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Union Pacific Reports Second Quarter 2021 Results

PR Newswire

OMAHA, Neb., July 22, 2021 /PRNewswire/ — Union Pacific Corporation (NYSE: UNP) today reported 2021 second quarter net income of $1.8 billion, or $2.72 per diluted share. This compares to $1.1 billion, or $1.67 per diluted share, in the second quarter 2020.

“The Union Pacific team leveraged volume growth, core pricing gains, and productivity to produce record quarterly results,” said Lance Fritz, Union Pacific chairman, president, and chief executive officer. “Beyond our strong financial performance, we also made progress on our goal to reduce our carbon footprint, which includes a 3% improvement in our fuel consumption rate. Importantly, these strong results were achieved in a challenging environment as our rail network continues to be impacted by supply chain disruptions, particularly in the Intermodal space. As we move into the second half of 2021, we will continue working with our customers and the broader supply chain to increase fluidity and efficiently handle the strong demand for freight transportation.”

Financial Results: Quarterly Records for Operating Ratio, Operating Income, Net Income, and Earnings Per Share


Second Quarter 2021 Compared to Second Quarter 2020

  • Operating revenue of $5.5 billion was up 30%.
  • Business volumes, as measured by total revenue carloads, increased 22%.
  • Union Pacific’s 55.1% operating ratio improved 590 basis points. Higher fuel prices negatively impacted the operating ratio by 210 basis points.
  • Operating Income of $2.5 billion was up 50%.
  • The company repurchased 12.2 million shares in second quarter 2021 at an aggregate cost of $2.7 billion.

Operating Performance: Quarterly Records for Workforce Productivity and Train Length; Second Quarter Records for Locomotive Productivity and Fuel Consumption Rate


Second Quarter 2021 Compared to Second Quarter 2020

  • Quarterly freight car velocity was 213 daily miles per car, a 6% decline.
  • Quarterly locomotive productivity was 140 gross ton-miles per horsepower day, a 3% improvement.
  • Average maximum train length was 9,410 feet, a 9% increase.
  • Fuel consumption rate, measured in gallons of fuel per thousand gross ton-miles (GTMs), improved 3%.
  • Quarterly workforce productivity was 1,060 car miles per employee, a 22% improvement.
  • Union Pacific’s first half reportable personal injury rate deteriorated to 0.95 per 200,000 employee-hours compared to 0.83 for first half 2020.

Second Quarter 2021 Earnings Conference Call

Union Pacific will webcast its second quarter 2021 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, July 22, 2021, 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.

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 2020, which was filed with the SEC on February 5, 2021. 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,


For the Periods Ended June 30,



2nd Quarter



Year-to-Date



2021


2020


%



2021


2020


%


 Operating Revenues

      Freight revenues


$


5,132

$

3,972

29 

%


$


9,781

$

8,852

10   

%

      Other


372

272

37


724

621

17

 Total operating revenues


5,504

4,244

30


10,505

9,473

11


 Operating Expenses

      Compensation and benefits


1,022

905

13


2,048

1,964

4

      Depreciation


550

551

–


1,099

1,098

–

      Purchased services and materials


478

441

8


968

962

1

      Fuel


497

247

U 


908

681

33

      Equipment and other rents


200

211

(5)


412

438

(6)

      Other


284

235

21


604

533

13

 Total operating expenses


3,031

2,590

17


6,039

5,676

6


 Operating Income


2,473

1,654

50


4,466

3,797

18

      Other income, net


125

131

(5)


176

184

(4)

      Interest expense


(282)

(289)

(2)


(572)

(567)

1

 Income before income taxes


2,316

1,496

55


4,070

3,414

19

 Income taxes


(518)

(364)

42


(931)

(808)

15


 Net Income


$


1,798

$

1,132

59   

%


$


3,139

$

2,606

20   

%


 Share and Per Share

      Earnings per share – basic


$


2.73

$

1.67

63   

%


$


4.73

$

3.83

23   

%

      Earnings per share – diluted


$


2.72

$

1.67

63


$


4.72

$

3.82

24

      Weighted average number of shares – basic


658.5

677.7

(3)


663.1

681.0

(3)

      Weighted average number of shares – diluted


660.1

679.2

(3)


664.7

682.7

(3)

      Dividends declared per share


$


1.07

$

0.97

10


$


2.04

$

1.94

5


 Operating Ratio


55.1%

61.0%

(5.9)

pts


57.5%

59.9%

(2.4)

pts


 Effective Tax Rate


22.4%

24.3%

(1.9)

pts


22.9%

23.7%

(0.8)

pts

 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Freight Revenues Statistics (unaudited)



2nd Quarter



Year-to-Date


 For the Periods Ended June 30,



2021


2020


%



2021


2020


%



 Freight Revenues (Millions)

      Grain & grain products


$


795

$

644

23

%


$


1,561

$

1,333

17

%

      Fertilizer


179

168

7


349

342

2

      Food & refrigerated


251

205

22


486

455

7

      Coal & renewables


423

369

15


764

790

(3)

    Bulk


1,648

1,386

19


3,160

2,920

8

      Industrial chemicals & plastics


498

435

14


933

930

–

      Metals & minerals


467

368

27


842

837

1

      Forest products


348

266

31


664

569

17

      Energy & specialized markets


546

431

27


1,076

1,058

2

    Industrial


1,859

1,500

24


3,515

3,394

4

      Automotive


428

189

F


875

713

23

      Intermodal


1,197

897

33


2,231

1,825

22

    Premium


1,625

1,086

50


3,106

2,538

22

 Total


$


5,132

$

3,972

29

%


$


9,781

$

8,852

10

%



 Revenue Carloads (Thousands)

      Grain & grain products


204

167

22

%


407

342

19

%

      Fertilizer


54

53

2


98

99

(1)

      Food & refrigerated


48

41

17


93

89

4

      Coal & renewables


198

186

6


372

394

(6)

    Bulk


504

447

13


970

924

5

      Industrial chemicals & plastics


156

141

11


296

295

–

      Metals & minerals


182

162

12


328

336

(2)

      Forest products


64

50

28


124

106

17

      Energy & specialized markets


138

115

20


277

277

–

    Industrial


540

468

15


1,025

1,014

1

      Automotive


173

79

F


353

287

23

      Intermodal [a]


878

724

21


1,674

1,433

17

    Premium


1,051

803

31


2,027

1,720

18

 Total


2,095

1,718

22

%


4,022

3,658

10

%



 Average Revenue per Car

      Grain & grain products


$


3,894

$

3,861

1

%


$


3,838

$

3,901

(2)

%

      Fertilizer


3,304

3,181

4


3,550

3,456

3

      Food & refrigerated


5,226

4,986

5


5,230

5,142

2

      Coal & renewables


2,134

1,979

8


2,051

2,001

2

    Bulk


3,266

3,099

5


3,256

3,161

3

      Industrial chemicals & plastics


3,189

3,086

3


3,153

3,148

–

      Metals & minerals


2,569

2,276

13


2,567

2,494

3

      Forest products


5,463

5,256

4


5,357

5,361

–

      Energy & specialized markets


3,944

3,739

5


3,886

3,813

2

    Industrial


3,442

3,201

8


3,430

3,345

3

      Automotive


2,479

2,388

4


2,482

2,487

–

      Intermodal [a]


1,363

1,241

10


1,332

1,274

5

    Premium


1,547

1,354

14


1,532

1,476

4

 Average 


$


2,449

$

2,312

6

%


$


2,432

$

2,420

–

%

[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



2021


2020


 Assets

      Cash and cash equivalents


$


1,115

$

1,799

      Short-term investments


46

60

      Other current assets


2,603

2,355

      Investments


2,277

2,164

      Properties, net


54,148

54,161

      Operating lease assets


1,635

1,610

      Other assets


249

249

 Total assets


$


62,073

$

62,398


 Liabilities and Common Shareholders’ Equity

      Debt due within one year


$


1,110

$

1,069

      Other current liabilities


3,247

3,104

      Debt due after one year


27,702

25,660

      Operating lease liabilities


1,256

1,283

      Deferred income taxes


12,389

12,247

      Other long-term liabilities


2,066

2,077

 Total liabilities


47,770

45,440

 Total common shareholders’ equity


14,303

16,958

 Total liabilities and common shareholders’ equity


$


62,073

$

62,398

 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Condensed Consolidated Statements of Cash Flows (unaudited)


 Millions,



Year-to-Date


 For the Periods Ended June 30,



2021


2020


 Operating Activities

      Net income


$


3,139

$

2,606

      Depreciation


1,099

1,098

      Deferred income taxes


128

171

      Other – net


(147)

517

 Cash provided by operating activities


4,219

4,392


 Investing Activities

      Capital investments


(1,190)

(1,599)

      Maturities of short-term investments


48

75

      Purchases of short-term investments


(24)

(75)

      Other – net


95

182

 Cash used in investing activities


(1,071)

(1,417)


 Financing Activities

      Share repurchase programs


(4,085)

(2,556)

      Debt issued


2,896

4,004

      Dividends paid


(1,350)

(1,319)

      Debt repaid


(691)

(770)

      Accelerated share repurchase programs pending final settlement


(400)

(400)

      Debt Exchange


(268)


–

      Net issuance of commercial paper


125

(1)

      Other – net


(34)

(65)

 Cash used in financing activities


(3,807)

(1,107)


 Net Change in Cash, Cash Equivalents and Restricted Cash


(659)

1,868

 Cash, cash equivalents, and restricted cash at beginning of year


1,818

856


 Cash, Cash Equivalents, and Restricted Cash at End of Period


$


1,159

$

2,724


 Free Cash Flow*

      Cash provided by operating activities


$


4,219

$

4,392

      Cash used in investing activities


(1,071)

(1,417)

      Dividends paid


(1,350)

(1,319)

 Free cash flow


$


1,798

$

1,656

*

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,



2021


2020


%



2021


2020


%


 Operating/Performance Statistics 

      Freight car velocity (daily miles per car) [a]


213

227

(6)

%


211

218

(3)

%

      Average train speed (miles per hour) *


25.0

26.9

(7)


25.1

26.0

(3)

      Average terminal dwell time (hours) *


22.9

21.6

6


23.2

22.8

2

      Locomotive productivity (GTMs per horsepower day)


140

136

3


139

133

5

      Gross ton-miles (GTMs) (millions)


207,803

170,626

22


400,890

371,923

8

      Train length (feet)


9,410

8,664

9


9,330

8,517

10

      Intermodal car trip plan compliance (%)


71

82

(11)

pts


74

83

(9)

pts

      Manifest/Automotive car trip plan compliance (%)


67

76

(9)

pts


68

69

(1)

pts

      Workforce productivity (car miles per employee)


1,060

868

22


1,031

882

17

      Total employees (average)


30,066

30,059

–


29,910

31,965

(6)


 Locomotive Fuel Statistics

      Average fuel price per gallon consumed


$ 2.16

$ 1.26

71

%


$ 2.01

$ 1.59

26

%

      Fuel consumed in gallons (millions)


223

189

18


439

414

6

      Fuel consumption rate**


1.072

1.107

(3)


1.095

1.112

(2)


 Revenue Ton-Miles (Millions)

      Grain & grain products


20,190

16,242

24

%


40,538

32,353

25

%

      Fertilizer


3,169

3,116

2


6,164

6,160

–

      Food & refrigerated


4,641

3,752

24


9,139

8,258

11

      Coal & renewables


20,716

18,188

14


38,252

38,193

–

    Bulk


48,716

41,298

18


94,093

84,964

11

      Industrial chemicals & plastics


7,990

6,286

27


15,045

13,460

12

      Metals & minerals


8,584

6,402

34


15,460

14,935

4

      Forest products


6,706

5,398

24


13,024

11,439

14

      Energy & specialized markets


9,112

7,276

25


18,702

19,322

(3)

    Industrial


32,392

25,362

28


62,231

59,156

5

      Automotive


3,769

1,740

F


7,542

6,229

21

      Intermodal


19,878

17,514

13


38,253

35,248

9

    Premium


23,647

19,254

23


45,795

41,477

10

 Total


104,755

85,914

22

%


202,119

185,597

9

%

[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)



2021


 Millions, Except Per Share Amounts and Percentages,



1st Qtr



2nd Qtr



Year-to-Date


 Operating Revenues

      Freight revenues

$

4,649

$

5,132

$

9,781

      Other revenues

352

372

724

 Total operating revenues

5,001

5,504

10,505


 Operating Expenses

      Compensation and benefits

1,026

1,022

2,048

      Depreciation

549

550

1,099

      Purchased services and materials

490

478

968

      Fuel

411

497

908

      Equipment and other rents

212

200

412

      Other

320

284

604

 Total operating expenses

3,008

3,031

6,039


 Operating Income

1,993

2,473

4,466

      Other income, net

51

125

176

      Interest expense

(290)

(282)

(572)

 Income before income taxes

1,754

2,316

4,070

 Income taxes

(413)

(518)

(931)


 Net Income

$

1,341

$

1,798

$

3,139


 Share and Per Share

      Earnings per share – basic

$

2.01

$

2.73

$

4.73

      Earnings per share – diluted

$

2.00

$

2.72

$

4.72

      Weighted average number of shares – basic

667.6

658.5

663.1

      Weighted average number of shares – diluted

669.2

660.1

664.7

      Dividends declared per share

$

0.97

$

1.07

$

2.04


 Operating Ratio

60.1%

55.1%

57.5%


 Effective Tax Rate

23.5%

22.4%

22.9%

 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Freight Revenues Statistics (unaudited)



2021



1st Qtr

 



2nd Qtr

 



Year-to-Date



 Freight Revenues (Millions)

      Grain & grain products

$

766

$

795

$

1,561

      Fertilizer

170

179

349

      Food & refrigerated

235

251

486

      Coal & renewables

341

423

764

    Bulk

1,512

1,648

3,160

      Industrial chemicals & plastics

435

498

933

      Metals & minerals

375

467

842

      Forest products

316

348

664

      Energy & specialized markets

530

546

1,076

    Industrial

1,656

1,859

3,515

      Automotive

447

428

875

      Intermodal

1,034

1,197

2,231

    Premium

1,481

1,625

3,106

 Total

$

4,649

$

5,132

$

9,781



 Revenue Carloads (Thousands)

      Grain & grain products

203

204

407

      Fertilizer

44

54

98

      Food & refrigerated

45

48

93

      Coal & renewables

174

198

372

    Bulk

466

504

970

      Industrial chemicals & plastics

140

156

296

      Metals & minerals

146

182

328

      Forest products

60

64

124

      Energy & specialized markets

139

138

277

    Industrial

485

540

1,025

      Automotive

180

173

353

      Intermodal [a]

796

878

1,674

    Premium

976

1,051

2,027

 Total

1,927

2,095

4,022



 Average Revenue per Car

      Grain & grain products

$

3,782

$

3,894

$

3,838

      Fertilizer

3,852

3,304

3,550

      Food & refrigerated

5,234

5,226

5,230

      Coal & renewables

1,958

2,134

2,051

    Bulk

3,246

3,266

3,256

      Industrial chemicals & plastics

3,113

3,189

3,153

      Metals & minerals

2,563

2,569

2,567

      Forest products

5,244

5,463

5,357

      Energy & specialized markets

3,828

3,944

3,886

    Industrial

3,417

3,442

3,430

      Automotive

2,485

2,479

2,482

      Intermodal [a]

1,299

1,363

1,332

    Premium

1,517

1,547

1,532

 Average 

$

2,413

$

2,449

$

2,432

[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]



2021


2020

 Net income


$


5,882

$

5,349

 Add:

 Income tax expense


1,754

1,631

 Depreciation


2,211

2,210

 Interest expense


1,146

1,141

 EBITDA


$


10,993

$

10,331

 Adjustments:

 Other income, net


(279)

(287)

 Interest on operating lease liabilities**


53

59

 Adjusted EBITDA


$


10,767

$

10,103

 Debt


$


28,812

$

26,729

 Operating lease liabilities


1,553

1,604

 Unfunded pension and OPEB, net of taxes of $180 and $195


607

637

 Adjusted debt


$


30,972

$

28,970

 Adjusted debt / Adjusted EBITDA


2.9

2.9



Comparable Adjusted Debt / Adjusted EBITDA*



Jun. 30,


Dec. 31,


for the Trailing Twelve Months Ended [a]



2021


2020

 Adjusted debt / Adjusted EBITDA


2.9

2.9

 Factors Affecting Comparability:

Brazos yard impairment [b]


(0.1)

(0.1)

 Comparable Adjusted Debt / Adjusted EBITDA*


2.8

2.8

[a]

The trailing twelve months income statement information ended June 30, 2021, is recalculated by taking the twelve months ended December 31, 2020, subtracting the six months ended June 30, 2020, and adding the six months ended June 30, 2021.

[b]

Adjustments remove the impact of $209 million from net income and $69 million from income tax expense for the year ended December 31, 2020. See page 9 for a reconciliation to GAAP.

*

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, and adjustments for other income and interest on operating lease liabilities) and comparable adjusted debt to adjusted EBITDA are 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 these measures are 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 and comparable 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 and comparable adjusted debt to adjusted EBITDA. At June 30, 2021, and December 31, 2020, the incremental borrowing rate on operating lease liabilities was 3.4% and 3.7%, respectively.

**

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.

 


UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES


Non-GAAP Measures Reconciliation to GAAP



Financial Performance*


 Millions, Except Per Share Amounts and Percentages


Reported results


Brazos Yard


Adjusted results


(GAAP)


Impairment 


(non-GAAP)


 For the Year Ended December 31, 2020

 Income taxes

$

1,631

$

69

$

1,700

 Net income

$

5,349

$

209

$

5,558

*

The above table reconciles our results for the year ended December 31, 2020, to adjusted results that exclude the impact of certain items identified as affecting comparability. We use adjusted income taxes and adjusted net income, 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, income taxes and net income.

 

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SOURCE Union Pacific Corporation