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July 23, 2020, 8:01 a.m. EDT

Union Pacific Reports Second Quarter 2020 Results

OMAHA, Neb., July 23, 2020 /PRNewswire/ -- Union Pacific Corporation /zigman2/quotes/209717171/composite UNP +0.69% today reported 2020 second quarter net income of $1.1 billion, or $1.67 per diluted share. This compares to $1.6 billion, or $2.22 per diluted share, in the second quarter 2019.

"The Second Quarter proved very challenging as we faced a volume decline of 20 percent due to the economic impact of the COVID-19 pandemic.  Demonstrating the transformation our Company is experiencing through the implementation of Unified Plan 2020, we were able to largely mitigate the impact of that volume loss," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "Our dedicated employees are feeling a very real impact from this pandemic, making tangible sacrifices. Despite this adversity, they continue to make strides to improve the safety of our railroad, while providing our customers an uninterrupted, enhanced service product."

Second Quarter Summary

Operating revenue of $4.2 billion was down 24 percent in second quarter 2020, compared to second quarter 2019. Second quarter business volumes, as measured by total revenue carloads, decreased 20 percent compared to 2019. Volumes for all three business teams – bulk, industrial, and premium – declined in the quarter due to the deteriorating economic conditions brought on by the COVID-19 pandemic. In addition:

  • Quarterly freight revenue declined 24 percent, compared to second quarter 2019, as core pricing gains were offset by lower volumes, negative business mix and decreased fuel surcharge revenue.

  • Union Pacific's 61 percent operating ratio increased 1.4 points compared to second quarter 2019.

 





Operating Ratio Earnings PerDiluted Share
Second Quarter 2019 59.6% $2.22
2019 Weather / Insurance Recovery       0.9  pts $0.05
2019 Payroll Tax Refund          (0.7) pts ($0.04)
Fuel Impact     2.7  pts $0.09
Core Results          (4.3) pts ($0.72)
Illinois Tollway Real Estate Sale N/A $0.07
Second Quarter 2020 61.0% $1.67

 

  • Union Pacific recognized a $69 million gain from a real estate sale to the Illinois State Toll Highway Authority.

  • The $1.26 per gallon average quarterly diesel fuel price in second quarter 2020 was 43 percent lower than second quarter 2019.

  • Union Pacific's first half reportable personal injury rate of 0.83 incidents per 200,000 employee hours improved 5 percent compared to first half 2019.

  • Quarterly freight car velocity was 225 daily miles per car, an 11 percent improvement compared to second quarter 2019.

  • Quarterly locomotive productivity was 136 GTMs per horsepower day, a 12 percent improvement compared to second quarter 2019.

  • Average maximum train length was 8,664 feet, a 13 percent increase compared to second quarter 2019.

Summary of Second Quarter Freight Revenues

  • Bulk down 17 percent

  • Industrial down 23 percent

  • Premium down 33 percent

2020 Outlook

Although the state of global economy is somewhat uncertain given the lingering impact of the COVID-19 pandemic, Union Pacific currently expects full year 2020 carload volumes to be down around 10 percent or so compared to 2019.

"Our first priority continues to be the health and safety of our employees during the pandemic, as they perform critical service to support economic recovery," Fritz said. "Our ability to be nimble and flexible in adjusting our resources to rapidly changing volumes, while providing a high level service product, demonstrates the strength of our service model.  We remain focused on providing our customers with a safe, reliable and efficient service product."

Second Quarter 2020 Earnings Conference Call

Union Pacific will webcast its second quarter 2020 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, July 23, 2020 at 8:45 a.m. Eastern Time. 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 /zigman2/quotes/209717171/composite UNP +0.69% delivers the goods families and businesses use every day with safe, reliable and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com .

Supplemental financial information is attached.

This news release 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,  its ability to improve network performance, its results of operations, and potential impacts of the COVID-19 pandemic.  These statements are, or will be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of 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 2019, which was filed with the SEC on February 7, 2020, and the Company's Quarterly Report on Form 10-Q which was filed with the SEC on April 23, 2020. 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, 2nd Quarter
Year-to-Date
 For the Periods Ended June 30, 2020 2019 %

2020 2019 %
 Operating Revenues












      Freight revenues $ 3,972 $ 5,236 (24) %
$ 8,852 $ 10,246 (14) %
      Other
272
360 (24)


621
734 (15)
 Total operating revenues
4,244
5,596 (24)


9,473
10,980 (14)
 Operating Expenses












      Compensation and benefits
905
1,145 (21)


1,964
2,350 (16)
      Depreciation
551
551 -


1,098
1,100 -
      Purchased services and materials
441
573 (23)


962
1,149 (16)
      Fuel
247
560 (56)


681
1,091 (38)
      Equipment and other rents
211
260 (19)


438
518 (15)
      Other
235
247 (5)


533
552 (3)
 Total operating expenses
2,590
3,336 (22)


5,676
6,760 (16)
 Operating Income
1,654
2,260 (27)


3,797
4,220 (10)
      Other income
131
57 F


184
134 37
      Interest expense
(289)
(259) 12


(567)
(506) 12
 Income before income taxes
1,496
2,058 (27)


3,414
3,848 (11)
 Income taxes
(364)
(488) (25)


(808)
(887) (9)
 Net Income $ 1,132 $ 1,570 (28) %
$ 2,606 $ 2,961 (12) %














 Share and Per Share












      Earnings per share - basic $ 1.67 $ 2.23 (25) %
$ 3.83 $ 4.16 (8) %
      Earnings per share - diluted $ 1.67 $ 2.22 (25)

$ 3.82 $ 4.15 (8)
      Weighted average number of shares - basic
677.7
705.5 (4)


681.0
711.2 (4)
      Weighted average number of shares - diluted
679.2
708.0 (4)


682.7
713.8 (4)
      Dividends declared per share $ 0.97 $ 0.88 10

$ 1.94 $ 1.76 10














 Operating Ratio
61.0%
59.6% 1.4 pts

59.9%
61.6% (1.7) pts
 Effective Tax Rate
24.3%
23.7% 0.6 pts

23.7%
23.1% 0.6 pts

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)















2nd Quarter
Year-to-Date
 For the Periods Ended June 30, 2020 2019 %

2020 2019 %
 Freight Revenues (Millions)












      Grain & grain products $ 644 $ 711 (9) %
$ 1,333 $ 1,376 (3) %
      Fertilizer
168
172 (2)


342
331 3
      Food & refrigerated
205
272 (25)


455
514 (11)
      Coal & renewables
369
523 (29)


790
1,077 (27)
    Bulk
1,386
1,678 (17)


2,920
3,298 (11)
      Industrial chemicals & plastics
435
482 (10)


930
934 -
      Metals & minerals
368
557 (34)


837
1,093 (23)
      Forest products
266
303 (12)


569
588 (3)
      Energy & specialized markets
431
595 (28)


1,058
1,161 (9)
    Industrial
1,500
1,937 (23)


3,394
3,776 (10)
      Automotive
189
554 (66)


713
1,074 (34)
      Intermodal
897
1,067 (16)


1,825
2,098 (13)
    Premium
1,086
1,621 (33)


2,538
3,172 (20)
 Total $ 3,972 $ 5,236 (24) %
$ 8,852 $ 10,246 (14) %
 Revenue Carloads (Thousands)












      Grain & grain products
167
178 (6) %

342
347 (1) %
      Fertilizer
53
54 (2)


99
97 2
      Food & refrigerated
41
52 (21)


89
99 (10)
      Coal & renewables
186
244 (24)


394
500 (21)
    Bulk
447
528 (15)


924
1,043 (11)
      Industrial chemicals & plastics
141
157 (10)


295
305 (3)
      Metals & minerals
162
199 (19)


336
379 (11)
      Forest products
50
56 (11)


106
112 (5)
      Energy & specialized markets
115
156 (26)


277
303 (9)
    Industrial
468
568 (18)


1,014
1,099 (8)
      Automotive
79
218 (64)


287
428 (33)
      Intermodal [a]
724
823 (12)


1,433
1,654 (13)
    Premium
803
1,041 (23)


1,720
2,082 (17)
 Total
1,718
2,137 (20) %

3,658
4,224 (13) %
 Average Revenue per Car












      Grain & grain products $ 3,861 $ 3,993 (3) %
$ 3,901 $ 3,959 (1) %
      Fertilizer
3,181
3,182 -


3,456
3,419 1
      Food & refrigerated
4,986
5,211 (4)


5,142
5,215 (1)
      Coal & renewables
1,979
2,147 (8)


2,001
2,155 (7)
    Bulk
3,099
3,179 (3)


3,161
3,163 -
      Industrial chemicals & plastics
3,086
3,081 -


3,148
3,064 3
      Metals & minerals
2,276
2,806 (19)


2,494
2,883 (13)
      Forest products
5,256
5,324 (1)


5,361
5,236 2
      Energy & specialized markets
3,739
3,807 (2)


3,813
3,835 (1)
    Industrial
3,201
3,408 (6)


3,345
3,436 (3)
      Automotive
2,388
2,546 (6)


2,487
2,510 (1)
      Intermodal [a]
1,241
1,295 (4)


1,274
1,268 -
    Premium
1,354
1,557 (13)


1,476
1,523 (3)
 Average  $ 2,312 $ 2,450 (6) %
$ 2,420 $ 2,425 - %


[a] For intermodal shipments each container or trailer equals one carload.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Financial Position (unaudited)






Jun. 30, Dec. 31,
 Millions, Except Percentages 2020 2019
 Assets



      Cash and cash equivalents $ 2,706 $ 831
      Short-term investments
60
60
      Other current assets
2,317
2,568
      Investments
2,042
2,050
      Net properties
54,270
53,916
      Operating lease assets
1,700
1,812
      Other assets
460
436
 Total assets $ 63,555 $ 61,673





 Liabilities and Common Shareholders' Equity



      Debt due within one year $ 1,990 $ 1,257
      Other current liabilities
3,289
3,094
      Debt due after one year
26,439
23,943
      Operating lease liabilities
1,320
1,471
      Deferred income taxes
12,171
11,992
      Other long-term liabilities
1,894
1,788
 Total liabilities
47,103
43,545
 Total common shareholders' equity
16,452
18,128
 Total liabilities and common shareholders' equity $ 63,555 $ 61,673

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows (unaudited)





 Millions, Year-to-Date
 For the Periods Ended June 30, 2020 2019
 Operating Activities



      Net income $ 2,606 $ 2,961
      Depreciation
1,098
1,100
      Deferred income taxes
171
209
      Other - net
517
(370)
 Cash provided by operating activities
4,392
3,900
 Investing Activities



      Capital investments
(1,599)
(1,560)
      Maturities of short-term investments
75
105
      Purchases of short-term investments
(75)
(100)
      Other - net
182
(55)
 Cash used in investing activities
(1,417)
(1,610)
 Financing Activities



      Debt issued
4,004
2,992
      Share repurchase programs
(2,556)
(3,629)
      Dividends paid
(1,319)
(1,248)
      Debt repaid
(770)
(604)
      Accelerated share repurchase programs pending final settlement
(400)
(500)
      Net issuance of commercial paper
(1)
471
      Other - net
(65)
(29)
 Cash used in financing activities
(1,107)
(2,547)
 Net Change in Cash, Cash Equivalents and Restricted Cash
1,868
(257)
 Cash, cash equivalents, and restricted cash at beginning of year
856
1,328
 Cash, Cash Equivalents, and Restricted Cash at End of Period $ 2,724 $ 1,071
 Free Cash Flow*



      Cash provided by operating activities $ 4,392 $ 3,900
      Cash used in investing activities
(1,417)
(1,610)
      Dividends paid
(1,319)
(1,248)
 Free cash flow $ 1,656 $ 1,042


* 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)













2nd Quarter
Year-to-Date
 For the Periods Ended June 30, 2020
2019 %

2020
2019 %
 Operating/Performance Statistics 










      Freight car velocity (daily miles per car) [a] 225
202 11 %
216
198 9 %
      Average train speed (miles per hour) [a] * 26.9
24.5 10

26.0
24.6 6
      Average terminal dwell time (hours) [a] * 21.6
25.7 (16)

22.8
26.2 (13)
      Locomotive productivity (GTMs per horsepower day) 136
121 12

133
116 15
      Gross ton-miles (GTMs) (millions) 170,626
220,009 (22)

371,923
430,328 (14)
      Train length (feet) 8,664
7,652 13

8,517
7,472 14
      Intermodal car trip plan compliance (%) 82
69 13 pts
83
68 15 pts
      Manifest/Automotive car trip plan compliance (%) 76
59 17 pts
69
61 8 pts
      Workforce productivity (car miles per employee) 868
866 -

882
839 5
      Total employees (average) 30,059
38,657 (22)

31,965
39,355 (19)












 Locomotive Fuel Statistics










      Average fuel price per gallon consumed $ 1.26
$ 2.21 (43) %
$ 1.59
$ 2.14 (26) %
      Fuel consumed in gallons (millions) 189
245 (23)

414
493 (16)
      Fuel consumption rate** 1.107
1.112 -

1.112
1.146 (3)












 Revenue Ton-Miles (Millions)










      Grain & grain products 16,242
17,244 (6) %
32,353
33,421 (3) %
      Fertilizer 3,116
3,099 1

6,160
5,985 3
      Food & refrigerated 3,752
4,851 (23)

8,258
9,358 (12)
      Coal & renewables 18,188
24,855 (27)

38,193
51,184 (25)
    Bulk 41,298
50,049 (17)

84,964
99,948 (15)
      Industrial chemicals & plastics 6,286
7,215 (13)

13,460
14,027 (4)
      Metals & minerals 6,402
10,260 (38)

14,935
20,179 (26)
      Forest products 5,398
6,083 (11)

11,439
11,927 (4)
      Energy & specialized markets 7,276
11,147 (35)

19,322
21,792 (11)
    Industrial 25,362
34,705 (27)

59,156
67,925 (13)
      Automotive 1,740
4,672 (63)

6,229
9,197 (32)
      Intermodal 17,514
19,318 (9)

35,248
38,324 (8)
    Premium 19,254
23,990 (20)

41,477
47,521 (13)
 Total 85,914
108,744 (21) %
185,597
215,394 (14) %


[a] Prior years have been realigned to conform to the current year presentation.


* Surface Transportation Board reported performance measures. 


** 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)








2020
 Millions, Except Per Share Amounts and Percentages, 1st Qtr  2nd Qtr  Year-to-Date
 Operating Revenues





      Freight revenues $ 4,880 $ 3,972 $ 8,852
      Other revenues
349
272
621
 Total operating revenues
5,229
4,244
9,473
 Operating Expenses





      Compensation and benefits
1,059
905
1,964
      Depreciation
547
551
1,098
      Purchased services and materials
521
441
962
      Fuel
434
247
681
      Equipment and other rents
227
211
438
      Other
298
235
533
 Total operating expenses
3,086
2,590
5,676
 Operating Income
2,143
1,654
3,797
      Other income
53
131
184
      Interest expense
(278)
(289)
(567)
 Income before income taxes
1,918
1,496
3,414
 Income taxes
(444)
(364)
(808)
 Net Income $ 1,474 $ 1,132 $ 2,606







 Share and Per Share





      Earnings per share - basic $ 2.15 $ 1.67 $ 3.83
      Earnings per share - diluted $ 2.15 $ 1.67 $ 3.82
      Weighted average number of shares - basic
684.3
677.7
681.0
      Weighted average number of shares - diluted
686.2
679.2
682.7
      Dividends declared per share $ 0.97 $ 0.97 $ 1.94







 Operating Ratio
59.0%
61.0%
59.9%
 Effective Tax Rate
23.1%
24.3%
23.7%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)








2020

1st Qtr  2nd Qtr  Year-to-Date
 Freight Revenues (Millions)





      Grain & grain products $ 689 $ 644 $ 1,333
      Fertilizer
174
168
342
      Food & refrigerated
250
205
455
      Coal & renewables
421
369
790
    Bulk
1,534
1,386
2,920
      Industrial chemicals & plastics
495
435
930
      Metals & minerals
469
368
837
      Forest products
303
266
569
      Energy & specialized markets
627
431
1,058
    Industrial
1,894
1,500
3,394
      Automotive
524
189
713
      Intermodal
928
897
1,825
    Premium
1,452
1,086
2,538
 Total $ 4,880 $ 3,972 $ 8,852
 Revenue Carloads (Thousands)





      Grain & grain products
175
167
342
      Fertilizer
46
53
99
      Food & refrigerated
48
41
89
      Coal & renewables
208
186
394
    Bulk
477
447
924
      Industrial chemicals & plastics
154
141
295
      Metals & minerals
174
162
336
      Forest products
56
50
106
      Energy & specialized markets
162
115
277
    Industrial
546
468
1,014
      Automotive
208
79
287
      Intermodal [a]
709
724
1,433
    Premium
917
803
1,720
 Total
1,940
1,718
3,658
 Average Revenue per Car





      Grain & grain products $ 3,940 $ 3,861 $ 3,901
      Fertilizer
3,768
3,181
3,456
      Food & refrigerated
5,277
4,986
5,142
      Coal & renewables
2,022
1,979
2,001
    Bulk
3,219
3,099
3,161
      Industrial chemicals & plastics
3,205
3,086
3,148
      Metals & minerals
2,697
2,276
2,494
      Forest products
5,457
5,256
5,361
      Energy & specialized markets
3,866
3,739
3,813
    Industrial
3,469
3,201
3,345
      Automotive
2,525
2,388
2,487
      Intermodal [a]
1,307
1,241
1,274
    Premium
1,583
1,354
1,476
 Average  $ 2,516 $ 2,312 $ 2,420


[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 Jun. 30, Dec. 31,
for the Trailing Twelve Months Ended [a] 2020 2019
 Net income $ 5,564 $ 5,919
 Add:



 Income tax expense
1,749
1,828
 Depreciation
2,214
2,216
 Interest expense
1,111
1,050
 EBITDA $ 10,638 $ 11,013
 Adjustments:


 Other income
(293)
(243)
 Interest on operating lease liabilities**
61
68
 Adjusted EBITDA $ 10,406 $ 10,838
 Debt $ 28,429 $ 25,200
 Operating lease liabilities
1,639
1,833
 Unfunded pension and OPEB,  net of taxes of $115 and $124
370
400
 Adjusted debt $ 30,438 $ 27,433
 Adjusted debt / Adjusted EBITDA
2.9
2.5


[a] The trailing twelve months income statement information ended June 30, 2020 is recalculated by taking the twelve months ended December 31, 2019, subtracting the six months ended June 30, 2019, and adding the six months ended June 30, 2020.


* Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB obligation divided by net income plus income tax expense, depreciation, amortization, interest expense and adjustments for other income and interest on operating lease liabilities. Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other income and interest on operating lease liabilities) 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. At both June 30, 2020 and December 31, 2019, the incremental borrowing rate on operating lease liabilities was 3.7%.


** Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.

 

Cision
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SOURCE Union Pacific Corporation

COMTEX_368371174/2454/2020-07-23T08:00:30

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/zigman2/quotes/209717171/composite
US : U.S.: NYSE
$ 195.67
+1.35 +0.69%
Volume: 1.71M
Sept. 24, 2020 4:00p
P/E Ratio
24.31
Dividend Yield
1.98%
Market Cap
$132.83 billion
Rev. per Employee
$544,047
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/zigman2/quotes/209717171/composite
US : U.S.: NYSE
$ 195.67
+1.35 +0.69%
Volume: 1.71M
Sept. 24, 2020 4:00p
P/E Ratio
24.31
Dividend Yield
1.98%
Market Cap
$132.83 billion
Rev. per Employee
$544,047
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Comtex
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