Union Pacific Plans $20 Billion Stock Buyback

Date : 06/01/2018 @ 7:29AM
Source : Dow Jones News
Stock : Union Pacific Corp. (UNP)
Quote : 148.56  -0.03 (-0.02%) @ 4:02PM

Union Pacific Plans $20 Billion Stock Buyback

Union Pacific (NYSE:UNP)
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   By Colin Kellaher 
 

Union Pacific Corp. (UNP) plans to buy back about $20 billion worth of stock between 2018 and 2020 and expects to achieve a 60% operating ratio on a full-year basis by 2020.

In a presentation to investors Thursday, the Omaha, Neb., railroad operator said it also expects positive annual volume growth over the next three years. Union Pacific posted an 11% decline in volume between 2015 and 2017.

Union Pacific's operating ratio, or operating expenses as a percentage of revenue, was 62.8% in 2017. The railroad's ultimate goal is a ratio of 55%.

The company said capital expenditures will remain at or below 15% of revenue for the foreseeable future, including an estimated $3.3 billion in 2018. The railroad is targeting a dividend payout ratio of 40%-45%.

Union Pacific said it expects to reach its targeted adjusted debt-to-Ebitda ratio of up to 2.7 over the next two to three years; and that it aims to maintain investment-grade credit ratings of at least "Baa1" by Moody's and "BBB+" by Standard & Poors.

S&P late Thursday lowered its corporate credit rating on Union Pacific to 'A-' from 'A,' citing the planned $20 billion share repurchase, which S&P said will be partially funded through incremental debt, resulting in weaker credit metrics.

 

Write to Colin Kellaher at colin.kellaher@wsj.com

 

(END) Dow Jones Newswires

June 01, 2018 07:14 ET (11:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.

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