Union Pacific Reports Record First Quarter

Diluted Earnings per Share up 39 Percent

First Quarter Records

- Diluted earnings per share of $1.79 improved 39 percent.

- Operating revenues totaled $5.1 billion, up 14 percent and a best-ever quarterly record.

- Operating income totaled $1.5 billion, up 33 percent.

- Operating ratio of 70.5 percent improved 4.2 points.

- Customer satisfaction index reached 93, up 2 points and a best-ever quarterly record.

Apr 19, 2012, 08:00 ET from Union Pacific Corporation

OMAHA, Neb., April 19, 2012 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2012 first quarter net income of $863 million, or $1.79 per diluted share, compared to $639 million, or $1.29 per diluted share, in the first quarter 2011. 

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"Union Pacific achieved record financial results across the board this quarter," said Jack Koraleski, Union Pacific chief executive officer.  "We're clearly realizing the benefits of our diverse franchise, despite current coal challenges.  We remain focused on delivering safe, efficient, high-quality service that creates value for our customers and increased financial returns for our shareholders."

First Quarter Summary

First quarter business volumes, as measured by total revenue carloads, grew 1 percent versus 2011.  Four of Union Pacific's six business groups  -  automotive, industrial products, chemicals and intermodal  - reported volume growth.  Quarterly operating revenue increased 14 percent in the first quarter 2012 to $5.1 billion versus $4.5 billion in the first quarter 2011.  In addition:

  • Each of Union Pacific's six business groups reported freight revenue growth in the first quarter, driven by core pricing gains and improved fuel surcharge recovery.  Volume growth in four of our six business groups also contributed to revenue growth.
  • Union Pacific's operating ratio of 70.5 percent was a first quarter best, 4.2 points better than the previous first quarter record set in 2011.  Pricing gains, volume growth, efficient operations, and improved fuel surcharge recovery contributed to this record performance. 
  • Average quarterly diesel fuel prices increased 12 percent to $3.23 per gallon in the first quarter 2012 from $2.88 per gallon in the first quarter 2011. 
  • The Customer Satisfaction Index of 93 set a new all-time quarterly record and was two points better than the first quarter 2011.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.3 mph, increasing 1 percent compared to the first quarter 2011.
  • The Company repurchased 3.9 million shares in the first quarter 2012 at an average share price of $110.64 and an aggregate cost of $433 million.

Summary of First Quarter Freight Revenues

  • Automotive up 26 percent
  • Industrial Products up 25 percent
  • Chemicals up 16 percent
  • Intermodal up 15 percent
  • Agricultural up 6 percent
  • Energy up 5 percent

2012 Outlook

"With a strong first quarter behind us, we're focused on the prospects that lie ahead," said Koraleski.  "Although softer coal demand remains a challenge, the benefits of our diverse franchise should support continued opportunities in other markets, driving record financial results for the year.  We're moving forward with our capital investment strategy, investing today to strengthen the network and build capacity that will drive continued improvement in customer service and increased shareholder returns in the future."

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, Energy, 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 demand for coal; its ability to take advantage of growth opportunities, including opportunities in markets other than coal, and generate financial results, and the effectiveness of its capital investment strategy, including its ability to improve capacity and customer satisfaction and increase returns to 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,

1st Quarter

 For the Periods Ended March 31,

2012

2011

%

 Operating Revenues

      Freight revenues

$

4,823

$

4,248

14%

      Other revenues

289

242

19

 Total operating revenues

5,112

4,490

14

 Operating Expenses

      Compensation and benefits

1,211

1,167

4

      Fuel

926

826

12

      Purchased services and materials

526

475

11

      Depreciation

427

395

8

      Equipment and other rents

296

302

(2)

      Other

216

188

15

 Total operating expenses

3,602

3,353

7

 Operating Income

1,510

1,137

33

      Other income

16

15

7

      Interest expense

(135)

(141)

(4)

 Income before income taxes

1,391

1,011

38

 Income taxes

(528)

(372)

42

 Net Income

$

863

$

639

35%

 Share and Per Share

      Earnings per share - basic

$

1.81

$

1.31

38%

      Earnings per share - diluted

$

1.79

$

1.29

39

      Weighted average number of shares - basic

477.8

489.6

(2)

      Weighted average number of shares - diluted

481.4

494.1

(3)

      Dividends declared per share

$

0.60

$

0.38

58

 Operating Ratio

70.5%

74.7%

(4.2)

pts

 Effective Tax Rate

38.0%

36.8%

1.2

pts

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)

1st Quarter

 For the Periods Ending March 31,

2012

2011

%

 Freight Revenues (Millions)

 Agricultural

$

858

$

807

6%

 Automotive

430

342

26

 Chemicals

768

664

16

 Energy

995

952

5

 Industrial Products

863

690

25

 Intermodal

909

793

15

 Total

$

4,823

$

4,248

14%

 Revenue Carloads (Thousands)

 Agricultural

234

238

(2)%

 Automotive

180

157

15

 Chemicals

241

223

8

 Energy

495

538

(8)

 Industrial Products

290

263

10

 Intermodal*

778

770

1

 Total

2,218

2,189

1%

 Average Revenue per Car

 Agricultural

$

3,664

$

3,386

8%

 Automotive

2,390

2,175

10

 Chemicals

3,184

2,974

7

 Energy

2,010

1,770

14

 Industrial Products

2,977

2,628

13

 Intermodal*

1,169

1,031

13

 Average 

$

2,175

$

1,941

12%

*

Each intermodal container or trailer equals one carload.

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Financial Position (unaudited)

Mar. 31,

Dec. 31,

 Millions, Except Percentages

2012

2011

 Assets

      Cash and cash equivalents

$

995

$

1,217

      Other current assets

2,570

2,510

      Investments

1,210

1,175

      Net properties

40,309

39,934

      Other assets

252

260

 Total assets

$

45,336

$

45,096

 Liabilities and Common Shareholders' Equity

      Debt due within one year

$

769

$

209

      Other current liabilities

3,133

3,108

      Debt due after one year

8,066

8,697

      Deferred income taxes

12,505

12,368

      Other long-term liabilities

2,108

2,136

 Total liabilities

26,581

26,518

 Total common shareholders' equity

18,755

18,578

 Total liabilities and common shareholders' equity

$

45,336

$

45,096

 Debt to Capital

32.0%

32.4%

 Adjusted Debt to Capital*

40.1%

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 6 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 Ending March 31,

2012

2011

 Operating Activities

      Net income

$

863

$

639

      Depreciation

427

395

      Deferred income taxes

124

172

      Other - net

(10)

88

 Cash provided by operating activities

1,404

1,294

 Investing Activities

      Capital investments

(804)

(602)

      Other - net

(26)

(55)

 Cash used in investing activities

(830)

(657)

 Financing Activities

      Common shares repurchased

(433)

(248)

      Dividends paid

(289)

(186)

      Debt repaid

(72)

(87)

      Other - net

(2)

46

 Cash used in financing activities

(796)

(475)

 Net Change in Cash and Cash Equivalents

(222)

162

 Cash and cash equivalents at beginning of year

1,217

1,086

 Cash and Cash Equivalents End of Period

$

995

$

1,248

 Free Cash Flow*

      Cash provided by operating activities

$

1,404

$

1,294

      Cash used in investing activities

(830)

(657)

      Dividends paid

(289)

(186)

 Free cash flow

$

285

$

451

*  

Free cash flow is a non-GAAP measure; however, we believe that it is important 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)

1st Quarter

 For the Periods Ending March 31,

2012

2011

%

 Operating/Performance Statistics

      Gross ton-miles (GTMs) (millions)

240,484

235,406

2%

      Employees (average)

45,642

44,045

4

      GTMs (millions) per employee

5.27

5.34

(1)

      Customer satisfaction index

93

91

2

pts

 Locomotive Fuel Statistics

      Average fuel price per gallon consumed

$ 3.23

$ 2.88

12%

      Fuel consumed in gallons (millions)

279

278

-

      Fuel consumption rate*

1.160

1.180

(2)

 AAR Reported Performance Measures

      Average train speed (miles per hour)

26.3

26.1

1%

      Average terminal dwell time (hours)

26.4

26.4

-

      Average rail car inventory (thousands)

275.4

268.4

3

 Revenue Ton-Miles (Millions)

      Agricultural

21,909

22,606

(3)%

      Automotive

3,657

3,177

15

      Chemicals

16,045

14,568

10

      Energy

54,379

58,270

(7)

      Industrial Products

17,688

15,105

17

      Intermodal

19,029

19,039

-

 Total

132,707

132,765

-%

*

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

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Non-GAAP Measures Reconciliation to GAAP

 Debt to Capital*

Mar. 31,

Dec. 31,

 Millions, Except Percentages

2012

2011

 Debt (a)

$

8,835

$

8,906

 Equity

18,755

18,578

 Capital (b)

$

27,590

$

27,484

 Debt to capital (a/b)

32.0%

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*

Mar. 31,

Dec. 31,

 Millions, Except Percentages

2012

2011

 Debt

$

8,835

$

8,906

 Net present value of operating leases

3,099

3,224

 Unfunded pension and OPEB

623

623

 Adjusted debt (a)

$

12,557

$

12,753

 Equity

18,755

18,578

 Adjusted capital (b)

$

31,312

$

31,331

 Adjusted debt to capital (a/b)

40.1%

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 6.1% and 6.2% at March 31, 2012 and December 31, 2011, respectively. The lower discount rate reflects changes to interest rates and our current financing costs. Management believes this is an important measure in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations.

 

SOURCE Union Pacific Corporation