01—Abstract
Summary
Summary of the 10-Q filed April 21, 2011. Cited figures are marked; the original filing is the authoritative source.
Union Pacific Corporation (UNP) reported a strong first quarter for 2011, with net income increasing by 23.8% to $639 milliona, or $1.29 per diluted share, compared to $516 million, or $1.01 per diluted share, in the same period of 2010.
This growth was primarily driven by a 13% increase in total operating revenues to $4.49 billionb, fueled by a significant rise in freight revenues across all commodity groups, reflecting improved economic conditions and higher volumes. The company demonstrated effective cost management despite increased operating expenses, particularly in fuel, which rose 42% due to higher prices. The operating ratio improved slightly to 74.7%, indicating efficient operations.
Union Pacific also continued its commitment to returning capital to shareholders, with share repurchases totaling $248 millionc and dividend payments increasing. While the company faced challenges from severe winter weather in early February, its operational performance remained resilient, with key metrics like average train speed holding steady despite increased carloads. The company's financial position remains solid, supported by robust cash flow from operations and a manageable debt level, positioning it well for continued growth.
02—Key points
Key Highlights
- Net income increased by 23.8% to $639 million ($1.29 per diluted share) in Q1 2011, up from $516 million ($1.01 per diluted share) in Q1 2010.
- Total operating revenues grew by 13% to $4.49 billion, driven by a 13% increase in freight revenues to $4.25 billion.
- Freight revenue growth was broad-based across all six commodity groups, with Industrial Products (+15%) and Intermodal (+15%) showing particularly strong increases.
- Operating expenses increased by 13% to $3.35 billion, significantly impacted by a 42% rise in fuel costs ($826 million) due to higher prices.
- The operating ratio improved slightly to 74.7% from 75.1% in the prior year's quarter, indicating improved operational efficiency.
- Cash provided by operating activities more than doubled to $1.29 billion from $656 million in the prior year's quarter.
- The company repurchased $248 million in common stock during the quarter and increased dividends paid to $186 million, demonstrating a commitment to shareholder returns.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed April 21, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Revenue | $4.49B$3.96B | +13.2% |
| Operating Expenses | $3.35B$2.98B | +12.6% |
| Operating Income | $1.14B$988.00M | +15.1% |
| Interest Expense | $141.00M$155.00M | −9.0% |
| Net Income | $639.00M$516.00M | +23.8% |
| EPS (Basic) | $0.66$0.51 | +28.4% |
| EPS (Diluted) | $0.65$0.51 | +27.7% |
| Shares Outstanding (Basic) | 979.20M1.01B | −3.0% |
| Shares Outstanding (Diluted) | 988.20M1.02B | −2.9% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Union Pacific's revenue growth in Q1 2011?
Revenue growth was primarily driven by a 13% increase in total operating revenues to $4.49 billion. This was largely due to a 13% rise in freight revenues to $4.25 billion, fueled by increased volumes across all six commodity groups (a 5% overall increase in revenue carloads) and higher average revenue per car (up 8%), which benefited from core pricing gains and increased fuel surcharges.
How did Union Pacific manage its expenses in the face of rising fuel costs?
While operating expenses increased by 13% to $3.35 billion, this was heavily influenced by a 42% surge in fuel costs to $826 million due to higher prices. The company managed to improve its operating ratio to 74.7% from 75.1% in the prior year by implementing productivity improvements, achieving better asset utilization, and leveraging volume growth, which helped to offset some of the cost pressures from fuel and inflation.
What is the company's strategy for returning capital to shareholders?
Union Pacific demonstrated its commitment to shareholder returns by repurchasing $248 million of its common stock during the quarter under its authorized share repurchase program. Additionally, dividends paid increased to $186 million, reflecting a higher dividend per share of $0.38 compared to $0.27 in the prior year's quarter. The company also announced a new 40 million share repurchase authorization effective April 1, 2011.
Did any significant operational challenges impact the company during the quarter?
Yes, severe winter weather in early February significantly impacted network operations, particularly in the Chicago area which handles a substantial portion of UNP's traffic. This weather event caused operational disruptions and contributed to a slight increase in average terminal dwell time. Despite these challenges, the company managed its operations effectively, with average train speed remaining flat despite a 5% increase in carloads.
06—Continue