Union Pacific Reports Third Quarter 2021 Results

News provided by

Union Pacific Corporation

Oct 21, 2021, 08:00 ET

OMAHA, Neb., Oct. 21, 2021 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2021 third quarter net income of $1.7 billion, or $2.57 per diluted share. This compares to $1.4 billion, or $2.01 per diluted share, in the third quarter 2020.

"The Union Pacific team successfully navigated global supply chain disruptions, a major bridge outage, and additional weather events to produce strong quarterly revenue growth and financial results," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "In the quarter, the team delivered solid core pricing gains, leveraged business development to produce a positive business mix, and generated productivity to offset flat volume. We also set a quarterly record for fuel consumption rate as we continue to make strides towards our goal to reduce our absolute greenhouse gas emissions. As we close out 2021, we are committed to improving our safety performance and service product to support our customers and the broader supply chain to handle the strong demand for freight transportation."

Financial Results: Third Quarter Records for Operating Income, Operating Ratio, Net Income, and Earnings Per Share

Third Quarter 2021 Compared to Third Quarter 2020

  • Operating revenue of $5.6 billion was up 13%.
  • Business volumes, as measured by total revenue carloads, were flat.
  • Union Pacific's 56.3% operating ratio improved 240 basis points. Higher fuel prices negatively impacted the operating ratio by 140 basis points.
  • Operating Income of $2.4 billion was up 20%.
  • The company repurchased 8.6 million shares in third quarter 2021 at an aggregate cost of $1.8 billion.

Operating Performance: Quarterly Record for Fuel Consumption Rate; Third Quarter Record for Workforce Productivity
Third Quarter 2021 Compared to Third Quarter 2020

  • Network operations challenged by wildfires and other weather events, reflected in quarterly freight car velocity of 195 daily miles per car, a 13% decline.
  • Quarterly locomotive productivity was 127 gross ton-miles (GTMs) per horsepower day, an 8% decline.
  • Quarterly workforce productivity was 1,044 car miles per employee, a 5% improvement.
  • Average maximum train length was 9,359 feet, a 4% increase.
  • Fuel consumption rate, measured in gallons of fuel per thousand GTMs, improved 1%.
  • Union Pacific's year-to-date reportable personal injury rate deteriorated to 1.00 per 200,000 employee-hours compared to 0.90 for year-to-date 2020.

Third Quarter 2021 Earnings Conference Call

Union Pacific will webcast its third quarter 2021 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, October 21, 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,

3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2021

2020

%

2021

2020

%

 Operating Revenues












      Freight revenues

$

5,166

$

4,596

12 %


$

14,947

$

13,448

11 %

      Other


400


323

24



1,124


944

19

 Total operating revenues


5,566


4,919

13



16,071


14,392

12

 Operating Expenses













      Compensation and benefits


1,040


1,008

3



3,088


2,972

4

      Depreciation


553


555

-



1,652


1,653

-

      Purchased services and materials


510


508

-



1,478


1,470

1

      Fuel


544


301

81



1,452


982

48

      Equipment and other rents


217


217

-



629


655

(4)

      Other


270


299

(10)



874


832

5

 Total operating expenses


3,134


2,888

9



9,173


8,564

7

 Operating Income


2,432


2,031

20



6,898


5,828

18

      Other income, net


38


37

3



214


221

(3)

      Interest expense


(290)


(295)

(2)



(862)


(862)

-

 Income before income taxes


2,180


1,773

23



6,250


5,187

20

 Income taxes


(507)


(410)

24



(1,438)


(1,218)

18

 Net Income

$

1,673

$

1,363

23 %


$

4,812

$

3,969

21 %













 Share and Per Share












      Earnings per share - basic

$

2.58

$

2.02

28 %


$

7.31

$

5.85

25 %

      Earnings per share - diluted

$

2.57

$

2.01

28


$

7.29

$

5.83

25

      Weighted average number of shares - basic


648.7


675.0

(4)



658.3


679.0

(3)

      Weighted average number of shares - diluted


650.3


676.8

(4)



659.9


680.7

(3)

      Dividends declared per share

$

1.07

$

0.97

10


$

3.11

$

2.91

7













 Operating Ratio


56.3%


58.7%

(2.4) pts



57.1%


59.5%

(2.4) pts

 Effective Tax Rate


23.3%


23.1%

0.2 pts



23.0%


23.5%

(0.5) pts


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)


























3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2021

2020

%


2021

2020

%

 Freight Revenues (Millions)












      Grain & grain products

$

731

$

695

5 %


$

2,292

$

2,028

13 %

      Fertilizer


172


157

10



521


499

4

      Food & refrigerated


253


239

6



739


694

6

      Coal & renewables


531


387

37



1,295


1,177

10

    Bulk


1,687


1,478

14



4,847


4,398

10

      Industrial chemicals & plastics


503


454

11



1,436


1,384

4

      Metals & minerals


488


365

34



1,330


1,202

11

      Forest products


342


284

20



1,006


853

18

      Energy & specialized markets


578


464

25



1,654


1,522

9

    Industrial


1,911


1,567

22



5,426


4,961

9

      Automotive


417


481

(13)



1,292


1,194

8

      Intermodal


1,151


1,070

8



3,382


2,895

17

    Premium


1,568


1,551

1



4,674


4,089

14

 Total

$

5,166

$

4,596

12 %


$

14,947

$

13,448

11 %

 Revenue Carloads (Thousands)












      Grain & grain products


185


187

(1) %



592


529

12b %

      Fertilizer


55


50

10



153


149

3

      Food & refrigerated


48


48

-



141


137

3

      Coal & renewables


232


213

9



604


607

-

    Bulk


520


498

4



1,490


1,422

5

      Industrial chemicals & plastics


153


144

6



449


439

2

      Metals & minerals


188


156

21



516


492

5

      Forest products


63


55

15



187


161

16

      Energy & specialized markets


145


125

16



422


402

5

    Industrial


549


480

14



1,574


1,494

5

      Automotive


166


203

(18)



519


490

6

      Intermodal [a]


809


863

(6)



2,483


2,296

8

    Premium


975


1,066

(9)



3,002


2,786

8

 Total


2,044


2,044

- %



6,066


5,702

6 %

 Average Revenue per Car












      Grain & grain products

$

3,937

$

3,705

6 %


$

3,869

$

3,832

1 %

      Fertilizer


3,125


3,172

(1)



3,398


3,361

1

      Food & refrigerated


5,246


4,891

7



5,235


5,053

4

      Coal & renewables


2,298


1,820

26



2,146


1,938

11

    Bulk


3,244


2,964

9



3,252


3,092

5

      Industrial chemicals & plastics


3,277


3,154

4



3,195


3,150

1

      Metals & minerals


2,596


2,337

11



2,577


2,444

5

      Forest products


5,457


5,181

5



5,390


5,300

2

      Energy & specialized markets


3,996


3,742

7



3,924


3,791

4

    Industrial


3,482


3,271

6



3,448


3,321

4

      Automotive


2,500


2,368

6



2,488


2,438

2

      Intermodal [a]


1,424


1,238

15



1,362


1,261

8

    Premium


1,608


1,454

11



1,557


1,468

6

 Average 

$

2,528

$

2,248

12 %


$

2,464

$

2,359

4 %


[a]  For intermodal shipments each 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

2021

2020

 Assets





      Cash and cash equivalents

$

1,194

$

1,799

      Short-term investments


46


60

      Other current assets


2,570


2,355

      Investments


2,273


2,164

      Properties, net


54,362


54,161

      Operating lease assets


1,630


1,610

      Other assets


285


249

 Total assets

$

62,360

$

62,398






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

1,835

$

1,069

      Other current liabilities


3,276


3,104

      Debt due after one year


27,560


25,660

      Operating lease liabilities


1,262


1,283

      Deferred income taxes


12,500


12,247

      Other long-term liabilities


2,010


2,077

 Total liabilities


48,443


45,440

 Total common shareholders' equity


13,917


16,958

 Total liabilities and common shareholders' equity

$

62,360

$

62,398


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)











 Millions,

Year-to-Date

 For the Periods Ended September 30,

2021

2020

 Operating Activities





      Net income

$

4,812

$

3,969

      Depreciation


1,652


1,653

      Deferred income taxes


189


327

      Other - net


(150)


44

 Cash provided by operating activities


6,503


5,993

 Investing Activities





      Capital investments


(1,945)


(2,294)

      Maturities of short-term investments


64


106

      Purchases of short-term investments


(40)


(106)

      Other - net


129


213

 Cash used in investing activities


(1,792)


(2,081)

 Financing Activities





      Share repurchase programs


(5,846)


(2,956)

      Debt issued


3,901


4,004

      Dividends paid


(2,045)


(1,974)

      Debt repaid


(1,120)


(832)

      Debt Exchange


(270)


(327)

      Net issuance of commercial paper


125


(2)

      Other - net


(36)


(63)

 Cash used in financing activities


(5,291)


(2,150)

 Net Change in Cash, Cash Equivalents and Restricted Cash


(580)


1,762

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


1,818


856

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

$

1,238

$

2,618

 Free Cash Flow*





      Cash provided by operating activities

$

6,503

$

5,993

      Cash used in investing activities


(1,792)


(2,081)

      Dividends paid


(2,045)


(1,974)

 Free cash flow

$

2,666

$

1,938


* 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)
























3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2021


2020

%


2021


2020

%

 Operating/Performance Statistics 










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

195


223

(13)%


205


220

(7)%

      Average train speed (miles per hour) *

24.2


25.3

(4)


24.8


25.8

(4)

      Average terminal dwell time (hours) *

24.0


22.8

5


23.5


22.8

3

      Locomotive productivity (GTMs per horsepower day)

127


138

(8)


135


135

-

      Gross ton-miles (GTMs) (millions)

207,059


196,998

5


607,949


568,921

7

      Train length (feet)

9,359


8,984

4


9,340


8,676

8

      Intermodal car trip plan compliance (%)

66


77

(11)pts


72


81

(9)pts

      Manifest/Automotive car trip plan compliance (%)

60


72

(12)pts


65


70

(5)pts

      Workforce productivity (car miles per employee)

1,044


998

5


1,036


920

13

      Total employees (average)

29,810


30,155

(1)


29,877


31,362

(5)











 Locomotive Fuel Statistics










      Average fuel price per gallon consumed

$ 2.37


$ 1.36

74%


$ 2.13


$ 1.51

41%

      Fuel consumed in gallons (millions)

221


213

4


660


627

5

      Fuel consumption rate**

1.068


1.084

(1)


1.085


1.103

(2)











 Revenue Ton-Miles (Millions)










      Grain & grain products

17,326


18,035

(4)%


57,864


50,388

15%

      Fertilizer

3,038


2,932

4


9,202


9,092

1

      Food & refrigerated

4,685


4,614

2


13,824


12,872

7

      Coal & renewables

24,539


20,374

20


62,791


58,567

7

    Bulk

49,588


45,955

8


143,681


130,919

10

      Industrial chemicals & plastics

7,746


7,170

8


22,791


20,630

10

      Metals & minerals

8,922


6,536

37


24,382


21,471

14

      Forest products

6,381


5,882

8


19,405


17,321

12

      Energy & specialized markets

9,780


8,005

22


28,482


27,327

4

    Industrial

32,829


27,593

19


95,060


86,749

10

      Automotive

3,507


4,269

(18)


11,049


10,498

5

      Intermodal

18,390


20,096

(8)


56,643


55,344

2

    Premium

21,897


24,365

(10)


67,692


65,842

3

 Total

104,314


97,913

7%


306,433


283,510

8%











[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 

3rd Qtr 

Year-to-Date

 Operating Revenues









      Freight revenues

$

4,649

$

5,132

$

5,166

$

14,947

      Other revenues


352


372


400


1,124

 Total operating revenues


5,001


5,504


5,566


16,071

 Operating Expenses









      Compensation and benefits


1,026


1,022


1,040


3,088

      Depreciation


549


550


553


1,652

      Purchased services and materials


490


478


510


1,478

      Fuel


411


497


544


1,452

      Equipment and other rents


212


200


217


629

      Other


320


284


270


874

 Total operating expenses


3,008


3,031


3,134


9,173

 Operating Income


1,993


2,473


2,432


6,898

      Other income, net


51


125


38


214

      Interest expense


(290)


(282)


(290)


(862)

 Income before income taxes


1,754


2,316


2,180


6,250

 Income taxes


(413)


(518)


(507)


(1,438)

 Net Income

$

1,341

$

1,798

$

1,673

$

4,812










 Share and Per Share









      Earnings per share - basic

$

2.01

$

2.73

$

2.58

$

7.31

      Earnings per share - diluted

$

2.00

$

2.72

$

2.57

$

7.29

      Weighted average number of shares - basic


667.6


658.5


648.7


658.3

      Weighted average number of shares - diluted


669.2


660.1


650.3


659.9

      Dividends declared per share

$

0.97

$

1.07

$

1.07

$

3.11










 Operating Ratio


60.1%


55.1%


56.3%


57.1%

 Effective Tax Rate


23.5%


22.4%


23.3%


23.0%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)




















2021


1st Qtr 

2nd Qtr 

3rd Qtr 

Year-to-Date

 Freight Revenues (Millions)









      Grain & grain products

$

766

$

795

$

731

$

2,292

      Fertilizer


170


179


172


521

      Food & refrigerated


235


251


253


739

      Coal & renewables


341


423


531


1,295

    Bulk


1,512


1,648


1,687


4,847

      Industrial chemicals & plastics


435


498


503


1,436

      Metals & minerals


375


467


488


1,330

      Forest products


316


348


342


1,006

      Energy & specialized markets


530


546


578


1,654

    Industrial


1,656


1,859


1,911


5,426

      Automotive


447


428


417


1,292

      Intermodal


1,034


1,197


1,151


3,382

    Premium


1,481


1,625


1,568


4,674

 Total

$

4,649

$

5,132

$

5,166

$

14,947

 Revenue Carloads (Thousands)









      Grain & grain products


203


204


185


592

      Fertilizer


44


54


55


153

      Food & refrigerated


45


48


48


141

      Coal & renewables


174


198


232


604

    Bulk


466


504


520


1,490

      Industrial chemicals & plastics


140


156


153


449

      Metals & minerals


146


182


188


516

      Forest products


60


64


63


187

      Energy & specialized markets


139


138


145


422

    Industrial


485


540


549


1,574

      Automotive


180


173


166


519

      Intermodal [a]


796


878


809


2,483

    Premium


976


1,051


975


3,002

 Total


1,927


2,095


2,044


6,066

 Average Revenue per Car









      Grain & grain products

$

3,782

$

3,894

$

3,937

$

3,869

      Fertilizer


3,852


3,304


3,125


3,398

      Food & refrigerated


5,234


5,226


5,246


5,235

      Coal & renewables


1,958


2,134


2,298


2,146

    Bulk


3,246


3,266


3,244


3,252

      Industrial chemicals & plastics


3,113


3,189


3,277


3,195

      Metals & minerals


2,563


2,569


2,596


2,577

      Forest products


5,244


5,463


5,457


5,390

      Energy & specialized markets


3,828


3,944


3,996


3,924

    Industrial


3,417


3,442


3,482


3,448

      Automotive


2,485


2,479


2,500


2,488

      Intermodal [a]


1,299


1,363


1,424


1,362

    Premium


1,517


1,547


1,608


1,557

 Average 

$

2,413

$

2,449

$

2,528

$

2,464



[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

Sep. 30,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2021

2020

 Net income

$

6,192

$

5,349

 Add:





 Income tax expense


1,851


1,631

 Depreciation


2,209


2,210

 Interest expense


1,141


1,141

 EBITDA

$

11,393

$

10,331

 Adjustments:





 Other income, net


(280)


(287)

 Interest on operating lease liabilities**


53


59

 Adjusted EBITDA

$

11,166

$

10,103

 Debt

$

29,395

$

26,729

 Operating lease liabilities


1,568


1,604

 Unfunded pension and OPEB, net of taxes of $175 and $195


585


637

 Adjusted debt

$

31,548

$

28,970

 Adjusted debt / Adjusted EBITDA


2.8


2.9






Comparable Adjusted Debt / Adjusted EBITDA*






Sep. 30,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2021

2020

 Adjusted debt / Adjusted EBITDA


2.83


2.87

 Factors Affecting Comparability:





Brazos yard impairment [b]


(0.07)


(0.08)

 Comparable Adjusted Debt / Adjusted EBITDA

2.76

2.79



[a]  

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