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Press release from PR Newswire

Union Pacific Reports Best-Ever Quarterly Results

Thursday, October 17, 2013

Union Pacific Reports Best-Ever Quarterly Results

08:00 EDT Thursday, October 17, 2013

Diluted Earnings per Share up 13 Percent

OMAHA, Neb., Oct. 17, 2013 /PRNewswire/ -- 

Best-Ever Quarterly Records

  • Diluted earnings per share of $2.48 improved 13 percent.
  • Operating revenues totaled nearly $5.6 billion, up 4 percent.
  • Operating income totaled $1.96 billion, up 10 percent.
  • Operating ratio of 64.8 percent improved 1.8 points.

Union Pacific Corporation (NYSE: UNP) today reported 2013 third quarter net income of $1.15 billion, or $2.48 per diluted share, compared to $1 billion, or $2.19 per diluted share, in the third quarter 2012. 

(Logo: http://photos.prnewswire.com/prnh/20110304/LA59497LOGO)

"Union Pacific achieved all-time record financial results this quarter," said Jack Koraleski, Union Pacific chief executive officer.  "Despite the challenges of lower coal and grain volumes, in addition to disruptions caused by the Colorado flooding, we managed our network efficiently and continued to benefit from the strength of our diverse franchise.  When combined with real core pricing and productivity gains, we more than offset flat volumes to generate a new, best-ever quarterly Operating Ratio of 64.8 percent."

Third Quarter Summary

Operating revenue increased 4 percent in the third quarter 2013 to nearly $5.6 billion versus $5.3 billion in the third quarter 2012.  Third quarter business volumes, as measured by total revenue carloads, were flat compared to 2012.  Volume growth from industrial products, automotive, and chemical shipments was offset by declines in coal, agricultural products, and intermodal shipments.  In addition:

  • Quarterly freight revenue increased 5 percent compared to the third quarter 2012, mainly driven by core pricing gains.
  • Union Pacific's operating ratio of 64.8 percent was a best-ever quarterly record, 1.8 points better than the third quarter 2012 and 0.9 points better than the previous quarterly record set in the second quarter 2013. 
  • The average quarterly diesel fuel price of $3.17 per gallon in the third quarter 2013 was down 1 percent compared to the third quarter 2012. 
  • The Customer Satisfaction Index of 93 was one point lower than the third quarter 2012.
  • Quarterly train speed, as reported to the Association of American Railroads, was 26.3 mph, improving 1 percent versus the third quarter 2012.  
  • Lost revenue and increased costs from the flooding in Colorado negatively impacted operating income by about $10 million.
  • The Company repurchased nearly 3.7 million shares in the third quarter 2013 at an average share price of $156.77 and an aggregate cost of $575 million.

Summary of Third Quarter Freight Revenues

  • Automotive up 17 percent
  • Industrial Products up 11 percent
  • Chemicals up 5 percent
  • Coal up 2 percent
  • Intermodal flat
  • Agricultural down 2 percent

2013 Outlook

"As we move through the fourth quarter, we continue to monitor the economic landscape," Koraleski said.  "Supported by our diverse franchise, we remain agile and well positioned for economic recovery.  We'll continue to focus on running a safe, efficient, and reliable network that generates greater value for both our customers and shareholders going forward."

About Union Pacific

Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad links 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2007-2012, Union Pacific invested $18 billion in its network and operations to support America's transportation infrastructure, including a record $3.7 billion in 2012.  The railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific  serves many of the fastest-growing U.S. population centers, operates 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. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.

Investor contact is Michelle Gerhardt, (402) 544-4227.

Media contact is Tom Lange, (402) 544-3560.

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 future economic improvement and its ability to capitalize on any future economic improvement; provide safe, efficient and reliable service; maintain agility; and generate value for its customers and 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 2012, which was filed with the SEC on February 8, 2013.  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 and Percentages,

3rd Quarter

Year-to-Date

 For the Periods Ended September 30,

2013

2012

%

2013

2012

%

 Operating Revenues

      Freight revenues

$

5,250

$

5,019

5

%

$

15,387

$

14,755

4

%

      Other revenues

323

324

-

946

921

3

 Total operating revenues

5,573

5,343

4

16,333

15,676

4

 Operating Expenses

      Compensation and benefits

1,196

1,188

1

3,597

3,550

1

      Fuel

866

880

(2)

2,629

2,688

(2)

      Purchased services and materials

588

542

8

1,730

1,610

7

      Depreciation

447

447

-

1,319

1,307

1

      Equipment and other rents

309

300

3

924

895

3

      Other

205

200

3

661

606

9

 Total operating expenses

3,611

3,557

2

10,860

10,656

2

 Operating Income

1,962

1,786

10

5,473

5,020

9

      Other income

28

28

-

91

65

40

      Interest expense

(138)

(137)

1

(399)

(407)

(2)

 Income before income taxes

1,852

1,677

10

5,165

4,678

10

 Income taxes

(701)

(635)

10

(1,951)

(1,771)

10

 Net Income

$

1,151

$

1,042

10

%

$

3,214

$

2,907

11

%

 Share and Per Share

      Earnings per share - basic

$

2.49

$

2.21

13

%

$

6.91

$

6.13

13

%

      Earnings per share - diluted

$

2.48

$

2.19

13

$

6.88

$

6.08

13

      Weighted average number of shares - basic

461.7

472.0

(2)

465.0

474.5

(2)

      Weighted average number of shares - diluted

464.2

475.2

(2)

467.4

477.9

(2)

      Dividends declared per share

$

0.79

$

0.60

32

$

2.17

$

1.80

21

 Operating Ratio

64.8%

66.6%

(1.8)

pts 

66.5%

68.0%

(1.5)

pts 

 Effective Tax Rate

37.9%

37.9%

-

pts 

37.8%

37.9%

(0.1)

pts 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)

3rd Quarter 

Year-to-Date 

 For the Periods Ended September 30,

2013

2012

%

2013

2012

%

 Freight Revenues (Millions)

 Agricultural

$

771

$

783

(2)

%

$

2,339

$

2,495

(6)

%

 Automotive

512

436

17

1,533

1,341

14

 Chemicals

883

841

5

2,646

2,404

10

 Coal

1,082

1,058

2

2,993

2,922

2

 Industrial Products

975

879

11

2,868

2,659

8

 Intermodal

1,027

1,022

-

3,008

2,934

3

 Total

$

5,250

$

5,019

5

%

$

15,387

$

14,755

4

%

 Revenue Carloads (Thousands)

 Agricultural

210

218

(4)

%

631

685

(8)

%

 Automotive

195

181

8

576

551

5

 Chemicals

282

275

3

840

777

8

 Coal

468

501

(7)

1,284

1,408

(9)

 Industrial Products

325

299

9

931

905

3

 Intermodal*

848

857

(1)

2,480

2,481

-

 Total

2,328

2,331

-

%

6,742

6,807

(1)

%

 Average Revenue per Car

 Agricultural

$

3,679

$

3,596

2

%

$

3,707

$

3,643

2

%

 Automotive

2,620

2,407

9

2,661

2,435

9

 Chemicals

3,134

3,064

2

3,151

3,094

2

 Coal

2,312

2,111

10

2,331

2,075

12

 Industrial Products

2,998

2,933

2

3,080

2,938

5

 Intermodal*

1,211

1,192

2

1,213

1,182

3

 Average 

$

2,255

$

2,153

5

%

$

2,282

$

2,168

5

%

*       Each intermodal 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

2013

2012

 Assets

      Cash and cash equivalents

$

1,366

$

1,063

      Other current assets

2,698

2,551

      Investments

1,282

1,259

      Net properties

43,311

41,997

      Other assets

301

283

 Total assets

$

48,958

$

47,153

 Liabilities and Common Shareholders' Equity

      Debt due within one year

$

691

$

196

      Other current liabilities

2,964

2,923

      Debt due after one year

8,764

8,801

      Deferred income taxes

13,739

13,108

      Other long-term liabilities

2,026

2,248

 Total liabilities

28,184

27,276

 Total common shareholders' equity

20,774

19,877

 Total liabilities and common shareholders' equity

$

48,958

$

47,153

 Debt to Capital

31.3%

31.2%

 Adjusted Debt to Capital*

38.5%

39.1%

*

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 COMPANIES

 Condensed Consolidated Statements of Cash Flows (unaudited)

 Millions,

Year-to-Date

 For the Periods Ended September 30,

2013

2012

 Operating Activities

      Net income

$

3,214

$

2,907

      Depreciation

1,319

1,307

      Deferred income taxes

637

490

      Other - net

(289)

(338)

 Cash provided by operating activities

4,881

4,366

 Investing Activities

      Capital investments

(2,635)

(2,876)

      Other - net

39

10

 Cash used in investing activities

(2,596)

(2,866)

 Financing Activities

      Common shares repurchased

(1,432)

(1,179)

      Dividends paid

(968)

(860)

      Debt issued

944

695

      Debt exchange

(288)

-

      Debt repaid

(217)

(250)

      Other - net

(21)

7

 Cash used in financing activities

(1,982)

(1,587)

 Net Change in Cash and Cash Equivalents

303

(87)

 Cash and cash equivalents at beginning of year

1,063

1,217

 Cash and Cash Equivalents End of Period

$

1,366

$

1,130

 Free Cash Flow*

      Cash provided by operating activities

$

4,881

$

4,366

      Cash used in investing activities

(2,596)

(2,866)

      Dividends paid

(968)

(860)

 Free cash flow

$

1,317

$

640

*

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 COMPANIES

 Operating and Performance Statistics (unaudited)

3rd Quarter

Year-to-Date

 For the Periods Ended September 30,

2013

2012

%

2013

2012

%

 Operating/Performance Statistics 

      Gross ton-miles (GTMs) (millions)

241,350

245,415

(2)

%

704,434

720,382

(2)

%

      Employees (average)

46,605

46,205

1

46,610

45,882

2

      GTMs (millions) per employee

5.18

5.31

(2)

15.11

15.70

(4)

      Customer satisfaction index

93

94

(1)

pt 

93

93

-

pts 

 Locomotive Fuel Statistics

      Average fuel price per gallon consumed

$ 3.17

$ 3.19

(1)

%

$ 3.17

$ 3.21

(1)

%

      Fuel consumed in gallons (millions)

265

267

(1)

808

811

-

      Fuel consumption rate*

1.098

1.084

1

1.147

1.125

2

 AAR Reported Performance Measures

      Average train speed (miles per hour)

26.3

26.1

1

%

26.1

26.4

(1)

%

      Average terminal dwell time (hours)

26.3

26.0

1

26.8

26.0

3

      Average rail car inventory (thousands)

258.5

268.0

(4)

261.2

270.7

(4)

 Revenue Ton-Miles (Millions)

      Agricultural

18,452

19,349

(5)

%

56,707

62,470

(9)

%

      Automotive

3,995

3,596

11

11,931

11,113

7

      Chemicals

18,541

17,608

5

56,211

50,446

11

      Coal

51,325

55,468

(7)

141,037

156,169

(10)

      Industrial Products

19,665

17,772

11

58,237

53,915

8

      Intermodal

19,305

19,513

(1)

58,537

58,529

-

 Total

131,283

133,306

(2)

%

382,660

392,642

(3)

%

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)

2013

 Millions, Except Per Share Amounts and Percentages

1st Qtr

2nd Qtr

3rd Qtr

Year-to-Date

 Operating Revenues

      Freight revenues

$

4,984

$

5,153

$

5,250

$

15,387

      Other revenues

306

317

323

946

 Total operating revenues

5,290

5,470

5,573

16,333

 Operating Expenses

      Compensation and benefits

1,216

1,185

1,196

3,597

      Fuel

900

863

866

2,629

      Purchased services and materials

557

585

588

1,730

      Depreciation

434

438

447

1,319

      Equipment and other rents

313

302

309

924

      Other

237

219

205

661

 Total operating expenses

3,657

3,592

3,611

10,860

 Operating Income

1,633

1,878

1,962

5,473

      Other income

40

23

28

91

      Interest expense

(128)

(133)

(138)

(399)

 Income before income taxes

1,545

1,768

1,852

5,165

 Income tax expense

(588)

(662)

(701)

(1,951)

 Net Income

$

957

$

1,106

$

1,151

$

3,214

 Share and Per Share

      Earnings per share - basic

$

2.05

$

2.38

$

2.49

$

6.91

      Earnings per share - diluted

$

2.03

$

2.37

$

2.48

$

6.88

      Weighted average number of shares - basic

467.8

465.3

461.7

465.0

      Weighted average number of shares - diluted

470.5

467.6

464.2

467.4

      Dividends declared per share

$

0.69

$

0.69

$

0.79

$

2.17

 Operating Ratio

69.1%

65.7%

64.8%

66.5%

 Effective Tax Rate

38.1%

37.4%

37.9%

37.8%

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)

2013

1st Qtr

2nd Qtr

3rd Qtr

Year-to-Date

 Freight Revenues (Millions)

 Agricultural

$

784

$

784

$

771

$

2,339

 Automotive

487

534

512

1,533

 Chemicals

873

890

883

2,646

 Coal

936

975

1,082

2,993

 Industrial Products

916

977

975

2,868

 Intermodal

988

993

1,027

3,008

 Total

$

4,984

$

5,153

$

5,250

$

15,387

 Revenue Carloads (Thousands)

 Agricultural

212

209

210

631

 Automotive

184

197

195

576

 Chemicals

271

287

282

840

 Coal

402

414

468

1,284

 Industrial Products

289

317

325

931

 Intermodal*

810

822

848

2,480

 Total

2,168

2,246

2,328

6,742

 Average Revenue per Car

 Agricultural

$

3,694

$

3,750

$

3,679

$

3,707

 Automotive

2,648

2,715

2,620

2,661

 Chemicals

3,225

3,098

3,134

3,151

 Coal

2,329

2,353

2,312

2,331

 Industrial Products

3,174

3,079

2,998

3,080

 Intermodal*

1,219

1,210

1,211

1,213

 Average

$

2,299

$

2,295

$

2,255

$

2,282

*      Each intermodal container or trailer equals one carload.

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Non-GAAP Measures Reconciliation to GAAP

 Debt to Capital*

Sep. 30,

Dec. 31,

 Millions, Except Percentages

2013

2012

 Debt (a)

$

9,455

$

8,997

 Equity

20,774

19,877

 Capital (b)

$

30,229

$

28,874

 Debt to capital (a/b)

31.3%

31.2%

*

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 Percentages

2013

2012

 Debt

$

9,455

$

8,997

 Net present value of operating leases

3,027

3,096

 Unfunded pension and OPEB

543

679

 Adjusted debt (a)

13,025

12,772

 Equity

20,774

19,877

 Adjusted capital (b)

$

33,799

$

32,649

 Adjusted debt to capital (a/b)

38.5%

39.1%

*

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 5.7% at September 30, 2013 and 6.0% at December 31, 2012. The discount rate reflects our effective interest rate. 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 Corporation

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