Union Pacific Reports Second Quarter 2022 Results

News provided by

Union Pacific Corporation

Jul 21, 2022, 07:45 ET

  • Earnings per diluted share of $2.93
  • Operating revenue up 14%
  • Operating income up 1%

OMAHA, Neb., July 21, 2022 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2022 second quarter net income of $1.8 billion, or $2.93 per diluted share. This compares to 2021 second quarter net income of $1.8 billion, or $2.72 per diluted share.

"As anticipated, the Second Quarter was a tough one as we limited carloadings and increased expenses to recover network fluidity," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "We also experienced record high fuel prices and increasing inflation, adding pressure to our total costs. Offsetting the cost pressures were higher fuel surcharge revenue, solid core pricing, a positive mix, and continued train size initiatives. The result was operating revenue and income growth. Our network fluidity improved through the quarter, and we are positioned to grow volumes in the back half of 2022 while continuing to improve our service product."

Financial Results: Topline Growth Produces Quarterly Records for Operating Revenue, Operating Income, Net Income, and Earnings Per Share
Second Quarter 2022 Compared to Second Quarter 2021

  • Operating revenue of $6.3 billion was up 14% driven by higher fuel surcharge revenue, core pricing gains, and a positive business mix, offset slightly by volume declines.
  • Business volumes, as measured by total revenue carloads, were down 1%.
  • Union Pacific's 60.2% operating ratio deteriorated by 510 basis points. Higher fuel prices negatively impacted the operating ratio 130 basis points.
  • Operating income of $2.5 billion was up 1%.
  • The company repurchased 3.1 million shares in second quarter 2022 at an aggregate cost of $722 million.

Operating Performance: Service and Efficiency Measures Lag as Network Recovery Continues
Second Quarter 2022 Compared to Second Quarter 2021

  • Quarterly freight car velocity of 187 daily miles per car, a 12% decline.
  • Quarterly locomotive productivity was 123 gross ton-miles (GTMs) per horsepower day, a 12% decline.
  • Average maximum train length was flat at 9,439 feet.
  • Quarterly workforce productivity was 1,034 car miles per employee, a 2% decline.
  • Fuel consumption rate of 1.076, measured in gallons of fuel per thousand GTMs, was flat.
  • Union Pacific's first half reportable personal injury rate improved to 0.93 per 200,000 employee-hours compared to 0.95 for first half 2021.

2022 Guidance: First Half 2022 Results Challenge Previous Full Year Volume and Operating Ratio Targets

Updated

  • Stronger second half volumes should produce full year carload growth of 4% to 5%
  • Full year operating ratio around 58%
  • Second half operating ratio improvement vs. 2021
  • Second half incremental margins around 50%

Affirmed

  • Pricing gains in excess of inflation dollars
  • Capital spending of $3.3 billion
  • Long term dividend payout target of 45% of earnings
  • Share repurchases in line with 2021

Second Quarter 2022 Earnings Conference Call

Union Pacific will webcast its second quarter 2022 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, July 21, 2022, 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 (including those in response to increased traffic), its results of operations, and potential impacts of the COVID-19 pandemic and the Russian-Ukraine conflict. 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 2021, which was filed with the SEC on February 4, 2022. 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

2nd Quarter

Year-to-Date

Percentages, For the Periods Ended June 30,

2022

2021

%

2022

2021

%

Operating Revenues























Freight revenues

$

5,842

$

5,132


14

%

$

11,282

$

9,781


15

%

Other revenues

427


372


15


847


724


17

Total operating revenues

6,269


5,504


14


12,129


10,505


15

Operating Expenses























Compensation and benefits

1,092


1,022


7


2,193


2,048


7

Fuel

940


497


89


1,654


908


82

Purchased services and materials

622


478


30


1,183


968


22

Depreciation

559


550


2


1,114


1,099


1

Equipment and other rents

230


200


15


445


412


8

Other

331


284


17


668


604


11

Total operating expenses

3,774


3,031


25


7,257


6,039


20

Operating Income

2,495


2,473


1


4,872


4,466


9

Other income, net

163


125


30


210


176


19

Interest expense

(316)


(282)


12


(623)


(572)


9

Income before income taxes

2,342


2,316


1


4,459


4,070


10

Income taxes

(507)


(518)


(2)


(994)


(931)


7

Net Income

$

1,835

$

1,798


2

%

$

3,465

$

3,139


10

%

























Share and Per Share























Earnings per share - basic

$

2.93

$

2.73


7

%

$

5.51

$

4.73


16

%

Earnings per share - diluted

$

2.93

$

2.72


8

$

5.50

$

4.72


17

Weighted average number of shares - basic

625.6


658.5


(5)


628.9


663.1


(5)

Weighted average number of shares - diluted

626.8


660.1


(5)


630.2


664.7


(5)

Dividends declared per share

$

1.30

$

1.07


21

$

2.48

$

2.04


22

























Operating Ratio

60.2

%

55.1

%

5.1

pts

59.8

%

57.5

%

2.3

pts

Effective Tax Rate

21.6

%

22.4

%

(0.8)

pts

22.3

%

22.9

%

(0.6)

pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)



2nd Quarter

Year-to-Date

For the Periods Ended June 30,

2022

2021

%

2022

2021

%

Freight Revenues (Millions)























Grain & grain products

$

867

$

795


9

%

$

1,744

$

1,561


12

%

Fertilizer

183


179


2


363


349


4

Food & refrigerated

271


251


8


538


486


11

Coal & renewables

492


423


16


1,000


764


31

Bulk

1,813


1,648


10


3,645


3,160


15

Industrial chemicals & plastics

557


498


12


1,077


933


15

Metals & minerals

562


467


20


1,047


842


24

Forest products

386


348


11


750


664


13

Energy & specialized markets

586


546


7


1,138


1,076


6

Industrial

2,091


1,859


12


4,012


3,515


14

Automotive

561


428


31


1,062


875


21

Intermodal

1,377


1,197


15


2,563


2,231


15

Premium

1,938


1,625


19


3,625


3,106


17

Total

$

5,842

$

5,132


14

%

$

11,282


9,781


15

%

Revenue Carloads (Thousands)























Grain & grain products

195


204


(4)

%

400


407


(2)

%

Fertilizer

53


54


(2)


98


98


-

Food & refrigerated

48


48


-


95


93


2

Coal & renewables

202


198


2


427


372


15

Bulk

498


504


(1)


1,020


970


5

Industrial chemicals & plastics

161


156


3


321


296


8

Metals & minerals

205


182


13


387


328


18

Forest products

63


64


(2)


127


124


2

Energy & specialized markets

141


138


2


272


277


(2)

Industrial

570


540


6


1,107


1,025


8

Automotive

192


173


11


382


353


8

Intermodal [a]

805


878


(8)


1,562


1,674


(7)

Premium

997


1,051


(5)


1,944


2,027


(4)

Total

2,065


2,095


(1)

%

4,071


4,022


1

%

Average Revenue per Car























Grain & grain products

$

4,451

$

3,894


14

%

$

4,357

$

3,838


14

%

Fertilizer

3,437


3,304


4


3,701


3,550


4

Food & refrigerated

5,770


5,226


10


5,703


5,230


9

Coal & renewables

2,426


2,134


14


2,340


2,051


14

Bulk

3,642


3,266


12


3,574


3,256


10

Industrial chemicals & plastics

3,455


3,189


8


3,351


3,153


6

Metals & minerals

2,755


2,569


7


2,710


2,567


6

Forest products

6,128


5,463


12


5,898


5,357


10

Energy & specialized markets

4,161


3,944


6


4,189


3,886


8

Industrial

3,674


3,442


7


3,626


3,430


6

Automotive

2,919


2,479


18


2,780


2,482


12

Intermodal [a]

1,711


1,363


26


1,641


1,332


23

Premium

1,943


1,547


26


1,864


1,532


22

Average

$

2,830

$

2,449


16

%

$

2,771

$

2,432


14

%


[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

2022

2021

Assets







Cash and cash equivalents

$

788

$

960

Short-term investments

46


46

Other current assets

3,142


2,545

Investments

2,287


2,241

Properties, net

55,315


54,871

Operating lease assets

1,706


1,787

Other assets

1,156


1,075

Total assets

$

64,440

$

63,525









Liabilities and Common Shareholders' Equity







Debt due within one year

$

2,334

$

2,166

Other current liabilities

3,668


3,578

Debt due after one year

29,673


27,563

Operating lease liabilities

1,295


1,429

Deferred income taxes

12,777


12,675

Other long-term liabilities

1,983


1,953

Total liabilities

51,730


49,364

Total common shareholders' equity

12,710


14,161

Total liabilities and common shareholders' equity

$

64,440

$

63,525

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Cash Flows (unaudited)

Millions,

Year-to-Date

for the Periods Ended June 30,

2022

2021

Operating Activities







Net income

$

3,465

$

3,139

Depreciation

1,114


1,099

Deferred income taxes

93


128

Other - net

(505)


(147)

Cash provided by operating activities

4,167


4,219

Investing Activities







Capital investments*

(1,645)


(1,190)

Maturities of short-term investments

-


48

Purchases of short-term investments

-


(24)

Other - net

105


95

Cash used in investing activities

(1,540)


(1,071)

Financing Activities







Debt issued

4,090


2,896

Share repurchase programs

(3,473)


(4,085)

Debt repaid

(1,664)


(691)

Dividends paid

(1,556)


(1,350)

Net issued/(paid) of commercial paper

(151)


125

Accelerated share repurchase programs pending final settlement

-


(400)

Debt exchange

-


(268)

Other - net

(42)


(34)

Cash used in financing activities

(2,796)


(3,807)

Net Change in Cash, Cash Equivalents and Restricted Cash

(169)


(659)

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

983


1,818

Cash, cash equivalents, and restricted cash at end of period

$

814

$

1,159

Free Cash Flow**







Cash provided by operating activities

$

4,167

$

4,219

Cash used in investing activities

(1,540)


(1,071)

Dividends paid

(1,556)


(1,350)

Free cash flow

$

1,071

$

1,798


*

Capital investments include locomotive and freight car early lease buyouts of $46 million in 2022 and $23 million in 2021.

**

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,

2022

2021

%

2022

2021

%

Operating/Performance Statistics























Freight car velocity (daily miles per car)

187


213


(12)

%

192


211


(9)

%

Average train speed (miles per hour) *

23.6


25.0


(6)


23.9


25.1


(5)

Average terminal dwell time (hours) *

24.6


22.9


7


24.3


23.2


5

Locomotive productivity (GTMs per horsepower day)

123


140


(12)


126


139


(9)

Gross ton-miles (GTMs) (millions)

209,789


207,803


1


419,495


400,890


5

Train length (feet)

9,439


9,410


-


9,321


9,330


-

Intermodal car trip plan compliance (%)**

62


71


(9)

pts

67


74


(7)

pts

Manifest/Automotive car trip plan compliance (%)**

56


67


(11)

pts

59


68


(9)

pts

Workforce productivity (car miles per employee)

1,034


1,060


(2)


1,045


1,031


1

Total employees (average)

30,715


30,066


2


30,452


29,910


2

























Locomotive Fuel Statistics























Average fuel price per gallon consumed

$

4.03

$

2.16


87

%

$

3.48

$

2.01


73

%

Fuel consumed in gallons (millions)

226


223


1


460


439


5

Fuel consumption rate***

1.076


1.072


-


1.096


1.095


-

























Revenue Ton-Miles (Millions)























Grain & grain products

19,459


20,190


(4)

%

40,488


40,538


-

%

Fertilizer

3,115


3,169


(2)


6,266


6,164


2

Food & refrigerated

4,257


4,641


(8)


8,959


9,139


(2)

Coal & renewables

20,558


20,716


(1)


44,808


38,252


17

Bulk

47,389


48,716


(3)


100,521


94,093


7

Industrial chemicals & plastics

7,685


7,990


(4)


15,244


15,045


1

Metals & minerals

9,662


8,584


13


18,407


15,460


19

Forest products

6,694


6,706


-


13,319


13,024


2

Energy & specialized markets

9,105


9,112


-


18,171


18,702


(3)

Industrial

33,146


32,392


2


65,141


62,231


5

Automotive

4,140


3,769


10


8,287


7,542


10

Intermodal

18,710


19,878


(6)


36,628


38,253


(4)

Premium

22,850


23,647


(3)


44,915


45,795


(2)

Total

103,385


104,755


(1)

%

210,577


202,119


4

%


*

Surface Transportation Board (STB) reported performance measures.

**

Methodology used to report is not comparable with the reporting to the STB under docket number EP 770.

***

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)



2022

Millions, Except Per Share Amounts and Percentages,

1st Qtr

2nd Qtr

Year-to-Date

Operating Revenues











Freight revenues

$

5,440

$

5,842

$

11,282

Other revenues

420


427


847

Total operating revenues

5,860


6,269


12,129

Operating Expenses











Compensation and benefits

1,101


1,092


2,193

Fuel

714


940


1,654

Purchased services and materials

561


622


1,183

Depreciation

555


559


1,114

Equipment and other rents

215


230


445

Other

337


331


668

Total operating expenses

3,483


3,774


7,257

Operating Income

2,377


2,495


4,872

Other income, net

47


163


210

Interest expense

(307)


(316)


(623)

Income before income taxes

2,117


2,342


4,459

Income taxes

(487)


(507)


(994)

Net Income

$

1,630

$

1,835

$

3,465













Share and Per Share











Earnings per share - basic

$

2.58

$

2.93

$

5.51

Earnings per share - diluted

$

2.57

$

2.93

$

5.50

Weighted average number of shares - basic

632.2


625.6


628.9

Weighted average number of shares - diluted

633.6


626.8


630.2

Dividends declared per share

$

1.18

$

1.30

$

2.48













Operating Ratio

59.4

%

60.2

%

59.8

%

Effective Tax Rate

23.0

%

21.6

%

22.3

%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)



2022


1st Qtr

2nd Qtr

Year-to-Date

Freight Revenues (Millions)











Grain & grain products

$

877

$

867

$

1,744

Fertilizer

180


183


363

Food & refrigerated

267


271


538

Coal & renewables

508


492


1,000

Bulk

1,832


1,813


3,645

Industrial chemicals & plastics

520


557


1,077

Metals & minerals

485


562


1,047

Forest products

364


386


750

Energy & specialized markets

552


586


1,138

Industrial

1,921


2,091


4,012

Automotive

501


561


1,062

Intermodal

1,186


1,377


2,563

Premium

1,687


1,938


3,625

Total

$

5,440

$

5,842

$

11,282

Revenue Carloads (Thousands)











Grain & grain products

205


195


400

Fertilizer

45


53


98

Food & refrigerated

47


48


95

Coal & renewables

225


202


427

Bulk

522


498


1,020

Industrial chemicals & plastics

160


161


321

Metals & minerals

182


205


387

Forest products

64


63


127

Energy & specialized markets

131


141


272

Industrial

537


570


1,107

Automotive

190


192


382

Intermodal [a]

757


805


1,562

Premium

947


997


1,944

Total

2,006


2,065


4,071

Average Revenue per Car











Grain & grain products

$

4,269

$

4,451

$

4,357

Fertilizer

4,016


3,437


3,701

Food & refrigerated

5,637


5,770


5,703

Coal & renewables

2,262


2,426


2,340

Bulk

3,508


3,642


3,574

Industrial chemicals & plastics

3,247


3,455


3,351

Metals & minerals

2,660


2,755


2,710

Forest products

5,672


6,128


5,898

Energy & specialized markets

4,219


4,161


4,189

Industrial

3,574


3,674


3,626

Automotive

2,640


2,919


2,780

Intermodal [a]

1,566


1,711


1,641

Premium

1,782


1,943


1,864

Average

$

2,711

$

2,830

$

2,771


[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]

2022

2021

Net income

$

6,849

$

6,523

Add:






Income tax expense

2,018


1,955

Depreciation

2,223


2,208

Interest expense

1,208


1,157

EBITDA

$

12,298

$

11,843

Adjustments:






Other income, net

(331)


(297)

Interest on operating lease liabilities [b]

51


56

Adjusted EBITDA

$

12,018

$

11,602

Debt

$

32,007

$

29,729

Operating lease liabilities

1,609


1,759

Unfunded/(funded) pension and OPEB, net of tax cost/(benefit) of ($33) and ($21)

(113)


(72)

Adjusted debt

$

33,503

$

31,416

Adjusted debt / Adjusted EBITDA

2.8


2.7


[a]

The trailing twelve months income statement information ended June 30, 2022, is recalculated by taking the twelve
months ended December 31, 2021, subtracting the six months ended June 30, 2021, and adding the six months ended
June 30, 2022.

[b]

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.


*

Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other postretirement
benefit) obligations 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) is 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 this measure is 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 should be considered in addition to, rather than as a substitute for, net
income. The table above provides a reconciliation from net income to adjusted debt to adjusted EBITDA. At both
June 30, 2022, and December 31, 2021, the incremental borrowing rate on operating lease liabilities was 3.2%.

SOURCE Union Pacific Corporation

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