EX-99.1 2 unp-20200423xex99_1.htm EX-99.1 Ex 991

 

 

Exhibit 99.1

 





Union Pacific Reports Strong First Quarter 2020 Results



FOR IMMEDIATE RELEASE



Omaha, Neb., April 23, 2020 – Union Pacific Corporation (NYSE: UNP) today reported 2020 first quarter net income of $1.5 billion, or $2.15 per diluted share. This compares to $1.4 billion, or $1.93 per diluted share, in the first quarter 2019.

“Against the backdrop of the emerging COVID-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all time best operating ratio of 59 percent,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”

First Quarter Summary

Operating revenue of $5.2 billion was down 3 percent in first quarter 2020, compared to first quarter 2019. First quarter business volumes, as measured by total revenue carloads, decreased 7 percent compared to 2019. Industrial volumes increased compared to 2019, while bulk and premium shipments declined. In addition:



·

Quarterly freight revenue declined 3 percent, compared to first quarter 2019, as positive business mix and core pricing gains were offset by lower volumes and decreased fuel surcharge revenue.

·

Union Pacific’s 59 percent operating ratio represented a quarterly record and the fourth consecutive quarter below 60 percent, improving 4.6 points compared to first quarter 2019.



 

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Operating Ratio

 

Earnings Per

Diluted Share

 

First Quarter 2019

63.6%

 

$1.93

 

2019 Payroll Tax Refund

(0.8) pts

 

 ($0.05)

 

2019 Weather Expense

0.8 pts

 

 $0.05

 

Fuel Impact

0.8 pts

 

 $0.04

 

Core Results

3.8 pts

 

 $0.18

 

First Quarter 2020

 59.0%

 

$2.15

 





·

The $1.87 per gallon average quarterly diesel fuel price in first quarter 2020 was 10 percent lower than first quarter 2019.

·

Fuel consumption rate, measured in gallons of fuel per thousand gross ton-miles (GTMs), improved 5% compared to first quarter 2019, achieving a first quarter record in 2020.

·

Union Pacific’s reportable personal injury rate of 0.80 incidents per 200,000 employee hours decreased 11 percent compared to first quarter 2019.

·

Quarterly freight car velocity was 209 daily miles per car, an 8 percent improvement compared to first quarter 2019.

·

Quarterly locomotive productivity was 131 GTMs per horsepower day, an 18 percent improvement compared to first quarter 2019.

·

Average maximum train length was 8,396 feet, a 15 percent increase compared to first quarter 2019.

·

The Company repurchased 14.3 million shares in first quarter 2020 at an aggregate cost of $2.6 billion.

Summary of First Quarter Freight Revenues

·

Industrial up 3 percent

·

Bulk down 5 percent

·

Premium down 6 percent

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2020 Outlook

Union Pacific expects second quarter 2020 carload volumes to be down around 25 percent, compared to the second quarter 2019. Although the situation is fluid and highly uncertain, the Company fully expects to maintain sufficient liquidity to sustain an extended period of lower volumes.

“Our first priority is the health and safety of our employees during the COVID-19 pandemic, as they perform the work necessary to move the goods communities need during this national emergency,” Fritz said. “The eighteen month implementation of Unified Plan 2020 has put our company in a position of strength, with a strong balance sheet and ample liquidity, as we face today’s fluid and uncertain situation. We remain focused on providing a highly consistent, reliable and efficient service product for our customers.”

First Quarter 2020 Earnings Conference Call

Union Pacific will webcast its first quarter 2020 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, April 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 Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. The railroad's diversified business mix is classified into its Bulk, Industrial and Premium business groups. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.



Union Pacific Investor contact:  Brad Stock at 402-544-4227 or bkstock@up.com

Union Pacific Media contact:  Raquel Espinoza at 402-544-5034 or respinoza@up.com

 

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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.  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.



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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income (unaudited) 





 

 

 

 

 

 



 

 

 

 

 

 

Millions, Except Per Share Amounts and Percentages,

1st Quarter

For the Periods Ended March 31,

2020  2019 

%

 

Operating Revenues

 

 

 

 

 

 

     Freight revenues

$

4,880 

$

5,010  (3)

%

     Other

 

349 

 

374  (7)

 

Total operating revenues

 

5,229 

 

5,384  (3)

 

Operating Expenses

 

 

 

 

 

 

     Compensation and benefits

 

1,059 

 

1,205  (12)

 

     Depreciation

 

547 

 

549 

 -

 

     Purchased services and materials

 

521 

 

576  (10)

 

     Fuel

 

434 

 

531  (18)

 

     Equipment and other rents

 

227 

 

258  (12)

 

     Other

 

298 

 

305  (2)

 

Total operating expenses

 

3,086 

 

3,424  (10)

 

Operating Income

 

2,143 

 

1,960 

 

     Other income

 

53 

 

77  (31)

 

     Interest expense

 

(278)

 

(247) 13 

 

Income before income taxes

 

1,918 

 

1,790 

 

Income taxes

 

(444)

 

(399) 11 

 

Net Income

$

1,474 

$

1,391 

%

 

 

 

 

 

 

 

Share and Per Share

 

 

 

 

 

 

     Earnings per share - basic

$

2.15 

$

1.94  11 

%

     Earnings per share - diluted

$

2.15 

$

1.93  11 

 

     Weighted average number of shares - basic

 

684.3 

 

716.8  (5)

 

     Weighted average number of shares - diluted

 

686.2 

 

719.5  (5)

 

     Dividends declared per share

$

0.97 

$

0.88  10 

 

 

 

 

 

 

 

 

Operating Ratio

 

59.0% 

 

63.6%  (4.6)

pts

Effective Tax Rate

 

23.1% 

 

22.3%  0.8 

pts



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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited) 





 

 

 

 

 

 



 

 

 

 

 

 



1st Quarter

For the Periods Ended March 31,

2020  2019 

%

 

Freight Revenues (Millions)

 

 

 

 

 

 

     Grain & grain products

$

689 

$

665 

%

     Fertilizer

 

174 

 

159 

 

     Food & refrigerated

 

250 

 

242 

 

     Coal & renewables

 

421 

 

554  (24)

 

   Bulk

 

1,534 

 

1,620  (5)

 

     Industrial chemicals & plastics

 

495 

 

452  10 

 

     Metals & minerals

 

469 

 

536  (13)

 

     Forest products

 

303 

 

285 

 

     Energy & specialized markets

 

627 

 

566  11 

 

   Industrial

 

1,894 

 

1,839 

 

     Automotive

 

524 

 

520 

 

     Intermodal

 

928 

 

1,031  (10)

 

   Premium

 

1,452 

 

1,551  (6)

 

Total

$

4,880 

$

5,010  (3)

%

Revenue Carloads (Thousands)

 

 

 

 

 

 

     Grain & grain products

 

175 

 

169 

%

     Fertilizer

 

46 

 

43 

 

     Food & refrigerated

 

48 

 

47 

 

     Coal & renewables

 

208 

 

256  (19)

 

   Bulk

 

477 

 

515  (7)

 

     Industrial chemicals & plastics

 

154 

 

148 

 

     Metals & minerals

 

174 

 

180  (3)

 

     Forest products

 

56 

 

56 

 -

 

     Energy & specialized markets

 

162 

 

147  10 

 

   Industrial

 

546 

 

531 

 

     Automotive

 

208 

 

210  (1)

 

     Intermodal [a]

 

709 

 

831  (15)

 

   Premium

 

917 

 

1,041  (12)

 

Total

 

1,940 

 

2,087  (7)

%

Average Revenue per Car

 

 

 

 

 

 

     Grain & grain products

$

3,940 

$

3,924 

 -

%

     Fertilizer

 

3,768 

 

3,718 

 

     Food & refrigerated

 

5,277 

 

5,219 

 

     Coal & renewables

 

2,022 

 

2,162  (6)

 

   Bulk

 

3,219 

 

3,146 

 

     Industrial chemicals & plastics

 

3,205 

 

3,047 

 

     Metals & minerals

 

2,697 

 

2,968  (9)

 

     Forest products

 

5,457 

 

5,145 

 

     Energy & specialized markets

 

3,866 

 

3,865 

 -

 

   Industrial

 

3,469 

 

3,465 

 -

 

     Automotive

 

2,525 

 

2,472 

 

     Intermodal [a]

 

1,307 

 

1,241 

 

   Premium

 

1,583 

 

1,489 

 

Average 

$

2,516 

$

2,401 

%



[a]

For intermodal shipments each container or trailer equals one carload.

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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Financial Position (unaudited) 





 

 

 

 

 

 

 

 

 

 

Mar. 31,

Dec. 31,

Millions, Except Percentages

2020  2019 

Assets

 

 

 

 

     Cash and cash equivalents

$

1,130 

$

831 

     Short-term investments

 

60 

 

60 

     Other current assets

 

2,614 

 

2,568 

     Investments

 

2,078 

 

2,050 

     Net properties

 

54,121 

 

53,916 

     Operating lease assets

 

1,773 

 

1,812 

     Other assets

 

440 

 

436 

Total assets

$

62,216 

$

61,673 

 

 

 

 

 

Liabilities and Common Shareholders' Equity

 

 

 

 

     Debt due within one year

$

1,511 

$

1,257 

     Other current liabilities

 

3,130 

 

3,094 

     Debt due after one year

 

26,365 

 

23,943 

     Operating lease liabilities

 

1,339 

 

1,471 

     Deferred income taxes

 

12,088 

 

11,992 

     Other long-term liabilities

 

1,792 

 

1,788 

Total liabilities

 

46,225 

 

43,545 

Total common shareholders' equity

 

15,991 

 

18,128 

Total liabilities and common shareholders' equity

$

62,216 

$

61,673 





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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)







 

 

 

 

 

 

 

 

 

Millions,

Year-to-Date

For the Periods Ended March 31,

2020  2019 

Operating Activities

 

 

 

 

     Net income

$

1,474 

$

1,391 

     Depreciation

 

547 

 

549 

     Deferred income taxes

 

91 

 

103 

     Other - net

 

43 

 

(84)

Cash provided by operating activities

 

2,155 

 

1,959 

Investing Activities

 

 

 

 

     Capital investments

 

(807)

 

(752)

     Maturities of short-term investments

 

70 

 

90 

     Purchases of short-term investments

 

(70)

 

(90)

     Other - net

 

 -

 

(32)

Cash used in investing activities

 

(807)

 

(784)

Financing Activities

 

 

 

 

     Debt issued

 

2,996 

 

2,992 

     Common share repurchases

 

(2,556)

 

(2,987)

     Dividends paid

 

(660)

 

(626)

     Accelerated share repurchase programs pending final settlement

 

(400)

 

(500)

     Debt repaid

 

(305)

 

(560)

     Net issuance of commercial paper

 

(1)

 

299 

     Other - net

 

(71)

 

(23)

Cash used in financing activities

 

(997)

 

(1,405)

Net Change in Cash, Cash Equivalents and Restricted Cash

 

351 

 

(230)

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

 

856 

 

1,328 

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

$

1,207 

$

1,098 

Free Cash Flow*

 

 

 

 

     Cash provided by operating activities

$

2,155 

$

1,959 

     Cash used in investing activities

 

(807)

 

(784)

     Dividends paid

 

(660)

 

(626)

Free cash flow

$

688 

$

549 



*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.



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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Operating and Performance Statistics (unaudited) 





 

 

 

 

 

 

 

 

 

 

 



1st Quarter

For the Periods Ended March 31,

2020 

 

2019 

%

 

Operating/Performance Statistics 

 

 

 

 

 

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

209 

 

194 

%

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

25.4 

 

24.6 

 

     Average terminal dwell time (hours) [a] *

23.8 

 

26.8  (11)

 

     Locomotive productivity (GTMs per horsepower day)

131 

 

111  18 

 

     Gross ton-miles (GTMs) (millions)

201,297 

 

210,319  (4)

 

     Train length (feet)

8,396 

 

7,292  15 

 

     Intermodal car trip plan compliance (%)

85 

 

66  19 

pts

     Manifest/Automotive car trip plan compliance (%)

64 

 

63 

pts

     Workforce productivity (car miles per employee)

894 

 

812  10 

 

     Total employees (average)

33,872 

 

40,053  (15)

 

 

 

 

 

 

 

Locomotive Fuel Statistics

 

 

 

 

 

     Average fuel price per gallon consumed

$       1.87 

 

$       2.07 

(10)

%

     Fuel consumed in gallons (millions)

225 

 

248  (9)

 

     Fuel consumption rate**

1.117 

 

1.182  (5)

 

 

 

 

 

 

 

Revenue Ton-Miles (Millions)

 

 

 

 

 

     Grain & grain products

16,111 

 

16,177 

 -

%

     Fertilizer

3,044 

 

2,886 

 

     Food & refrigerated

4,506 

 

4,507 

 -

 

     Coal & renewables

20,005 

 

26,329  (24)

 

   Bulk

43,666 

 

49,899  (12)

 

     Industrial chemicals & plastics

7,174 

 

6,812 

 

     Metals & minerals

8,533 

 

9,919  (14)

 

     Forest products

6,041 

 

5,844 

 

     Energy & specialized markets

12,046 

 

10,645  13 

 

   Industrial

33,794 

 

33,220 

 

     Automotive

4,489 

 

4,525  (1)

 

     Intermodal

17,734 

 

19,006  (7)

 

   Premium

22,223 

 

23,531  (6)

 

Total

99,683 

 

106,650  (7)

%

 

 

 

 

 

 

[a]    Prior years have been recast 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. 



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UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP





Adjusted Debt / Adjusted EBITDA*





 

 

 

 



 

 

 

 

Millions, Except Ratios

Mar. 31,

Dec. 31,

for the Trailing Twelve Months Ended [a]

2020  2019 

Net income

$

6,002 

$

5,919 

Add:

 

 

 

 

Income tax expense

 

1,873 

 

1,828 

Depreciation

 

2,214 

 

2,216 

Interest expense

 

1,081 

 

1,050 

EBITDA

$

11,170 

$

11,013 

Adjustments:

 

 

 

Other income

 

(219)

 

(243)

Interest on operating lease liabilities**

 

62 

 

68 

Adjusted EBITDA

$

11,013 

$

10,838 

Debt

$

27,876 

$

25,200 

Operating lease liabilities

 

1,665 

 

1,833 

Unfunded pension and OPEB, net of taxes of $116 and $124

 

387 

 

400 

Adjusted debt

$

29,928 

$

27,433 

Adjusted debt / Adjusted EBITDA

 

2.7 

 

2.5 



[a]

The trailing twelve months income statement information ended March 31, 2020 is recalculated by taking the twelve months ended December 31, 2019, subtracting the three months ended March 31, 2019, and adding the three months ended March 31, 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 March 31, 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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