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Press release from PR Newswire

Union Pacific Reports Record First Quarter

Thursday, April 19, 2012

Union Pacific Reports Record First Quarter08:00 EDT Thursday, April 19, 2012Diluted Earnings per Share up 39 Percent First Quarter Records - Diluted earnings per share of $1.79 improved 39 percent. - Operating revenues totaled $5.1 billion, up 14 percent and a best-ever quarterly record. - Operating income totaled $1.5 billion, up 33 percent. - Operating ratio of 70.5 percent improved 4.2 points. - Customer satisfaction index reached 93, up 2 points and a best-ever quarterly record.OMAHA, Neb., April 19, 2012 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2012 first quarter net income of $863 million, or $1.79 per diluted share, compared to $639 million, or $1.29 per diluted share, in the first quarter 2011.  (Logo:"Union Pacific achieved record financial results across the board this quarter," said Jack Koraleski, Union Pacific chief executive officer.  "We're clearly realizing the benefits of our diverse franchise, despite current coal challenges.  We remain focused on delivering safe, efficient, high-quality service that creates value for our customers and increased financial returns for our shareholders."First Quarter SummaryFirst quarter business volumes, as measured by total revenue carloads, grew 1 percent versus 2011.  Four of Union Pacific's six business groups  -  automotive, industrial products, chemicals and intermodal  - reported volume growth.  Quarterly operating revenue increased 14 percent in the first quarter 2012 to $5.1 billion versus $4.5 billion in the first quarter 2011.  In addition:Each of Union Pacific's six business groups reported freight revenue growth in the first quarter, driven by core pricing gains and improved fuel surcharge recovery.  Volume growth in four of our six business groups also contributed to revenue growth. Union Pacific's operating ratio of 70.5 percent was a first quarter best, 4.2 points better than the previous first quarter record set in 2011.  Pricing gains, volume growth, efficient operations, and improved fuel surcharge recovery contributed to this record performance.  Average quarterly diesel fuel prices increased 12 percent to $3.23 per gallon in the first quarter 2012 from $2.88 per gallon in the first quarter 2011.  The Customer Satisfaction Index of 93 set a new all-time quarterly record and was two points better than the first quarter 2011. Quarterly train speed, as reported to the Association of American Railroads, was 26.3 mph, increasing 1 percent compared to the first quarter 2011. The Company repurchased 3.9 million shares in the first quarter 2012 at an average share price of $110.64 and an aggregate cost of $433 million. Summary of First Quarter Freight RevenuesAutomotive up 26 percent Industrial Products up 25 percent Chemicals up 16 percent Intermodal up 15 percent Agricultural up 6 percent Energy up 5 percent 2012 Outlook"With a strong first quarter behind us, we're focused on the prospects that lie ahead," said Koraleski.  "Although softer coal demand remains a challenge, the benefits of our diverse franchise should support continued opportunities in other markets, driving record financial results for the year.  We're moving forward with our capital investment strategy, investing today to strengthen the network and build capacity that will drive continued improvement in customer service and increased shareholder returns in the future."About Union PacificIt was 150 years ago that Abraham Lincoln signed the Pacific Railway Act of July 1, 1862, creating the original Union Pacific. One of America's iconic companies, today, Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP), linking 23 states in the western two-thirds of the country by rail and providing freight solutions and logistics expertise to the global supply chain. From 2000 through 2011, Union Pacific spent more than $31 billion on its network and operations, making needed investments in America's infrastructure and enhancing its ability to provide safe, reliable, fuel-efficient and environmentally responsible freight transportation. Union Pacific's diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad serves many of the fastest-growing U.S. population centers and emphasizes excellent customer service. Union Pacific operates competitive routes from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways.Supplemental financial information is attached. This press release and related materials contain statements about the Corporation's future that are not statements of historical fact, including specifically the statements regarding the Corporation's expectations with respect to demand for coal; its ability to take advantage of growth opportunities, including opportunities in markets other than coal, and generate financial results, and the effectiveness of its capital investment strategy, including its ability to improve capacity and customer satisfaction and increase returns to shareholders.  These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.  Forward-looking statements also generally include, without limitation, information or statements regarding:  projections, predictions, expectations, estimates or forecasts as to the Corporation's and its subsidiaries' business, financial, and operational results, and future economic performance;  and management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved.  Forward-looking information, including expectations regarding operational and financial improvements and the Corporation's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement.  Important factors, including risk factors, could affect the Corporation's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements.  Information regarding risk factors and other cautionary information are available in the Corporation's Annual Report on Form 10-K for 2011, which was filed with the SEC on February 3, 2012.  The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).   Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made.  The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements.  References to our website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein.                                                                                   UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Income (unaudited) Millions, Except Per Share Amounts, 1st Quarter For the Periods Ended March 31, 20122011% Operating Revenues      Freight revenues$4,823$4,24814%      Other revenues28924219 Total operating revenues5,1124,49014 Operating Expenses      Compensation and benefits1,2111,1674      Fuel92682612      Purchased services and materials52647511      Depreciation4273958      Equipment and other rents296302(2)      Other 21618815 Total operating expenses3,6023,3537 Operating Income1,5101,13733      Other income 16157      Interest expense(135)(141)(4) Income before income taxes1,3911,01138 Income taxes (528)(372)42 Net Income$863$63935% Share and Per Share       Earnings per share - basic$1.81$1.3138%      Earnings per share - diluted$1.79$1.2939      Weighted average number of shares - basic477.8489.6(2)      Weighted average number of shares - diluted481.4494.1(3)      Dividends declared per share$0.60$0.3858 Operating Ratio70.5%74.7%(4.2)pts Effective Tax Rate 38.0%36.8%1.2pts  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)1st Quarter For the Periods Ending March 31, 20122011% Freight Revenues (Millions) Agricultural $858$8076% Automotive 43034226 Chemicals 76866416 Energy 9959525 Industrial Products 86369025 Intermodal 90979315 Total $4,823$4,24814% Revenue Carloads (Thousands) Agricultural234238(2)% Automotive18015715 Chemicals2412238 Energy495538(8) Industrial Products29026310 Intermodal*7787701 Total2,2182,1891% Average Revenue per Car Agricultural$3,664$3,3868% Automotive2,3902,17510 Chemicals3,1842,9747 Energy2,0101,77014 Industrial Products2,9772,62813 Intermodal*1,1691,03113 Average  $2,175$1,94112%*Each intermodal container or trailer equals one carload.  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Financial Position (unaudited)Mar. 31,Dec. 31, Millions, Except Percentages 20122011 Assets      Cash and cash equivalents$995$1,217      Other current assets 2,5702,510      Investments1,2101,175      Net properties 40,30939,934      Other assets252260 Total assets $45,336$45,096 Liabilities and Common Shareholders' Equity      Debt due within one year $769$209      Other current liabilities3,1333,108      Debt due after one year 8,0668,697      Deferred income taxes 12,50512,368      Other long-term liabilities2,1082,136 Total liabilities26,58126,518 Total common shareholders' equity18,75518,578 Total liabilities and common shareholders' equity$45,336$45,096 Debt to Capital32.0%32.4% Adjusted Debt to Capital*40.1%40.7%*Adjusted Debt to Capital is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance. See page 6 for a reconciliation to GAAP.  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Cash Flows (unaudited) Millions,Year-to-Date For the Periods Ending March 31, 20122011 Operating Activities      Net income $863$639      Depreciation 427395      Deferred income taxes 124172      Other - net (10)88 Cash provided by operating activities 1,4041,294 Investing Activities      Capital investments (804)(602)      Other - net (26)(55) Cash used in investing activities (830)(657) Financing Activities      Common shares repurchased(433)(248)      Dividends paid(289)(186)      Debt repaid(72)(87)      Other - net (2)46 Cash used in financing activities (796)(475) Net Change in Cash and Cash Equivalents (222)162 Cash and cash equivalents at beginning of year 1,2171,086 Cash and Cash Equivalents End of Period$995$1,248 Free Cash Flow*      Cash provided by operating activities$1,404$1,294      Cash used in investing activities(830)(657)      Dividends paid(289)(186) Free cash flow $285$451*   Free cash flow is a non-GAAP measure; however, we believe that it is important in evaluating our financial performance and measures our ability to generate cash without incurring additional financing.  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Operating and Performance Statistics (unaudited)1st Quarter For the Periods Ending March 31, 20122011% Operating/Performance Statistics      Gross ton-miles (GTMs) (millions)240,484235,4062%      Employees (average)45,64244,0454      GTMs (millions) per employee5.275.34(1)      Customer satisfaction index93912pts Locomotive Fuel Statistics      Average fuel price per gallon consumed $ 3.23$ 2.8812%      Fuel consumed in gallons (millions)279278-      Fuel consumption rate* 1.1601.180(2) AAR Reported Performance Measures      Average train speed (miles per hour)26.326.11%      Average terminal dwell time (hours)26.426.4-      Average rail car inventory (thousands)275.4268.43 Revenue Ton-Miles (Millions)      Agricultural21,90922,606(3)%      Automotive3,6573,17715      Chemicals16,04514,56810      Energy54,37958,270(7)      Industrial Products17,68815,10517      Intermodal19,02919,039- Total132,707132,765-%*Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.    UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP Debt to Capital*Mar. 31,Dec. 31, Millions, Except Percentages20122011 Debt (a)$8,835$8,906 Equity18,75518,578 Capital (b)$27,590$27,484 Debt to capital (a/b)32.0%32.4%*Total debt divided by total debt plus equity. Management believes this is an important measure in evaluating our balance sheet strength and is important in managing our credit ratios and financing relationships. Adjusted Debt to Capital, Reconciliation to GAAP*Mar. 31,Dec. 31, Millions, Except Percentages20122011 Debt$8,835$8,906 Net present value of operating leases3,0993,224 Unfunded pension and OPEB623623 Adjusted debt (a)$12,557$12,753 Equity18,75518,578 Adjusted capital (b)$31,312$31,331 Adjusted debt to capital (a/b)40.1%40.7%*Total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation divided by total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation plus equity.  Operating leases were discounted using 6.1% and 6.2% at March 31, 2012 and December 31, 2011, respectively. The lower discount rate reflects changes to interest rates and our current financing costs. Management believes this is an important measure in evaluating the total amount of leverage in our capital structure including off-balance sheet obligations. SOURCE Union Pacific CorporationFor further information: Investors, Michelle Gerhardt, +1-402-544-4227, or Media, Donna Kush, +1-402-544-3753