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Press release from PR Newswire

Union Pacific Reports Best-Ever Quarterly Results

Thursday, October 18, 2012

Union Pacific Reports Best-Ever Quarterly Results08:00 EDT Thursday, October 18, 2012Third Quarter Diluted Earnings per Share Up 18 PercentOMAHA, Neb., Oct. 18, 2012 /PRNewswire/ -- All-Time Quarterly Records Diluted earnings per share of $2.19 improved 18 percent. Operating revenues totaled $5.3 billion, up 5 percent. Operating income totaled $1.8 billion, up 13 percent. Operating ratio of 66.6 percent improved 2.5 points. Customer satisfaction index reached 94, up 3 points. (Logo: Union Pacific Corporation (NYSE: UNP) today reported 2012 third quarter net income of $1 billion, or $2.19 per diluted share, compared to $904 million, or $1.85 per diluted share, in the third quarter 2011.  "Despite a 12 percent decline in coal volumes and significantly weaker steel and scrap metal markets, we generated best-ever financial results across the board," said Jack Koraleski, Union Pacific chief executive officer.  "We achieved solid core pricing gains, managed our network efficiently and delivered on the benefits of our diverse franchise with growth in other markets."Third Quarter SummaryThird quarter business volumes, as measured by total revenue carloads, were down slightly compared to 2011.  Volume growth in chemicals, automotive and intermodal offset declines in shipments of coal, agricultural products and industrial products.  Quarterly operating revenue increased 5 percent in the third quarter 2012 to $5.3 billion versus $5.1 billion in the third quarter 2011.  In addition:Quarterly freight revenue increased 4 percent compared to the third quarter 2011, mainly driven by core pricing gains of 5 percent. Union Pacific's operating ratio of 66.6 percent was an all-time quarterly best, 2.5 points better than the third quarter 2011 and a 0.4 point improvement from the previous record set in the second quarter 2012.  Average quarterly diesel fuel prices were flat at $3.19 per gallon in the third quarter 2012 compared to $3.18 per gallon in the third quarter 2011.  The Customer Satisfaction Index of 94 set an all-time quarterly record and was 3 points better than the third quarter 2011. Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, increasing 6 percent compared to the third quarter 2011.  Severe drought conditions in the South negatively impacted train speed in the third quarter of last year. The Company repurchased 3.1 million shares in the third quarter 2012 at an average share price of $122.13 and an aggregate cost of $378 million. Summary of Third Quarter Freight RevenuesChemicals up 17 percent Automotive up 15 percent Intermodal up 8 percent Industrial Products up 2 percent Agricultural down 4 percent Coal down 5 percent 2012 Outlook"As we look out over the next several months, the political and financial challenges in the U.S. and abroad have increased economic uncertainty," Koraleski said.  "In this environment, we'll continue to be agile as we were in the third quarter.  We'll adapt to changing market conditions and leverage our diverse franchise to provide excellent customer service and generate strong returns for our shareholders."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, Coal, 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 economic conditions; its ability to adapt to changing market conditions and continue providing quality customer service; and its ability to generate returns for its 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 COMPANIESCondensed Consolidated Statements of Income (unaudited)Millions, Except Per Share Amounts and Percentages,3rd QuarterYear-to-DateFor the Periods Ended September 30,20122011%20122011%Operating Revenues     Freight revenues$5,019$4,8364%$14,755$13,6798%     Other revenues3242652292177020Total operating revenues5,3435,101515,67614,4498Operating Expenses     Compensation and benefits1,1881,193-3,5503,5261     Fuel880916(4)2,6882,6462     Purchased services and materials54250671,6101,4978     Depreciation447408101,3071,2049     Equipment and other rents30029328958782     Other 200207(3)6065913Total operating expenses3,5573,523110,65610,3423Operating Income1,7861,578135,0204,10722     Other income 281765655812     Interest expense(137)(142)(4)(407)(431)(6)Income before income taxes1,6771,453154,6783,73425Income taxes (635)(549)16(1,771)(1,406)26Net Income$1,042$90415%$2,907$2,32825%Share and Per Share      Earnings per share - basic$2.21$1.8718$6.13$4.7828     Earnings per share - diluted$2.19$1.8518$6.08$4.7428     Weighted average number of shares - basic472.0484.2(3)474.5487.4(3)     Weighted average number of shares - diluted475.2488.1(3)477.9491.5(3)     Dividends declared per share$0.60$0.47526$1.80$1.3335Operating Ratio66.6%69.1%(2.5)68.0%71.6%(3.6)Effective Tax Rate 37.9%37.8%0.137.9%37.7%0.2 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESFreight Revenues Statistics (unaudited)3rd QuarterYear-to-DateFor the Periods Ended September 30,20122011%20122011%Freight Revenues (Millions)Agricultural $783$814(4)%$2,495$2,4701%Automotive 436379151,3411,10222Chemicals 841720172,4042,08715Coal1,0581,112(5)2,9223,014(3)Industrial Products 87986322,6592,35613Intermodal 1,02294882,9342,65011Total $5,019$4,8364%$14,755$13,6798%Revenue Carloads (Thousands)Agricultural218223(2)%685698(2)%Automotive1811601355148214Chemicals2752331877768913Coal501572(12)1,4081,606(12)Industrial Products299305(2)9058655Intermodal*85784812,4812,4372Total2,3312,341-%6,8076,777-%Average Revenue per CarAgricultural$3,596$3,655(2)%$3,643$3,5373%Automotive2,4072,36422,4352,2876Chemicals3,0643,087(1)3,0943,0292Coal2,1111,94592,0751,87711Industrial Products2,9332,83242,9382,7248Intermodal*1,1921,11971,1821,0879Average $2,153$2,0664%$2,168$2,0197%* Each intermodal container or trailer equals one carload UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Financial Position (unaudited)Sep. 30,Dec. 31,Millions, Except Percentages 20122011Assets     Cash and cash equivalents$1,130$1,217     Other current assets 2,8162,510     Investments1,2351,175     Net properties 41,61739,934     Other assets272260Total assets $47,070$45,096Liabilities and Common Shareholders' Equity     Debt due within one year $713$209     Other current liabilities3,1613,108     Debt due after one year 8,7738,697     Deferred income taxes 12,85812,368     Other long-term liabilities2,0162,136Total liabilities27,52126,518Total common shareholders' equity19,54918,578Total liabilities and common shareholders' equity$47,070$45,096Debt to Capital32.7%32.4%Adjusted Debt to Capital*40.2%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 8 for a reconciliation to GAAP.  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Cash Flows (unaudited)Millions,Year-to-DateFor the Periods Ended September 30,20122011Operating Activities     Net income $2,907$2,328     Depreciation 1,3071,204     Deferred income taxes 490721     Other - net (338)81Cash provided by operating activities 4,3664,334Investing Activities     Capital investments (2,876)(2,218)     Other - net 10(23)Cash used in investing activities (2,866)(2,241)Financing Activities     Common shares repurchased(1,179)(1,036)     Dividends paid (860)(607)     Debt issued695486     Debt repaid (250)(188)     Debt exchange-(272)     Other - net 785Cash used in financing activities (1,587)(1,532)Net Change in Cash and Cash Equivalents (87)561Cash and cash equivalents at beginning of year 1,2171,086Cash and Cash Equivalents End of Period$1,130$1,647Free Cash Flow*     Cash provided by operating activities$4,366$4,334     Cash used in investing activities(2,866)(2,241)     Dividends paid(860)(607)Free cash flow $640$1,486*Free cash flow is a non-GAAP measure; however, we believe that it is important to management and investors in evaluating our financial performance and measures our ability to generate cash without incurring additional financing. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESOperating and Performance Statistics (unaudited)3rd QuarterYear-to-DateFor the Periods Ended September 30,20122011%20122011%Operating/Performance Statistics     Gross ton-miles (GTMs) (millions)245,415250,855(2)%720,382725,477(1)%     Employees (average)46,20545,507245,88244,8412     GTMs (millions) per employee5.315.51(4)15.7016.18(3)     Customer satisfaction index94913pts93912ptsLocomotive Fuel Statistics     Average fuel price per gallon consumed $3.19$3.18-%$3.21$3.113%     Fuel consumed in gallons (millions)267277(4)811820(1)     Fuel consumption rate* 1.0841.103(2)1.1251.130-AAR Reported Performance Measures     Average train speed (miles per hour)26.124.66%26.425.63%     Average terminal dwell time (hours)26.026.2(1)26.026.1-     Average rail car inventory (thousands)268.0274.4(2)270.7272.5(1)Revenue Ton-Miles (Millions)     Agricultural19,34920,991(8)%62,47066,145(6)%     Automotive3,5963,2181211,1139,60016     Chemicals17,60814,8551950,44644,37614     Coal55,46863,274(12)156,169176,274(11)     Industrial Products17,77217,746-53,91549,8528     Intermodal19,51319,961(2)58,52958,726-Total133,306140,045(5)%392,642404,973(3)%* Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.  UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESCondensed Consolidated Statements of Income (unaudited)2012Millions, Except Per Share Amounts and Percentages1st Qtr2nd Qtr3rd QtrYear-to-DateOperating Revenues     Freight revenues$4,823$4,913$5,019$14,755     Other revenues289308324921Total operating revenues5,1125,2215,34315,676Operating Expenses     Compensation and benefits1,2111,1511,1883,550     Fuel9268828802,688     Purchased services and materials5265425421,610     Depreciation4274334471,307     Equipment and other rents296299300895     Other 216190200606Total operating expenses3,6023,4973,55710,656Operating Income1,5101,7241,7865,020     Other income16212865     Interest expense(135)(135)(137)(407)Income before income taxes1,3911,6101,6774,678Income tax expense(528)(608)(635)(1,771)Net Income$863$1,002$1,042$2,907Share and Per Share     Earnings per share - basic$1.81$2.11$2.21$6.13     Earnings per share - diluted$1.79$2.10$2.19$6.08     Weighted average number of shares - basic477.8473.8472.0474.5     Weighted average number of shares - diluted481.4477.2475.2477.9     Dividends declared per share$0.60$0.60$0.60$1.80Operating Ratio70.5%67.0%66.6%68.0%Effective Tax Rate38.0%37.8%37.9%37.9% UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESFreight Revenues Statistics (unaudited)20121st Qtr 2nd Qtr3rd QtrYear-to-DateFreight Revenues (Millions)Agricultural $858$854$783$2,495Automotive4304754361,341Chemicals7687958412,404Coal9958691,0582,922Industrial Products8639178792,659Intermodal9091,0031,0222,934Total$4,823$4,913$5,019$14,755Revenue Carloads (Thousands)Agricultural 234233218685Automotive180190181551Chemicals241261275777Coal4954125011,408Industrial Products290316299905Intermodal*7788468572,481Total2,2182,2582,3316,807Average Revenue per CarAgricultural $3,664$3,665$3,596$3,643Automotive2,3902,5052,4072,435Chemicals3,1843,0443,0643,094Coal2,0102,1092,1112,075Industrial Products2,9772,9072,9332,938Intermodal*1,1691,1851,1921,182Average$2,175$2,176$2,153$2,168* Each intermodal container or trailer equals one carload. UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIESNon-GAAP Measures Reconciliation to GAAPDebt to Capital*Sep. 30,Dec. 31,Millions, Except Percentages20122011Debt (a)$9,486$8,906Equity19,54918,578Capital (b)$29,035$27,484Debt to capital (a/b)32.7%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* Sep. 30,Dec. 31,Millions, Except Percentages20122011Debt$9,486$8,906Net present value of operating leases3,0963,224Unfunded pension and OPEB548623Adjusted debt (a)13,13012,753Equity19,54918,578Adjusted capital (b)$32,679$31,331Adjusted debt to capital (a/b)40.2%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 6.0% at September 30, 2012 and 6.2% at December 31, 2011. The lower discount rate reflects changes to interest rates and our current financing costs. Management believes this is an important measure to management and investors 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