10-QPeriod: Q3 FY2014

UNION PACIFIC CORP Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 23, 2014For Securities:UNP

Summary

Union Pacific Corporation (UNP) reported strong financial results for the third quarter and first nine months of 2014, showcasing robust growth in operating revenues and improved profitability. Total operating revenues for the third quarter of 2014 increased by 11% year-over-year to $6.2 billion, driven primarily by an 11% rise in freight revenues. This growth was fueled by a 7% increase in volume across various commodity groups, including strong performance in agricultural products, industrial products, and intermodal. Average Revenue per Car (ARC) also saw a 3% increase, attributable to pricing gains. For the nine-month period, total operating revenues grew 9% to $17.8 billion. Net income for the third quarter of 2014 was $1.37 billion, or $1.53 per diluted share, a significant increase from $1.15 billion, or $1.24 per diluted share, in the prior year's quarter. Year-to-date net income reached $3.75 billion, up from $3.21 billion in the same period of 2013. The company's operating ratio improved to a record low of 62.3% for the quarter, indicating enhanced operational efficiency. Strong cash flow from operations was evident, although capital investments increased, reflecting ongoing investment in the business. Shareholder returns were supported by increased dividends and ongoing share repurchases.

Financial Highlights

48 data points
Beta

Revenue

$6.18B

Net Income

$1.37B

22.2% Net Margin

EPS (Diluted)

$1.53

Total Assets

$52.57B

Cash & Equivalents

$1.89B

Free Cash Flow

$979.00M

Financial Statements
Beta
Revenue$6.18B
Operating Expenses$3.85B
Operating Income$2.33B
Interest Expense$144.00M
Net Income$1.37B
EPS (Basic)$1.53
EPS (Diluted)$1.53
Shares Outstanding (Basic)893.20M
Shares Outstanding (Diluted)896.90M

Key Highlights

  • 1Total operating revenues increased 11% to $6.2 billion in Q3 2014 and 9% to $17.8 billion for the nine months ended September 30, 2014.
  • 2Net income rose to $1.37 billion ($1.53/share) in Q3 2014, up from $1.15 billion ($1.24/share) in Q3 2013. Year-to-date net income was $3.75 billion, up from $3.21 billion.
  • 3Freight revenue grew 11% in Q3 2014, driven by a 7% increase in volume and a 3% increase in Average Revenue per Car (ARC) due to pricing.
  • 4The operating ratio improved significantly to a record low of 62.3% in Q3 2014, down from 64.8% in Q3 2013, reflecting operational efficiencies.
  • 5Cash provided by operating activities increased to $5.36 billion for the nine months ended September 30, 2014, from $4.88 billion in the prior year.
  • 6The company repurchased approximately $2.3 billion of common stock in the first nine months of 2014, demonstrating a commitment to shareholder returns.
  • 7Capital investments increased to $3.23 billion for the nine months of 2014, supporting long-term growth and infrastructure improvements.

Frequently Asked Questions

Union Pacific's revenue growth in the third quarter of 2014 was driven by an 11% increase in freight revenues, supported by a 7% rise in shipment volume across key commodity groups like agricultural products, industrial products, and intermodal. Additionally, Average Revenue per Car (ARC) increased by 3% due to effective pricing strategies.

Profitability saw a notable improvement. Net income for the third quarter of 2014 increased to $1.37 billion ($1.53 per diluted share) from $1.15 billion ($1.24 per diluted share) in the same quarter of 2013. This was accompanied by a significant reduction in the operating ratio to a record low of 62.3% for the quarter, indicating improved operational efficiency.

Union Pacific continues to invest in its business, as evidenced by a 19% increase in capital investments to $3.23 billion for the first nine months of 2014, focusing on infrastructure and capacity projects. Concurrently, the company actively returns capital to shareholders through share repurchases, with approximately $2.3 billion bought back in the first nine months of 2014, and an increase in dividends paid.

Key operational metrics show mixed trends. While gross and revenue ton-miles increased by 7% for the nine-month period, reflecting higher volumes, average train speed decreased by 8% year-to-date and average terminal dwell time increased by 12%, suggesting potential network congestion or operational challenges. The company is investing in resources to address these issues.