ex_557272.htm

EX-99.1 2 ex_557272.htm EXHIBIT 99.1 ex_557272.htm

Exhibit 99.1

Union Pacific Reports Third Quarter 2023 Results

	●	Earnings per diluted share of $2.51
	●	Operating revenue of $5.9 billion
	●	Operating income of $2.2 billion

Omaha, Neb., October 19, 2023 – Union Pacific Corporation (NYSE: UNP) today reported 2023 third quarter net income of $1.5 billion, or $2.51 per diluted share. This compares to 2022 third quarter net income of $1.9 billion, or $3.05 per diluted share.

“We faced many challenges in the quarter, including continued inflationary pressures and a drop in carloads,” said Jim Vena, Union Pacific Chief Executive Officer. “Operationally we gained momentum through the quarter, which positions us to provide our customers with great service. Operating and safety metrics are showing solid improvement, as we increase asset utilization. We are aligning the team around our strategy focused on being the best in safety, service, and operational excellence as we drive growth to the railroad. Through our day-to-day actions, we will continue to make improvements as we exit the year.”

Financial Results: Operating Revenue Reduced by Lower Fuel Surcharge Revenue and Lower Volumes

Third Quarter 2023 Compared to Third Quarter 2022

	●	Operating revenue of $5.9 billion was down 10% driven by reduced fuel surcharge revenue, lower volumes, and business mix, partially offset by core pricing gains.
	●	Business volumes, as measured by total revenue carloads, were down 3%.
	●	Operating ratio was 63.4%, up 350 basis points. Rising fuel prices during the quarter negatively impacted the operating ratio 170 basis points.
	●	Operating income of $2.2 billion declined 17%.

Operating Performance: Service Strengthening as Resource Utilization Improves

Third Quarter 2023 Compared to Third Quarter 2022

	●	Quarterly freight car velocity was 200 daily miles per car, a 5% improvement.
	●	Quarterly locomotive productivity was 129 gross ton-miles (GTMs) per horsepower day, a 4% improvement.
	●	Average maximum train length was 9,537 feet, a 1% increase.
	●	Quarterly workforce productivity decreased 6% to 985 car miles per employee.
	●	Fuel consumption rate of 1.052, measured in gallons of fuel per thousand GTMs, was flat.
	●	Union Pacific’s year to date reportable personal injury and derailment rates improved.

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2023 Full Year Outlook Remains Relatively Unchanged

●	Year to date softness in consumer-related volumes likely drive full year volume expectations below Industrial Production (Current forecast: 0.0%)
●	Pricing dollars in excess of inflation dollars
●	2023 Capital Allocation:
	○	Updated capital plan of $3.7 billion
	○	Maintain dividend of $1.30/quarter
	○	No further 2023 share repurchases planned

Third Quarter 2023 Earnings Conference Call

Union Pacific will webcast its third quarter 2023 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, October 19, 2023, 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.

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

Union Pacific Media contact: Clarissa Beyah at 402-957-4793 or cbeyah@up.com

Supplemental financial information is attached.

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****

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 potential impacts of public health crises, including pandemics, epidemics and the outbreak of other contagious diseases, such as the coronavirus and its variant strains (COVID); the Russia-Ukraine and Israeli wars and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volume and carloadings; expectations as to general macroeconomic conditions, including slowdowns and recessions, domestically or internationally, and future volatility in interest rates and fuel prices; closing of customer manufacturing, distribution, or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications; expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to business, financial, and operational results, future economic performance, and planned capital investments ; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyberattacks or other matters. 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 2022, which was filed with the SEC on February 10, 2023. 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 the Company’s 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	*3rd Quarter*								*Year-to-Date*
Percentages, For the Periods Ended September 30,	*2023*			2022			%		*2023*			2022			%
Operating Revenues
Freight revenues	$	5,545		$	6,109		(9	)%	$	16,770		$	17,391		(4	)%
Other revenues		396			457		(13	)		1,190			1,304		(9	)
Total operating revenues		5,941			6,566		(10	)		17,960			18,695		(4	)
Operating Expenses
Compensation and benefits		1,201			1,278		(6	)		3,649			3,471		5
Fuel		702			932		(25	)		2,132			2,586		(18	)
Purchased services and materials		668			626		7			1,971			1,809		9
Depreciation		580			563		3			1,729			1,677		3
Equipment and other rents		235			215		9			718			660		9
Other		378			319		18			1,086			987		10
Total operating expenses		3,764			3,933		(4	)		11,285			11,190		1
Operating Income		2,177			2,633		(17	)		6,675			7,505		(11	)
Other income, net		106			124		(15	)		383			334		15
Interest expense		(334	)		(315	)	6			(1,009	)		(938	)	8
Income before income taxes		1,949			2,442		(20	)		6,049			6,901		(12	)
Income tax expense		(421	)		(547	)	(23	)		(1,322	)		(1,541	)	(14	)
Net Income	$	1,528		$	1,895		(19	)%	$	4,727		$	5,360		(12	)%

Share and Per Share
Earnings per share - basic	$	2.51		$	3.05		(18	)%	$	7.76		$	8.56		(9	)%
Earnings per share - diluted	$	2.51		$	3.05		(18	)	$	7.75		$	8.54		(9	)
Weighted average number of shares - basic		608.7			620.4		(2	)		609.3			626.1		(3	)
Weighted average number of shares - diluted		609.8			621.5		(2	)		610.3			627.4		(3	)
Dividends declared per share	$	1.30		$	1.30		-		$	3.90		$	3.78		3

Operating Ratio		63.4	%		59.9	%	3.5	pts		62.8	%		59.9	%	2.9	pts
Effective Tax Rate		21.6	%		22.4	%	(0.8	)pts		21.9	%		22.3	%	(0.4	)pts

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

	*3rd Quarter*							*Year-to-Date*
For the Periods Ended September 30,	*2023*		2022		%			*2023*		2022		%
*Freight Revenues (Millions)*
Grain & grain products	$	825	$	880		(6	)%	$	2,658	$	2,624		1	%
Fertilizer		194		178		9			563		541		4
Food & refrigerated		259		290		(11	)		777		828		(6	)
Coal & renewables		488		611		(20	)		1,422		1,611		(12	)
Bulk		1,766		1,959		(10	)		5,420		5,604		(3	)
Industrial chemicals & plastics		557		579		(4	)		1,638		1,656		(1	)
Metals & minerals		556		601		(7	)		1,654		1,648		-
Forest products		333		390		(15	)		1,012		1,140		(11	)
Energy & specialized markets		611		624		(2	)		1,856		1,762		5
Industrial		2,057		2,194		(6	)		6,160		6,206		(1	)
Automotive		609		601		1			1,821		1,663		10
Intermodal		1,113		1,355		(18	)		3,369		3,918		(14	)
Premium		1,722		1,956		(12	)		5,190		5,581		(7	)
Total	$	5,545	$	6,109		(9	)%	$	16,770		17,391		(4	)%
*Revenue Carloads (Thousands)*
Grain & grain products		183		190		(4	)%		582		590		(1	)%
Fertilizer		51		51		-			144		149		(3	)
Food & refrigerated		45		48		(6	)		133		143		(7	)
Coal & renewables		231		243		(5	)		650		670		(3	)
Bulk		510		532		(4	)		1,509		1,552		(3	)
Industrial chemicals & plastics		163		165		(1	)		484		486		-
Metals & minerals		206		202		2			604		589		3
Forest products		54		62		(13	)		161		189		(15	)
Energy & specialized markets		146		140		4			429		412		4
Industrial		569		569		-			1,678		1,676		-
Automotive		210		198		6			623		580		7
Intermodal [a]		763		811		(6	)		2,246		2,373		(5	)
Premium		973		1,009		(4	)		2,869		2,953		(3	)
Total		2,052		2,110		(3	)%		6,056		6,181		(2	)%
*Average Revenue per Car*
Grain & grain products	$	4,486	$	4,641		(3	)%	$	4,563	$	4,449		3	%
Fertilizer		3,818		3,504		9			3,921		3,634		8
Food & refrigerated		5,847		6,017		(3	)		5,850		5,809		1
Coal & renewables		2,114		2,514		(16	)		2,187		2,403		(9	)
Bulk		3,465		3,685		(6	)		3,592		3,612		(1	)
Industrial chemicals & plastics		3,406		3,508		(3	)		3,381		3,404		(1	)
Metals & minerals		2,688		2,969		(9	)		2,736		2,799		(2	)
Forest products		6,197		6,347		(2	)		6,305		6,044		4
Energy & specialized markets		4,201		4,434		(5	)		4,331		4,273		1
Industrial		3,612		3,852		(6	)		3,671		3,702		(1	)
Automotive		2,894		3,030		(4	)		2,921		2,866		2
Intermodal [a]		1,459		1,672		(13	)		1,500		1,651		(9	)
Premium		1,769		1,939		(9	)		1,809		1,890		(4	)
Average	$	2,702	$	2,895		(7	)%	$	2,769	$	2,814		(2	)%

[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		*2023*			2022
Assets
Cash and cash equivalents		$	750		$	973
Short-term investments			16			46
Other current assets			3,047			2,933
Investments			2,580			2,375
Properties, net			57,010			56,038
Operating lease assets			1,670			1,672
Other assets			1,467			1,412
Total assets		$	66,540		$	65,449

Liabilities and Common Shareholders' Equity
Debt due within one year		$	1,724		$	1,678
Other current liabilities			3,580			3,842
Debt due after one year			31,153			31,648
Operating lease liabilities			1,244			1,300
Deferred income taxes			13,095			13,033
Other long-term liabilities			1,740			1,785
Total liabilities			52,536			53,286
Total common shareholders' equity			14,004			12,163
Total liabilities and common shareholders' equity		$	66,540		$	65,449

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows (unaudited)

	*Year-to-Date*
Millions, for the Periods Ended September 30,	*2023*			2022
Operating Activities
Net income	$	4,727		$	5,360
Depreciation		1,729			1,677
Deferred income taxes		59			180
Other - net		(531	)		(147	)
Cash provided by operating activities		5,984			7,070
Investing Activities
Capital investments*		(2,582	)		(2,690	)
Other - net		(68	)		131
Cash used in investing activities		(2,650	)		(2,559	)
Financing Activities
Dividends paid		(2,380	)		(2,362	)
Debt repaid		(2,179	)		(2,185	)
Debt issued		1,599			6,080
Share repurchase programs		(705	)		(5,497	)
Other - net		125			(246	)
Cash used in financing activities		(3,540	)		(4,210	)
Net change in cash, cash equivalents, and restricted cash		(206	)		301
Cash, cash equivalents, and restricted cash at beginning of year		987			983
Cash, cash equivalents, and restricted cash at end of period	$	781		$	1,284
Free Cash Flow**
Cash provided by operating activities	$	5,984		$	7,070
Cash used in investing activities		(2,650	)		(2,559	)
Dividends paid		(2,380	)		(2,362	)
Free cash flow	$	954		$	2,149

*	Capital investments include locomotive and freight car early lease buyouts of $14 million in 2023 and $55 million in 2022.
**	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,	*2023*		2022			%		*2023*		2022			%
Operating/Performance Statistics
Freight car velocity (daily miles per car)*		200		191	5	%			199		192	4	%
Average train speed (miles per hour)*		23.6		23.7	-				23.9		23.8	-
Average terminal dwell time (hours)*		23.5		24.4	(4	)			23.6		24.3	(3	)
Locomotive productivity (GTMs per horsepower day)		129		124	4				126		126	-
Gross ton-miles (GTMs) (millions)		208,678		214,999	(3	)			622,932		634,494	(2	)
Train length (feet)		9,537		9,483	1				9,337		9,376	-
Intermodal car trip plan compliance (%)**		75		62	13		pts		75		65	10		pts
Manifest/Automotive car trip plan compliance (%)**		64		58	6		pts		63		59	4		pts
Workforce productivity (car miles per employee)		985		1,045	(6	)			984		1,045	(6	)
Total employees (average)		31,624		30,841	3				31,800		30,582	4

Locomotive Fuel Statistics
Average fuel price per gallon consumed	$	3.12	$	3.96	(21	)%	$	3.07	$	3.64	(16	)%
Fuel consumed in gallons (millions)		219		227	(4	)		677		687	(1	)
Fuel consumption rate***		1.052		1.056	-			1.087		1.083	-

Revenue Ton-Miles (Millions)
Grain & grain products	17,649	18,554	(5	)%	56,551	59,042	(4	)%
Fertilizer	2,982	2,802	6		9,071	9,068	-
Food & refrigerated	4,643	4,430	5		13,700	13,389	2
Coal & renewables	23,367	25,169	(7	)	66,728	69,977	(5	)
Bulk	48,641	50,955	(5	)	146,050	151,476	(4	)
Industrial chemicals & plastics	7,492	7,702	(3	)	21,797	22,946	(5	)
Metals & minerals	9,253	10,053	(8	)	27,409	28,460	(4	)
Forest products	5,636	6,573	(14	)	17,000	19,892	(15	)
Energy & specialized markets	9,621	9,322	3		28,937	27,493	5
Industrial	32,002	33,650	(5	)	95,143	98,791	(4	)
Automotive	4,624	4,347	6		13,711	12,634	9
Intermodal	17,765	18,296	(3	)	53,452	54,924	(3	)
Premium	22,389	22,643	(1	)	67,163	67,558	(1	)
Total	103,032	107,248	(4	)%	308,356	317,825	(3	)%

*	Surface Transportation Board (STB) reported performance measures.
**	Methodology used to report is not comparable with the reporting to the STB under docket number EP 770.
***	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)

	*2023*
Millions, Except Per Share Amounts and Percentages,	*1st Qtr*			*2nd Qtr*			*3rd Qtr*		*Year-to-Date*
Operating Revenues
Freight revenues	$	5,656		$	5,569		$	5,545		$	16,770
Other revenues		400			394			396			1,190
Total operating revenues		6,056			5,963			5,941			17,960
Operating Expenses
Compensation and benefits		1,179			1,269			1,201			3,649
Fuel		766			664			702			2,132
Purchased services and materials		653			650			668			1,971
Depreciation		572			577			580			1,729
Equipment and other rents		235			248			235			718
Other		357			351			378			1,086
Total operating expenses		3,762			3,759			3,764			11,285
Operating Income		2,294			2,204			2,177			6,675
Other income, net		184			93			106			383
Interest expense		(336	)		(339	)		(334	)		(1,009	)
Income before income taxes		2,142			1,958			1,949			6,049
Income tax expense		(512	)		(389	)		(421	)		(1,322	)
Net Income	$	1,630		$	1,569		$	1,528		$	4,727

Share and Per Share
Earnings per share - basic	$	2.67		$	2.58		$	2.51		$	7.76
Earnings per share - diluted	$	2.67		$	2.57		$	2.51		$	7.75
Weighted average number of shares - basic		610.6			608.7			608.7			609.3
Weighted average number of shares - diluted		611.5			609.5			609.8			610.3
Dividends declared per share	$	1.30		$	1.30		$	1.30		$	3.90

Operating Ratio		62.1	%		63.0	%		63.4	%		62.8	%
Effective Tax Rate		23.9	%		19.9	%		21.6	%		21.9	%

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Freight Revenues Statistics (unaudited)

	*2023*
	*1st Qtr*		*2nd Qtr*		*3rd Qtr*		*Year-to-Date*
*Freight Revenues (Millions)*
Grain & grain products	$	943	$	890	$	825		$	2,658
Fertilizer		186		183		194			563
Food & refrigerated		263		255		259			777
Coal & renewables		505		429		488			1,422
Bulk		1,897		1,757		1,766			5,420
Industrial chemicals & plastics		536		545		557			1,638
Metals & minerals		536		562		556			1,654
Forest products		332		347		333			1,012
Energy & specialized markets		613		632		611			1,856
Industrial		2,017		2,086		2,057			6,160
Automotive		587		625		609			1,821
Intermodal		1,155		1,101		1,113			3,369
Premium		1,742		1,726		1,722			5,190
Total	$	5,656	$	5,569	$	5,545		$	16,770
*Revenue Carloads (Thousands)*
Grain & grain products		202		197		183			582
Fertilizer		45		48		51			144
Food & refrigerated		44		44		45			133
Coal & renewables		216		203		231			650
Bulk		507		492		510			1,509
Industrial chemicals & plastics		157		164		163			484
Metals & minerals		188		210		206			604
Forest products		52		55		54			161
Energy & specialized markets		139		144		146			429
Industrial		536		573		569			1,678
Automotive		200		213		210			623
Intermodal [a]		734		749		763			2,246
Premium		934		962		973			2,869
Total		1,977		2,027		2,052			6,056
*Average Revenue per Car*
Grain & grain products	$	4,668	$	4,527	$	4,486		$	4,563
Fertilizer		4,135		3,830		3,818			3,921
Food & refrigerated		5,963		5,740		5,847			5,850
Coal & renewables		2,341		2,107		2,114			2,187
Bulk		3,743		3,568		3,465			3,592
Industrial chemicals & plastics		3,402		3,336		3,406			3,381
Metals & minerals		2,853		2,677		2,688			2,736
Forest products		6,384		6,337		6,197			6,305
Energy & specialized markets		4,408		4,388		4,201			4,331
Industrial		3,760		3,646		3,612			3,671
Automotive		2,944		2,928		2,894			2,921
Intermodal [a]		1,573		1,471		1,459			1,500
Premium		1,866		1,794		1,769			1,809
Average	$	2,861	$	2,748	$	2,702		$	2,769

[a]	For intermodal shipments each container or trailer equals one carload.

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES

Non-GAAP Measures Reconciliation to GAAP

Debt / Net Income
Millions, Except Ratios	*Sep. 30,*		Dec. 31,
for the Trailing Twelve Months Ended [a]	*2023*		2022
Debt	$	32,877	$	33,326
Net income		6,365		6,998
Debt / net income		5.2		4.8

Adjusted Debt / Adjusted EBITDA*
Millions, Except Ratios	*Sep. 30,*			Dec. 31,
for the Trailing Twelve Months Ended [a]	*2023*			2022
Net income	$	6,365		$	6,998
Add:
Income tax expense		1,855			2,074
Depreciation		2,298			2,246
Interest expense		1,342			1,271
EBITDA	$	11,860		$	12,589
Adjustments:
Other income, net		(475	)		(426	)
Interest on operating lease liabilities [b]		56			54
Adjusted EBITDA	$	11,441		$	12,217
Debt	$	32,877		$	33,326
Operating lease liabilities		1,606			1,631
Unfunded pension and OPEB, net of tax cost of $0 and $0		-			-
Adjusted debt	$	34,483		$	34,957
Adjusted debt / Adjusted EBITDA		3.0			2.9

[a]	The trailing twelve months income statement information ended September 30, 2023, is recalculated by taking the twelve months ended December 31, 2022, subtracting the nine months ended September 30, 2022, and adding the nine months ended September 30, 2023.
[b]	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.

*	Total debt plus operating lease liabilities plus after-tax unfunded pension and OPEB (other postretirement benefit) obligations 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) is considered 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, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide a reconciliation from net income to adjusted EBITDA, debt to adjusted debt, and debt to net income to adjusted debt to adjusted EBITDA. At September 30, 2023, and December 31, 2022, the incremental borrowing rate on operating lease liabilities was 3.5% and 3.3%, respectively.