01—Abstract
Summary
Summary of the 10-K filed February 6, 2015. Cited figures are marked; the original filing is the authoritative source.
Union Pacific Corporation (UNP) reported a strong financial performance in 2014, setting records for earnings per share ($5.75a) and operating ratio (63.5%), indicating improved efficiency.
The company also saw robust volume growth of 7%, driven by agricultural products and industrial products, alongside increases in intermodal, automotive, and coal segments. Shareholder returns were enhanced through a 29% increase in declared dividends and a $3.2 billionb share repurchase program. The company invested $4.1 billion in capital expenditures to strengthen its infrastructure and support future growth, including progress on the federally mandated Positive Train Control (PTC) project.
Despite network performance challenges due to significant carload growth and weather disruptions, Union Pacific demonstrated resilience. The company expanded its workforce and locomotive fleet to improve operational fluidity and customer service. Looking ahead, Union Pacific expressed confidence in its well-positioned franchise to capitalize on future growth opportunities and continue delivering shareholder value through ongoing efficiency improvements and strategic capital investments.
02—Key points
Key Highlights
- Record earnings per share of $5.75 and an all-time low operating ratio of 63.5% in 2014.
- Overall freight revenues increased by 9% to $22.6 billion, driven by a 7% volume growth and 2.5% core pricing gains.
- Shareholder returns significantly improved, with a 29% increase in dividends declared and $3.2 billion in share repurchases.
- Capital expenditures totaled $4.1 billion in 2014, focused on infrastructure enhancement, service improvements, and growth initiatives.
- Strong performance in Agricultural Products (15% revenue growth) and Industrial Products (15% revenue growth) were key drivers.
- Despite network challenges (8% decrease in average train speed, 12% increase in terminal dwell), the company took steps to improve operational fluidity by increasing workforce and locomotives.
- The company maintained a strong safety record, achieving an all-time record low reportable personal injury rate.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 6, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $23.99B$21.96B | +9.2% |
| Operating Expenses | $15.23B$14.52B | +4.9% |
| Operating Income | $8.75B$7.45B | +17.6% |
| Interest Expense | $561.00M$526.00M | +6.7% |
| Net Income | $5.18B$4.39B | +18.0% |
| EPS (Basic) | $5.77$4.74 | +21.7% |
| EPS (Diluted) | $5.75$4.71 | +22.1% |
| Shares Outstanding (Basic) | 897.10M926.50M | −3.2% |
| Shares Outstanding (Diluted) | 901.10M931.50M | −3.3% |
05—Questions
Frequently Asked Questions
What were Union Pacific's key financial achievements in 2014?
In 2014, Union Pacific achieved record earnings per share of $5.75 and an all-time best operating ratio of 63.5%. Operating income grew by 18% to $8.8 billion, and net income reached $5.2 billion. Freight revenues increased by 9% to $22.6 billion due to strong volume growth and pricing.
How did Union Pacific return value to shareholders in 2014?
Union Pacific significantly enhanced shareholder returns by increasing its quarterly dividend per share twice, leading to a 29% increase in total dividends declared for 2014 compared to 2013. Additionally, the company repurchased $3.2 billion worth of its own shares, a 45% increase from the previous year.
What were the main drivers of Union Pacific's revenue growth in 2014?
Revenue growth was driven by a combination of factors including a 7% increase in overall volume and a 2.5% core pricing gain. Specific commodity groups that showed strong performance included Agricultural Products (15% revenue growth) and Industrial Products (15% revenue growth), alongside positive contributions from Intermodal, Automotive, and Chemicals.
Did Union Pacific face any operational challenges in 2014, and how did it address them?
Yes, Union Pacific experienced operational challenges due to significant carload growth and severe weather. This resulted in an 8% decrease in average train speed and a 12% increase in average terminal dwell time. To address this, the company increased its workforce by over 1,700 employees and added approximately 800 locomotives to improve network fluidity and customer service.
06—Continue