Union Pacific Reports Record Second Quarter
Achieves Best-Ever Earnings per Share
Second Quarter Records
- Diluted earnings per share improved 14 percent to $1.59.
- Operating revenues totaled $4.9 billion, up 16 percent.
- Operating income totaled $1.4 billion, up 9 percent.
- Net income increased 10 percent to $785 million.
- Customer Satisfaction Index improved three points to 92, an all-time quarterly record.
OMAHA, Neb., July 21, 2011 /PRNewswire-FirstCall/ -- Union Pacific Corporation (NYSE: UNP) today reported 2011 second quarter net income of $785 million, or $1.59 per diluted share, compared to $711 million, or $1.40 per diluted share, in the second quarter 2010.
(Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)
"Union Pacific achieved another strong quarter, delivering best-ever quarterly earnings," said Jim Young, Union Pacific chairman and chief executive officer. "We saw the benefits of our diverse franchise, with volume growth in five of our six commodity groups. We generated record second quarter operating income and cash from operations despite the impact of severe flooding in the Midwest."
Second Quarter Summary
Second quarter business volumes, as measured by total revenue carloads, grew 3 percent versus 2010. Five of Union Pacific's six business groups reported volume growth, with strong growth in shipments of agricultural products and chemicals. Intermodal volumes were down slightly during the quarter compared to 2010. Quarterly operating revenue increased 16 percent in the second quarter 2011 to $4.9 billion versus $4.2 billion in the second quarter 2010. In addition:
- Each of Union Pacific's six business groups reported freight revenue growth in the second quarter. Increased fuel cost recoveries, core pricing gains, and volume growth contributed to these increases.
- Quarterly diesel fuel prices increased 44 percent from an average of $2.29 per gallon in the second quarter 2010 to an average of $3.29 per gallon in the second quarter 2011.
- Union Pacific's operating ratio of 71.3 percent was 1.9 points worse than the previous second-quarter record set in 2010. The impact of higher fuel prices negatively impacted operating ratio and earnings by 2.0 points and $0.02 per diluted share compared to 2010.
- Flood-related issues increased operating expenses by $14 million, or $0.02 per diluted share and resulted in missed coal revenue of approximately $20 million, or $0.02 per diluted share net of estimated cost savings.
- The Customer Satisfaction Index of 92 set a new all-time quarterly best record, three points better than the second quarter 2010.
- Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, decreasing one percent compared to the second quarter 2010.
- The Company repurchased 3.6 million shares in the second quarter 2011 at an average share price of $100.75 and an aggregate cost of approximately $360 million.
Summary of Second Quarter Freight Revenues
- Agricultural up 22 percent
- Chemicals up 19 percent
- Industrial Products up 16 percent
- Energy up 14 percent
- Automotive up 14 percent
- Intermodal up 13 percent
2011 Outlook
"Looking to the second half of the year, we expect stronger performance despite some economic uncertainties and ongoing flood challenges," said Young. "With our diverse franchise and strong value proposition, we're well-positioned to leverage volume growth and achieve pricing gains that will improve financial returns for our shareholders."
About Union Pacific
Union Pacific Corporation owns one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country. Union Pacific serves many of the fastest-growing U.S. population centers and provides Americans with a fuel-efficient, environmentally responsible and safe mode of freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad emphasizes excellent customer service and offers competitive routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada's rail systems and is the only railroad serving all six major gateways to Mexico, making it North America's premier rail franchise.
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 and its performance for the rest of the year; and its ability to leverage volume growth and improve pricing and financial returns. 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 2010, which was filed with the SEC on February 4, 2011. 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, |
2011 |
2010 |
% |
2011 |
2010 |
% |
|||||||||
Operating Revenues |
|||||||||||||||
Freight revenues |
$ |
4,595 |
$ |
3,956 |
16% |
$ |
8,843 |
$ |
7,711 |
15% |
|||||
Other revenues |
263 |
226 |
16 |
505 |
436 |
16 |
|||||||||
Total operating revenues |
4,858 |
4,182 |
16 |
9,348 |
8,147 |
15 |
|||||||||
Operating Expenses |
|||||||||||||||
Compensation and benefits |
1,166 |
1,051 |
11 |
2,333 |
2,110 |
11 |
|||||||||
Fuel |
904 |
608 |
49 |
1,730 |
1,191 |
45 |
|||||||||
Purchased services and materials |
516 |
472 |
9 |
991 |
904 |
10 |
|||||||||
Depreciation |
401 |
368 |
9 |
796 |
735 |
8 |
|||||||||
Equipment and other rents |
283 |
282 |
- |
585 |
572 |
2 |
|||||||||
Other |
196 |
122 |
61 |
384 |
368 |
4 |
|||||||||
Total operating expenses |
3,466 |
2,903 |
19 |
6,819 |
5,880 |
16 |
|||||||||
Operating Income |
1,392 |
1,279 |
9 |
2,529 |
2,267 |
12 |
|||||||||
Other income |
26 |
19 |
37 |
41 |
20 |
F |
|||||||||
Interest expense |
(148) |
(152) |
(3) |
(289) |
(307) |
(6) |
|||||||||
Income before income taxes |
1,270 |
1,146 |
11 |
2,281 |
1,980 |
15 |
|||||||||
Income taxes |
(485) |
(435) |
11 |
(857) |
(753) |
14 |
|||||||||
Net Income |
$ |
785 |
$ |
711 |
10% |
$ |
1,424 |
$ |
1,227 |
16% |
|||||
Share and Per Share |
|||||||||||||||
Earnings per share - basic |
$ |
1.61 |
$ |
1.42 |
13% |
$ |
2.91 |
$ |
2.44 |
19% |
|||||
Earnings per share - diluted |
$ |
1.59 |
$ |
1.40 |
14 |
$ |
2.89 |
$ |
2.42 |
19 |
|||||
Weighted average number of shares - basic |
488.4 |
501.8 |
(3) |
489.0 |
503.1 |
(3) |
|||||||||
Weighted average number of shares - diluted |
492.4 |
506.5 |
(3) |
493.3 |
507.6 |
(3) |
|||||||||
Dividends declared per share |
$ |
0.475 |
$ |
0.33 |
44 |
$ |
0.855 |
$ |
0.60 |
43 |
|||||
Operating Ratio |
71.3% |
69.4% |
1.9 |
pts |
72.9% |
72.2% |
0.7 |
pts |
|||||||
Effective Tax Rate |
38.2% |
38.0% |
0.2 |
pts |
37.6% |
38.0% |
(0.4) |
pts |
|||||||
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES |
||||||||||||||
Freight Revenues Statistics (unaudited) |
||||||||||||||
2nd Quarter |
Year-to-Date |
|||||||||||||
For the Periods Ended June 30, |
2011 |
2010 |
% |
2011 |
2010 |
% |
||||||||
Freight Revenues (Millions) |
||||||||||||||
Agricultural |
$ |
849 |
$ |
698 |
22% |
$ |
1,656 |
$ |
1,428 |
16% |
||||
Automotive |
381 |
334 |
14 |
723 |
639 |
13 |
||||||||
Chemicals |
703 |
592 |
19 |
1,367 |
1,179 |
16 |
||||||||
Energy |
950 |
836 |
14 |
1,902 |
1,680 |
13 |
||||||||
Industrial Products |
803 |
692 |
16 |
1,493 |
1,290 |
16 |
||||||||
Intermodal |
909 |
804 |
13 |
1,702 |
1,495 |
14 |
||||||||
Total |
$ |
4,595 |
$ |
3,956 |
16% |
$ |
8,843 |
$ |
7,711 |
15% |
||||
Revenue Carloads (Thousands) |
||||||||||||||
Agricultural |
237 |
213 |
11% |
475 |
441 |
8% |
||||||||
Automotive |
165 |
159 |
4 |
322 |
310 |
4 |
||||||||
Chemicals |
233 |
209 |
11 |
456 |
412 |
11 |
||||||||
Energy |
496 |
486 |
2 |
1,034 |
1,002 |
3 |
||||||||
Industrial Products |
297 |
286 |
4 |
560 |
528 |
6 |
||||||||
Intermodal |
819 |
827 |
(1) |
1,589 |
1,569 |
1 |
||||||||
Total |
2,247 |
2,180 |
3% |
4,436 |
4,262 |
4% |
||||||||
Average Revenue per Car |
||||||||||||||
Agricultural |
$ |
3,580 |
$ |
3,277 |
9% |
$ |
3,483 |
$ |
3,238 |
8% |
||||
Automotive |
2,321 |
2,094 |
11 |
2,250 |
2,059 |
9 |
||||||||
Chemicals |
3,024 |
2,826 |
7 |
3,000 |
2,859 |
5 |
||||||||
Energy |
1,916 |
1,722 |
11 |
1,840 |
1,677 |
10 |
||||||||
Industrial Products |
2,697 |
2,420 |
11 |
2,665 |
2,444 |
9 |
||||||||
Intermodal |
1,108 |
974 |
14 |
1,071 |
953 |
12 |
||||||||
Average |
$ |
2,045 |
$ |
1,815 |
13% |
$ |
1,993 |
$ |
1,809 |
10% |
||||
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES |
||||||
Condensed Consolidated Statements of Financial Position (unaudited) |
||||||
Jun. 30, |
Dec. 31, |
|||||
Millions, Except Percentages |
2011 |
2010 |
||||
Assets |
||||||
Cash and cash equivalents |
$ |
1,055 |
$ |
1,086 |
||
Other current assets |
2,644 |
2,346 |
||||
Investments |
1,176 |
1,137 |
||||
Net properties |
38,908 |
38,253 |
||||
Other assets |
246 |
266 |
||||
Total assets |
$ |
44,029 |
$ |
43,088 |
||
Liabilities and Common Shareholders' Equity |
||||||
Debt due within one year |
$ |
179 |
$ |
239 |
||
Other current liabilities |
2,974 |
2,713 |
||||
Debt due after one year |
8,759 |
9,003 |
||||
Deferred income taxes |
12,016 |
11,557 |
||||
Other long-term liabilities |
1,795 |
1,813 |
||||
Total liabilities |
25,723 |
25,325 |
||||
Total common shareholders' equity |
18,306 |
17,763 |
||||
Total liabilities and common shareholders' equity |
$ |
44,029 |
$ |
43,088 |
||
Debt to Capital |
32.8% |
34.2% |
||||
Adjusted Debt to Capital* |
40.9% |
42.5% |
||||
* |
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, |
2011 |
2010 |
|||||
Operating Activities |
|||||||
Net income |
$ |
1,424 |
$ |
1,227 |
|||
Depreciation |
796 |
735 |
|||||
Deferred income taxes |
459 |
119 |
|||||
Other - net |
(39) |
(386) |
|||||
Cash provided by operating activities |
2,640 |
1,695 |
|||||
Investing Activities |
|||||||
Capital investments |
(1,327) |
(1,056) |
|||||
Other - net |
(39) |
(12) |
|||||
Cash used in investing activities |
(1,366) |
(1,068) |
|||||
Financing Activities |
|||||||
Common shares repurchased |
(608) |
(422) |
|||||
Dividends paid |
(374) |
(272) |
|||||
Debt exchange |
(272) |
- |
|||||
Debt repaid |
(131) |
(885) |
|||||
Debt issued |
- |
400 |
|||||
Other - net |
80 |
19 |
|||||
Cash used in financing activities |
(1,305) |
(1,160) |
|||||
Net Change in Cash and Cash Equivalents |
(31) |
(533) |
|||||
Cash and cash equivalents at beginning of year |
1,086 |
1,850 |
|||||
Cash and Cash Equivalents End of Period |
$ |
1,055 |
$ |
1,317 |
|||
Free Cash Flow* |
|||||||
Cash provided by operating activities |
$ |
2,640 |
$ |
1,695 |
|||
Receivables securitization facility** |
- |
400 |
|||||
Cash provided by operating activities excluding receivables securitization facility |
2,640 |
2,095 |
|||||
Cash used in investing activities |
(1,366) |
(1,068) |
|||||
Dividends paid |
(374) |
(272) |
|||||
Free cash flow |
$ |
900 |
$ |
755 |
|||
* |
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. |
||||||
** |
Effective January 1, 2010, new accounting guidance requires us to account for receivables transferred under our receivables securitization facility as secured borrowings in our Condensed Consolidated Statements of Financial Position and as financing activities in our Condensed Consolidated Statements of Cash Flows. The receivables securitization facility line in the above table is included in our free cash flow calculation to adjust cash provided by operating activities as though our receivables securitization facility had been accounted for under the new accounting guidance for all periods presented. |
||||||
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES |
|||||||||||
Operating and Performance Statistics (unaudited) |
|||||||||||
2nd Quarter |
Year-to-Date |
||||||||||
For the Periods Ended June 30, |
2011 |
2010 |
% |
2011 |
2010 |
% |
|||||
Operating/Performance Statistics |
|||||||||||
Gross ton-miles (GTMs) (millions) |
239,216 |
228,062 |
5% |
474,622 |
451,772 |
5% |
|||||
Employees (average) |
44,971 |
42,571 |
6 |
44,508 |
42,350 |
5 |
|||||
GTMs (millions) per employee |
5.32 |
5.36 |
(1) |
10.66 |
10.67 |
- |
|||||
Customer satisfaction index |
92 |
89 |
3 |
pts |
92 |
88 |
4 |
pts |
|||
Locomotive Fuel Statistics |
|||||||||||
Average fuel price per gallon consumed |
$ 3.29 |
$ 2.29 |
44% |
$ 3.08 |
$ 2.22 |
39% |
|||||
Fuel consumed in gallons (millions) |
265 |
257 |
3 |
543 |
520 |
4 |
|||||
Fuel consumption rate* |
1.109 |
1.126 |
(2) |
1.144 |
1.150 |
(1) |
|||||
AAR Reported Performance Measures |
|||||||||||
Average train speed (miles per hour) |
26.1 |
26.4 |
(1)% |
26.1 |
26.3 |
(1)% |
|||||
Average terminal dwell time (hours) |
25.6 |
24.7 |
4 |
26.0 |
25.4 |
2 |
|||||
Average rail car inventory (thousands) |
271.9 |
275.2 |
(1) |
271.5 |
276.4 |
(2) |
|||||
Revenue Ton-Miles (Millions) |
|||||||||||
Agricultural |
22,548 |
20,147 |
12% |
45,154 |
42,199 |
7% |
|||||
Automotive |
3,205 |
3,271 |
(2) |
6,382 |
6,457 |
(1) |
|||||
Chemicals |
14,953 |
13,325 |
12 |
29,521 |
26,658 |
11 |
|||||
Energy |
54,730 |
53,437 |
2 |
113,000 |
109,015 |
4 |
|||||
Industrial Products |
17,001 |
15,957 |
7 |
32,106 |
29,820 |
8 |
|||||
Intermodal |
19,726 |
20,177 |
(2) |
38,765 |
38,968 |
(1) |
|||||
Total |
132,163 |
126,314 |
5% |
264,928 |
253,117 |
5% |
|||||
* 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) |
|||||||||
2011 |
|||||||||
Millions, Except Per Share Amounts and Percentages |
1st Qtr |
2nd Qtr |
Year-to-Date |
||||||
Operating Revenues |
|||||||||
Freight revenues |
$ |
4,248 |
$ |
4,595 |
$ |
8,843 |
|||
Other revenues |
242 |
263 |
505 |
||||||
Total operating revenues |
4,490 |
4,858 |
9,348 |
||||||
Operating Expenses |
|||||||||
Compensation and benefits |
1,167 |
1,166 |
2,333 |
||||||
Fuel |
826 |
904 |
1,730 |
||||||
Purchased services and materials |
475 |
516 |
991 |
||||||
Depreciation |
395 |
401 |
796 |
||||||
Equipment and other rents |
302 |
283 |
585 |
||||||
Other |
188 |
196 |
384 |
||||||
Total operating expenses |
3,353 |
3,466 |
6,819 |
||||||
Operating Income |
1,137 |
1,392 |
2,529 |
||||||
Other income |
15 |
26 |
41 |
||||||
Interest expense |
(141) |
(148) |
(289) |
||||||
Income before income taxes |
1,011 |
1,270 |
2,281 |
||||||
Income tax expense |
(372) |
(485) |
(857) |
||||||
Net Income |
$ |
639 |
$ |
785 |
$ |
1,424 |
|||
Share and Per Share |
|||||||||
Earnings per share - basic |
$ |
1.31 |
$ |
1.61 |
$ |
2.91 |
|||
Earnings per share - diluted |
$ |
1.29 |
$ |
1.59 |
$ |
2.89 |
|||
Weighted average number of shares - basic |
489.6 |
488.4 |
489.0 |
||||||
Weighted average number of shares - diluted |
494.1 |
492.4 |
493.3 |
||||||
Dividends declared per share |
$ |
0.38 |
$ |
0.475 |
$ |
0.855 |
|||
Operating Ratio |
74.7% |
71.3% |
72.9% |
||||||
Effective Tax Rate |
36.8% |
38.2% |
37.6% |
||||||
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES |
|||||||||
Freight Revenues Statistics (unaudited) |
|||||||||
2011 |
|||||||||
1st Qtr |
2nd Qtr |
Year-to-Date |
|||||||
Freight Revenues (Millions) |
|||||||||
Agricultural |
$ |
807 |
$ |
849 |
$ |
1,656 |
|||
Automotive |
342 |
381 |
723 |
||||||
Chemicals |
664 |
703 |
1,367 |
||||||
Energy |
952 |
950 |
1,902 |
||||||
Industrial Products |
690 |
803 |
1,493 |
||||||
Intermodal |
793 |
909 |
1,702 |
||||||
Total |
$ |
4,248 |
$ |
4,595 |
$ |
8,843 |
|||
Revenue Carloads (Thousands) |
|||||||||
Agricultural |
238 |
237 |
475 |
||||||
Automotive |
157 |
165 |
322 |
||||||
Chemicals |
223 |
233 |
456 |
||||||
Energy |
538 |
496 |
1,034 |
||||||
Industrial Products |
263 |
297 |
560 |
||||||
Intermodal |
770 |
819 |
1,589 |
||||||
Total |
2,189 |
2,247 |
4,436 |
||||||
Average Revenue per Car |
|||||||||
Agricultural |
$ |
3,386 |
$ |
3,580 |
$ |
3,483 |
|||
Automotive |
2,175 |
2,321 |
2,250 |
||||||
Chemicals |
2,974 |
3,024 |
3,000 |
||||||
Energy |
1,770 |
1,916 |
1,840 |
||||||
Industrial Products |
2,628 |
2,697 |
2,665 |
||||||
Intermodal |
1,031 |
1,108 |
1,071 |
||||||
Average |
$ |
1,941 |
$ |
2,045 |
$ |
1,993 |
|||
UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES |
||||||
Non-GAAP Measures Reconciliation to GAAP |
||||||
Debt to Capital* |
||||||
Jun. 30, |
Dec. 31, |
|||||
Millions, Except Percentages |
2011 |
2010 |
||||
Debt (a) |
$ |
8,938 |
$ |
9,242 |
||
Equity |
18,306 |
17,763 |
||||
Capital (b) |
$ |
27,244 |
$ |
27,005 |
||
Debt to capital (a/b) |
32.8% |
34.2% |
||||
* |
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* |
||||||
Jun. 30, |
Dec. 31, |
|||||
Millions, Except Percentages |
2011 |
2010 |
||||
Debt |
8,938 |
9,242 |
||||
Net present value of operating leases |
3,325 |
3,476 |
||||
Unfunded pension and OPEB |
421 |
421 |
||||
Adjusted debt (a) |
$ |
12,684 |
$ |
13,139 |
||
Equity |
18,306 |
17,763 |
||||
Adjusted capital (b) |
$ |
30,990 |
$ |
30,902 |
||
Adjusted debt to capital (a/b) |
40.9% |
42.5% |
||||
* |
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 6.3% at June 30, 2011 and 6.2% at December 31, 2010. The higher 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
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