Union Pacific Reports Second Quarter 2021 Results

News provided by

Union Pacific Corporation

Jul 22, 2021, 08:00 ET

OMAHA, Neb., July 22, 2021 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2021 second quarter net income of $1.8 billion, or $2.72 per diluted share. This compares to $1.1 billion, or $1.67 per diluted share, in the second quarter 2020.

"The Union Pacific team leveraged volume growth, core pricing gains, and productivity to produce record quarterly results," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "Beyond our strong financial performance, we also made progress on our goal to reduce our carbon footprint, which includes a 3% improvement in our fuel consumption rate. Importantly, these strong results were achieved in a challenging environment as our rail network continues to be impacted by supply chain disruptions, particularly in the Intermodal space. As we move into the second half of 2021, we will continue working with our customers and the broader supply chain to increase fluidity and efficiently handle the strong demand for freight transportation."

Financial Results: Quarterly Records for Operating Ratio, Operating Income, Net Income, and Earnings Per Share
Second Quarter 2021 Compared to Second Quarter 2020

  • Operating revenue of $5.5 billion was up 30%.
  • Business volumes, as measured by total revenue carloads, increased 22%.
  • Union Pacific's 55.1% operating ratio improved 590 basis points. Higher fuel prices negatively impacted the operating ratio by 210 basis points.
  • Operating Income of $2.5 billion was up 50%.
  • The company repurchased 12.2 million shares in second quarter 2021 at an aggregate cost of $2.7 billion.

Operating Performance: Quarterly Records for Workforce Productivity and Train Length; Second Quarter Records for Locomotive Productivity and Fuel Consumption Rate
Second Quarter 2021 Compared to Second Quarter 2020

  • Quarterly freight car velocity was 213 daily miles per car, a 6% decline.
  • Quarterly locomotive productivity was 140 gross ton-miles per horsepower day, a 3% improvement.
  • Average maximum train length was 9,410 feet, a 9% increase.
  • Fuel consumption rate, measured in gallons of fuel per thousand gross ton-miles (GTMs), improved 3%.
  • Quarterly workforce productivity was 1,060 car miles per employee, a 22% improvement.
  • Union Pacific's first half reportable personal injury rate deteriorated to 0.95 per 200,000 employee-hours compared to 0.83 for first half 2020.

Second Quarter 2021 Earnings Conference Call

Union Pacific will webcast its second quarter 2021 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, July 22, 2021, at 8:45 a.m. Eastern Time. Participants may join the conference call by dialing 877-407-8293 (or for international participants, 201-689-8349).

ABOUT UNION PACIFIC

Union Pacific (NYSE: UNP) delivers the goods families and businesses use every day with safe, reliable and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com.

Supplemental financial information is attached.

This news release and related materials contain statements about the Company's future that are not statements of historical fact, including specifically the statements regarding the Company's expectations with respect to economic conditions and demand levels, its ability to improve network performance, its results of operations, and potential impacts of the COVID-19 pandemic. These statements are, or will be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of 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 Company'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 Company'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 Company'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 Company's Annual Report on Form 10-K for 2020, which was filed with the SEC on February 5, 2021. The Company 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 Company 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 Company does update one or more forward-looking statements, no inference should be drawn that the Company 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, For the Periods Ended June 30,

2nd Quarter


Year-to-Date

2021

2020

%



2021

2020

%


 Operating Revenues














      Freight revenues

$

5,132

$

3,972

29 

%


$

9,781

$

8,852

10   

%

      Other


372


272

37




724


621

17


 Total operating revenues


5,504


4,244

30




10,505


9,473

11


 Operating Expenses














      Compensation and benefits


1,022


905

13




2,048


1,964

4


      Depreciation


550


551

-




1,099


1,098

-


      Purchased services and materials


478


441

8




968


962

1


      Fuel


497


247

U 




908


681

33


      Equipment and other rents


200


211

(5)




412


438

(6)


      Other


284


235

21




604


533

13


 Total operating expenses


3,031


2,590

17




6,039


5,676

6


 Operating Income


2,473


1,654

50




4,466


3,797

18


      Other income, net


125


131

(5)




176


184

(4)


      Interest expense


(282)


(289)

(2)




(572)


(567)

1


 Income before income taxes


2,316


1,496

55




4,070


3,414

19


 Income taxes


(518)


(364)

42




(931)


(808)

15


 Net Income

$

1,798

$

1,132

59   

%


$

3,139

$

2,606

20   

%















 Share and Per Share














      Earnings per share - basic

$

2.73

$

1.67

63   

%


$

4.73

$

3.83

23   

%

      Earnings per share - diluted

$

2.72

$

1.67

63



$

4.72

$

3.82

24


      Weighted average number of shares - basic


658.5


677.7

(3)




663.1


681.0

(3)


      Weighted average number of shares - diluted


660.1


679.2

(3)




664.7


682.7

(3)


      Dividends declared per share

$

1.07

$

0.97

10



$

2.04

$

1.94

5
















 Operating Ratio


55.1%


61.0%

(5.9)

pts



57.5%


59.9%

(2.4)

pts

 Effective Tax Rate


22.4%


24.3%

(1.9)

pts



22.9%


23.7%

(0.8)

pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

















2nd Quarter


Year-to-Date

 For the Periods Ended June 30,

2021

2020

%



2021

2020

%


 Freight Revenues (Millions)














      Grain & grain products

$

795

$

644

23

%


$

1,561

$

1,333

17

%

      Fertilizer


179


168

7




349


342

2


      Food & refrigerated


251


205

22




486


455

7


      Coal & renewables


423


369

15




764


790

(3)


    Bulk


1,648


1,386

19




3,160


2,920

8


      Industrial chemicals & plastics


498


435

14




933


930

-


      Metals & minerals


467


368

27




842


837

1


      Forest products


348


266

31




664


569

17


      Energy & specialized markets


546


431

27




1,076


1,058

2


    Industrial


1,859


1,500

24




3,515


3,394

4


      Automotive


428


189

F




875


713

23


      Intermodal


1,197


897

33




2,231


1,825

22


    Premium


1,625


1,086

50




3,106


2,538

22


 Total

$

5,132

$

3,972

29

%


$

9,781

$

8,852

10

%

 Revenue Carloads (Thousands)














      Grain & grain products


204


167

22

%



407


342

19

%

      Fertilizer


54


53

2




98


99

(1)


      Food & refrigerated


48


41

17




93


89

4


      Coal & renewables


198


186

6




372


394

(6)


    Bulk


504


447

13




970


924

5


      Industrial chemicals & plastics


156


141

11




296


295

-


      Metals & minerals


182


162

12




328


336

(2)


      Forest products


64


50

28




124


106

17


      Energy & specialized markets


138


115

20




277


277

-


    Industrial


540


468

15




1,025


1,014

1


      Automotive


173


79

F




353


287

23


      Intermodal [a]


878


724

21




1,674


1,433

17


    Premium


1,051


803

31




2,027


1,720

18


 Total


2,095


1,718

22

%



4,022


3,658

10

%

 Average Revenue per Car














      Grain & grain products

$

3,894

$

3,861

1

%


$

3,838

$

3,901

(2)

%

      Fertilizer


3,304


3,181

4




3,550


3,456

3


      Food & refrigerated


5,226


4,986

5




5,230


5,142

2


      Coal & renewables


2,134


1,979

8




2,051


2,001

2


    Bulk


3,266


3,099

5




3,256


3,161

3


      Industrial chemicals & plastics


3,189


3,086

3




3,153


3,148

-


      Metals & minerals


2,569


2,276

13




2,567


2,494

3


      Forest products


5,463


5,256

4




5,357


5,361

-


      Energy & specialized markets


3,944


3,739

5




3,886


3,813

2


    Industrial


3,442


3,201

8




3,430


3,345

3


      Automotive


2,479


2,388

4




2,482


2,487

-


      Intermodal [a]


1,363


1,241

10




1,332


1,274

5


    Premium


1,547


1,354

14




1,532


1,476

4


 Average 

$

2,449

$

2,312

6

%


$

2,432

$

2,420

-

%



[a]

For intermodal shipments each container or trailer equals one carload.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)







Jun. 30,

Dec. 31,

 Millions, Except Percentages

2021

2020

 Assets





      Cash and cash equivalents

$

1,115

$

1,799

      Short-term investments


46


60

      Other current assets


2,603


2,355

      Investments


2,277


2,164

      Properties, net


54,148


54,161

      Operating lease assets


1,635


1,610

      Other assets


249


249

 Total assets

$

62,073

$

62,398






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

1,110

$

1,069

      Other current liabilities


3,247


3,104

      Debt due after one year


27,702


25,660

      Operating lease liabilities


1,256


1,283

      Deferred income taxes


12,389


12,247

      Other long-term liabilities


2,066


2,077

 Total liabilities


47,770


45,440

 Total common shareholders' equity


14,303


16,958

 Total liabilities and common shareholders' equity

$

62,073

$

62,398

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)






 Millions,

Year-to-Date

 For the Periods Ended June 30,

2021

2020

 Operating Activities





      Net income

$

3,139

$

2,606

      Depreciation


1,099


1,098

      Deferred income taxes


128


171

      Other - net


(147)


517

 Cash provided by operating activities


4,219


4,392

 Investing Activities





      Capital investments


(1,190)


(1,599)

      Maturities of short-term investments


48


75

      Purchases of short-term investments


(24)


(75)

      Other - net


95


182

 Cash used in investing activities


(1,071)


(1,417)

 Financing Activities





      Share repurchase programs


(4,085)


(2,556)

      Debt issued


2,896


4,004

      Dividends paid


(1,350)


(1,319)

      Debt repaid


(691)


(770)

      Accelerated share repurchase programs pending final settlement


(400)


(400)

      Debt Exchange


(268)


-

      Net issuance of commercial paper


125


(1)

      Other - net


(34)


(65)

 Cash used in financing activities


(3,807)


(1,107)

 Net Change in Cash, Cash Equivalents and Restricted Cash


(659)


1,868

 Cash, cash equivalents, and restricted cash at beginning of year


1,818


856

 Cash, Cash Equivalents, and Restricted Cash at End of Period

$

1,159

$

2,724

 Free Cash Flow*





      Cash provided by operating activities

$

4,219

$

4,392

      Cash used in investing activities


(1,071)


(1,417)

      Dividends paid


(1,350)


(1,319)

 Free cash flow

$

1,798

$

1,656



*

Free cash flow is a non-GAAP measure; however, we believe this measure is important to management and investors 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)














2nd Quarter


Year-to-Date

 For the Periods Ended June 30,

2021


2020

%



2021


2020

%


 Operating/Performance Statistics 












      Freight car velocity (daily miles per car) [a]

213


227

(6)

%


211


218

(3)

%

      Average train speed (miles per hour) *

25.0


26.9

(7)



25.1


26.0

(3)


      Average terminal dwell time (hours) *

22.9


21.6

6



23.2


22.8

2


      Locomotive productivity (GTMs per horsepower day)

140


136

3



139


133

5


      Gross ton-miles (GTMs) (millions)

207,803


170,626

22



400,890


371,923

8


      Train length (feet)

9,410


8,664

9



9,330


8,517

10


      Intermodal car trip plan compliance (%)

71


82

(11)

pts


74


83

(9)

pts

      Manifest/Automotive car trip plan compliance (%)

67


76

(9)

pts


68


69

(1)

pts

      Workforce productivity (car miles per employee)

1,060


868

22



1,031


882

17


      Total employees (average)

30,066


30,059

-



29,910


31,965

(6)














 Locomotive Fuel Statistics












      Average fuel price per gallon consumed

$ 2.16


$ 1.26

71

%


$ 2.01


$ 1.59

26

%

      Fuel consumed in gallons (millions)

223


189

18



439


414

6


      Fuel consumption rate**

1.072


1.107

(3)



1.095


1.112

(2)














 Revenue Ton-Miles (Millions)












      Grain & grain products

20,190


16,242

24

%


40,538


32,353

25

%

      Fertilizer

3,169


3,116

2



6,164


6,160

-


      Food & refrigerated

4,641


3,752

24



9,139


8,258

11


      Coal & renewables

20,716


18,188

14



38,252


38,193

-


    Bulk

48,716


41,298

18



94,093


84,964

11


      Industrial chemicals & plastics

7,990


6,286

27



15,045


13,460

12


      Metals & minerals

8,584


6,402

34



15,460


14,935

4


      Forest products

6,706


5,398

24



13,024


11,439

14


      Energy & specialized markets

9,112


7,276

25



18,702


19,322

(3)


    Industrial

32,392


25,362

28



62,231


59,156

5


      Automotive

3,769


1,740

F



7,542


6,229

21


      Intermodal

19,878


17,514

13



38,253


35,248

9


    Premium

23,647


19,254

23



45,795


41,477

10


 Total

104,755


85,914

22

%


202,119


185,597

9

%















[a]

Prior years have been realigned to conform to the current year presentation.



*

Surface Transportation Board reported performance measures. 



**

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)









2021

 Millions, Except Per Share Amounts and Percentages,

1st Qtr

2nd Qtr

Year-to-Date

 Operating Revenues







      Freight revenues

$

4,649

$

5,132

$

9,781

      Other revenues


352


372


724

 Total operating revenues


5,001


5,504


10,505

 Operating Expenses







      Compensation and benefits


1,026


1,022


2,048

      Depreciation


549


550


1,099

      Purchased services and materials


490


478


968

      Fuel


411


497


908

      Equipment and other rents


212


200


412

      Other


320


284


604

 Total operating expenses


3,008


3,031


6,039

 Operating Income


1,993


2,473


4,466

      Other income, net


51


125


176

      Interest expense


(290)


(282)


(572)

 Income before income taxes


1,754


2,316


4,070

 Income taxes


(413)


(518)


(931)

 Net Income

$

1,341

$

1,798

$

3,139








 Share and Per Share







      Earnings per share - basic

$

2.01

$

2.73

$

4.73

      Earnings per share - diluted

$

2.00

$

2.72

$

4.72

      Weighted average number of shares - basic


667.6


658.5


663.1

      Weighted average number of shares - diluted


669.2


660.1


664.7

      Dividends declared per share

$

0.97

$

1.07

$

2.04








 Operating Ratio


60.1%


55.1%


57.5%

 Effective Tax Rate


23.5%


22.4%


22.9%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)









2021


1st Qtr 

2nd Qtr 

Year-to-Date

 Freight Revenues (Millions)







      Grain & grain products

$

766

$

795

$

1,561

      Fertilizer


170


179


349

      Food & refrigerated


235


251


486

      Coal & renewables


341


423


764

    Bulk


1,512


1,648


3,160

      Industrial chemicals & plastics


435


498


933

      Metals & minerals


375


467


842

      Forest products


316


348


664

      Energy & specialized markets


530


546


1,076

    Industrial


1,656


1,859


3,515

      Automotive


447


428


875

      Intermodal


1,034


1,197


2,231

    Premium


1,481


1,625


3,106

 Total

$

4,649

$

5,132

$

9,781

 Revenue Carloads (Thousands)







      Grain & grain products


203


204


407

      Fertilizer


44


54


98

      Food & refrigerated


45


48


93

      Coal & renewables


174


198


372

    Bulk


466


504


970

      Industrial chemicals & plastics


140


156


296

      Metals & minerals


146


182


328

      Forest products


60


64


124

      Energy & specialized markets


139


138


277

    Industrial


485


540


1,025

      Automotive


180


173


353

      Intermodal [a]


796


878


1,674

    Premium


976


1,051


2,027

 Total


1,927


2,095


4,022

 Average Revenue per Car







      Grain & grain products

$

3,782

$

3,894

$

3,838

      Fertilizer


3,852


3,304


3,550

      Food & refrigerated


5,234


5,226


5,230

      Coal & renewables


1,958


2,134


2,051

    Bulk


3,246


3,266


3,256

      Industrial chemicals & plastics


3,113


3,189


3,153

      Metals & minerals


2,563


2,569


2,567

      Forest products


5,244


5,463


5,357

      Energy & specialized markets


3,828


3,944


3,886

    Industrial


3,417


3,442


3,430

      Automotive


2,485


2,479


2,482

      Intermodal [a]


1,299


1,363


1,332

    Premium


1,517


1,547


1,532

 Average 

$

2,413

$

2,449

$

2,432



[a]

For intermodal shipments each container or trailer equals one carload.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP


 Adjusted Debt / Adjusted EBITDA*





Millions, Except Ratios

Jun. 30,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2021

2020

 Net income

$

5,882

$

5,349

 Add:





 Income tax expense


1,754


1,631

 Depreciation


2,211


2,210

 Interest expense


1,146


1,141

 EBITDA

$

10,993

$

10,331

 Adjustments:





 Other income, net


(279)


(287)

 Interest on operating lease liabilities**


53


59

 Adjusted EBITDA

$

10,767

$

10,103

 Debt

$

28,812

$

26,729

 Operating lease liabilities


1,553


1,604

 Unfunded pension and OPEB, net of taxes of $180 and $195


607


637

 Adjusted debt

$

30,972

$

28,970

 Adjusted debt / Adjusted EBITDA


2.9


2.9






Comparable Adjusted Debt / Adjusted EBITDA*






Jun. 30,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2021

2020

 Adjusted debt / Adjusted EBITDA


2.9


2.9

 Factors Affecting Comparability:





Brazos yard impairment [b]


(0.1)


(0.1)

 Comparable Adjusted Debt / Adjusted EBITDA*

2.8

2.8



[a]

The trailing twelve months income statement information ended June 30, 2021, is recalculated by taking the twelve months ended December 31, 2020, subtracting the six months ended June 30, 2020, and adding the six months ended June 30, 2021.

[b]

Adjustments remove the impact of $209 million from net income and $69 million from income tax expense for the year ended December 31, 2020. See page 9 for a reconciliation to GAAP.



*

Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB obligation divided by net income plus income tax expense, depreciation, amortization, interest expense, and adjustments for other income and interest on operating lease liabilities. Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on operating lease liabilities) and comparable adjusted debt to adjusted EBITDA are considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe these measures are important to management and investors in evaluating the Company's ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company's credit rating. Adjusted debt to adjusted EBITDA and comparable adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income. The table above provides reconciliations from net income to adjusted debt to adjusted EBITDA and comparable adjusted debt to adjusted EBITDA. At June 30, 2021, and December 31, 2020, the incremental borrowing rate on operating lease liabilities was 3.4% and 3.7%, respectively.



**

Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP


Financial Performance*










 Millions, Except Per Share Amounts and Percentages

Reported results

Brazos Yard

Adjusted results


(GAAP)

Impairment 

(non-GAAP)

 For the Year Ended December 31, 2020










 Income taxes

$

1,631


$

69


$

1,700


 Net income

$

5,349


$

209


$

5,558




*

The above table reconciles our results for the year ended December 31, 2020, to adjusted results that exclude the impact of certain items identified as affecting comparability. We use adjusted income taxes and adjusted net income, as applicable, among other measures, to evaluate our actual operating performance. We believe these non-GAAP financial measures provide valuable information regarding earnings and business trends by excluding specific items that we believe are not indicative of our ongoing operating results of our business, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry. Since these are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, income taxes and net income.

SOURCE Union Pacific Corporation