, making needed investments in America's infrastructure and enhancing its ability to provide safe, reliable, fuel-efficient and environmentally responsible freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. The railroad serves many of the fastest-growing U.S. population centers and emphasizes excellent customer service. Union Pacific operates competitive routes 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.

Supplemental financial information is attached.

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 economic conditions; its ability to adapt to changing market conditions and continue providing quality customer service; and its ability to generate returns for 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 2011, which was filed with the SEC on February 3, 2012.  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,

2012

2011

%

2012

2011

%

Operating Revenues

     Freight revenues

$

5,019

$

4,836

4%

$

14,755

$

13,679

8%

     Other revenues

324

265

22

921

770

20

Total operating revenues

5,343

5,101

5

15,676

14,449

8

Operating Expenses

     Compensation and benefits

1,188

1,193

-

3,550

3,526

1

     Fuel

880

916

(4)

2,688

2,646

2

     Purchased services and materials

542

506

7

1,610

1,497

8

     Depreciation

447

408

10

1,307

1,204

9

     Equipment and other rents

300

293

2

895

878

2

     Other

200

207

(3)

606

591

3

Total operating expenses

3,557

3,523

1

10,656

10,342

3

Operating Income

1,786

1,578

13

5,020

4,107

22

     Other income

28

17

65

65

58

12

     Interest expense

(137)

(142)

(4)

(407)

(431)

(6)

Income before income taxes

1,677

1,453

15

4,678

3,734

25

Income taxes

(635)

(549)

16

(1,771)

(1,406)

26

Net Income

$

1,042

$

904

15%

$

2,907

$

2,328

25%

Share and Per Share

     Earnings per share - basic

$

2.21

$

1.87

18

$

6.13

$

4.78

28

     Earnings per share - diluted

$

2.19

$

1.85

18

$

6.08

$

4.74

28

     Weighted average number of shares - basic

472.0

484.2

(3)

474.5

487.4

(3)

     Weighted average number of shares - diluted

475.2

488.1

(3)

477.9

491.5

(3)

     Dividends declared per share

$

0.60

$

0.475

26

$

1.80

$

1.33

35

Operating Ratio

66.6%

69.1%

(2.5)

68.0%

71.6%

(3.6)

Effective Tax Rate

37.9%

37.8%

0.1

37.9%

37.7%

0.2

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

3rd Quarter

Year-to-Date

For the Periods Ended September 30,

2012

2011

%

2012

2011

%

Freight Revenues (Millions)

Agricultural

$

783

$

814

(4)%

$

2,495

$

2,470

1%

Automotive

436

379

15

1,341

1,102

22

Chemicals

841

720

17

2,404

2,087

15

Coal

1,058

1,112

(5)

2,922

3,014

(3)

Industrial Products

879

863

2

2,659

2,356

13

Intermodal

1,022

948

8

2,934

2,650

11

Total

$

5,019

$

4,836

4%

$

14,755

$

13,679

8%

Revenue Carloads (Thousands)

Agricultural

218

223

(2)%

685

698

(2)%

Automotive

181

160

13

551

482

14

Chemicals

275

233

18

777

689

13

Coal

501

572

(12)

1,408

1,606

(12)

Industrial Products

299

305

(2)

905

865

5

Intermodal*

857

848

1

2,481

2,437

2

Total

2,331

2,341

-%

6,807

6,777

-%

Average Revenue per Car

Agricultural

$

3,596

$

3,655

(2)%

$

3,643

$

3,537

3%

Automotive

2,407

2,364

2

2,435

2,287

6

Chemicals

3,064

3,087

(1)

3,094

3,029

2

Coal

2,111

1,945

9

2,075

1,877

11

Industrial Products

2,933

2,832

4

2,938

2,724

8

Intermodal*

1,192

1,119

7

1,182

1,087

9

Average

$

2,153

$

2,066

4%

$

2,168

$

2,019

7%

* 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

2012

2011

Assets

     Cash and cash equivalents

$

1,130

$

1,217

     Other current assets

2,816

2,510

     Investments

1,235

1,175

     Net properties

41,617

39,934

     Other assets

272

260

Total assets

$

47,070

$

45,096

Liabilities and Common Shareholders' Equity

     Debt due within one year

$

713

$

209

     Other current liabilities

3,161

3,108

     Debt due after one year

8,773

8,697

     Deferred income taxes

12,858

12,368

     Other long-term liabilities

2,016

2,136

Total liabilities

27,521

26,518

Total common shareholders' equity

19,549

18,578

Total liabilities and common shareholders' equity

$

47,070

$

45,096

Debt to Capital

32.7%

32.4%

Adjusted Debt to Capital*

40.2%

40.7%

*

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 September 30,

2012

2011

Operating Activities

     Net income

$

2,907

$

2,328

     Depreciation

1,307

1,204

     Deferred income taxes

490

721

     Other - net

(338)

81

Cash provided by operating activities

4,366

4,334

Investing Activities

     Capital investments

(2,876)

(2,218)

     Other - net

10

(23)

Cash used in investing activities

(2,866)

(2,241)

Financing Activities

     Common shares repurchased

(1,179)

(1,036)

     Dividends paid

(860)

(607)

     Debt issued

695

486

     Debt repaid

(250)

(188)

     Debt exchange

-

(272)

     Other - net

7

85

Cash used in financing activities

(1,587)

(1,532)

Net Change in Cash and Cash Equivalents

(87)

561

Cash and cash equivalents at beginning of year

1,217

1,086

Cash and Cash Equivalents End of Period

$

1,130

$

1,647

Free Cash Flow*

     Cash provided by operating activities

$

4,366

$

4,334

     Cash used in investing activities

(2,866)

(2,241)

     Dividends paid

(860)

(607)

Free cash flow

$

640

$

1,486

*

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)

3rd Quarter

Year-to-Date

For the Periods Ended September 30,

2012

2011

%

2012

2011

%

Operating/Performance Statistics

     Gross ton-miles (GTMs) (millions)

245,415

250,855

(2)%

720,382

725,477

(1)%

     Employees (average)

46,205

45,507

2

45,882

44,841

2

     GTMs (millions) per employee

5.31

5.51

(4)

15.70

16.18

(3)

     Customer satisfaction index

94

91

3

pts

93

91

2

pts

Locomotive Fuel Statistics

     Average fuel price per gallon consumed

$3.19

$3.18

-%

$3.21

$3.11

3%

     Fuel consumed in gallons (millions)

267

277

(4)

811

820

(1)

     Fuel consumption rate*

1.084

1.103

(2)

1.125

1.130

-

AAR Reported Performance Measures

     Average train speed (miles per hour)

26.1

24.6

6%

26.4

25.6

3%

     Average terminal dwell time (hours)

26.0

26.2

(1)

26.0

26.1

-

     Average rail car inventory (thousands)

268.0

274.4

(2)

270.7

272.5

(1)

Revenue Ton-Miles (Millions)

     Agricultural

19,349

20,991

(8)%

62,470

66,145

(6)%

     Automotive

3,596

3,218

12

11,113

9,600

16

     Chemicals

17,608

14,855

19

50,446

44,376

14

     Coal

55,468

63,274

(12)

156,169

176,274

(11)

     Industrial Products

17,772

17,746

-

53,915

49,852

8

     Intermodal

19,513

19,961

(2)

58,529

58,726

-

Total

133,306

140,045

(5)%

392,642

404,973

(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)

2012

Millions, Except Per Share Amounts and Percentages

1st Qtr

2nd Qtr

3rd Qtr

Year-to-Date

Operating Revenues

     Freight revenues

$

4,823

$

4,913

$

5,019

$

14,755

     Other revenues

289

308

324

921

Total operating revenues

5,112

5,221

5,343

15,676

Operating Expenses

     Compensation and benefits

1,211

1,151

1,188

3,550

     Fuel

926

882

880

2,688

     Purchased services and materials

526

542

542

1,610

     Depreciation

427

433

447

1,307

     Equipment and other rents

296

299

300

895

     Other

216

190

200

606

Total operating expenses

3,602

3,497

3,557

10,656

Operating Income

1,510

1,724

1,786

5,020

     Other income

16

21

28

65

     Interest expense

(135)

(135)

(137)

(407)

Income before income taxes

1,391

1,610

1,677

4,678

Income tax expense

(528)

(608)

(635)

(1,771)

Net Income

$

863

$

1,002

$

1,042

$

2,907

Share and Per Share

     Earnings per share - basic

$

1.81

$

2.11

$

2.21

$

6.13

     Earnings per share - diluted

$

1.79

$

2.10

$

2.19

$

6.08

     Weighted average number of shares - basic

477.8

473.8

472.0

474.5

     Weighted average number of shares - diluted

481.4

477.2

475.2

477.9

     Dividends declared per share

$

0.60

$

0.60

$

0.60

$

1.80

Operating Ratio

70.5%

67.0%

66.6%

68.0%

Effective Tax Rate

38.0%

37.8%

37.9%

37.9%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

2012

1st Qtr

2nd Qtr

3rd Qtr

Year-to-Date

Freight Revenues (Millions)

Agricultural

$

858

$

854

$

783

$

2,495

Automotive

430

475

436

1,341

Chemicals

768

795

841

2,404

Coal

995

869

1,058

2,922

Industrial Products

863

917

879

2,659

Intermodal

909

1,003

1,022

2,934

Total

$

4,823

$

4,913

$

5,019

$

14,755

Revenue Carloads (Thousands)

Agricultural

234

233

218

685

Automotive

180

190

181

551

Chemicals

241

261

275

777

Coal

495

412

501

1,408

Industrial Products

290

316

299

905

Intermodal*

778

846

857

2,481

Total

2,218

2,258

2,331

6,807

Average Revenue per Car

Agricultural

$

3,664

$

3,665

$

3,596

$

3,643

Automotive

2,390

2,505

2,407

2,435

Chemicals

3,184

3,044

3,064

3,094

Coal

2,010

2,109

2,111

2,075

Industrial Products

2,977

2,907

2,933

2,938

Intermodal*

1,169

1,185

1,192

1,182

Average

$

2,175

$

2,176

$

2,153

$

2,168

* 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

2012

2011

Debt (a)

$

9,486

$

8,906

Equity

19,549

18,578

Capital (b)

$

29,035

$

27,484

Debt to capital (a/b)

32.7%

32.4%

*

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

2012

2011

Debt

$

9,486

$

8,906

Net present value of operating leases

3,096

3,224

Unfunded pension and OPEB

548

623

Adjusted debt (a)

13,130

12,753

Equity

19,549

18,578

Adjusted capital (b)

$

32,679

$

31,331

Adjusted debt to capital (a/b)

40.2%

40.7%

*

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 6.0% at September 30, 2012 and 6.2% at December 31, 2011. The lower discount rate reflects changes to interest rates and our current financing costs. 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 Corporation



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