PR Newswire | Oct 21, 2021 08:02AM EDT

10/21 07:00 CDT

Union Pacific Reports Third Quarter 2021 Results OMAHA, Neb., Oct. 21, 2021

OMAHA, Neb., Oct. 21, 2021 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2021 third quarter net income of $1.7 billion, or $2.57 per diluted share. This compares to $1.4 billion, or $2.01 per diluted share, in the third quarter 2020.

"The Union Pacific team successfully navigated global supply chain disruptions, a major bridge outage, and additional weather events to produce strong quarterly revenue growth and financial results," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "In the quarter, the team delivered solid core pricing gains, leveraged business development to produce a positive business mix, and generated productivity to offset flat volume. We also set a quarterly record for fuel consumption rate as we continue to make strides towards our goal to reduce our absolute greenhouse gas emissions. As we close out 2021, we are committed to improving our safety performance and service product to support our customers and the broader supply chain to handle the strong demand for freight transportation."

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

Third Quarter 2021 Compared to Third Quarter 2020

* Operating revenue of $5.6 billion was up 13%. * Business volumes, as measured by total revenue carloads, were flat. * Union Pacific's 56.3% operating ratio improved 240 basis points. Higher fuel prices negatively impacted the operating ratio by 140 basis points. * Operating Income of $2.4 billion was up 20%. * The company repurchased 8.6 million shares in third quarter 2021 at an aggregate cost of $1.8 billion.

Operating Performance: Quarterly Record for Fuel Consumption Rate; Third Quarter Record for Workforce ProductivityThird Quarter 2021 Compared to Third Quarter 2020

* Network operations challenged by wildfires and other weather events, reflected in quarterly freight car velocity of 195 daily miles per car, a 13% decline. * Quarterly locomotive productivity was 127 gross ton-miles (GTMs) per horsepower day, an 8% decline. * Quarterly workforce productivity was 1,044 car miles per employee, a 5% improvement. * Average maximum train length was 9,359 feet, a 4% increase. * Fuel consumption rate, measured in gallons of fuel per thousand GTMs, improved 1%. * Union Pacific's year-to-date reportable personal injury rate deteriorated to 1.00 per 200,000 employee-hours compared to 0.90 for year-to-date 2020.

Third Quarter 2021 Earnings Conference Call

Union Pacific will webcast its third quarter 2021 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, October 21, 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, 3rd Quarter Year-to-Date

For the Periods Ended September 30, 2021 2020 % 2021 2020 %

Operating Revenues

Freight revenues $ 5,166 $ 4,596 12 % $ 14,947 $ 13,448 11 %

Other 400 323 24 1,124 944 19

Total operating revenues 5,566 4,919 13 16,071 14,392 12

Operating Expenses

Compensation and benefits 1,040 1,008 3 3,088 2,972 4

Depreciation 553 555 - 1,652 1,653 -

Purchased services and materials 510 508 - 1,478 1,470 1

Fuel 544 301 81 1,452 982 48

Equipment and other rents 217 217 - 629 655 (4)

Other 270 299 (10) 874 832 5

Total operating expenses 3,134 2,888 9 9,173 8,564 7

Operating Income 2,432 2,031 20 6,898 5,828 18

Other income, net 38 37 3 214 221 (3)

Interest expense (290) (295) (2) (862) (862) -

Income before income taxes 2,180 1,773 23 6,250 5,187 20

Income taxes (507) (410) 24 (1,438) (1,218) 18

Net Income $ 1,673 $ 1,363 23 % $ 4,812 $ 3,969 21 %

Share and Per Share

Earnings per share - basic $ 2.58 $ 2.02 28 % $ 7.31 $ 5.85 25 %

Earnings per share - diluted $ 2.57 $ 2.01 28 $ 7.29 $ 5.83 25

Weighted average number of shares - basic 648.7 675.0 (4) 658.3 679.0 (3)

Weighted average number of shares - diluted 650.3 676.8 (4) 659.9 680.7 (3)

Dividends declared per share $ 1.07 $ 0.97 10 $ 3.11 $ 2.91 7

Operating Ratio 56.3% 58.7% (2.4) pts 57.1% 59.5% (2.4) pts

Effective Tax Rate 23.3% 23.1% 0.2 pts 23.0% 23.5% (0.5) pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

3rd Quarter Year-to-Date

For the Periods Ended September 30, 2021 2020 % 2021 2020 %

Freight Revenues (Millions)

Grain & grain products $ 731 $ 695 5 % $ 2,292 $ 2,028 13 %

Fertilizer 172 157 10 521 499 4

Food & refrigerated 253 239 6 739 694 6

Coal & renewables 531 387 37 1,295 1,177 10

Bulk 1,687 1,478 14 4,847 4,398 10

Industrial chemicals & plastics 503 454 11 1,436 1,384 4

Metals & minerals 488 365 34 1,330 1,202 11

Forest products 342 284 20 1,006 853 18

Energy & specialized markets 578 464 25 1,654 1,522 9

Industrial 1,911 1,567 22 5,426 4,961 9

Automotive 417 481 (13) 1,292 1,194 8

Intermodal 1,151 1,070 8 3,382 2,895 17

Premium 1,568 1,551 1 4,674 4,089 14

Total $ 5,166 $ 4,596 12 % $ 14,947 $ 13,448 11 %

Revenue Carloads (Thousands)

Grain & grain products 185 187 (1) % 592 529 12b %

Fertilizer 55 50 10 153 149 3

Food & refrigerated 48 48 - 141 137 3

Coal & renewables 232 213 9 604 607 -

Bulk 520 498 4 1,490 1,422 5

Industrial chemicals & plastics 153 144 6 449 439 2

Metals & minerals 188 156 21 516 492 5

Forest products 63 55 15 187 161 16

Energy & specialized markets 145 125 16 422 402 5

Industrial 549 480 14 1,574 1,494 5

Automotive 166 203 (18) 519 490 6

Intermodal [a] 809 863 (6) 2,483 2,296 8

Premium 975 1,066 (9) 3,002 2,786 8

Total 2,044 2,044 - % 6,066 5,702 6 %

Average Revenue per Car

Grain & grain products $ 3,937 $ 3,705 6 % $ 3,869 $ 3,832 1 %

Fertilizer 3,125 3,172 (1) 3,398 3,361 1

Food & refrigerated 5,246 4,891 7 5,235 5,053 4

Coal & renewables 2,298 1,820 26 2,146 1,938 11

Bulk 3,244 2,964 9 3,252 3,092 5

Industrial chemicals & plastics 3,277 3,154 4 3,195 3,150 1

Metals & minerals 2,596 2,337 11 2,577 2,444 5

Forest products 5,457 5,181 5 5,390 5,300 2

Energy & specialized markets 3,996 3,742 7 3,924 3,791 4

Industrial 3,482 3,271 6 3,448 3,321 4

Automotive 2,500 2,368 6 2,488 2,438 2

Intermodal [a] 1,424 1,238 15 1,362 1,261 8

Premium 1,608 1,454 11 1,557 1,468 6

Average $ 2,528 $ 2,248 12 % $ 2,464 $ 2,359 4 %

[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 2021 2020

Assets

Cash and cash equivalents $ 1,194 $ 1,799

Short-term investments 46 60

Other current assets 2,570 2,355

Investments 2,273 2,164

Properties, net 54,362 54,161

Operating lease assets 1,630 1,610

Other assets 285 249

Total assets $ 62,360 $ 62,398

Liabilities and Common Shareholders' Equity

Debt due within one year $ 1,835 $ 1,069

Other current liabilities 3,276 3,104

Debt due after one year 27,560 25,660

Operating lease liabilities 1,262 1,283

Deferred income taxes 12,500 12,247

Other long-term liabilities 2,010 2,077

Total liabilities 48,443 45,440

Total common shareholders' equity 13,917 16,958

Total liabilities and common shareholders' equity $ 62,360 $ 62,398

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)

Millions, Year-to-Date

For the Periods Ended September 30, 2021 2020

Operating Activities

Net income $ 4,812 $ 3,969

Depreciation 1,652 1,653

Deferred income taxes 189 327

Other - net (150) 44

Cash provided by operating activities 6,503 5,993

Investing Activities

Capital investments (1,945) (2,294)

Maturities of short-term investments 64 106

Purchases of short-term investments (40) (106)

Other - net 129 213

Cash used in investing activities (1,792) (2,081)

Financing Activities

Share repurchase programs (5,846) (2,956)

Debt issued 3,901 4,004

Dividends paid (2,045) (1,974)

Debt repaid (1,120) (832)

Debt Exchange (270) (327)

Net issuance of commercial paper 125 (2)

Other - net (36) (63)

Cash used in financing activities (5,291) (2,150)

Net Change in Cash, Cash Equivalents and Restricted Cash (580) 1,762

Cash, cash equivalents, and restricted cash at beginning of year 1,818 856

Cash, Cash Equivalents, and Restricted Cash at End of Period $ 1,238 $ 2,618

Free Cash Flow*

Cash provided by operating activities $ 6,503 $ 5,993

Cash used in investing activities (1,792) (2,081)

Dividends paid (2,045) (1,974)

Free cash flow $ 2,666 $ 1,938

* Free cash flow is a non-GAAP measure; however, we believe this measure isimportant to management and investors inevaluating our financial performance and measures our ability to generate cashwithout 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, 2021 2020 % 2021 2020 %

Operating/Performance Statistics

Freight car velocity (daily miles per car) [a] 195 223 (13)% 205 220 (7)%

Average train speed (miles per hour) * 24.2 25.3 (4) 24.8 25.8 (4)

Average terminal dwell time (hours) * 24.0 22.8 5 23.5 22.8 3

Locomotive productivity (GTMs per horsepower day) 127 138 (8) 135 135 -

Gross ton-miles (GTMs) (millions) 207,059 196,998 5 607,949 568,921 7

Train length (feet) 9,359 8,984 4 9,340 8,676 8

Intermodal car trip plan compliance (%) 66 77 (11)pts 72 81 (9)pts

Manifest/Automotive car trip plan compliance (%) 60 72 (12)pts 65 70 (5)pts

Workforce productivity (car miles per employee) 1,044 998 5 1,036 920 13

Total employees (average) 29,810 30,155 (1) 29,877 31,362 (5)

Locomotive Fuel Statistics

Average fuel price per gallon consumed $ 2.37 $ 1.36 74% $ 2.13 $ 1.51 41%

Fuel consumed in gallons (millions) 221 213 4 660 627 5

Fuel consumption rate** 1.068 1.084 (1) 1.085 1.103 (2)

Revenue Ton-Miles (Millions)

Grain & grain products 17,326 18,035 (4)% 57,864 50,388 15%

Fertilizer 3,038 2,932 4 9,202 9,092 1

Food & refrigerated 4,685 4,614 2 13,824 12,872 7

Coal & renewables 24,539 20,374 20 62,791 58,567 7

Bulk 49,588 45,955 8 143,681 130,919 10

Industrial chemicals & plastics 7,746 7,170 8 22,791 20,630 10

Metals & minerals 8,922 6,536 37 24,382 21,471 14

Forest products 6,381 5,882 8 19,405 17,321 12

Energy & specialized markets 9,780 8,005 22 28,482 27,327 4

Industrial 32,829 27,593 19 95,060 86,749 10

Automotive 3,507 4,269 (18) 11,049 10,498 5

Intermodal 18,390 20,096 (8) 56,643 55,344 2

Premium 21,897 24,365 (10) 67,692 65,842 3

Total 104,314 97,913 7% 306,433 283,510 8%

[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 3rd Qtr Year-to-Date

Operating Revenues

Freight revenues $ 4,649 $ 5,132 $ 5,166 $ 14,947

Other revenues 352 372 400 1,124

Total operating revenues 5,001 5,504 5,566 16,071

Operating Expenses

Compensation and benefits 1,026 1,022 1,040 3,088

Depreciation 549 550 553 1,652

Purchased services and materials 490 478 510 1,478

Fuel 411 497 544 1,452

Equipment and other rents 212 200 217 629

Other 320 284 270 874

Total operating expenses 3,008 3,031 3,134 9,173

Operating Income 1,993 2,473 2,432 6,898

Other income, net 51 125 38 214

Interest expense (290) (282) (290) (862)

Income before income taxes 1,754 2,316 2,180 6,250

Income taxes (413) (518) (507) (1,438)

Net Income $ 1,341 $ 1,798 $ 1,673 $ 4,812

Share and Per Share

Earnings per share - basic $ 2.01 $ 2.73 $ 2.58 $ 7.31

Earnings per share - diluted $ 2.00 $ 2.72 $ 2.57 $ 7.29

Weighted average number of shares - basic 667.6 658.5 648.7 658.3

Weighted average number of shares - diluted 669.2 660.1 650.3 659.9

Dividends declared per share $ 0.97 $ 1.07 $ 1.07 $ 3.11

Operating Ratio 60.1% 55.1% 56.3% 57.1%

Effective Tax Rate 23.5% 22.4% 23.3% 23.0%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

2021

1st Qtr 2nd Qtr 3rd Qtr Year-to-Date

Freight Revenues (Millions)

Grain & grain products $ 766 $ 795 $ 731 $ 2,292

Fertilizer 170 179 172 521

Food & refrigerated 235 251 253 739

Coal & renewables 341 423 531 1,295

Bulk 1,512 1,648 1,687 4,847

Industrial chemicals & plastics 435 498 503 1,436

Metals & minerals 375 467 488 1,330

Forest products 316 348 342 1,006

Energy & specialized markets 530 546 578 1,654

Industrial 1,656 1,859 1,911 5,426

Automotive 447 428 417 1,292

Intermodal 1,034 1,197 1,151 3,382

Premium 1,481 1,625 1,568 4,674

Total $ 4,649 $ 5,132 $ 5,166 $ 14,947

Revenue Carloads (Thousands)

Grain & grain products 203 204 185 592

Fertilizer 44 54 55 153

Food & refrigerated 45 48 48 141

Coal & renewables 174 198 232 604

Bulk 466 504 520 1,490

Industrial chemicals & plastics 140 156 153 449

Metals & minerals 146 182 188 516

Forest products 60 64 63 187

Energy & specialized markets 139 138 145 422

Industrial 485 540 549 1,574

Automotive 180 173 166 519

Intermodal [a] 796 878 809 2,483

Premium 976 1,051 975 3,002

Total 1,927 2,095 2,044 6,066

Average Revenue per Car

Grain & grain products $ 3,782 $ 3,894 $ 3,937 $ 3,869

Fertilizer 3,852 3,304 3,125 3,398

Food & refrigerated 5,234 5,226 5,246 5,235

Coal & renewables 1,958 2,134 2,298 2,146

Bulk 3,246 3,266 3,244 3,252

Industrial chemicals & plastics 3,113 3,189 3,277 3,195

Metals & minerals 2,563 2,569 2,596 2,577

Forest products 5,244 5,463 5,457 5,390

Energy & specialized markets 3,828 3,944 3,996 3,924

Industrial 3,417 3,442 3,482 3,448

Automotive 2,485 2,479 2,500 2,488

Intermodal [a] 1,299 1,363 1,424 1,362

Premium 1,517 1,547 1,608 1,557

Average $ 2,413 $ 2,449 $ 2,528 $ 2,464

[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] 2021 2020

Net income $ 6,192 $ 5,349

Add:

Income tax expense 1,851 1,631

Depreciation 2,209 2,210

Interest expense 1,141 1,141

EBITDA $ 11,393 $ 10,331

Adjustments:

Other income, net (280) (287)

Interest on operating lease liabilities** 53 59

Adjusted EBITDA $ 11,166 $ 10,103

Debt $ 29,395 $ 26,729

Operating lease liabilities 1,568 1,604

Unfunded pension and OPEB, net of taxes of $175 and $195 585 637

Adjusted debt $ 31,548 $ 28,970

Adjusted debt / Adjusted EBITDA 2.8 2.9

Comparable Adjusted Debt / Adjusted EBITDA*

Sep. 30, Dec. 31,

for the Trailing Twelve Months Ended [a] 2021 2020

Adjusted debt / Adjusted EBITDA 2.83 2.87

Factors Affecting Comparability:

Brazos yard impairment [b] (0.07) (0.08)

Comparable Adjusted Debt / Adjusted EBITDA 2.76 2.79

The trailing twelve months income statement information ended September[a] 30, 2021, is recalculated by taking the twelve months ended December 31, 2020, subtracting the nine months ended September 30, 2020, and adding the nine months ended September 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 September 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