Union Pacific Reports Record Third Quarter Results

Date : 10/25/2018 @ 12:00PM
Source : PR Newswire (US)
Stock : Union Pacific Corp. (UNP)
Quote : 151.43  0.0 (0.00%) @ 1:16PM

Union Pacific Reports Record Third Quarter Results

Union Pacific (NYSE:UNP)
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OMAHA, Neb., Oct. 25, 2018 /PRNewswire/ --

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

Third Quarter Results

  • Diluted earnings per share of $2.15 increased 43 percent.
  • Operating income totaled $2.3 billion, up 9 percent.
  • Operating ratio of 61.7 percent, flat with third quarter 2017 (see footnote 1).

Union Pacific Corporation (NYSE: UNP) today reported 2018 third quarter net income of $1.6 billion, or a third quarter record $2.15 per diluted share. This compares to $1.2 billion, or $1.50 per diluted share, in the third quarter 2017.

"While we reported solid financial results, we did not make the service and productivity gains that we expected during the quarter. However, we are making progress implementing our new Unified Plan 2020 and we are well positioned to drive improvement going forward," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "I am confident we have the right people and plans in place to improve our operations, provide more reliable service for our customers, and achieve industry-leading financial performance."

Third Quarter Summary

Operating revenue of $5.9 billion was up 10 percent in the third quarter 2018 compared to the third quarter 2017. Third quarter carloads increased 6 percent compared to 2017. Volume increases in industrial, premium, and agricultural products more than offset declines in energy. In addition:

  • Quarterly freight revenue improved 10 percent compared to the third quarter 2017, as volume growth, higher fuel surcharge revenue, and core pricing gains were partially offset by negative mix of traffic.
  • Union Pacific's 61.7 percent operating ratio was flat (see footnote) compared to the third quarter 2017.
  • The $2.38 per gallon average quarterly diesel fuel price in the third quarter 2018 was 34 percent higher than the third quarter 2017.
  • Quarterly train speed, as reported to the Association of American Railroads, was 24.0 mph, 6 percent slower than the third quarter 2017.
  • Union Pacific's year-to-date reportable personal injury rate of 0.77 per 200,000 employee hours improved 1 percent compared to the year-to-date rate achieved in 2017.
  • The Company repurchased 2.2 million shares in the third quarter 2018.

Summary of Third Quarter Freight Revenues

  • Energy up 1 percent
  • Agricultural Products up 6 percent
  • Industrial up 13 percent
  • Premium up 18 percent

Outlook

"Looking ahead, I am confident that the recent progress we have made on our Unified Plan 2020 will accelerate in the near term.  As we move forward with its implementation, along with other G55 + 0 initiatives, we will regain our productivity momentum and improve the value proposition for all of our stakeholders," Fritz said.

Footnote 1Certain 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.

Third Quarter 2018 Earnings Conference Call

Union Pacific will host its third quarter 2018 earnings release presentation live over the Internet and via teleconference on Thursday, October 25, 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; its ability to generate financial returns; improve resource productivity; enhancing the customer experience; implementing corporate strategies; and providing excellent service to its customers and returns to 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 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,

3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2018

2017

%



2018

2017

%


 Operating Revenues














      Freight revenues

$

5,558

$

5,050

10

%


$

15,997

$

14,750

8

%

      Other


370


358

3




1,078


1,040

4


 Total operating revenues


5,928


5,408

10




17,075


15,790

8


 Operating Expenses














      Compensation and benefits*


1,262


1,237

2




3,776


3,703

2


      Fuel


659


450

46




1,891


1,344

41


      Purchased services and materials


632


615

3




1,861


1,778

5


      Depreciation


547


528

4




1,636


1,573

4


      Equipment and other rents


272


275

(1)




803


824

(3)


      Other


287


230

25




801


709

13


 Total operating expenses


3,659


3,335

10




10,768


9,931

8


 Operating Income


2,269


2,073

9




6,307


5,859

8


      Other income*


48


90

(47)




48


212

(77)


      Interest expense


(241)


(180)

34




(630)


(531)

19


 Income before income taxes


2,076


1,983

5




5,725


5,540

3


 Income taxes


(483)


(789)

(39)




(1,313)


(2,106)

(38)


 Net Income

$

1,593

$

1,194

33

%


$

4,412

$

3,434

28

%















 Share and Per Share














      Earnings per share - basic

$

2.16

$

1.50

44

%


$

5.82

$

4.27

36

%

      Earnings per share - diluted

$

2.15

$

1.50

43



$

5.79

$

4.26

36


      Weighted average number of shares - basic


737.4


794.5

(7)




758.1


803.4

(6)


      Weighted average number of shares - diluted


740.9


797.6

(7)




761.4


806.5

(6)


      Dividends declared per share

$

0.80

$

0.605

32



$

2.26

$

1.815

25
















 Operating Ratio*


61.7%


61.7%

-

pts



63.1%


62.9%

0.2

pts

 Effective Tax Rate


23.3%


39.8%

(16.5)

pts



22.9%


38.0%

(15.1)

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)
















3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2018

2017

%



2018

2017

%


 Freight Revenues (Millions)














 Agricultural Products

$

1,133

$

1,072

6

%


$

3,345

$

3,230

4

%

 Energy


1,214


1,204

1




3,498


3,285

6


 Industrial


1,497


1,324

13




4,274


3,922

9


 Premium


1,714


1,450

18




4,880


4,313

13


 Total

$

5,558

$

5,050

10

%


$

15,997

$

14,750

8

%

 Revenue Carloads (Thousands)














 Agricultural Products


285


280

2

%



849


859

(1)

%

 Energy


440


448

(2)




1,246


1,234

1


 Industrial


458


419

9




1,321


1,249

6


 Premium [a]


1,133


1,041

9




3,250


3,079

6


 Total


2,316


2,188

6

%



6,666


6,421

4

%

 Average Revenue per Car














 Agricultural Products

$

3,973

$

3,827

4

%


$

3,939

$

3,760

5

%

 Energy


2,757


2,690

2




2,807


2,663

5


 Industrial


3,269


3,159

3




3,236


3,140

3


 Premium


1,513


1,392

9




1,501


1,401

7


 Average 

$

2,399

$

2,307

4

%


$

2,400

$

2,297

4

%


[a]   

For intermodal shipments each 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

2018

2017

 Assets





      Cash and cash equivalents

$

1,810

$

1,275

      Short-term investments


90


90

      Other current assets


2,916


2,641

      Investments


1,887


1,809

      Net properties


52,210


51,605

      Other assets


399


386

 Total assets

$

59,312

$

57,806






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

1,468

$

800

      Other current liabilities


3,061


3,139

      Debt due after one year


20,943


16,144

      Deferred income taxes


11,270


10,936

      Other long-term liabilities


1,925


1,931

 Total liabilities


38,667


32,950

 Total common shareholders' equity


20,645


24,856

 Total liabilities and common shareholders' equity

$

59,312

$

57,806

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)






 Millions,

Year-to-Date

 For the Periods Ended September 30,

2018

2017

 Operating Activities





      Net income

$

4,412

$

3,434

      Depreciation


1,636


1,573

      Deferred income taxes


312


514

      Other - net


14


(123)

 Cash provided by operating activities


6,374


5,398

 Investing Activities





      Capital investments


(2,428)


(2,379)

      Purchases of short-term investments


(90)


(90)

      Maturities of short-term investments


90


60

      Other - net


(6)


149

 Cash used in investing activities


(2,434)


(2,260)

 Financing Activities





      Share repurchase programs


(7,024)


(2,882)

      Debt issued


6,992


2,285

      Debt repaid


(1,807)


(471)

      Dividends paid


(1,716)


(1,460)

      Net issuance of commercial paper


195


-

      Other - net


(45)


(40)

 Cash used in financing activities


(3,405)


(2,568)

 Net Change in Cash and Cash Equivalents


535


570

 Cash and cash equivalents at beginning of year


1,275


1,277

 Cash and Cash Equivalents at End of Period

$

1,810

$

1,847

 Free Cash Flow*





      Cash provided by operating activities

$

6,374

$

5,398

      Cash used in investing activities


(2,434)


(2,260)

      Dividends paid


(1,716)


(1,460)

 Free cash flow

$

2,224

$

1,678


*     

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)














3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2018


2017

%



2018


2017

%


 Operating/Performance Statistics 












      Gross ton-miles (GTMs) (millions)

240,183


229,791

5

%


698,050


671,547

4

%

      Employees (average)

42,323


42,056

1



42,057


42,127

-


      GTMs (millions) per employee

5.67


5.46

4



16.60


15.94

4














 Locomotive Fuel Statistics












      Average fuel price per gallon consumed

$       2.38


$       1.77

34

%


$       2.27


$       1.74

30

%

      Fuel consumed in gallons (millions)

266


245

9



803


744

8


      Fuel consumption rate*

1.109


1.063

4



1.151


1.107

4














 AAR Reported Performance Measures












      Average train speed (miles per hour)

24.0


25.4

(6)

%


24.5


25.5

(4)

%

      Average terminal dwell time (hours)

29.3


30.0

(2)



30.6


29.6

3














 Revenue Ton-Miles (Millions)












      Agricultural Products

25,911


24,708

5

%


76,992


75,944

1

%

      Energy

45,190


46,032

(2)



129,154


126,535

2


      Industrial

25,899


24,467

6



75,939


73,615

3


      Premium

26,313


23,763

11



76,264


71,777

6


 Total

123,313


118,970

4

%


358,349


347,871

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) 











2018

 Millions, Except Per Share Amounts and Percentages,

1st Qtr 

2nd Qtr 

3rd Qtr 

Year-to-Date

 Operating Revenues









      Freight revenues

$

5,122

$

5,317

$

5,558

$

15,997

      Other revenues


353


355


370


1,078

 Total operating revenues


5,475


5,672


5,928


17,075

 Operating Expenses









      Compensation and benefits


1,273


1,241


1,262


3,776

      Fuel


589


643


659


1,891

      Purchased services and materials


599


630


632


1,861

      Depreciation


543


546


547


1,636

      Equipment and other rents


266


265


272


803

      Other


266


248


287


801

 Total operating expenses


3,536


3,573


3,659


10,768

 Operating Income


1,939


2,099


2,269


6,307

      Other income/(expense)


(42)


42


48


48

      Interest expense


(186)


(203)


(241)


(630)

 Income before income taxes


1,711


1,938


2,076


5,725

 Income taxes


(401)


(429)


(483)


(1,313)

 Net Income

$

1,310

$

1,509

$

1,593

$

4,412










 Share and Per Share









      Earnings per share - basic

$

1.69

$

1.98

$

2.16

$

5.82

      Earnings per share - diluted

$

1.68

$

1.98

$

2.15

$

5.79

      Weighted average number of shares - basic


776.4


760.5


737.4


758.1

      Weighted average number of shares - diluted


779.6


763.7


740.9


761.4

      Dividends declared per share

$

0.73

$

0.73

$

0.80

$

2.26










 Operating Ratio


64.6%


63.0%


61.7%


63.1%

 Effective Tax Rate


23.4%


22.1%


23.3%


22.9%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)











2018


1st Qtr 

2nd Qtr 

3rd Qtr 

Year-to-Date

 Freight Revenues (Millions)









 Agricultural Products

$

1,098

$

1,114

$

1,133

$

3,345

 Energy


1,173


1,111


1,214


3,498

 Industrial


1,340


1,437


1,497


4,274

 Premium


1,511


1,655


1,714


4,880

 Total

$

5,122

$

5,317

$

5,558

$

15,997

 Revenue Carloads (Thousands)









 Agricultural Products


279


285


285


849

 Energy


419


387


440


1,246

 Industrial


411


452


458


1,321

 Premium [a]


1,016


1,101


1,133


3,250

 Total


2,125


2,225


2,316


6,666

 Average Revenue per Car









 Agricultural Products

$

3,942

$

3,903

$

3,973

$

3,939

 Energy


2,799


2,874


2,757


2,807

 Industrial


3,262


3,178


3,269


3,236

 Premium


1,487


1,503


1,513


1,501

 Average 

$

2,411

$

2,389

$

2,399

$

2,400


[a]   

For intermodal shipments each container or trailer equals one carload.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP


Adjusted Debt / Adjusted EBITDA*










Millions, Except Ratios

Sep. 30,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2018

2017

 Net income

$

11,690

$

10,712

 Less:





 Other income


81


245

 Add:





 Income tax expense/(benefit)


(3,873)


(3,080)

 Depreciation


2,168


2,105

 Interest expense


818


719

 EBITDA

$

10,722

$

10,211

 Interest on present value of operating leases


85


98

 Adjusted EBITDA (a)

$

10,807

$

10,309

 Debt

$

22,411

$

16,944

 Net present value of operating leases


1,929


2,140

 Unfunded pension and OPEB,  net of taxes of $137 and $238


452


396

 Adjusted debt (b)

$

24,792

$

19,480

 Adjusted debt / Adjusted EBITDA (b/a)


2.3


1.9



[a]   

The trailing twelve months income statement information ended September 30, 2018 is recalculated by taking the twelve months ended December 31, 2017, subtracting the nine months ended September 30, 2017, and adding the nine months ended September 30, 2018.



*     

Total debt plus net present value of operating leases plus after-tax unfunded pension and OPEB obligation divided by net income less income tax benefit and other income plus depreciation, interest expense, and interest on present value of operating leases. Operating leases were discounted using 4.4% at September 30, 2018, and 4.6% at December 31, 2017. Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and interest on present value of operating leases) 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 to management and investors in evaluating the Company's ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company's credit rating. Adjusted debt to Adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income. The table above provides reconciliations from net income to adjusted debt to adjusted EBITDA.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/union-pacific-reports-record-third-quarter-results-300737607.html

SOURCE Union Pacific Corporation

Copyright 2018 PR Newswire

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