10-KPeriod: FY2022

UNION PACIFIC CORP Annual Report, Year Ended Dec 31, 2022

Filed February 10, 2023For Securities:UNP

Summary

Union Pacific Corporation (UNP) reported a foundational year in 2022, marked by record earnings per share of $11.21, a 13% increase over 2021, driven by a 2% rise in total volumes and a 14% increase in freight revenues to $23.2 billion. This growth was primarily fueled by strength in industrial and bulk markets, offsetting continued supply chain challenges in premium segments. However, the company experienced a deterioration in its operating ratio to 60.1%, a 290-basis point increase from 2021, attributed to higher fuel prices, inflationary pressures, and operational inefficiencies, including a $92 million one-time charge for new labor agreements. Despite operational headwinds impacting service product reliability, Union Pacific returned $9.4 billion to shareholders through dividends and share repurchases, underscoring a commitment to shareholder value.

Financial Highlights

49 data points
Beta

Revenue

$24.88B

Net Income

$7.00B

28.1% Net Margin

EPS (Diluted)

$11.21

Total Assets

$65.45B

Cash & Equivalents

$973.00M

Free Cash Flow

$5.74B

Financial Statements
Beta
Revenue$24.88B
Operating Expenses$14.96B
Operating Income$9.92B
Interest Expense$1.27B
Net Income$7.00B
EPS (Basic)$11.24
EPS (Diluted)$11.21
Shares Outstanding (Basic)622.70M
Shares Outstanding (Diluted)624.00M

Key Highlights

  • 1Record Earnings Per Share (EPS) of $11.21, up 13% year-over-year.
  • 2Total freight revenues increased 14% to $23.2 billion, driven by higher fuel surcharges, core pricing gains, and a 2% volume increase.
  • 3Operating Ratio deteriorated to 60.1%, a 2.9-point increase from 2021, due to increased fuel costs, inflation, and operational inefficiencies.
  • 4Invested $3.4 billion in capital expenditures, focusing on infrastructure modernization, network capacity, and operational efficiency.
  • 5Returned $9.4 billion to shareholders through dividends ($3.2 billion) and share repurchases ($6.3 billion).
  • 6Made progress on safety, with a personal injury rate improving 18% to a five-year low, though derailment incident rates saw an 8% increase.
  • 7Navigated labor negotiations successfully, concluding a new agreement in December 2022.

Frequently Asked Questions

Union Pacific reported record earnings per share of $11.21, a 13% increase from 2021. Freight revenues rose by 14% to $23.2 billion, supported by a 2% increase in volumes and higher fuel surcharges. The company's operating ratio, however, worsened to 60.1% due to inflationary pressures, higher fuel costs, and operational challenges.

The company faced network congestion and service disruptions due to constrained crew bases and supply chain issues. To mitigate these, Union Pacific aggressively hired and trained over 1,300 new transportation employees, temporarily relocated staff to critical areas, added locomotives, and reduced freight car inventory. Despite these efforts, operational metrics like freight car velocity and trip plan compliance declined.

Union Pacific expects volume to outpace industrial production growth in 2023, driven by business development efforts. The company aims for operating ratio improvement through pricing, service product enhancement, and better resource utilization. They anticipate continued strong cash flow to support dividends and share repurchases, while acknowledging ongoing macroeconomic uncertainties and inflationary pressures.

In 2022, Union Pacific invested approximately $3.4 billion in capital expenditures, focusing on infrastructure, locomotive modernization, and growth projects. The company demonstrated a strong commitment to shareholder returns by paying $3.2 billion in dividends (a 10% increase) and repurchasing $6.3 billion of its shares, totaling $9.4 billion returned to shareholders.