Union Pacific Reports Record First Quarter Results

Date : 04/26/2018 @ 8:00AM
Source : PR Newswire (US)
Stock : Union Pacific Corp. (UNP)
Quote : 145.06  -0.6 (-0.41%) @ 4:12PM

Union Pacific Reports Record First Quarter Results

Union Pacific (NYSE:UNP)
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OMAHA, Neb., April 26, 2018 /PRNewswire/ --

Union Pacific. (PRNewsFoto/Union Pacific) (PRNewsfoto/Union Pacific)

First Quarter Results

  • Diluted earnings per share of $1.68 increased 27 percent.
  • Operating income totaled $1.9 billion, up 8 percent.
  • Operating ratio of 64.6 percent, improved 0.6 points (see footnote).

Union Pacific Corporation (NYSE: UNP) today reported 2018 first quarter net income of $1.3 billion, or a first-quarter record $1.68 per diluted share. This compares to about $1.1 billion, or $1.32 per diluted share, in the first quarter 2017.

"Our solid first quarter results were a direct reflection of the tremendous effort put forth by our entire workforce, and had it not been for some network congestion it would have been even better," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "I am encouraged by the work we are doing to quickly regain superior levels of service and efficiency."

First Quarter Summary

Operating revenue of $5.5 billion was up 7 percent in the first quarter 2018 compared to the first quarter 2017. First quarter business volumes, as measured by total revenue carloads, increased 2 percent compared to 2017. Volume increases in energy, industrial and premium more than offset a decline in agricultural products. In addition:

  • Quarterly freight revenue improved 7 percent compared to the first quarter 2017, as volume growth, increased fuel surcharge revenue, core pricing gains and positive mix all contributed to the increase.
  • Union Pacific's 64.6 percent operating ratio improved 0.6 points (see footnote) compared to the first quarter 2017. Higher fuel prices negatively impacted the operating ratio by about 0.2 points.
  • The $2.13 per gallon average quarterly diesel fuel price in the first quarter 2018 was 22 percent higher than the first quarter 2017.
  • Quarterly train speed, as reported to the Association of American Railroads, was 24.8 mph, 4 percent slower than the first quarter 2017.
  • Union Pacific's reportable personal injury rate of 0.74 per 200,000 employee-hours was a first quarter record, improving 17 percent compared to the first quarter 2017.
  • The Company repurchased 9.3 million shares in the first quarter 2018 at an aggregate cost of $1.2 billion.
  • Union Pacific redeemed $155 million of outstanding debentures and mortgage bonds, resulting in an approximate 8 cent reduction to diluted earnings per share.

Summary of First Quarter Freight Revenues

  • Agricultural Products flat
  • Industrial up 6 percent
  • Premium up 7 percent
  • Energy up 15 percent

2018 Outlook

"We are pleased with the improvement we have seen in recent weeks and are confident in the plan we have in place to continue building on the progress already made," Fritz said. "With the economy favoring a number of our market segments, we are well positioned to benefit from another year of positive volume growth and solid core pricing gains."

FootnoteCertain prior period amounts have been adjusted for the retrospective adoption of Accounting Standard Update 2017-07 related to the presentation of the components of net periodic pension and other postretirement benefit costs.

First Quarter 2018 Earnings Conference Call

Union Pacific will host its first quarter 2018 earnings release presentation live over the Internet and via teleconference on Thursday, April 26, 2018 at 8:45 a.m. Eastern Time.  The presentation will be webcast live over the internet on Union Pacific's website at www.up.com/investor.  Alternatively, the webcast can be accessed directly through the following link.  Participants may join the conference call by dialing 877/407-8293 (or for international participants, 201/689-8349).

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 connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. In the past 10 years, 2008-2017, Union Pacific invested approximately $34 billion in its network and operations to support America's transportation infrastructure. The railroad's diversified business mix includes Agricultural Products, Energy, Industrial and Premium. 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.

Supplemental financial information is attached.

This presentation 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 and its ability to improve network performance and customer service.  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 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 2017, which was filed with the SEC on February 9, 2018.  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,

1st Quarter

 For the Periods Ended March 31,

2018

2017

%


 Operating Revenues







  Freight revenues

$

5,122

$

4,794

7

%

  Other


353


338

4


 Total operating revenues


5,475


5,132

7


 Operating Expenses







      Compensation and benefits*


1,273


1,262

1


      Purchased services and materials


599


566

6


      Fuel


589


460

28


      Depreciation


543


520

4


      Equipment and other rents


266


276

(4)


      Other


266


260

2


 Total operating expenses


3,536


3,344

6


 Operating Income


1,939


1,788

8


      Other income/(expense)*


(42)


72


      Interest expense


(186)


(172)

8


 Income before income taxes


1,711


1,688

1


 Income taxes


(401)


(616)

(35)


 Net Income

$

1,310

$

1,072

22

%








 Share and Per Share







      Earnings per share - basic

$

1.69

$

1.32

28

%

      Earnings per share - diluted

$

1.68

$

1.32

27


      Weighted average number of shares - basic


776.4


811.5

(4)


      Weighted average number of shares - diluted


779.6


814.8

(4)


      Dividends declared per share

$

0.73

$

0.605

21









 Operating Ratio*


64.6%


65.2%

(0.6)

pts

 Effective Tax Rate


23.4%


36.5%

(13.1)

pts



*

Certain prior period amounts have been adjusted for the retrospective adoption of Accounting Standard Update 2017-07 related to the presentation of the components of net periodic pension and other postretirement benefit costs.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)









1st Quarter

 For the Periods Ended March 31,

2018

2017

%


 Freight Revenues (Millions)







 Agricultural Products

$

1,098

$

1,094

-

%

 Energy


1,173


1,024

15


 Industrial


1,340


1,264

6


 Premium


1,511


1,412

7


 Total

$

5,122

$

4,794

7

%

 Revenue Carloads (Thousands)







 Agricultural Products


279


290

(4)

%

 Energy


419


395

6


 Industrial


411


403

2


 Premium


1,016


1,000

2


 Total


2,125


2,088

2

%

 Average Revenue per Car







 Agricultural Products

$

3,942

$

3,768

5

%

 Energy


2,799


2,593

8


 Industrial


3,262


3,140

4


 Premium


1,487


1,413

5


 Average 

$

2,411

$

2,297

5

%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited)







Mar. 31,

Dec. 31,

 Millions, Except Percentages

2018

2017

 Assets





      Cash and cash equivalents

$

1,048

$

1,275

      Short-term investments


90


90

      Other current assets


2,759


2,641

      Investments


1,810


1,809

      Net properties


51,696


51,605

      Other assets


386


386

 Total assets

$

57,789

$

57,806






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

1,891

$

800

      Other current liabilities


2,855


3,139

      Debt due after one year


15,697


16,144

      Deferred income taxes


11,050


10,936

      Other long-term liabilities


1,907


1,931

 Total liabilities


33,400


32,950

 Total common shareholders' equity


24,389


24,856

 Total liabilities and common shareholders' equity

$

57,789

$

57,806






 Debt to Capital


41.9%


40.5%

 Adjusted Debt to Capital*


45.1%


43.9%



*

Adjusted Debt to Capital is a non-GAAP measure; however, management believes that it is an important measure 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 Ended March 31,

2018

2017

 Operating Activities





      Net income

$

1,310

$

1,072

      Depreciation


543


520

      Deferred income taxes


112


145

      Other - net


(64)


146

 Cash provided by operating activities


1,901


1,883

 Investing Activities





      Capital investments


(910)


(811)

      Purchases of short-term investments


(60)


(90)

      Maturities of short-term investments


60


60

      Other - net


(9)


(2)

 Cash used in investing activities


(919)


(843)

 Financing Activities





      Debt issued


1,706


200

      Common shares repurchased


(1,166)


(759)

      Debt repaid


(1,157)


(184)

      Dividends paid


(568)


(492)

      Other - net


(24)


(33)

 Cash used in financing activities


(1,209)


(1,268)

 Net Change in Cash and Cash Equivalents


(227)


(228)

 Cash and cash equivalents at beginning of year


1,275


1,277

 Cash and Cash Equivalents at End of Period

$

1,048

$

1,049

 Free Cash Flow*





      Cash provided by operating activities

$

1,901

$

1,883

      Cash used in investing activities


(919)


(843)

      Dividends paid


(568)


(492)

 Free cash flow

$

414

$

548



*

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)








1st Quarter

 For the Periods Ended March 31,

2018


2017

%


 Operating/Performance Statistics 






      Gross ton-miles (GTMs) (millions)

226,929


218,914

4

%

      Employees (average)

41,735


42,069

(1)


      GTMs (millions) per employee

5.44


5.20

5








 Locomotive Fuel Statistics






      Average fuel price per gallon consumed

$       2.13


$       1.75

22

%

      Fuel consumed in gallons (millions)

267


253

6


      Fuel consumption rate*

1.175


1.156

2








 AAR Reported Performance Measures






      Average train speed (miles per hour)

24.8


25.7

(4)

%

      Average terminal dwell time (hours)

33.0


30.6

8








 Revenue Ton-Miles (Millions)






      Agricultural Products

25,173


26,161

(4)

%

      Energy

43,962


40,186

9


      Industrial

24,290


24,053

1


      Premium

23,975


23,679

1


 Total

117,400


114,079

3

%



*

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 Percentages

2018

2017

 Debt (a)

$

17,588

$

16,944

 Equity


24,389


24,856

 Capital (b)

$

41,977

$

41,800

 Debt to capital (a/b)


41.9%


40.5%



*

Total debt divided by total debt plus equity. We believe this measure is important to management and investors 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 Percentages

2018

2017

 Debt

$

17,588

$

16,944

 Net present value of operating leases


1,989


2,140

 Unfunded pension and OPEB, net of taxes of $145 and $238


473


396

 Adjusted debt (a)


20,050


19,480

 Equity


24,389


24,856

 Adjusted capital (b)

$

44,439

$

44,336

 Adjusted debt to capital (a/b)


45.1%


43.9%



*

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 4.4% at March 31, 2018, and 4.6% at December 31, 2017. The discount rate reflects our effective interest rate. We believe this measure is important to management and investors in evaluating the total amount of leverage in our capital structure including off-balance sheet lease obligations.

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/union-pacific-reports-record-first-quarter-results-300636836.html

SOURCE Union Pacific Corporation

Copyright 2018 PR Newswire

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