PR Newswire | Jul 22, 2021 08:02AM EDT

07/22 07:00 CDT

Union Pacific Reports Second Quarter 2021 Results OMAHA, Neb., July 22, 2021

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 ShareSecond 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 RateSecond 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 2nd Quarter Year-to-DateShare Amounts andPercentages, For thePeriods Ended June 30, 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 1,022 905 13 2,048 1,964 4benefits

Depreciation 550 551 - 1,099 1,098 -

Purchased services 478 441 8 968 962 1and materials

Fuel 497 247 U 908 681 33

Equipment and other 200 211 (5) 412 438 (6)rents

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 2,316 1,496 55 4,070 3,414 19taxes

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 $ 2.73 $ 1.67 63 % $ 4.73 $ 3.83 23 %- basic

Earnings per share $ 2.72 $ 1.67 63 $ 4.72 $ 3.82 24- diluted

Weighted average 658.5 677.7 (3) 663.1 681.0 (3)number of shares - basic

Weighted averagenumber of shares - 660.1 679.2 (3) 664.7 682.7 (3)diluted

Dividends declared $ 1.07 $ 0.97 10 $ 2.04 $ 1.94 5per share

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 & 498 435 14 933 930 -plastics

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 & 156 141 11 296 295 -plastics

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 & 3,189 3,086 3 3,153 3,148 -plastics

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 2021 2020 % 2021 2020 %30,

Operating/PerformanceStatistics

Freight car velocity 213 227 (6) % 211 218 (3) %(daily miles per car) [a]

Average train speed 25.0 26.9 (7) 25.1 26.0 (3)(miles per hour) *

Average terminal 22.9 21.6 6 23.2 22.8 2dwell time (hours) *

Locomotiveproductivity (GTMs per 140 136 3 139 133 5horsepower day)

Gross ton-miles 207,803 170,626 22 400,890 371,923 8(GTMs) (millions)

Train length (feet) 9,410 8,664 9 9,330 8,517 10

Intermodal car trip 71 82 (11) pts 74 83 (9) ptsplan compliance (%)

Manifest/Automotivecar trip plan compliance 67 76 (9) pts 68 69 (1) pts(%)

Workforceproductivity (car miles per 1,060 868 22 1,031 882 17employee)

Total employees 30,066 30,059 - 29,910 31,965 (6)(average)

Locomotive Fuel Statistics

Average fuel price $ 2.16 $ 1.26 71 % $ 2.01 $ 1.59 26 %per gallon consumed

Fuel consumed in 223 189 18 439 414 6gallons (millions)

Fuel consumption 1.072 1.107 (3) 1.095 1.112 (2)rate**

Revenue Ton-Miles(Millions)

Grain & grain 20,190 16,242 24 % 40,538 32,353 25 %products

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 7,990 6,286 27 15,045 13,460 12& plastics

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 9,112 7,276 25 18,702 19,322 (3)markets

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 1st Qtr 2nd Qtr Year-to-DatePercentages,

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



The trailing twelve months income statement information ended June 30, [a]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.

Adjustments remove the impact of $209 million from net income and $69 [b]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 Reported Brazos Yard AdjustedPercentages results 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