Union Pacific Reports Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

Union Pacific Corporation (NYSE: UNP) reported a fourth quarter net income of $1.6 billion, or $2.67 per diluted share, showing an 8% increase in operating revenue to $6.2 billion compared to Q4 2021. Full year net income reached $7.0 billion ($11.21 per diluted share), a 7.7% rise from 2021. Despite higher revenues, operating income declined by 1% due to increased expenses driven by inflation and network recovery issues. The company repurchased 3.5 million shares in Q4 at a cost of $0.7 billion, and total capital spending for 2022 was $3.4 billion. 2023 guidance anticipates carload growth exceeding industrial production.

Positive

• Operating revenue for Q4 2022 reached $6.2 billion, an 8% increase year-over-year.
• Full year 2022 net income increased to $7.0 billion from $6.5 billion in 2021.
• Fuel consumption rate improved for the fourth consecutive year, indicating better efficiency.
• Union Pacific plans capital spending of $3.6 billion for 2023, supporting growth.

Negative

• Operating income in Q4 declined by 1% due to elevated operational expenses.
• Operating ratio deteriorated by 360 basis points to 61.0% in Q4 2022.
• Freight car velocity and locomotive productivity both declined by 3% and 5% respectively.

• Fourth quarter earnings per diluted share of $2.67
• Fourth quarter operating revenue up 8%
• Full year earnings per diluted share of $11.21
• Full year operating income up 6%

OMAHA, Neb., Jan. 24, 2023 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2022 fourth quarter net income of $1.6 billion, or $2.67 per diluted share. This compares to 2021 fourth quarter net income of $1.7 billion, or $2.66 per diluted share.

Reported net income for full year 2022 was $7.0 billion, or $11.21 per diluted share. These full year results compare to full year 2021 net income of $6.5 billion, or $9.95 per diluted share.

"In the fourth quarter, we grew carloads as we continued to face challenges hiring craft professionals in critical locations and experienced the impact of extreme winter weather on our network in December," said Lance Fritz, Union Pacific chairman, president, and chief executive officer. "As a result, revenue growth was more than offset by elevated operating expenses from operational inefficiencies and a higher inflationary environment. For the full year, we made good progress on employee safety, and we took another step toward our sustainability goals as our fuel consumption rate improved for the fourth consecutive year. Looking to 2023, we expect continued improvements in network fluidity to support business development, generating volume growth that exceeds industrial production. We also expect network improvements to help us recapture lost productivity while providing customers with reliable service."

Fourth Quarter Summary

Financial Results: Revenue Growth Offset by Higher Expenses Associated with Inflation and Network Recovery; Fourth Quarter Record for Operating Revenue
Fourth Quarter 2022 Compared to Fourth Quarter 2021

• Operating revenue of $6.2 billion was up 8% driven by higher fuel surcharge revenue, core pricing gains, and volume growth, partially offset by a negative business mix.
• Business volumes, as measured by total revenue carloads, were up 1%.
• Union Pacific's 61.0% operating ratio deteriorated 360 basis points. Falling fuel prices late in the quarter positively impacted the operating ratio by 20 basis points.
• Operating income of $2.4 billion declined 1%.
• The company repurchased 3.5 million shares in fourth quarter 2022 at an aggregate cost of $0.7 billion.

Operating Performance: Service and Efficiency Measures Impacted by Network Congestion and Winter Weather; Fourth Quarter Record for Fuel Consumption Rate
Fourth Quarter 2022 Compared to Fourth Quarter 2021

• Quarterly freight car velocity was 191 daily miles per car, a 3% decline.
• Quarterly locomotive productivity was 123 gross ton-miles (GTMs) per horsepower day, a 5% decline.
• Average maximum train length decreased 1% to 9,191 feet.
• Quarterly workforce productivity decreased 3% to 1,010 car miles per employee.
• Fuel consumption rate of 1.064, measured in gallons of fuel per thousand GTMs, improved 2%.

2022 Full Year Summary

Financial Results: Fuel Surcharge, Core Pricing Gains, and Volume Drive Revenue Growth; Records for Operating Revenue, Operating Income, Net Income, and Earnings Per Share
Full Year 2022 Compared to Full Year 2021

• Operating revenue of $24.9 billion was up 14% driven by higher fuel surcharge revenue, core pricing gains, and volume growth.
• Business volumes, as measured by total revenue carloads, grew 2%.
• Union Pacific's 60.1% reported operating ratio deteriorated 290 basis points. Higher fuel prices negatively impacted the operating ratio by 20 basis points and the prior period adjustment related to new labor agreements added 30 basis points to operating ratio.
• Operating Income of $9.9 billion was up 6%.
• Union Pacific's 2022 capital program totaled $3.4 billion.
• The company repurchased 27.1 million shares in 2022 at an aggregate cost of $6.3 billion.

Operating Performance: Network Operations Impacted by Crew Availability and Operational Inefficiencies; Record for Fuel Consumption Rate
Full Year 2022 Compared to Full Year 2021

• Union Pacific's reportable personal injury rate improved 18% to 0.80 per 200,000 employee-hours compared to 0.98 for full year 2021.
• Freight car velocity was 191 daily miles per car, a 6% decline.
• Locomotive productivity was 125 GTMs per horsepower day, a 6% decline.
• Average maximum train length of 9,329 feet was flat.
• Workforce productivity of 1,036 car miles per employee was flat.
• Fuel consumption rate of 1.078, measured in gallons of fuel per thousand GTMs, improved 1%.

2023 Guidance

• Full year carloads to exceed Industrial Production
• Current Industrial Production forecast: -0.5%
• Full year operating ratio improvement
• Pricing dollars in excess of inflation dollars
• Capital Allocation:
• Capital spending less than 15% of revenue
• Capital plan of $3.6 billion
• Long term dividend payout target of ~45% of earnings
• Excess cash to share repurchases

Fourth Quarter 2022 Earnings Conference Call

Union Pacific will webcast its fourth quarter 2022 earnings release presentation live at www.up.com/investor and via teleconference on Tuesday, January 24, 2023, at 8:45 a.m. Eastern Time. Participants may join the conference call by dialing 877-407-8293 (or for international participants, 201-689-8349).

ABOUT UNION PACIFIC

Union Pacific (NYSE: UNP) delivers the goods families and businesses use every day with safe, reliable, and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com.

Supplemental financial information is attached. 

This news release and related materials contain statements about the Company's future that are not statements of historical fact, including specifically the statements regarding the Company's expectations with respect to economic conditions and demand levels, its ability to improve network performance (including those in response to increased traffic), its results of operations, and potential impacts of the COVID-19 pandemic and the Russian-Ukraine conflict.  These statements are, or will be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements also generally include, without limitation, information, or statements regarding: projections, predictions, expectations, estimates, or forecasts as to the Company's and its subsidiaries' business, financial, and operational results, and future economic performance; and management's beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking information, including expectations regarding operational and financial improvements and the Company's future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement. Important factors, including risk factors, could affect the Company's and its subsidiaries' future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Information regarding risk factors and other cautionary information are available in the Company's Annual Report on Form 10-K for 2021, which was filed with the SEC on February 4, 2022. The Company updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC).

Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made. The Company assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References to our website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Income (unaudited)
Millions, Except Per Share Amounts and		4th Quarter												Full Year
Percentages, For the Periods Ended December 31,		2022				2021				%				2022				2021				%
Operating Revenues
Freight revenues		$	5,768			$	5,297				9	%		$	23,159			$	20,244				14	%
Other revenues			412				436				(6)				1,716				1,560				10
Total operating revenues			6,180				5,733				8				24,875				21,804				14
Operating Expenses
Compensation and benefits			1,174				1,070				10				4,645				4,158				12
Fuel			853				597				43				3,439				2,049				68
Purchased services and materials			633				538				18				2,442				2,016				21
Depreciation			569				556				2				2,246				2,208				2
Equipment and other rents			238				230				3				898				859				5
Other			301				302				-				1,288				1,176				10
Total operating expenses			3,768				3,293				14				14,958				12,466				20
Operating Income			2,412				2,440				(1)				9,917				9,338				6
Other income, net			92				83				11				426				297				43
Interest expense			(333)				(295)				13				(1,271)				(1,157)				10
Income before income taxes			2,171				2,228				(3)				9,072				8,478				7
Income taxes			(533)				(517)				3				(2,074)				(1,955)				6
Net Income		$	1,638			$	1,711				(4)			$	6,998			$	6,523				7
Share and Per Share
Earnings per share - basic		$	2.67			$	2.67				-	%		$	11.24			$	9.98				13	%
Earnings per share - diluted		$	2.67			$	2.66				-			$	11.21			$	9.95				13
Weighted average number of shares - basic			612.7				640.4				(4)				622.7				653.8				(5)
Weighted average number of shares - diluted			613.7				642.1				(4)				624.0				655.4				(5)
Dividends declared per share		$	1.30			$	1.18				10			$	5.08			$	4.29				18
Operating Ratio			61.0	%			57.4	%			3.6	pts			60.1	%			57.2	%			2.9	pts
Effective Tax Rate			24.6	%			23.2	%			1.4				22.9	%			23.1	%			(0.2)

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)
		4th Quarter												Full Year
For the Periods Ended December 31,		2022				2021				%				2022				2021				%
Freight Revenues (Millions)
Grain & grain products		$	974			$	889				10	%		$	3,598			$	3,181				13	%
Fertilizer			171				176				(3)				712				697				2
Food & refrigerated			265				259				2				1,093				998				10
Coal & renewables			523				485				8				2,134				1,780				20
Bulk			1,933				1,809				7				7,537				6,656				13
Industrial chemicals & plastics			502				507				(1)				2,158				1,943				11
Metals & minerals			548				481				14				2,196				1,811				21
Forest products			325				351				(7)				1,465				1,357				8
Energy & specialized markets			624				558				12				2,386				2,212				8
Industrial			1,999				1,897				5				8,205				7,323				12
Automotive			594				469				27				2,257				1,761				28
Intermodal			1,242				1,122				11				5,160				4,504				15
Premium			1,836				1,591				15				7,417				6,265				18
Total		$	5,768			$	5,297				9	%		$	23,159			$	20,244				14	%
Revenue Carloads (Thousands)
Grain & grain products			208				213				(2)	%			798				805				(1)	%
Fertilizer			41				48				(15)				190				201				(5)
Food & refrigerated			44				48				(8)				187				189				(1)
Coal & renewables			215				215				-				885				819				8
Bulk			508				524				(3)				2,060				2,014				2
Industrial chemicals & plastics			151				157				(4)				637				606				5
Metals & minerals			196				181				8				785				697				13
Forest products			52				63				(17)				241				250				(4)
Energy & specialized markets			140				137				2				552				559				(1)
Industrial			539				538				-				2,215				2,112				5
Automotive			198				182				9				778				701				11
Intermodal [a]			743				728				2				3,116				3,211				(3)
Premium			941				910				3				3,894				3,912				-
Total			1,988				1,972				1	%			8,169				8,038				2	%
Average Revenue per Car
Grain & grain products		$	4,681			$	4,187				12	%		$	4,509			$	3,953				14	%
Fertilizer			4,167				3,705				12				3,749				3,470				8
Food & refrigerated			5,957				5,409				10				5,844				5,279				11
Coal & renewables			2,431				2,251				8				2,410				2,173				11
Bulk			3,799				3,457				10				3,658				3,305				11
Industrial chemicals & plastics			3,335				3,242				3				3,388				3,207				6
Metals & minerals			2,790				2,659				5				2,797				2,598				8
Forest products			6,264				5,521				13				6,092				5,424				12
Energy & specialized markets			4,459				4,054				10				4,320				3,956				9
Industrial			3,711				3,522				5				3,704				3,467				7
Automotive			3,007				2,576				17				2,902				2,511				16
Intermodal [a]			1,672				1,541				9				1,656				1,403				18
Premium			1,953				1,748				12				1,905				1,601				19
Average		$	2,902			$	2,686				8	%		$	2,835			$	2,519				13	%

[a]	For intermodal shipments each container or trailer equals one carload.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Financial Position (unaudited)
	Dec. 31,				Dec. 31,
Millions, Except Percentages		2022				2021
Assets
Cash and cash equivalents		$	973			$	960
Short-term investments			46				46
Other current assets			2,933				2,545
Investments			2,375				2,241
Properties, net			56,038				54,871
Operating lease assets			1,672				1,787
Other assets			1,412				1,075
Total assets		$	65,449			$	63,525
Liabilities and Common Shareholders' Equity
Debt due within one year		$	1,678			$	2,166
Other current liabilities			3,842				3,578
Debt due after one year			31,648				27,563
Operating lease liabilities			1,300				1,429
Deferred income taxes			13,033				12,675
Other long-term liabilities			1,785				1,953
Total liabilities			53,286				49,364
Total common shareholders' equity			12,163				14,161
Total liabilities and common shareholders' equity		$	65,449			$	63,525
Return on Average Common Shareholders' Equity			53.2	%			41.9	%
Return on Invested Capital as Adjusted (ROIC)*			17.3	%			16.4	%

*	ROIC is a non-GAAP measure; however, management believes that it is an important measure in evaluating the efficiency and effectiveness of our long-term capital investments. See page 9 for a reconciliation to GAAP.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Cash Flows (unaudited)
Millions,		Full Year
For the Periods Ended December 31,		2022				2021
Operating Activities
Net income		$	6,998			$	6,523
Depreciation			2,246				2,208
Deferred and other income taxes			262				154
Other - net			(144)				147
Cash provided by operating activities			9,362				9,032
Investing Activities
Capital investments*			(3,620)				(2,936)
Maturities of short-term investments			46				94
Purchases of short-term investments			(46)				(70)
Other - net			149				203
Cash used in investing activities			(3,471)				(2,709)
Financing Activities
Share repurchase programs			(6,282)				(7,291)
Debt issued			6,080				4,201
Dividends paid			(3,159)				(2,800)
Debt repaid			(2,291)				(1,299)
Net issuance of commercial paper			(205)				325
Debt exchange			-				(270)
Other - net			(30)				(24)
Cash used in financing activities			(5,887)				(7,158)
Net Change in Cash, Cash Equivalents, and Restricted Cash			4				(835)
Cash, cash equivalents, and restricted cash at beginning of year			983				1,818
Cash, cash equivalents, and restricted cash at end of year		$	987			$	983
Free Cash Flow**
Cash provided by operating activities		$	9,362			$	9,032
Cash used in investing activities			(3,471)				(2,709)
Dividends paid			(3,159)				(2,800)
Free cash flow		$	2,732			$	3,523

*	Capital investments include locomotive and freight car early lease buyouts of $70 million in 2022 and $34 million in 2021.

**	Free cash flow is a non-GAAP measure; however, we believe this measure is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financing.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Operating and Performance Statistics (unaudited)
		4th Quarter												Full Year
For the Periods Ended December 31,		2022				2021				%				2022				2021				%
Operating/Performance Statistics
Freight car velocity (daily miles per car)*			191				197				(3)	%			191				203				(6)	%
Average train speed (miles per hour)*			23.8				24.2				(2)				23.8				24.6				(3)
Average terminal dwell time (hours)*			24.5				24.4				-				24.4				23.7				3
Locomotive productivity (GTMs per horsepower day)			123				129				(5)				125				133				(6)
Gross ton-miles (GTMs) (millions)			208,949				209,970				-				843,443				817,919				3
Train length (feet)			9,191				9,319				(1)				9,329				9,334				-
Intermodal car trip plan compliance (%)**			73				78				(5)	pts			67				73				(6)	pts
Manifest/Automotive car trip plan compliance (%)**			58				58				-	pts			59				63				(4)	pts
Workforce productivity (car miles per employee)			1,010				1,046				(3)				1,036				1,038				-
Total employees (average)			31,120				29,989				4				30,717				29,905				3
Locomotive Fuel Statistics
Average fuel price per gallon consumed		$	3.70			$	2.53				46	%		$	3.65			$	2.23				64	%
Fuel consumed in gallons (millions)			222				228				(3)				909				888				2
Fuel consumption rate***			1.064				1.088				(2)				1.078				1.086				(1)
Revenue Ton-Miles (Millions)
Grain & grain products			20,683				21,656				(4)	%			79,725				79,520				-	%
Fertilizer			2,701				3,185				(15)				11,769				12,387				(5)
Food & refrigerated			4,576				4,651				(2)				17,965				18,475				(3)
Coal & renewables			21,847				22,795				(4)				91,824				85,586				7
Bulk			49,807				52,287				(5)				201,283				195,968				3
Industrial chemicals & plastics			6,626				7,257				(9)				29,572				30,048				(2)
Metals & minerals			9,367				8,611				9				37,827				32,993				15
Forest products			5,546				6,458				(14)				25,438				25,863				(2)
Energy & specialized markets			9,575				9,420				2				37,068				37,902				(2)
Industrial			31,114				31,746				(2)				129,905				126,806				2
Automotive			4,384				3,830				14				17,018				14,879				14
Intermodal			17,622				16,977				4				72,546				73,620				(1)
Premium			22,006				20,807				6				89,564				88,499				1
Total			102,927				104,840				(2)	%			420,752				411,273				2	%

*	Surface Transportation Board (STB) reported performance measures.
**	Methodology used to report is not comparable with the reporting to the STB under docket number EP 770.
***	Fuel consumption is computed as follows: gallons of fuel consumed divided by gross ton-miles in thousands.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Condensed Consolidated Statements of Income (unaudited)
Millions,	2022
Except Per Share Amounts and Percentages,	1st Qtr			2nd Qtr				3rd Qtr				4th Qtr				Full Year
Operating Revenues
Freight revenues		$	5,440			$	5,842			$	6,109			$	5,768			$	23,159
Other revenues			420				427				457				412				1,716
Total operating revenues			5,860				6,269				6,566				6,180				24,875
Operating Expenses
Compensation and benefits			1,101				1,092				1,278				1,174				4,645
Fuel			714				940				932				853				3,439
Purchased services and materials			561				622				626				633				2,442
Depreciation			555				559				563				569				2,246
Equipment and other rents			215				230				215				238				898
Other			337				331				319				301				1,288
Total operating expenses			3,483				3,774				3,933				3,768				14,958
Operating Income			2,377				2,495				2,633				2,412				9,917
Other income, net			47				163				124				92				426
Interest expense			(307)				(316)				(315)				(333)				(1,271)
Income before income taxes			2,117				2,342				2,442				2,171				9,072
Income taxes			(487)				(507)				(547)				(533)				(2,074)
Net Income		$	1,630			$	1,835			$	1,895			$	1,638			$	6,998
Share and Per Share
Earnings per share - basic		$	2.58			$	2.93			$	3.05			$	2.67			$	11.24
Earnings per share - diluted		$	2.57			$	2.93			$	3.05			$	2.67			$	11.21
Weighted average number of shares - basic			632.2				625.6				620.4				612.7				622.7
Weighted average number of shares - diluted			633.6				626.8				621.5				613.7				624.0
Dividends declared per share		$	1.18			$	1.30			$	1.30			$	1.30			$	5.08
Operating Ratio			59.4	%			60.2	%			59.9	%			61.0	%			60.1	%
Effective Tax Rate			23.0	%			21.6	%			22.4	%			24.6	%			22.9	%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Freight Revenues Statistics (unaudited)
		2022
	1st Qtr			2nd Qtr				3rd Qtr				4th Qtr				Full Year
Freight Revenues (Millions)
Grain & grain products		$	877			$	867			$	880			$	974			$	3,598
Fertilizer			180				183				178				171				712
Food & refrigerated			267				271				290				265				1,093
Coal & renewables			508				492				611				523				2,134
Bulk			1,832				1,813				1,959				1,933				7,537
Industrial chemicals & plastics			520				557				579				502				2,158
Metals & minerals			485				562				601				548				2,196
Forest products			364				386				390				325				1,465
Energy & specialized markets			552				586				624				624				2,386
Industrial			1,921				2,091				2,194				1,999				8,205
Automotive			501				561				601				594				2,257
Intermodal			1,186				1,377				1,355				1,242				5,160
Premium			1,687				1,938				1,956				1,836				7,417
Total		$	5,440			$	5,842			$	6,109				5,768				23,159
Revenue Carloads (Thousands)
Grain & grain products			205				195				190				208				798
Fertilizer			45				53				51				41				190
Food & refrigerated			47				48				48				44				187
Coal & renewables			225				202				243				215				885
Bulk			522				498				532				508				2,060
Industrial chemicals & plastics			160				161				165				151				637
Metals & minerals			182				205				202				196				785
Forest products			64				63				62				52				241
Energy & specialized markets			131				141				140				140				552
Industrial			537				570				569				539				2,215
Automotive			190				192				198				198				778
Intermodal [a]			757				805				811				743				3,116
Premium			947				997				1,009				941				3,894
Total			2,006				2,065				2,110				1,988				8,169
Average Revenue per Car
Grain & grain products		$	4,269			$	4,451			$	4,641			$	4,681			$	4,509
Fertilizer			4,016				3,437				3,504				4,167				3,749
Food & refrigerated			5,637				5,770				6,017				5,957				5,844
Coal & renewables			2,262				2,426				2,514				2,431				2,410
Bulk			3,508				3,642				3,685				3,799				3,658
Industrial chemicals & plastics			3,247				3,455				3,508				3,335				3,388
Metals & minerals			2,660				2,755				2,969				2,790				2,797
Forest products			5,672				6,128				6,347				6,264				6,092
Energy & specialized markets			4,219				4,161				4,434				4,459				4,320
Industrial			3,574				3,674				3,852				3,711				3,704
Automotive			2,640				2,919				3,030				3,007				2,902
Intermodal [a]			1,566				1,711				1,672				1,672				1,656
Premium			1,782				1,943				1,939				1,953				1,905
Average		$	2,711			$	2,830			$	2,895			$	2,902			$	2,835

[a]	For intermodal shipments each container or trailer equals one carload.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP
Adjusted Debt / Adjusted EBITDA*
Millions, Except Ratios		Dec 31,				Dec 31,
For the Twelve Months Ended		2022				2021
Net income		$	6,998			$	6,523
Add:
Income tax expense			2,074				1,955
Depreciation			2,246				2,208
Interest expense			1,271				1,157
EBITDA		$	12,589			$	11,843
Adjustments:
Other income, net			(426)				(297)
Interest on operating lease liabilities**			54				56
Adjusted EBITDA		$	12,217			$	11,602
Debt		$	33,326			$	29,729
Operating lease liabilities			1,631				1,759
Unfunded pension and OPEB, net of tax cost of $0 and $0 [a]			-				-
Adjusted debt		$	34,957			$	31,488
Adjusted debt / adjusted EBITDA			2.9				2.7
Comparable Adjusted Debt / Adjusted EBITDA*
		Dec 31,				Dec 31,
		2022				2021
Adjusted debt / Adjusted EBITDA			2.9				2.7
Factors Affecting Comparability:
Labor accrual adjustment [b]			(0.1)				N/A
Comparable adjusted debt / adjusted EBITDA*			2.8				2.7

[a]	Prior periods were recast to conform to the current year presentation, which removes the impact of pension and OPEB when the net amount represents a funded amount.
[b]	Adjustments remove the impact of $69 million from net income and $23 million from income tax expense for the year ended December 31, 2022. See page 10 for a reconciliation to GAAP.

*

Total debt plus operating lease liabilities plus after-tax unfunded pension and other postretirement benefit (OPEB) liabilities divided by net income plus income tax expense, depreciation, amortization, interest expense, and adjustments for other income and interest on operating lease liabilities. Adjusted debt to adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and adjustments for other income and interest on operating lease liabilities) and comparable adjusted debt to adjusted EBITDA are considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe these measures are important to management and investors in evaluating the Company's ability to sustain given debt levels (including leases) with the cash generated from operations. In addition, a comparable measure is used by rating agencies when reviewing the Company's credit rating. Adjusted debt to adjusted EBITDA and comparable adjusted debt to adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income. The tables above provide a reconciliation from net income to adjusted EBITDA, debt to adjusted debt, and adjusted debt to adjusted EBITDA to comparable adjusted debt to adjusted EBITDA. At December 31, 2022 and 2021, the incremental borrowing rate on operating lease liabilities was 3.3% and 3.2%, respectively.

**	Represents the hypothetical interest expense we would incur (using the incremental borrowing rate) if the property under our operating leases were owned or accounted for as finance leases.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP
Return on Average Common Shareholders' Equity
Millions, Except Percentages		2022				2021
Net income		$	6,998			$	6,523
Average equity		$	13,162			$	15,560
Return on average common shareholders' equity			53.2	%			41.9	%
Return on Invested Capital as Adjusted (ROIC)*
Millions, Except Percentages		2022				2021
Net income		$	6,998			$	6,523
Interest expense			1,271				1,157
Interest on average operating lease liabilities			56				54
Taxes on interest			(304)				(280)
Net operating profit after taxes as adjusted		$	8,021			$	7,454
Average equity		$	13,162			$	15,560
Average debt			31,528				28,229
Average operating lease liabilities			1,695				1,682
Average invested capital as adjusted		$	46,385			$	45,471
Return on invested capital as adjusted			17.3	%			16.4	%

Comparable Return on Invested Capital as Adjusted (Comparable ROIC)*
		2022				2021
Return on invested capital as adjusted			17.3	%			16.4	%
Factors Affecting Comparability:
Labor accrual adjustment [a]			0.1				N/A
Comparable return on invested capital as adjusted			17.4	%			16.4	%

[a]	Adjustments remove the impact of $69 million from both net income for the year ended and shareholders' equity as of December 31, 2022. See page 10 for a reconciliation to GAAP.

*

ROIC and comparable ROIC are considered non-GAAP financial measures by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe these measures are important to management and investors in evaluating the efficiency and effectiveness of our long-term capital investments. In addition, we currently use ROIC as a performance criterion in determining certain elements of equity compensation for our executives. ROIC and comparable ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is return on average common shareholders' equity. The tables above provide reconciliations from return on average common shareholders' equity to ROIC and comparable ROIC. At December 31, 2022 and 2021, the incremental borrowing rate on operating lease liabilities was 3.3% and 3.2%, respectively.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES Non-GAAP Measures Reconciliation to GAAP
Financial Performance*
	Reported results			Labor accrual				Adjusted results
Millions, Except Per Share Amounts and Percentages			(GAAP)				adjustment					(non-GAAP)
For the Twelve Months Ended December 31, 2022
Compensation and benefits expense		$	4,645			$	(92)				$	4,553
Operating expense			14,958				(92)					14,866
Operating income			9,917				92					10,009
Income taxes			(2,074)				(23)					(2,097)
Net income			6,998				69					7,067
Diluted EPS			11.21				0.12					11.33
Operating ratio			60.1	%			(0.3)		pts			59.8	%
As of December 31, 2022
Shareholders' equity		$	12,163			$	69				$	12,232

*

The above table reconciles our results for the twelve months ended and as of December 31, 2022, to adjust results that exclude the impact of certain items identified as affecting comparability. We use adjusted compensation and benefits expense, adjusted operating expense, adjusted operating income, adjusted income taxes, adjusted net income, adjusted diluted earnings per share (EPS), adjusted operating ratio, and adjusted shareholders' equity, as applicable, among other measures, to evaluate our actual operating performance. We believe these non-GAAP financial measures provide valuable information regarding earnings and business trends by excluding specific items that we believe are not indicative of our ongoing operating results of our business, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry. Since these are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, compensation and benefits expense, operating expense, operating income, income taxes, net income, diluted EPS, operating ratio, and shareholders' equity as indicators of operating performance.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/union-pacific-reports-fourth-quarter-and-full-year-2022-results-301728715.html

SOURCE Union Pacific Corporation

FAQ

What were Union Pacific's fourth quarter earnings in 2022?

Union Pacific reported fourth quarter earnings of $1.6 billion, or $2.67 per diluted share.

How did Union Pacific's revenue perform in 2022 compared to 2021?

Union Pacific's operating revenue for 2022 increased by 14% to $24.9 billion compared to 2021.

What challenges did Union Pacific face in Q4 2022?

In Q4 2022, Union Pacific faced challenges including hiring difficulties and the impact of extreme winter weather.

What is Union Pacific's guidance for 2023?

Union Pacific expects full year carloads to exceed industrial production and plans capital spending of $3.6 billion.

What were the share repurchase activities of Union Pacific in Q4 2022?

Union Pacific repurchased 3.5 million shares for $0.7 billion in Q4 2022.