10-QPeriod: Q1 FY2022

UNION PACIFIC CORP Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 21, 2022For Securities:UNP

Summary

Union Pacific Corporation (UNP) reported a strong first quarter for 2022, with net income increasing to $1.63 billion ($2.57 per diluted share) from $1.34 billion ($2.00 per diluted share) in the prior year. This growth was primarily driven by a 17% increase in operating revenues, reaching $5.86 billion, fueled by higher average revenue per car (ARC) and a modest 4% increase in volume. Higher fuel surcharges, core pricing gains, and a favorable traffic mix contributed significantly to the revenue growth. Despite rising costs, particularly a substantial 74% increase in fuel expenses due to geopolitical events and inflation, Union Pacific managed to improve its operating ratio to 59.4% from 60.1% year-over-year. The company also saw robust cash flow from operations of $2.24 billion, though capital expenditures increased significantly to $848 million, supporting growth initiatives and infrastructure hardening. The company demonstrated a strong commitment to returning capital to shareholders, repurchasing $2.74 billion in stock during the quarter.

Financial Highlights

48 data points
Beta

Revenue

$5.86B

Net Income

$1.63B

27.8% Net Margin

EPS (Diluted)

$2.57

Total Assets

$64.05B

Cash & Equivalents

$909.00M

Free Cash Flow

$1.39B

Financial Statements
Beta
Revenue$5.86B
Operating Expenses$3.48B
Operating Income$2.38B
Interest Expense$307.00M
Net Income$1.63B
EPS (Basic)$2.58
EPS (Diluted)$2.57
Shares Outstanding (Basic)632.20M
Shares Outstanding (Diluted)633.60M

Key Highlights

  • 1Net income rose to $1.63 billion ($2.57 EPS) in Q1 2022, up from $1.34 billion ($2.00 EPS) in Q1 2021.
  • 2Operating revenues increased 17% year-over-year to $5.86 billion, driven by a 12% rise in Average Revenue per Car (ARC) and 4% volume growth.
  • 3Fuel expenses surged 74% due to a 59% increase in locomotive diesel fuel prices, significantly impacting operating costs.
  • 4The operating ratio improved to 59.4% from 60.1% year-over-year, indicating improved operational efficiency.
  • 5Cash provided by operating activities was strong at $2.24 billion, while capital investments increased to $848 million.
  • 6Union Pacific repurchased approximately $2.74 billion of its common stock during the quarter.
  • 7The company issued new debt totaling $3.49 billion during the quarter to fund general corporate purposes, including stock repurchases.

Frequently Asked Questions

Revenue growth was primarily driven by a 17% increase in operating revenues to $5.86 billion. This was achieved through a 12% rise in Average Revenue per Car (ARC), influenced by higher fuel surcharges, core pricing gains, and a favorable mix of traffic, along with a 4% increase in volume across most commodity groups.

Fuel expenses increased by 74% to $714 million in the first quarter of 2022 compared to the prior year, driven by a 59% surge in locomotive diesel fuel prices. While this significantly increased operating expenses, the higher revenues and pricing power helped to largely offset these cost increases, resulting in a 19% increase in operating income and an improved operating ratio.

Union Pacific anticipates capital expenditures of approximately $3.3 billion in 2022, a 10% increase from 2021. These investments are allocated towards supporting growth, hardening infrastructure, replacing assets, improving safety and network resilience, freight car acquisitions, and projects aimed at enhancing operational efficiency.

The company generated strong cash flow from operations ($2.24 billion) and utilized it for significant capital investments ($848 million) and returning capital to shareholders. This included paying $743 million in dividends and repurchasing approximately $2.74 billion of its common stock, including substantial accelerated share repurchase programs.