OMAHA, Neb., July 23, 2020 /PRNewswire/ — Union Pacific Corporation (NYSE: UNP) 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 Per
Diluted 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 (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.

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.

 

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SOURCE Union Pacific Corporation