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Press release from PR Newswire

Union Pacific Reports Best-Ever Quarterly and Full Year Results

Thursday, January 23, 2014

Union Pacific Reports Best-Ever Quarterly and Full Year Results

08:00 EST Thursday, January 23, 2014

OMAHA, Neb., Jan. 23, 2014 /PRNewswire/ --

Best-Ever Quarterly Records

  • Diluted earnings per share of $2.55 improved 16 percent.
  • Operating revenues totaled more than $5.6 billion, up 7 percent.
  • Operating income totaled $1.97 billion, up 14 percent.

2013 Full Year Records

  • Diluted earnings per share of $9.42 improved 14 percent.
  • Operating revenues totaled $21.96 billion, up 5 percent.
  • Operating income totaled $7.4 billion, up 10 percent.
  • Operating ratio of 66.1 percent improved 1.7 points.

Union Pacific Corporation (NYSE: UNP) today reported net income of $1.2 billion, or $2.55 per diluted share, for the fourth quarter 2013 compared to $1 billion, or $2.19 per diluted share, in the fourth quarter 2012. 

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

"For the first time in six quarters, we reported overall volume growth, despite significantly weaker coal shipments.  It highlights the strength of our diverse franchise, the extensive network reach we have to various markets, and a strong grain harvest," said Jack Koraleski, Union Pacific chief executive officer.  "Volume growth, combined with solid core pricing gains and our continued focus on safety, service, and efficiency, generated a record fourth quarter operating ratio of 65.0 percent.   The fourth quarter wrapped up another tremendous year for Union Pacific, with our overall financial performance exceeding all previous milestones."

Fourth Quarter SummaryOperating revenue increased 7 percent in the fourth quarter 2013 to more than $5.6 billion versus $5.25 billion in the fourth quarter 2012.  Fourth quarter business volumes, as measured by total revenue carloads, grew 2 percent compared to 2012.  Volume growth from agricultural products, automotive, industrial products and intermodal shipments more than offset declines in coal and chemical volumes.  In addition:

  • Quarterly freight revenue increased 7 percent compared to the fourth quarter 2012, driven by core pricing gains and volume growth.
  • Union Pacific's operating ratio of 65.0 percent was a fourth quarter record, 2.1 points better than the fourth quarter 2012 and only 0.2 points off the all-time quarterly record of 64.8 percent set in the third quarter 2013.
  • Average quarterly diesel fuel prices decreased 4 percent to $3.11 per gallon in the fourth quarter 2013 compared to $3.25 per gallon in the fourth quarter 2012. 
  • The Customer Satisfaction Index of 93 matched the fourth quarter record set in 2012.
  • Quarterly train speed, as reported to the Association of American Railroads, was 25.8 mph, down 3 percent from the fourth quarter 2012, primarily due to severe winter weather conditions. 
  • The Company repurchased more than 4.9 million shares in the fourth quarter 2013 at an average share price of $159.36 and an aggregate cost of $786 million.

Summary of Fourth Quarter Freight Revenues

  • Agricultural up 19 percent
  • Automotive up 17 percent
  • Industrial Products up 14 percent
  • Chemicals up 3 percent
  • Intermodal flat
  • Coal down 1 percent

2013 Full Year SummaryFor the full year 2013, Union Pacific reported net income of $4.4 billion or $9.42 per diluted share.  This compares to $3.9 billion or $8.27 per diluted share in 2012, 11 and 14 percent increases, respectively.  Operating revenue totaled a record $21.96 billion versus $20.9 billion in 2012.  Operating income increased 10 percent to more than $7.4 billion, up from $6.7 billion in 2012.  In addition:

  • Freight revenue grew 5 percent to $20.7 billion compared to $19.7 billion in 2012.  Carloadings were flat versus 2012 as declines in coal and agricultural shipments offset volume growth from automotive, chemicals, and industrial products shipments.  Intermodal volumes were flat compared to 2012.
  • Union Pacific's operating ratio of 66.1 percent was a full year record, improving 1.7 points from the previous record set in 2012. 
  • Average diesel fuel prices decreased 2 percent to $3.15 per gallon in 2013 from $3.22 per gallon in 2012. 
  • The Company increased its quarterly dividend per share by 14.5 percent to $0.79 cents per share in the third quarter 2013.  Total dividends declared for the full year 2013 grew 19 percent compared to the full year 2012.
  • The Company repurchased more than 14.5 million shares in 2013 at an average share price of $152.52, and an aggregate cost of $2.2 billion.

2014 Outlook"As we look at 2014, we see signs that the economy is slowly strengthening.  We're well-positioned for economic growth and are confident in our ability to deliver on our customers' growing transportation needs," Koraleski said.  "We'll continue our unrelenting focus on both safety and service to our customers.  We strongly believe in the power and potential of the Union Pacific franchise to drive even greater financial performance and shareholder returns in the years to come."

About Union PacificUnion Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2007-2013, Union Pacific invested more than $21.6 billion in its network and operations to support America's transportation infrastructure.  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 Stephanie Serkhoshian, (402) 544-0100.

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 general economic conditions and its ability to meet its customers transportation requirements, operate safely, adequately serve its customers and improve financial performance and shareholder returns.  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,

4th Quarter

Full Year

 For the Periods Ended December 31,

2013

2012

%

2013

2012

%

 Operating Revenues

      Freight revenues

$

5,297

$

4,931

7%

$

20,684

$

19,686

5%

      Other revenues

333

319

4

1,279

1,240

3

 Total operating revenues

5,630

5,250

7

21,963

20,926

5

 Operating Expenses

      Compensation and benefits

1,210

1,135

7

4,807

4,685

3

      Fuel

905

920

(2)

3,534

3,608

(2)

      Purchased services and materials

585

533

10

2,315

2,143

8

      Depreciation

458

453

1

1,777

1,760

1

      Equipment and other rents

311

302

3

1,235

1,197

3

      Other

188

182

3

849

788

8

 Total operating expenses

3,657

3,525

4

14,517

14,181

2

 Operating Income

1,973

1,725

14

7,446

6,745

10

      Other income

37

43

(14)

128

108

19

      Interest expense

(127)

(128)

(1)

(526)

(535)

(2)

 Income before income taxes

1,883

1,640

15

7,048

6,318

12

 Income taxes

(709)

(604)

17

(2,660)

(2,375)

12

 Net Income

$

1,174

$

1,036

13%

$

4,388

$

3,943

11%

 Share and Per Share

      Earnings per share - basic

$

2.56

$

2.21

16%

$

9.47

$

8.33

14%

      Earnings per share - diluted

$

2.55

$

2.19

16

$

9.42

$

8.27

14

      Weighted average number of shares - basic

458.1

468.8

(2)

463.3

473.1

(2)

      Weighted average number of shares - diluted

460.7

472.0

(2)

465.8

476.5

(2)

      Dividends declared per share

$

0.79

$

0.69

14

$

2.96

$

2.49

19

 Operating Ratio

65.0%

67.1%

(2.1)

pts 

66.1%

67.8%

(1.7)

pts 

 Effective Tax Rate

37.7%

36.8%

0.9

pts 

37.7%

37.6%

0.1

pts 

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)

4th Quarter 

Full Year 

 For the Periods Ended December 31,

2013

2012

%

2013

2012

%

 Freight Revenues (Millions)

 Agricultural

$

937

$

785

19%

$

3,276

$

3,280

-%

 Automotive

544

466

17

2,077

1,807

15

 Chemicals

855

834

3

3,501

3,238

8

 Coal

985

990

(1)

3,978

3,912

2

 Industrial Products

954

835

14

3,822

3,494

9

 Intermodal

1,022

1,021

-

4,030

3,955

2

 Total

$

5,297

$

4,931

7%

$

20,684

$

19,686

5%

 Revenue Carloads (Thousands)

 Agricultural

243

215

13%

874

900

(3)

 Automotive

205

187

10

781

738

6%

 Chemicals

263

265

(1)

1,103

1,042

6

 Coal

419

463

(10)

1,703

1,871

(9)

 Industrial Products

305

280

9

1,236

1,185

4

 Intermodal *

845

831

2

3,325

3,312

-

 Total

2,280

2,241

2%

9,022

9,048

-%

 Average Revenue per Car

 Agricultural

$

3,846

$

3,647

5%

$

3,746

$

3,644

3%

 Automotive

2,653

2,487

7

2,659

2,448

9

 Chemicals

3,255

3,146

3

3,176

3,107

2

 Coal

2,352

2,141

10

2,336

2,092

12

 Industrial Products

3,134

2,978

5

3,093

2,947

5

 Intermodal *

1,208

1,229

(2)

1,212

1,194

2

 Average 

$

2,323

$

2,200

6

$

2,293

$

2,176

5%

*      Each intermodal container or trailer equals one carload.

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Financial Position (unaudited)

Dec. 31,

Dec. 31,

 Millions, Except Percentages

2013

2012

 Assets

      Cash and cash equivalents

$

1,432

$

1,063

      Other current assets

2,558

2,551

      Investments

1,321

1,259

      Net properties

43,749

41,997

      Other assets

671

283

 Total assets

$

49,731

$

47,153

 Liabilities and Common Shareholders' Equity

      Debt due within one year

$

705

$

196

      Other current liabilities

3,086

2,923

      Debt due after one year

8,872

8,801

      Deferred income taxes

14,163

13,108

      Other long-term liabilities

1,680

2,248

 Total liabilities

28,506

27,276

 Total common shareholders' equity

21,225

19,877

 Total liabilities and common shareholders' equity

$

49,731

$

47,153

 Debt to Capital

31.1%

31.2%

 Adjusted Debt to Capital*

37.6%

39.1%

 Return on Invested Capital*

14.7%

14.0%

*

Adjusted Debt to Capital and Return on Invested Capital are non-GAAP measures; however, we believe that they are important in evaluating our financial performance. See pages 8 and 9 for a reconciliation to GAAP.

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Condensed Consolidated Statements of Cash Flows (unaudited)

 Millions,

Full Year

 For the Periods Ended December 31,

2013

2012

 Operating Activities

      Net income

$

4,388

$

3,943

      Depreciation

1,777

1,760

      Deferred income taxes

723

887

      Other - net

(65)

(429)

 Cash provided by operating activities

6,823

6,161

 Investing Activities

      Capital investments

(3,496)

(3,738)

      Other - net

91

105

 Cash used in investing activities

(3,405)

(3,633)

 Financing Activities

      Common shares repurchased

(2,218)

(1,474)

      Debt issued

1,443

695

      Dividends paid

(1,333)

(1,146)

      Debt repaid

(640)

(758)

      Debt exchange

(289)

-

      Other - net

(12)

1

 Cash used in financing activities

(3,049)

(2,682)

 Net Change in Cash and Cash Equivalents

369

(154)

 Cash and cash equivalents at beginning of year

1,063

1,217

 Cash and Cash Equivalents End of Period

$

1,432

$

1,063

 Free Cash Flow*

      Cash provided by operating activities

$

6,823

$

6,161

      Cash used in investing activities

(3,405)

(3,633)

      Dividends paid

(1,333)

(1,146)

 Free cash flow

$

2,085

$

1,382

*

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)

4th Quarter

Full Year

 For the Periods Ended December 31,

2013

2012

%

2013

2012

%

 Operating/Performance Statistics 

      Gross ton-miles (GTMs) (millions)

244,631

238,898

2%

949,065

959,280

(1)%

      Employees (average)

45,951

46,067

-

46,445

45,928

1

      GTMs (millions) per employee

5.32

5.19

3

20.43

20.89

(2)

      Customer satisfaction index

93

93

-

pts 

93

93

-

pts 

 Locomotive Fuel Statistics

      Average fuel price per gallon consumed

$ 3.11

$ 3.25

(4)%

$ 3.15

$ 3.22

(2)%

      Fuel consumed in gallons (millions)

283

274

3

1,091

1,085

1

      Fuel consumption rate *

1.157

1.148

1

1.149

1.131

2

 AAR Reported Performance Measures

      Average train speed (miles per hour)

25.8

26.7

(3)%

26.0

26.5

(2)%

      Average terminal dwell time (hours)

28.0

26.8

4

27.1

26.2

3

 Revenue Ton-Miles (Millions)

      Agricultural

24,197

18,937

28%

80,904

81,407

(1)%

      Automotive

4,238

3,829

11

16,169

14,942

8

      Chemicals

17,752

17,649

1

73,963

68,095

9

      Coal

45,865

51,297

(11)

186,902

207,466

(10)

      Industrial Products

19,523

17,009

15

77,760

70,924

10

      Intermodal

20,037

19,748

1

78,574

78,277

-

 Total

131,612

128,469

2%

514,272

521,111

(1)%

*

Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.

Note: Average rail car inventory is no longer being reported as a key railroad performance measure because of recently identified inaccuracies in the AAR's calculation for the rail industry, which prevents comparisons to prior reporting periods.  The impact of changes in rail car inventory will be described, as necessary, in connection with our discussion of train speed and/or terminal dwell metrics. 

 

 

 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

4th Qtr

Full Year

 Operating Revenues

      Freight revenues

$

4,984

$

5,153

$

5,250

$

5,297

$

20,684

      Other revenues

306

317

323

333

1,279

  Total operating revenues

5,290

5,470

5,573

5,630

21,963

 Operating Expenses

      Compensation and benefits

1,216

1,185

1,196

1,210

4,807

      Fuel

900

863

866

905

3,534

      Purchased services and materials

557

585

588

585

2,315

      Depreciation

434

438

447

458

1,777

      Equipment and other rents

313

302

309

311

1,235

      Other

237

219

205

188

849

  Total operating expenses

3,657

3,592

3,611

3,657

14,517

 Operating Income

1,633

1,878

1,962

1,973

7,446

      Other income

40

23

28

37

128

      Interest expense

(128)

(133)

(138)

(127)

(526)

 Income before income taxes

1,545

1,768

1,852

1,883

7,048

 Income tax expense

(588)

(662)

(701)

(709)

(2,660)

 Net Income

$

957

$

1,106

$

1,151

$

1,174

$

4,388

 Share and Per Share

      Earnings per share - basic

$

2.05

$

2.38

$

2.49

$

2.56

$

9.47

      Earnings per share - diluted

$

2.03

$

2.37

$

2.48

$

2.55

$

9.42

      Weighted average number of shares - basic

467.8

465.3

461.7

458.1

463.3

      Weighted average number of shares - diluted

470.5

467.6

464.2

460.7

465.8

      Dividends declared per share

$

0.69

$

0.69

$

0.79

$

0.79

$

2.96

 Operating Ratio

69.1%

65.7%

64.8%

65.0%

66.1%

 Effective Tax Rate

38.1%

37.4%

37.9%

37.7%

37.7%

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Freight Revenues Statistics (unaudited)

2013

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

 Freight Revenues (Millions)

 Agricultural

$

784

$

784

$

771

$

937

$

3,276

 Automotive

487

534

512

544

2,077

 Chemicals

873

890

883

855

3,501

 Coal

936

975

1,082

985

3,978

 Industrial Products

916

977

975

954

3,822

 Intermodal

988

993

1,027

1,022

4,030

 Total

$

4,984

$

5,153

$

5,250

$

5,297

$

20,684

 Revenue Carloads (Thousands)

 Agricultural

212

209

210

243

874

 Automotive

184

197

195

205

781

 Chemicals

271

287

282

263

1,103

 Coal

402

414

468

419

1,703

 Industrial Products

289

317

325

305

1,236

 Intermodal *

810

822

848

845

3,325

 Total

2,168

2,246

2,328

2,280

9,022

 Average Revenue per Car

 Agricultural

$

3,694

$

3,750

$

3,679

$

3,846

$

3,746

 Automotive

2,648

2,715

2,620

2,653

2,659

 Chemicals

3,225

3,098

3,134

3,255

3,176

 Coal

2,329

2,353

2,312

2,352

2,336

 Industrial Products

3,174

3,079

2,998

3,134

3,093

 Intermodal *

1,219

1,210

1,211

1,208

1,212

 Average

$

2,299

$

2,295

$

2,255

$

2,323

$

2,293

*      Each intermodal container or trailer equals one carload.

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Non-GAAP Measures Reconciliation to GAAP

 Debt to Capital*

Dec. 31,

Dec. 31,

 Millions, Except Percentages

2013

2012

 Debt (a)

$

9,577

$

8,997

 Equity

21,225

19,877

 Capital (b)

$

30,802

$

28,874

 Debt to capital (a/b)

31.1%

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*

Dec. 31,

Dec. 31,

 Millions, Except Percentages

2013

2012

 Debt

$

9,577

$

8,997

 Net present value of operating leases

3,057

3,096

 Unfunded pension and OPEB

170

679

 Adjusted debt (a)

$

12,804

$

12,772

 Equity

21,225

19,877

 Adjusted capital (b)

$

34,029

$

32,649

 Adjusted debt to capital (a/b)

37.6%

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 December 31, 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.

 

 

 UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

 Non-GAAP Measures Reconciliation to GAAP

 Return on Invested Capital as Adjusted (ROIC)*

Dec. 31, 

Dec. 31, 

 Millions, Except Percentages

2013

2012

 Net income

$

4,388

$

3,943

 Add: Interest expense

526

535

 Add: Interest on present value of operating leases

175

190

 Less: Taxes on interest

(264)

(273)

 Net operating profit after taxes as adjusted (a)

$

4,825

$

4,395

 Average equity

$

20,551

$

19,228

 Add: Average debt

9,287

8,952

 Add: Average present value of operating leases

3,077

3,160

 Average invested capital as adjusted (b)

$

32,915

$

31,340

 Return on invested capital as adjusted (a/b)

14.7%

14.0%

*

ROIC 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 in evaluating the efficiency and effectiveness of the Corporation's long-term capital investments, and we currently use ROIC as a performance criteria in determining certain elements of equity compensation for our executives. ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is Return on Average Common Shareholders' Equity.

 

SOURCE Union Pacific Corporation

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