01—Abstract
Summary
Summary of the 10-Q filed April 21, 2022. Cited figures are marked; the original filing is the authoritative source.
Union Pacific Corporation (UNP) reported a strong first quarter for 2022, with net income increasing to $1.63 billiona ($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 billionb, 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 billionc, 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.
02—Key points
Key Highlights
- Net income rose to $1.63 billion ($2.57 EPS) in Q1 2022, up from $1.34 billion ($2.00 EPS) in Q1 2021.
- Operating 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.
- Fuel expenses surged 74% due to a 59% increase in locomotive diesel fuel prices, significantly impacting operating costs.
- The operating ratio improved to 59.4% from 60.1% year-over-year, indicating improved operational efficiency.
- Cash provided by operating activities was strong at $2.24 billion, while capital investments increased to $848 million.
- Union Pacific repurchased approximately $2.74 billion of its common stock during the quarter.
- The company issued new debt totaling $3.49 billion during the quarter to fund general corporate purposes, including stock repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed April 21, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $5.86B$5.00B | +17.2% |
| Operating Expenses | $3.48B$3.01B | +15.8% |
| Operating Income | $2.38B$1.99B | +19.3% |
| Interest Expense | $307.00M$290.00M | +5.9% |
| Net Income | $1.63B$1.34B | +21.6% |
| EPS (Basic) | $2.58$2.01 | +28.4% |
| EPS (Diluted) | $2.57$2.00 | +28.5% |
| Shares Outstanding (Basic) | 632.20M667.60M | −5.3% |
| Shares Outstanding (Diluted) | 633.60M669.20M | −5.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the first quarter of 2022?
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.
How did rising fuel costs impact Union Pacific's profitability?
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.
What is the company's outlook for capital expenditures in 2022?
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.
How did Union Pacific manage its cash flow and return capital to shareholders during the quarter?
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.
06—Continue