OMAHA, Neb., April 21, 2016 /PRNewswire/ --
First Quarter Results
- Diluted earnings per share of $1.16 declined 11 percent.
- Operating income totaled $1.7
billion, down 15 percent.
- Operating ratio of 65.1 percent, up 0.3 points.
Union Pacific Corporation (NYSE: UNP) today reported 2016 first
quarter net income of nearly $1.0
billion, or $1.16 per diluted
share compared to about $1.2 billion,
or $1.30 per diluted share, in the
first quarter 2015.
"In this challenging volume environment, we have continued our
intense focus on operating safely and efficiently, managing our
resources, and improving our customer experience," said
Lance Fritz, Union Pacific chairman,
president and chief executive officer. "As a result, the
quarterly operating ratio came in at 65.1 percent, up only 0.3
points from last year, as solid core pricing and productivity
improvements helped to offset an 8 percent decline in total
volumes."
First Quarter Summary
Operating revenue of $4.8 billion
was down 14 percent in the first quarter 2016 compared to the first
quarter 2015. First quarter business volumes, as measured by
total revenue carloads, declined 8 percent compared to 2015.
Volume declines in coal, industrial products, agricultural
products, and intermodal more than offset growth in
automotive. Chemicals volume was flat compared to 2015 as
declines in crude oil and fertilizer carloads offset growth in
other chemicals shipments. In addition:
- Quarterly freight revenue decreased 14 percent compared to the
first quarter 2015, as volume declines, lower fuel surcharge
revenue and negative business mix more than offset core pricing
gains.
- Union Pacific's 65.1 percent operating ratio was unfavorable by
0.3 points compared to the first quarter 2015. The net impact
of lower fuel prices during the quarter negatively impacted the
operating ratio by about 0.5 points.
- The $1.25 per gallon average
quarterly diesel fuel price in the first quarter 2016 was 36
percent lower than the first quarter 2015.
- Quarterly train speed, as reported to the Association of
American Railroads, was 27.3 mph, 11 percent faster than the first
quarter 2015.
- Union Pacific's reportable personal injury rate of 0.75 per
200,000 employee-hours was a first quarter record, improving 12
percent compared to the first quarter 2015.
- The Company repurchased 9.3 million shares in the first quarter
2016 at an aggregate cost of $713
million.
Summary of First Quarter Freight Revenues
- Automotive down 1 percent
- Chemicals down 2 percent
- Agricultural Products down 6 percent
- Intermodal down 9 percent
- Industrial Products down 18 percent
- Coal down 43 percent
2016 Outlook
"This year has brought a continuation of many of the same trends
we experienced throughout most of 2015," Fritz said. "An
energy market recession, low commodity prices, the strength of the
U.S. dollar in a soft global economy, and muted domestic retail
demand all contributed to market weakness across many of our
business lines. Despite the current challenges, we will
continue to adapt to new business environments, drive productivity
and innovation, and improve our industry leading safety performance
as we work toward our ultimate goal of zero incidents. At the
same time, we will leverage the strength and diversity of the Union
Pacific franchise to develop new business opportunities, provide an
excellent customer experience and generate strong long-term value
for our shareholders."
First Quarter 2016 Earnings Conference Call
Union Pacific will host its first quarter 2016 earnings release
presentation live over the Internet and via teleconference on
Thursday, April 21, 2016 at
8:45 a.m. Eastern Time. The
presentation will be webcast live over the internet on Union
Pacific's website at www.up.com/investor. 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. From 2006-2015, Union Pacific
invested approximately $33 billion in
its network and operations to support America's transportation
infrastructure. The railroad's diversified business mix
includes Agricultural Products, Automotive, Chemicals, Coal,
Industrial Products and Intermodal. 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.
Supplemental financial information is attached.
This presentation 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 generate financial returns, improve network
performance, productivity and cost efficiency; capital spending
plans; new business development opportunities; and providing
returns to its shareholders. These statements are, or will
be, forward-looking statements as defined by the Securities Act of
1933 and 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 2015, which was filed with the SEC on February 5, 2016. 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,
|
1st
Quarter
|
For the
Periods Ended March 31,
|
2016
|
2015
|
%
|
|
Operating
Revenues
|
|
|
|
|
|
|
Freight
revenues
|
$
|
4,502
|
$
|
5,251
|
(14)
|
%
|
Other
revenues
|
|
327
|
|
363
|
(10)
|
|
Total operating
revenues
|
|
4,829
|
|
5,614
|
(14)
|
|
Operating
Expenses
|
|
|
|
|
|
|
Compensation and
benefits
|
|
1,213
|
|
1,369
|
(11)
|
|
Purchased services and
materials
|
|
569
|
|
643
|
(12)
|
|
Depreciation
|
|
502
|
|
491
|
2
|
|
Fuel
|
|
320
|
|
564
|
(43)
|
|
Equipment and other
rents
|
|
289
|
|
311
|
(7)
|
|
Other
|
|
249
|
|
259
|
(4)
|
|
Total operating
expenses
|
|
3,142
|
|
3,637
|
(14)
|
|
Operating
Income
|
|
1,687
|
|
1,977
|
(15)
|
|
Other
income
|
|
46
|
|
26
|
77
|
|
Interest
expense
|
|
(167)
|
|
(148)
|
13
|
|
Income before
income taxes
|
|
1,566
|
|
1,855
|
(16)
|
|
Income
taxes
|
|
(587)
|
|
(704)
|
(17)
|
|
Net
Income
|
$
|
979
|
$
|
1,151
|
(15)
|
%
|
|
|
|
|
|
|
|
Share and
Per Share
|
|
|
|
|
|
|
Earnings per share -
basic
|
$
|
1.16
|
$
|
1.31
|
(11)
|
%
|
Earnings per share -
diluted
|
$
|
1.16
|
$
|
1.30
|
(11)
|
|
Weighted average
number of shares - basic
|
|
844.0
|
|
879.3
|
(4)
|
|
Weighted average
number of shares - diluted
|
|
846.7
|
|
882.8
|
(4)
|
|
Dividends declared per
share
|
$
|
0.55
|
$
|
0.55
|
-
|
|
|
|
|
|
|
|
|
Operating
Ratio
|
|
65.1%
|
|
64.8%
|
0.3
|
pts
|
Effective
Tax Rate
|
|
37.5%
|
|
38.0%
|
(0.5)
|
pts
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Freight Revenues
Statistics (unaudited)
|
|
|
|
|
|
|
|
|
1st
Quarter
|
For the
Periods Ended March 31,
|
2016
|
2015
|
%
|
|
Freight
Revenues (Millions)
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
882
|
$
|
939
|
(6)
|
%
|
Automotive
|
|
510
|
|
516
|
(1)
|
|
Chemicals
|
|
878
|
|
897
|
(2)
|
|
Coal
|
|
519
|
|
915
|
(43)
|
|
Industrial
Products
|
|
834
|
|
1,017
|
(18)
|
|
Intermodal
|
|
879
|
|
967
|
(9)
|
|
Total
|
$
|
4,502
|
$
|
5,251
|
(14)
|
%
|
Revenue
Carloads (Thousands)
|
|
|
|
|
|
|
Agricultural
Products
|
|
235
|
|
245
|
(4)
|
%
|
Automotive
|
|
217
|
|
202
|
7
|
|
Chemicals
|
|
268
|
|
267
|
-
|
|
Coal
|
|
262
|
|
399
|
(34)
|
|
Industrial
Products
|
|
274
|
|
306
|
(10)
|
|
Intermodal*
|
|
788
|
|
812
|
(3)
|
|
Total
|
|
2,044
|
|
2,231
|
(8)
|
%
|
Average
Revenue per Car
|
|
|
|
|
|
|
Agricultural
Products
|
$
|
3,749
|
$
|
3,838
|
(2)
|
%
|
Automotive
|
|
2,350
|
|
2,553
|
(8)
|
|
Chemicals
|
|
3,272
|
|
3,362
|
(3)
|
|
Coal
|
|
1,985
|
|
2,293
|
(13)
|
|
Industrial
Products
|
|
3,041
|
|
3,325
|
(9)
|
|
Intermodal*
|
|
1,116
|
|
1,191
|
(6)
|
|
Average
|
$
|
2,202
|
$
|
2,354
|
(6)
|
%
|
|
|
*
|
Each intermodal
container or trailer equals one carload.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
|
|
|
Mar.
31,
|
Dec.
31,
|
Millions,
Except Percentages
|
2016
|
2015
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,673
|
$
|
1,391
|
Other current
assets
|
|
2,410
|
|
2,739
|
Investments
|
|
1,404
|
|
1,410
|
Net
properties
|
|
49,071
|
|
48,866
|
Other
assets
|
|
214
|
|
194
|
Total
assets
|
$
|
55,772
|
$
|
54,600
|
|
|
|
|
|
Liabilities
and Common Shareholders' Equity
|
|
|
|
|
Debt due within one
year
|
$
|
402
|
$
|
594
|
Other current
liabilities
|
|
2,885
|
|
2,612
|
Debt due after one
year
|
|
14,791
|
|
13,607
|
Deferred income
taxes
|
|
15,404
|
|
15,241
|
Other long-term
liabilities
|
|
1,815
|
|
1,844
|
Total
liabilities
|
|
35,297
|
|
33,898
|
Total common
shareholders' equity
|
|
20,475
|
|
20,702
|
Total
liabilities and common shareholders' equity
|
$
|
55,772
|
$
|
54,600
|
|
|
|
|
|
Debt to
Capital
|
|
42.6%
|
|
40.7%
|
Adjusted
Debt to Capital*
|
|
47.1%
|
|
45.7%
|
|
|
*
|
Adjusted Debt to
Capital is a non-GAAP measure; however, management believes that it
is an important measure in evaluating our financial performance.
See page 6 for a reconciliation to GAAP.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Condensed
Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
Millions,
|
Year-to-Date
|
For the
Periods Ended March 31,
|
2016
|
2015
|
Operating
Activities
|
|
|
|
|
Net income
|
$
|
979
|
$
|
1,151
|
Depreciation
|
|
502
|
|
491
|
Deferred income
taxes
|
|
169
|
|
108
|
Other - net
|
|
523
|
|
314
|
Cash provided
by operating activities
|
|
2,173
|
|
2,064
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Capital
investments
|
|
(687)
|
|
(1,101)
|
Other - net
|
|
15
|
|
(41)
|
Cash used in
investing activities
|
|
(672)
|
|
(1,142)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Debt issued
|
|
1,278
|
|
1,146
|
Common shares
repurchased
|
|
(706)
|
|
(792)
|
Dividends
paid*
|
|
(465)
|
|
(922)
|
Debt repaid
|
|
(282)
|
|
(333)
|
Other - net
|
|
(44)
|
|
(20)
|
Cash used in
financing activities
|
|
(219)
|
|
(921)
|
|
|
|
|
|
Net Change
in Cash and Cash Equivalents
|
|
1,282
|
|
1
|
Cash and cash
equivalents at beginning of year
|
|
1,391
|
|
1,586
|
Cash and
Cash Equivalents at End of Period
|
$
|
2,673
|
$
|
1,587
|
|
|
|
|
|
Free Cash
Flow**
|
|
|
|
|
Cash provided by
operating activities
|
$
|
2,173
|
$
|
2,064
|
Cash used in investing
activities
|
|
(672)
|
|
(1,142)
|
Dividends
paid
|
|
(465)
|
|
(922)
|
Free cash
flow
|
$
|
1,036
|
$
|
-
|
|
|
*
|
The 2015 dividends
paid amount includes the fourth quarter 2014 dividend of $438
million, which was paid on January 2, 2015, as well as the first
quarter 2015 dividend of $484 million, which was paid on March 30,
2015. Beginning in 2015, the timing of the dividend
declaration and payable dates was aligned to occur within the same
quarter.
|
|
|
**
|
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)
|
|
|
|
|
|
|
|
1st
Quarter
|
For the
Periods Ended March 31,
|
2016
|
|
2015
|
%
|
|
Operating/Performance
Statistics
|
|
|
|
|
|
Gross ton-miles (GTMs)
(millions)
|
205,480
|
|
237,213
|
(13)
|
%
|
Employees
(average)
|
43,655
|
|
48,830
|
(11)
|
|
GTMs (millions) per
employee
|
4.71
|
|
4.86
|
(3)
|
|
|
|
|
|
|
|
Locomotive
Fuel Statistics
|
|
|
|
|
|
Average fuel price per
gallon consumed
|
$ 1.25
|
|
$ 1.95
|
(36)
|
%
|
Fuel consumed in
gallons (millions)
|
247
|
|
282
|
(12)
|
|
Fuel consumption
rate*
|
1.204
|
|
1.187
|
1
|
|
|
|
|
|
|
|
AAR Reported
Performance Measures
|
|
|
|
|
|
Average train speed
(miles per hour)
|
27.3
|
|
24.6
|
11
|
%
|
Average terminal dwell
time (hours)
|
28.6
|
|
30.6
|
(7)
|
|
|
|
|
|
|
|
Revenue
Ton-Miles (Millions)
|
|
|
|
|
|
Agricultural
Products
|
22,291
|
|
22,982
|
(3)
|
%
|
Automotive
|
4,578
|
|
4,293
|
7
|
|
Chemicals
|
17,272
|
|
18,209
|
(5)
|
|
Coal
|
24,773
|
|
41,710
|
(41)
|
|
Industrial
Products
|
17,041
|
|
20,168
|
(16)
|
|
Intermodal
|
18,708
|
|
19,048
|
(2)
|
|
Total
|
104,663
|
|
126,410
|
(17)
|
%
|
|
|
*
|
Fuel consumption is
computed as follows: gallons of fuel consumed divided by gross
ton-miles in thousands.
|
UNION PACIFIC
CORPORATION AND SUBSIDIARY COMPANIES
|
Non-GAAP Measures
Reconciliation to GAAP
|
|
|
|
|
|
Debt to
Capital*
|
|
|
|
|
|
Mar.
31,
|
Dec.
31,
|
Millions,
Except Percentages
|
2016
|
2015
|
Debt
(a)
|
$
|
15,193
|
$
|
14,201
|
Equity
|
|
20,475
|
|
20,702
|
Capital
(b)
|
$
|
35,668
|
$
|
34,903
|
Debt to capital
(a/b)
|
|
42.6%
|
|
40.7%
|
|
|
*
|
Total debt divided by
total debt plus equity. We believe this measure is important to
management and investors in evaluating our balance sheet strength
and is important in managing our credit ratios and financing
relationships.
|
|
|
|
|
|
Adjusted
Debt to Capital, Reconciliation to GAAP*
|
|
|
|
|
|
Mar.
31,
|
Dec.
31,
|
Millions,
Except Percentages
|
2016
|
2015
|
Debt
|
$
|
15,193
|
$
|
14,201
|
Net present
value of operating leases
|
|
2,617
|
|
2,726
|
Unfunded
pension and OPEB
|
|
445
|
|
463
|
Adjusted debt
(a)
|
|
18,255
|
|
17,390
|
Equity
|
|
20,475
|
|
20,702
|
Adjusted
capital (b)
|
$
|
38,730
|
$
|
38,092
|
Adjusted debt
to capital (a/b)
|
|
47.1%
|
|
45.7%
|
|
|
*
|
Total debt plus net
present value of operating leases plus after-tax unfunded pension
and OPEB obligation divided by total debt plus net present value of
operating leases plus after-tax unfunded pension and OPEB
obligation plus equity. Operating leases were discounted using 4.7%
at March 31, 2016, and 4.8% at December 31, 2015. The discount rate
reflects our effective interest rate. We believe this measure is
important to management and investors in evaluating the total
amount of leverage in our capital structure including off-balance
sheet lease obligations.
|
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SOURCE Union Pacific