Union Pacific Reports Third Quarter 2022 Results

• Adjusted earnings per diluted share of $3.19
• Operating revenue up 18%
• Adjusted operating income up 13%

OMAHA, Neb., Oct. 20, 2022 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2022 third quarter net income of $1.9 billion, or $3.05 per diluted share. These results include a $114 million charge for a change to prior period accounting estimates related to new, tentative and ratified labor agreements.  Excluding the effects of that charge, adjusted third quarter net income was $2.0 billion, or $3.19 per diluted share. This compares to 2021 third quarter net income of $1.7 billion, or $2.57 per diluted share.

"We made positive strides in the third quarter to increase network fluidity and better meet customer demand," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "Inflationary pressures and operational inefficiencies continued to challenge us. We reported strong revenue and operating income growth in the quarter through increased fuel surcharge revenue, volume gains, and solid core pricing. As we close out 2022, we will maintain strong price discipline while improving efficiency and service to capitalize on the available demand."

Financial Results: Topline Growth Produces Quarterly Records for Operating Revenue, Operating Income, Net Income, and Earnings Per Share
Third Quarter 2022 Compared to Third Quarter 2021

• Operating revenue of $6.6 billion was up 18% driven by higher fuel surcharge revenue, volume growth, and core pricing gains.
• Business volumes, as measured by total revenue carloads, were up 3%.
• Union Pacific's reported operating ratio was 59.9%. Excluding the charge, the adjusted operating ratio of 58.2% deteriorated by 190 basis points. Lower fuel prices positively impacted the operating ratio by 70 basis points.
• Adjusted operating income of $2.7 billion was up 13%.
• The company repurchased 9.5 million shares in third quarter 2022 at an aggregate cost of $2.1 billion.

Operating Performance: Service and Efficiency Measures Improve Sequentially but Lag Prior Year Results; Quarterly Record for Fuel Consumption Rate
Third Quarter 2022 Compared to Third Quarter 2021

• Quarterly freight car velocity was 191 daily miles per car, a 2% decline.
• Quarterly locomotive productivity was 124 gross ton-miles (GTMs) per horsepower day, a 2% decline.
• Average maximum train length increased 1% to 9,483 feet.
• Quarterly workforce productivity of 1,045 car miles per employee was flat.
• Fuel consumption rate of 1.056, measured in gallons of fuel per thousand GTMs, improved 1%.
• Union Pacific's year-to-date reportable personal injury rate improved 20% to 0.80 per 200,000 employee-hours compared to 1.00 for year-to-date 2021.

2022 Guidance: Update Reflects Challenging Year

Updated

• Full year carload growth ~3%
• Full year reported operating ratio around 60%
• Capital spending of $3.4 billion
• Full year share repurchases of $6.5 billion

Affirmed

• Pricing gains in excess of inflation dollars
• Long term dividend payout target of 45% of earnings

Third Quarter 2022 Earnings Conference Call

Union Pacific will webcast its third quarter 2022 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, October 20, 2022, at 8:45 a.m. Eastern Time. Participants may join the conference call by dialing 877-407-8293 (or for international participants, 201-689-8349).

ABOUT UNION PACIFIC

Union Pacific (NYSE: UNP) 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.

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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 (including those in response to increased traffic), its results of operations, and potential impacts of the COVID-19 pandemic and the Russian-Ukraine conflict.  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 2021, which was filed with the SEC on February 4, 2022. 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		3rd Quarter												Year-to-Date
Percentages, For the Periods Ended September 30,			2022			2021				%				2022				2021				%
Operating Revenues
Freight revenues		$	6,109			$	5,166				18	%		$	17,391			$	14,947				16	%
Other revenues			457				400				14				1,304				1,124				16
Total operating revenues			6,566				5,566				18				18,695				16,071				16
Operating Expenses
Compensation and benefits			1,278				1,040				23				3,471				3,088				12
Fuel			932				544				71				2,586				1,452				78
Purchased services and materials			626				510				23				1,809				1,478				22
Depreciation			563				553				2				1,677				1,652				2
Equipment and other rents			215				217				(1)				660				629				5
Other			319				270				18				987				874				13
Total operating expenses			3,933				3,134				25				11,190				9,173				22
Operating Income			2,633				2,432				8				7,505				6,898				9
Other income, net			124				38			F					334				214				56
Interest expense			(315)				(290)				9				(938)				(862)				9
Income before income taxes			2,442				2,180				12				6,901				6,250				10
Income taxes			(547)				(507)				8				(1,541)				(1,438)				7
Net Income		$	1,895			$	1,673				13	%		$	5,360			$	4,812				11	%
Share and Per Share
Earnings per share - basic		$	3.05			$	2.58				18	%		$	8.56			$	7.31				17	%
Earnings per share - diluted		$	3.05			$	2.57				19			$	8.54			$	7.29				17
Weighted average number of shares - basic			620.4				648.7				(4)				626.1				658.3				(5)
Weighted average number of shares - diluted			621.5				650.3				(4)				627.4				659.9				(5)
Dividends declared per share		$	1.30			$	1.07				21			$	3.78			$	3.11				22
Operating Ratio			59.9	%			56.3	%			3.6	pts			59.9	%			57.1	%			2.8	pts
Effective Tax Rate			22.4	%			23.3	%			(0.9)	pts			22.3	%			23.0	%			(0.7)	pts

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)
		3rd Quarter												Year-to-Date
For the Periods Ended September 30,		2022				2021				%				2022				2021				%
Freight Revenues (Millions)
Grain & grain products		$	880			$	731				20	%		$	2,624			$	2,292				14	%
Fertilizer			178				172				3				541				521				4
Food & refrigerated			290				253				15				828				739				12
Coal & renewables			611				531				15				1,611				1,295				24
Bulk			1,959				1,687				16				5,604				4,847				16
Industrial chemicals & plastics			579				503				15				1,656				1,436				15
Metals & minerals			601				488				23				1,648				1,330				24
Forest products			390				342				14				1,140				1,006				13
Energy & specialized markets			624				578				8				1,762				1,654				7
Industrial			2,194				1,911				15				6,206				5,426				14
Automotive			601				417				44				1,663				1,292				29
Intermodal			1,355				1,151				18				3,918				3,382				16
Premium			1,956				1,568				25				5,581				4,674				19
Total		$	6,109			$	5,166				18	%		$	17,391				14,947				16	%
Revenue Carloads (Thousands)
Grain & grain products			190				185				3	%			590				592				-	%
Fertilizer			51				55				(7)				149				153				(3)
Food & refrigerated			48				48				-				143				141				1
Coal & renewables			243				232				5				670				604				11
Bulk			532				520				2				1,552				1,490				4
Industrial chemicals & plastics			165				153				8				486				449				8
Metals & minerals			202				188				7				589				516				14
Forest products			62				63				(2)				189				187				1
Energy & specialized markets			140				145				(3)				412				422				(2)
Industrial			569				549				4				1,676				1,574				6
Automotive			198				166				19				580				519				12
Intermodal [a]			811				809				-				2,373				2,483				(4)
Premium			1,009				975				3				2,953				3,002				(2)
Total			2,110				2,044				3	%			6,181				6,066				2	%
Average Revenue per Car
Grain & grain products		$	4,641			$	3,937				18	%		$	4,449			$	3,869				15	%
Fertilizer			3,504				3,125				12				3,634				3,398				7
Food & refrigerated			6,017				5,246				15				5,809				5,235				11
Coal & renewables			2,514				2,298				9				2,403				2,146				12
Bulk			3,685				3,244				14				3,612				3,252				11
Industrial chemicals & plastics			3,508				3,277				7				3,404				3,195				7
Metals & minerals			2,969				2,596				14				2,799				2,577				9
Forest products			6,347				5,457				16				6,044				5,390				12
Energy & specialized markets			4,434				3,996				11				4,273				3,924				9
Industrial			3,852				3,482				11				3,702				3,448				7
Automotive			3,030				2,500				21				2,866				2,488				15
Intermodal [a]			1,672				1,424				17				1,651				1,362				21
Premium			1,939				1,608				21				1,890				1,557				21
Average		$	2,895			$	2,528				15	%		$	2,814			$	2,464				14	%

[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		2022				2021
Assets
Cash and cash equivalents		$	1,267			$	960
Short-term investments			46				46
Other current assets			3,092				2,545
Investments			2,314				2,241
Properties, net			55,689				54,871
Operating lease assets			1,703				1,787
Other assets			1,232				1,075
Total assets		$	65,343			$	63,525
Liabilities and Common Shareholders' Equity
Debt due within one year		$	1,678			$	2,166
Other current liabilities			4,034				3,578
Debt due after one year			31,744				27,563
Operating lease liabilities			1,303				1,429
Deferred income taxes			12,868				12,675
Other long-term liabilities			1,973				1,953
Total liabilities			53,600				49,364
Total common shareholders' equity			11,743				14,161
Total liabilities and common shareholders' equity		$	65,343			$	63,525

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Cash Flows (unaudited)
Millions,		Year-to-Date
for the Periods Ended September 30,		2022				2021
Operating Activities
Net income		$	5,360			$	4,812
Depreciation			1,677				1,652
Deferred income taxes			180				189
Other - net			(147)				(150)
Cash provided by operating activities			7,070				6,503
Investing Activities
Capital investments*			(2,690)				(1,945)
Maturities of short-term investments			46				64
Purchases of short-term investments			(46)				(40)
Other - net			131				129
Cash used in investing activities			(2,559)				(1,792)
Financing Activities
Debt issued			6,080				3,901
Share repurchase programs			(5,497)				(5,846)
Dividends paid			(2,362)				(2,045)
Debt repaid			(2,185)				(1,120)
Net issued/(paid) of commercial paper			(203)				125
Debt exchange			-				(270)
Other - net			(43)				(36)
Cash used in financing activities			(4,210)				(5,291)
Net Change in Cash, Cash Equivalents and Restricted Cash			301				(580)
Cash, cash equivalents, and restricted cash at beginning of year			983				1,818
Cash, cash equivalents, and restricted cash at end of period		$	1,284			$	1,238
Free Cash Flow**
Cash provided by operating activities		$	7,070			$	6,503
Cash used in investing activities			(2,559)				(1,792)
Dividends paid			(2,362)				(2,045)
Free cash flow		$	2,149			$	2,666

*	Capital investments include locomotive and freight car early lease buyouts of $55 million in 2022 and $34 million in 2021.
**	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,		2022				2021				%				2022				2021				%
Operating/Performance Statistics
Freight car velocity (daily miles per car)			191				195				(2)	%			192				205				(6)	%
Average train speed (miles per hour) *			23.7				24.2				(2)				23.8				24.8				(4)
Average terminal dwell time (hours) *			24.4				24.0				2				24.3				23.5				3
Locomotive productivity (GTMs per horsepower day)			124				127				(2)				126				135				(7)
Gross ton-miles (GTMs) (millions)			214,999				207,059				4				634,494				607,949				4
Train length (feet)			9,483				9,359				1				9,376				9,340				-
Intermodal car trip plan compliance (%)**			62				66				(4)	pts			65				72				(7)	pts
Manifest/Automotive car trip plan compliance (%)**			58				60				(2)	pts			59				65				(6)	pts
Workforce productivity (car miles per employee)			1,045				1,044				-				1,045				1,036				1
Total employees (average)			30,841				29,810				3				30,582				29,877				2
Locomotive Fuel Statistics
Average fuel price per gallon consumed		$	3.96			$	2.37				67	%		$	3.64			$	2.13				71	%
Fuel consumed in gallons (millions)			227				221				3				687				660				4
Fuel consumption rate***			1.056				1.068				(1)				1.083				1.085				-
Revenue Ton-Miles (Millions)
Grain & grain products			18,554				17,326				7	%			59,042				57,864				2	%
Fertilizer			2,802				3,038				(8)				9,068				9,202				(1)
Food & refrigerated			4,430				4,685				(5)				13,389				13,824				(3)
Coal & renewables			25,169				24,539				3				69,977				62,791				11
Bulk			50,955				49,588				3				151,476				143,681				5
Industrial chemicals & plastics			7,702				7,746				(1)				22,946				22,791				1
Metals & minerals			10,053				8,922				13				28,460				24,382				17
Forest products			6,573				6,381				3				19,892				19,405				3
Energy & specialized markets			9,322				9,780				(5)				27,493				28,482				(3)
Industrial			33,650				32,829				3				98,791				95,060				4
Automotive			4,347				3,507				24				12,634				11,049				14
Intermodal			18,296				18,390				(1)				54,924				56,643				(3)
Premium			22,643				21,897				3				67,558				67,692				-
Total			107,248				104,314				3	%			317,825				306,433				4	%

*	Surface Transportation Board (STB) reported performance measures.
**	Methodology used to report is not comparable with the reporting to the STB under docket number EP 770.
***	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)
		2022
Millions, Except Per Share Amounts and Percentages,		1st Qtr				2nd Qtr				3rd Qtr		Year-to-Date
Operating Revenues
Freight revenues		$	5,440			$	5,842			$	6,109			$	17,391
Other revenues			420				427				457				1,304
Total operating revenues			5,860				6,269				6,566				18,695
Operating Expenses
Compensation and benefits			1,101				1,092				1,278				3,471
Fuel			714				940				932				2,586
Purchased services and materials			561				622				626				1,809
Depreciation			555				559				563				1,677
Equipment and other rents			215				230				215				660
Other			337				331				319				987
Total operating expenses			3,483				3,774				3,933				11,190
Operating Income			2,377				2,495				2,633				7,505
Other income, net			47				163				124				334
Interest expense			(307)				(316)				(315)				(938)
Income before income taxes			2,117				2,342				2,442				6,901
Income taxes			(487)				(507)				(547)				(1,541)
Net Income		$	1,630			$	1,835			$	1,895			$	5,360
Share and Per Share
Earnings per share - basic		$	2.58			$	2.93			$	3.05			$	8.56
Earnings per share - diluted		$	2.57			$	2.93			$	3.05			$	8.54
Weighted average number of shares - basic			632.2				625.6				620.4				626.1
Weighted average number of shares - diluted			633.6				626.8				621.5				627.4
Dividends declared per share		$	1.18			$	1.30			$	1.30			$	3.78
Operating Ratio			59.4	%			60.2	%			59.9	%			59.9	%
Effective Tax Rate			23.0	%			21.6	%			22.4	%			22.3	%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)
		2022
		1st Qtr				2nd Qtr				3rd Qtr		Year-to-Date
Freight Revenues (Millions)
Grain & grain products		$	877			$	867			$	880			$	2,624
Fertilizer			180				183				178				541
Food & refrigerated			267				271				290				828
Coal & renewables			508				492				611				1,611
Bulk			1,832				1,813				1,959				5,604
Industrial chemicals & plastics			520				557				579				1,656
Metals & minerals			485				562				601				1,648
Forest products			364				386				390				1,140
Energy & specialized markets			552				586				624				1,762
Industrial			1,921				2,091				2,194				6,206
Automotive			501				561				601				1,663
Intermodal			1,186				1,377				1,355				3,918
Premium			1,687				1,938				1,956				5,581
Total		$	5,440			$	5,842			$	6,109			$	17,391
Revenue Carloads (Thousands)
Grain & grain products			205				195				190				590
Fertilizer			45				53				51				149
Food & refrigerated			47				48				48				143
Coal & renewables			225				202				243				670
Bulk			522				498				532				1,552
Industrial chemicals & plastics			160				161				165				486
Metals & minerals			182				205				202				589
Forest products			64				63				62				189
Energy & specialized markets			131				141				140				412
Industrial			537				570				569				1,676
Automotive			190				192				198				580
Intermodal [a]			757				805				811				2,373
Premium			947				997				1,009				2,953
Total			2,006				2,065				2,110				6,181
Average Revenue per Car
Grain & grain products		$	4,269			$	4,451			$	4,641			$	4,449
Fertilizer			4,016				3,437				3,504				3,634
Food & refrigerated			5,637				5,770				6,017				5,809
Coal & renewables			2,262				2,426				2,514				2,403
Bulk			3,508				3,642				3,685				3,612
Industrial chemicals & plastics			3,247				3,455				3,508				3,404
Metals & minerals			2,660				2,755				2,969				2,799
Forest products			5,672				6,128				6,347				6,044
Energy & specialized markets			4,219				4,161				4,434				4,273
Industrial			3,574				3,674				3,852				3,702
Automotive			2,640				2,919				3,030				2,866
Intermodal [a]			1,566				1,711				1,672				1,651
Premium			1,782				1,943				1,939				1,890
Average		$	2,711			$	2,830			$	2,895			$	2,814

[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]		2022				2021
Net income		$	7,071			$	6,523
Add:
Income tax expense			2,058				1,955
Depreciation			2,233				2,208
Interest expense			1,233				1,157
EBITDA		$	12,595			$	11,843
Adjustments:
Other income, net			(417)				(297)
Interest on operating lease liabilities [b]			52				56
Adjusted EBITDA		$	12,230			$	11,602
Debt		$	33,422			$	29,729
Operating lease liabilities			1,629				1,759
Unfunded/(funded) pension and OPEB, net of tax cost/(benefit) of ($40) and ($21)			(139)				(72)
Adjusted debt		$	34,912			$	31,416
Adjusted debt / adjusted EBITDA			2.9				2.7

[a]	The trailing twelve months income statement information ended September 30, 2022, is recalculated by taking the twelve months ended December 31, 2021, subtracting the nine months ended September 30, 2021, and adding the nine months ended September 30, 2022.
[b]	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.
*	Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other postretirement benefit) obligations 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, and adjustments for 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 a reconciliation from net income to adjusted debt to adjusted EBITDA. At both September 30, 2022, and December 31, 2021, the incremental borrowing rate on operating lease liabilities was 3.2%.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP
Financial Performance*
Millions, Except Per Share Amounts	Reported results				Labor accrual					Adjusted results
For the Three Months Ended September 30, 2022	(GAAP)				adjustment					(non-GAAP)
Operating income		$	2,633			$	114				$	2,747
Net income			1,895				86					1,981
Diluted EPS		$	3.05			$	0.14				$	3.19
Operating ratio			59.9	%			(1.7)		pts			58.2	%
Millions, Except Per Share Amounts	Reported results				Labor accrual					Adjusted results
For the Nine Months Ended September 30, 2022	(GAAP)				adjustment					(non-GAAP)
Operating income		$	7,505			$	114				$	7,619
Net income			5,360				86					5,446
Diluted EPS		$	8.54			$	0.14				$	8.68
Operating ratio			59.9	%			(0.7)		pts			59.2	%

*

The above tables reconcile our results for the three and nine months ended September 30, 2022, to adjust results that exclude the impact of certain items identified as affecting comparability. We use adjusted operating income, adjusted net income, adjusted diluted earnings per share (EPS), and adjusted operating ratio, as applicable, among other measures, to evaluate our actual operating performance. We believe these non-GAAP financial measures provide valuable information regarding earnings and business trends by excluding specific items that we believe are not indicative of our ongoing operating results of our business, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry. Since these are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, operating income, net income, diluted EPS, and operating ratio as indicators of operating performance.

 

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SOURCE Union Pacific Corporation