10-QPeriod: Q1 FY2014

UNION PACIFIC CORP Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 17, 2014For Securities:UNP

Summary

Union Pacific Corporation's first quarter 2014 results demonstrate a solid performance, with total operating revenues increasing by 7% year-over-year to $5.64 billion. This growth was primarily driven by a 6% increase in freight revenues, reaching $5.29 billion, attributed to both higher volumes and improved average revenue per car (ARC). Net income rose to $1.09 billion, or $2.38 per diluted share, compared to $957 million, or $2.03 per diluted share, in the prior year's quarter. Despite challenges from severe winter weather, the company maintained operational efficiency, with its operating ratio improving to a first-quarter record of 67.1% from 69.1% in 2013. The company is actively managing its capital structure, issuing new debt while also repurchasing shares. Capital expenditures remain significant, with approximately $893 million invested in property and equipment during the quarter, supporting long-term infrastructure and capacity expansion. Union Pacific's financial health appears robust, supported by strong operating cash flows and a healthy credit facility. Investors can note the ongoing commitment to shareholder returns through increased dividends and share repurchases, alongside strategic capital investments for future growth.

Financial Highlights

48 data points
Beta

Revenue

$5.64B

Net Income

$1.09B

19.3% Net Margin

EPS (Diluted)

$1.19

Total Assets

$50.90B

Cash & Equivalents

$1.86B

Free Cash Flow

$874.00M

Financial Statements
Beta
Revenue$5.64B
Operating Expenses$3.78B
Operating Income$1.85B
Interest Expense$133.00M
Net Income$1.09B
EPS (Basic)$1.20
EPS (Diluted)$1.19
Shares Outstanding (Basic)908.10M
Shares Outstanding (Diluted)912.50M

Key Highlights

  • 1Total operating revenues increased 7% to $5.64 billion in Q1 2014.
  • 2Freight revenues grew 6% to $5.29 billion, driven by 5% volume growth and higher average revenue per car (ARC).
  • 3Net income rose to $1.09 billion ($2.38/diluted share) from $957 million ($2.03/diluted share) in Q1 2013.
  • 4Operating ratio improved to a record 67.1% for the first quarter, indicating enhanced operational efficiency.
  • 5Capital investments in Q1 2014 totaled $893 million, focusing on infrastructure and capacity.
  • 6The company continued its capital allocation strategy with increased dividends and significant share repurchases.
  • 7Despite severe winter weather impacts, operational performance showed resilience, with network fluidity improving late in the quarter.

Frequently Asked Questions

Union Pacific's revenue increased primarily due to a 6% rise in freight revenues, reaching $5.29 billion. This growth was a result of a 5% increase in shipment volumes across various commodity groups and a 1% increase in average revenue per car (ARC), driven by core pricing gains. Other revenues also saw a significant increase of 15%.

The severe winter weather in the first quarter of 2014 negatively impacted operations, leading to a 7% decrease in average train speed and a 12% increase in average terminal dwell time. This resulted in incremental cost increases, estimated at approximately $35 million for the quarter. Despite these challenges, the company managed to improve its operating ratio and saw network fluidity improve towards the end of the quarter.

Union Pacific plans to invest approximately $3.9 billion in capital expenditures for 2014, focusing on infrastructure, capacity expansion, and technology. The company also demonstrated its commitment to shareholder returns by increasing dividends declared per share to $0.91 from $0.69 in the prior year and actively repurchasing shares under its authorized program. Proceeds from new debt issuances were also used to fund share repurchases.

The company's debt-to-capital ratio stood at 32.4% at March 31, 2014. Union Pacific maintains a strong liquidity position with $1.86 billion in cash and cash equivalents and $1.8 billion in available credit under its revolving credit facility. The company also has robust operating cash flows, demonstrating its ability to fund operations and investments.