Union Pacific Reports Third Quarter 2020 Results

OMAHA, Neb., Oct. 22, 2020 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2020 third quarter net income of $1.4 billion, or $2.01 per diluted share. This compares to $1.6 billion, or $2.22 per diluted share, in the third quarter 2019.

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

"Our third quarter results represent another step in our company's transformation.  We demonstrated our ability to efficiently adjust to a sharp rebound in volume, which increased 19% from the second quarter, while operating expenses, excluding fuel price changes, increased only 11% sequentially," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "The strong financial results and quality service product delivered in the quarter are a testament to the women and men of Union Pacific as they continue to exhibit their commitment and resilience through safe operations."

Third Quarter Summary

Operating revenue of $4.9 billion was down 11% in third quarter 2020, compared to third quarter 2019. Third quarter business volumes, as measured by total revenue carloads, decreased 4% compared to 2019. Premium volumes increased compared to 2019, while industrial and bulk declined. In addition:

  • Quarterly freight revenue declined 11%, compared to third quarter 2019, as core pricing gains were more than offset by lower volumes, a less favorable business mix, and decreased fuel surcharge revenue.
  • Union Pacific's 58.7% operating ratio, an all-time quarterly record, improved 0.8 points compared to the third quarter 2019.  Lower fuel prices positively impacted the operating ratio by 100 basis points.
  • The $1.36 per gallon average quarterly diesel fuel price in third quarter 2020 was 35% lower than third quarter 2019.
  • Union Pacific's reportable personal injury rate was 0.90 per 200,000 employee-hours for the first three quarters 2020, compared to 0.82 for the same period 2019.
  • Quarterly freight car velocity was 220 daily miles per car, a 3% improvement compared to third quarter 2019.
  • Quarterly locomotive productivity was 138 gross ton-miles per horsepower day, an all-time quarterly record and an 11% improvement compared to third quarter 2019.
  • Quarterly workforce productivity was 998 car miles per employee, an all-time quarterly record and a 13% improvement compared to third quarter 2019.
  • Average maximum train length was 8,984 feet, a 13% increase compared to third quarter 2019.

Summary of Third Quarter Freight Revenues

  • Bulk down 12%
  • Industrial down 18%
  • Premium down 1%

2020 Outlook

"The results we are delivering, both operationally and financially, deepen our conviction that the changes we're making to transform our railroad are on target and on track," said Fritz. "An improved customer experience, coupled with a lower cost structure, is opening up new markets and opportunities to grow our business as we win with customers and convert more freight to rail."

Third Quarter 2020 Earnings Conference Call

Union Pacific will webcast its third quarter 2020 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, October 22, 2020 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 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 July 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,

3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2020

2019

%



2020

2019

%


 Operating Revenues














      Freight revenues

$

4,596

$

5,146

(11)

%


$

13,448

$

15,392

(13)

%

      Other


323


370

(13)




944


1,104

(14)


 Total operating revenues


4,919


5,516

(11)




14,392


16,496

(13)


 Operating Expenses














      Compensation and benefits


1,008


1,134

(11)




2,972


3,484

(15)


      Depreciation


555


557

-




1,653


1,657

-


      Purchased services and materials


508


574

(11)




1,470


1,723

(15)


      Fuel


301


504

(40)




982


1,595

(38)


      Equipment and other rents


217


236

(8)




655


754

(13)


      Other


299


277

8




832


829

-


 Total operating expenses


2,888


3,282

(12)




8,564


10,042

(15)


 Operating Income


2,031


2,234

(9)




5,828


6,454

(10)


      Other income


37


53

(30)




221


187

18


      Interest expense


(295)


(266)

11




(862)


(772)

12


 Income before income taxes


1,773


2,021

(12)




5,187


5,869

(12)


 Income taxes


(410)


(466)

(12)




(1,218)


(1,353)

(10)


 Net Income

$

1,363

$

1,555

(12)

%


$

3,969

$

4,516

(12)

%















 Share and Per Share














      Earnings per share - basic

$

2.02

$

2.22

(9)

%


$

5.85

$

6.39

(8)

%

      Earnings per share - diluted

$

2.01

$

2.22

(9)



$

5.83

$

6.36

(8)


      Weighted average number of shares - basic


675.0


699.3

(3)




679.0


707.2

(4)


      Weighted average number of shares - diluted


676.8


701.9

(4)




680.7


709.8

(4)


      Dividends declared per share

$

0.97

$

0.97

-



$

2.91

$

2.73

7
















 Operating Ratio


58.7%


59.5%

(0.8)

pts



59.5%


60.9%

(1.4)

pts

 Effective Tax Rate


23.1%


23.1%

-

pts



23.5%


23.1%

0.4

pts

 

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

















3rd Quarter


Year-to-Date

 For the Periods Ended September 30,

2020

2019

%



2020

2019

%


 Freight Revenues (Millions)














      Grain & grain products

$

695

$

704

(1)

%


$

2,028

$

2,080

(3)

%

      Fertilizer


157


161

(2)




499


492

1


      Food & refrigerated


239


253

(6)




694


767

(10)


      Coal & renewables


387


564

(31)




1,177


1,641

(28)


    Bulk


1,478


1,682

(12)




4,398


4,980

(12)


      Industrial chemicals & plastics


454


494

(8)




1,384


1,428

(3)


      Metals & minerals


365


520

(30)




1,202


1,613

(25)


      Forest products


284


290

(2)




853


878

(3)


      Energy & specialized markets


464


598

(22)




1,522


1,759

(13)


    Industrial


1,567


1,902

(18)




4,961


5,678

(13)


      Automotive


481


542

(11)




1,194


1,616

(26)


      Intermodal


1,070


1,020

5




2,895


3,118

(7)


    Premium


1,551


1,562

(1)




4,089


4,734

(14)


 Total

$

4,596

$

5,146

(11)

%


$

13,448

-

15,392

(13)

%

 Revenue Carloads (Thousands)














      Grain & grain products


187


181

3

%



529


528

-

%

      Fertilizer


50


48

4




149


145

3


      Food & refrigerated


48


48

-




137


147

(7)


      Coal & renewables


213


271

(21)




607


771

(21)


    Bulk


498


548

(9)




1,422


1,591

(11)


      Industrial chemicals & plastics


144


158

(9)




439


463

(5)


      Metals & minerals


156


200

(22)




492


579

(15)


      Forest products


55


55

-




161


167

(4)


      Energy & specialized markets


125


157

(20)




402


460

(13)


    Industrial


480


570

(16)




1,494


1,669

(10)


      Automotive


203


222

(9)




490


650

(25)


      Intermodal [a]


863


789

9




2,296


2,443

(6)


    Premium


1,066


1,011

5




2,786


3,093

(10)


 Total


2,044


2,129

(4)

%



5,702


6,353

(10)

%

 Average Revenue per Car














      Grain & grain products

$

3,705

$

3,900

(5)

%


$

3,832

$

3,939

(3)

%

      Fertilizer


3,172


3,334

(5)




3,361


3,391

(1)


      Food & refrigerated


4,891


5,203

(6)




5,053


5,211

(3)


      Coal & renewables


1,820


2,082

(13)




1,938


2,129

(9)


    Bulk


2,964


3,068

(3)




3,092


3,130

(1)


      Industrial chemicals & plastics


3,154


3,131

1




3,150


3,087

2


      Metals & minerals


2,337


2,599

(10)




2,444


2,785

(12)


      Forest products


5,181


5,275

(2)




5,300


5,249

1


      Energy & specialized markets


3,742


3,797

(1)




3,791


3,822

(1)


    Industrial


3,271


3,336

(2)




3,321


3,402

(2)


      Automotive


2,368


2,436

(3)




2,438


2,485

(2)


      Intermodal [a]


1,238


1,294

(4)




1,261


1,276

(1)


    Premium


1,454


1,545

(6)




1,468


1,530

(4)


 Average 

$

2,248

$

2,417

(7)

%


$

2,359

$

2,423

(3)

%


[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

2020

2019

 Assets





      Cash and cash equivalents

$

2,601

$

831

      Short-term investments


60


60

      Other current assets


2,469


2,568

      Investments


2,071


2,050

      Net properties


54,375


53,916

      Operating lease assets


1,642


1,812

      Other assets


496


436

 Total assets

$

63,714

$

61,673






 Liabilities and Common Shareholders' Equity





      Debt due within one year

$

1,980

$

1,257

      Other current liabilities


2,861


3,094

      Debt due after one year


26,080


23,943

      Operating lease liabilities


1,293


1,471

      Deferred income taxes


12,328


11,992

      Other long-term liabilities


1,973


1,788

 Total liabilities


46,515


43,545

 Total common shareholders' equity


17,199


18,128

 Total liabilities and common shareholders' equity

$

63,714

$

61,673

 

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







 Millions,

Year-to-Date

 For the Periods Ended September 30,

2020

2019

 Operating Activities





      Net income

$

3,969

$

4,516

      Depreciation


1,653


1,657

      Deferred income taxes


327


297

      Other - net


44


(206)

 Cash provided by operating activities


5,993


6,264

 Investing Activities





      Capital investments


(2,294)


(2,495)

      Maturities of short-term investments


106


120

      Purchases of short-term investments


(106)


(110)

      Other - net


213


(22)

 Cash used in investing activities


(2,081)


(2,507)

 Financing Activities





      Debt issued


4,004


3,986

      Share repurchase programs


(2,956)


(5,162)

      Dividends paid


(1,974)


(1,925)

      Debt repaid


(832)


(642)

      Debt Exchange


(327)


-

      Net issuance of commercial paper


(2)


(5)

      Other - net


(63)


(34)

 Cash used in financing activities


(2,150)


(3,782)

 Net Change in Cash, Cash Equivalents and Restricted Cash


1,762


(25)

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


856


1,328

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

$

2,618

$

1,303

 Free Cash Flow*





      Cash provided by operating activities

$

5,993

$

6,264

      Cash used in investing activities


(2,081)


(2,507)

      Dividends paid


(1,974)


(1,925)

 Free cash flow

$

1,938

$

1,832


*

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,

2020


2019

%



2020


2019

%


 Operating/Performance Statistics 












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

220


214

3

%


217


203

7

%

      Average train speed (miles per hour) [a] *

25.3


25.2

-



25.8


24.8

4


      Average terminal dwell time (hours) [a] *

22.8


23.6

(3)



22.8


25.3

(10)


      Locomotive productivity (GTMs per horsepower day)

138


124

11



135


118

14


      Gross ton-miles (GTMs) (millions)

196,998


215,487

(9)



568,921


645,815

(12)


      Train length (feet)

8,984


7,924

13



8,676


7,618

14


      Intermodal car trip plan compliance (%)

77


81

(4)

pts


81


72

9

pts

      Manifest/Automotive car trip plan compliance (%)

72


67

5

pts


70


63

7

pts

      Workforce productivity (car miles per employee)

998


883

13



920


853

8


      Total employees (average)

30,155


36,659

(18)



31,362


38,456

(18)














 Locomotive Fuel Statistics












      Average fuel price per gallon consumed

$1.36


$ 2.09

(35)

%


$ 1.51


$ 2.13

(29)

%

      Fuel consumed in gallons (millions)

213


232

(8)



627


725

(14)


      Fuel consumption rate**

1.084


1.075

1



1.103


1.122

(2)














 Revenue Ton-Miles (Millions)












      Grain & grain products

18,035


16,545

9

%


50,388


49,966

1

%

      Fertilizer

2,932


2,737

7



9,092


8,722

4


      Food & refrigerated

4,614


4,679

(1)



12,872


14,037

(8)


      Coal & renewables

20,374


27,516

(26)



58,567


78,700

(26)


    Bulk

45,955


51,477

(11)



130,919


151,425

(14)


      Industrial chemicals & plastics

7,170


7,268

(1)



20,630


21,295

(3)


      Metals & minerals

6,536


9,224

(29)



21,471


29,403

(27)


      Forest products

5,882


5,784

2



17,321


17,711

(2)


      Energy & specialized markets

8,005


11,381

(30)



27,327


33,173

(18)


    Industrial

27,593


33,657

(18)



86,749


101,582

(15)


      Automotive

4,269


4,757

(10)



10,498


13,954

(25)


      Intermodal

20,096


18,216

10



55,344


56,540

(2)


    Premium

24,365


22,973

6



65,842


70,494

(7)


 Total

97,913


108,107

(9)

%


283,510


323,501

(12)

%














[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 

3rd Qtr 

Year-to-Date

 Operating Revenues









      Freight revenues

$

4,880

$

3,972

$

4,596

$

13,448

      Other revenues


349


272


323


944

 Total operating revenues


5,229


4,244


4,919


14,392

 Operating Expenses









      Compensation and benefits


1,059


905


1,008


2,972

      Depreciation


547


551


555


1,653

      Purchased services and materials


521


441


508


1,470

      Fuel


434


247


301


982

      Equipment and other rents


227


211


217


655

      Other


298


235


299


832

 Total operating expenses


3,086


2,590


2,888


8,564

 Operating Income


2,143


1,654


2,031


5,828

      Other income


53


131


37


221

      Interest expense


(278)


(289)


(295)


(862)

 Income before income taxes


1,918


1,496


1,773


5,187

 Income taxes


(444)


(364)


(410)


(1,218)

 Net Income

$

1,474

$

1,132

$

1,363

$

3,969










 Share and Per Share









      Earnings per share - basic

$

2.15

$

1.67

$

2.02

$

5.85

      Earnings per share - diluted

$

2.15

$

1.67

$

2.01

$

5.83

      Weighted average number of shares - basic


684.3


677.7


675.0


679.0

      Weighted average number of shares - diluted


686.2


679.2


676.8


680.7

      Dividends declared per share

$

0.97

$

0.97

$

0.97

$

2.91










 Operating Ratio


59.0%


61.0%


58.7%


59.5%

 Effective Tax Rate


23.1%


24.3%


23.1%


23.5%

 

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












2020


1st Qtr 

2nd Qtr 

3rd Qtr 

Year-to-Date

 Freight Revenues (Millions)









      Grain & grain products

$

689

$

644

$

695

$

2,028

      Fertilizer


174


168


157


499

      Food & refrigerated


250


205


239


694

      Coal & renewables


421


369


387


1,177

    Bulk


1,534


1,386


1,478


4,398

      Industrial chemicals & plastics


495


435


454


1,384

      Metals & minerals


469


368


365


1,202

      Forest products


303


266


284


853

      Energy & specialized markets


627


431


464


1,522

    Industrial


1,894


1,500


1,567


4,961

      Automotive


524


189


481


1,194

      Intermodal


928


897


1,070


2,895

    Premium


1,452


1,086


1,551


4,089

 Total

$

4,880

$

3,972

$

4,596

$

13,448

 Revenue Carloads (Thousands)









      Grain & grain products


175


167


187


529

      Fertilizer


46


53


50


149

      Food & refrigerated


48


41


48


137

      Coal & renewables


208


186


213


607

    Bulk


477


447


498


1,422

      Industrial chemicals & plastics


154


141


144


439

      Metals & minerals


174


162


156


492

      Forest products


56


50


55


161

      Energy & specialized markets


162


115


125


402

    Industrial


546


468


480


1,494

      Automotive


208


79


203


490

      Intermodal [a]


709


724


863


2,296

    Premium


917


803


1,066


2,786

 Total


1,940


1,718


2,044


5,702

 Average Revenue per Car









      Grain & grain products

$

3,940

$

3,861

$

3,705

$

3,832

      Fertilizer


3,768


3,181


3,172


3,361

      Food & refrigerated


5,277


4,986


4,891


5,053

      Coal & renewables


2,022


1,979


1,820


1,938

    Bulk


3,219


3,099


2,964


3,092

      Industrial chemicals & plastics


3,205


3,086


3,154


3,150

      Metals & minerals


2,697


2,276


2,337


2,444

      Forest products


5,457


5,256


5,181


5,300

      Energy & specialized markets


3,866


3,739


3,742


3,791

    Industrial


3,469


3,201


3,271


3,321

      Automotive


2,525


2,388


2,368


2,438

      Intermodal [a]


1,307


1,241


1,238


1,261

    Premium


1,583


1,354


1,454


1,468

 Average 

$

2,516

$

2,312

$

2,248

$

2,359


[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]

2020

2019

 Net income

$

5,372

$

5,919

 Add:





 Income tax expense


1,693


1,828

 Depreciation


2,212


2,216

 Interest expense


1,140


1,050

 EBITDA

$

10,417

$

11,013

 Adjustments:




 Other income


(277)


(243)

 Interest on operating lease liabilities**


59


68

 Adjusted EBITDA

$

10,199

$

10,838

 Debt

$

28,060

$

25,200

 Operating lease liabilities


1,601


1,833

 Unfunded pension and OPEB,  net of taxes of $107 and $124


349


400

 Adjusted debt

$

30,010

$

27,433

 Adjusted debt / Adjusted EBITDA


2.9


2.5


[a] 

The trailing twelve months income statement information ended September 30, 2020 is recalculated by taking the twelve months ended December 31, 2019, subtracting the nine months ended September 30, 2019, and adding the nine months ended September 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 September 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 View original content to download multimedia:http://www.prnewswire.com/news-releases/union-pacific-reports-third-quarter-2020-results-301157617.html

SOURCE Union Pacific Corporation

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