Summary
Union Pacific Corporation (UNP) reported its first quarter 2020 results, a period marked by the onset of the COVID-19 pandemic which began to impact revenues in late March. Total operating revenues decreased by 3% to $5.23 billion, primarily driven by a 7% decline in freight carloads. Despite the revenue dip, operating income saw a 9% increase to $2.14 billion, and net income rose to $1.47 billion, or $2.15 per diluted share. This improvement was largely due to significant operating expense reductions, down 10% overall, stemming from productivity initiatives, lower fuel prices, and reduced workforce and weather-related costs. The company highlighted strong operational performance metrics, achieving an all-time record operating ratio of 59.0%. Management has taken proactive steps to manage liquidity and capital resources in light of the pandemic's uncertainty, including reducing projected 2020 capital expenditures and suspending share repurchases aside from a prior accelerated repurchase program settlement. While acknowledging the potential for material impacts from the ongoing pandemic, UNP remains focused on executing its strategic plan and maintaining its dividend.
Financial Highlights
47 data points| Revenue | $5.23B |
| Operating Expenses | $3.09B |
| Operating Income | $2.14B |
| Interest Expense | $278.00M |
| Net Income | $1.47B |
| EPS (Basic) | $2.15 |
| EPS (Diluted) | $2.15 |
| Shares Outstanding (Basic) | 684.30M |
| Shares Outstanding (Diluted) | 686.20M |
Key Highlights
- 1Total operating revenues declined 3% to $5.23 billion, impacted by a 7% decrease in freight carloads, with the COVID-19 pandemic beginning to affect volumes in late March.
- 2Despite lower revenues, operating income increased 9% to $2.14 billion, driven by a 10% reduction in operating expenses.
- 3Net income grew to $1.47 billion, or $2.15 per diluted share, up from $1.39 billion, or $1.93 per diluted share, in the prior year's first quarter.
- 4The company achieved an all-time record operating ratio of 59.0%, an improvement of 4.6 percentage points year-over-year, reflecting strong operational efficiencies.
- 5Union Pacific reduced its 2020 capital expenditure forecast by $150-$200 million due to economic uncertainties stemming from the COVID-19 pandemic.
- 6The company suspended share repurchase programs, with the exception of the final settlement of an accelerated share repurchase program, to preserve liquidity.
- 7Liquidity remains strong with over $1 billion in cash and cash equivalents and access to a $2 billion revolving credit facility and $400 million undrawn on its Receivables Facility as of March 31, 2020.