Union Pacific Reports Fourth Quarter and Full Year 2023 Results

Rhea-AI Summary

Union Pacific Corporation (UNP) reported fourth-quarter net income of $1.7 billion, or $2.71 per diluted share, up 1% from 2022. However, full-year earnings per diluted share were down 7% to $10.45, with net income down 9% to $6.4 billion. The company's operating revenue was flat, while operating income remained unchanged. Union Pacific's 2023 capital program totaled $3.7 billion, with 3.5 million shares repurchased at an aggregate cost of $712 million. The company's 2024 outlook is affected by muted volume, lower coal demand, and soft economic conditions.

Positive

• Increased fourth-quarter net income and earnings per diluted share compared to 2022
• Flat operating revenue and operating income
• Capital program of $3.7 billion in 2023
• 3.5 million shares repurchased at an aggregate cost of $712 million
• Pricing dollars in excess of inflation dollars in 2024 outlook

Negative

• Full-year earnings per diluted share down 7%
• Full-year net income down 9%
• Lower fuel surcharge revenue and volume declines affecting operating revenue
• No first-quarter share repurchases in 2024 outlook

Insights

Financial Analyst

The reported earnings per diluted share (EPS) of $2.71 for the fourth quarter, reflecting a marginal increase from the previous year, indicates a level of stability in Union Pacific's profitability despite broader economic headwinds. However, the full year EPS decrease of 7% alongside a 9% drop in net income could signal underlying challenges in the company's operations or market conditions that investors should be aware of. The flat operating income, despite increased volumes and core pricing gains, suggests that the company's efforts to improve efficiency are being offset by external factors, such as reduced fuel surcharge revenue.

Union Pacific's operating ratio, an important measure of efficiency that compares operating expenses to revenue, showed a slight improvement. This metric is crucial as a lower operating ratio typically indicates a more efficiently run railroad, which can be more attractive to investors. The 60.9% operating ratio in the fourth quarter, however, should be considered in the context of the industry average, which can provide a benchmark for evaluating performance.

The company's capital program and share repurchases reflect its long-term strategy and confidence in its financial health. A capital program of $3.7 billion suggests significant investment in infrastructure and assets, which could lead to improved future performance. Meanwhile, repurchasing shares can be seen as a move to return value to shareholders and an indication of the company's belief that its stock is undervalued.

Market Research Analyst

Union Pacific's performance in the context of the broader transportation sector is reflective of the current economic environment, with soft economic conditions and specific challenges such as lower coal demand and international intermodal business loss. These factors are crucial as they directly affect freight volumes, which are a primary revenue driver for railroads. The muted volume outlook for 2024 suggests that Union Pacific and its investors may need to brace for a potentially challenging year ahead.

However, the company's ability to achieve core pricing gains in such an environment is noteworthy. This suggests a competitive advantage and pricing power, which can be critical for maintaining profitability when volumes are under pressure. It is also indicative of the company's strategic focus on operational excellence and service quality, which can help differentiate it from competitors and sustain customer loyalty.

Economist

The reported figures from Union Pacific provide a snapshot of the company's financial health and offer insights into broader economic trends. The decrease in fuel surcharge revenue is indicative of fluctuating fuel prices, which can have a significant impact on transportation companies' costs and profitability. The operating ratio deterioration, despite being partially mitigated by lower fuel prices, raises questions about the company's cost management and operational efficiency in a challenging economic climate.

The company's outlook for 2024, with no planned share repurchases in the first quarter, may reflect a cautious approach in light of the uncertain economic conditions. This conservative capital allocation could be a strategic move to preserve liquidity and maintain financial flexibility. Stakeholders should consider these factors when assessing the company's resilience and potential for growth, especially in an industry that is highly sensitive to economic cycles and commodity prices.

• Fourth quarter earnings per diluted share of $2.71, up 1%
• Fourth quarter net income up 1%
• Full year earnings per diluted share of $10.45, down 7%
• Full year net income down 9%

OMAHA, Neb., Jan. 25, 2024 /PRNewswire/ -- Union Pacific Corporation (NYSE: UNP) today reported 2023 fourth quarter net income of $1.7 billion, or $2.71 per diluted share. This compares to 2022 fourth quarter net income of $1.6 billion, or $2.67 per diluted share.

Reported net income for full year 2023 was $6.4 billion, or $10.45 per diluted share. These full year results compare to full year 2022 net income of $7.0 billion, or $11.21 per diluted share.

"The team continues to execute our multi-year strategy to be the industry's best in safety, service, and operational excellence," said Jim Vena, Union Pacific Chief Executive Officer. "Our fourth quarter results show much of what's possible at Union Pacific and that we're on the right path to reaching our goals. Service and operational metrics showed great improvement in the quarter. Those improvements propel us toward a service product that supports growth with our customers. We enter 2024 with strong momentum, recognizing we have plenty of opportunity to improve. We're excited to show our stakeholders what our great team can accomplish."

Fourth Quarter Summary: 2023 vs. 2022

Financial Results: Increased Volume and Core Pricing Gains Offset by Lower Fuel Surcharge Revenue Led to Flat Operating Revenue

• Operating revenue of $6.2 billion was flat driven by increased volume and core pricing gains offset by reduced fuel surcharge revenue and business mix.
• Revenue carloads were up 3%.
• Operating ratio was 60.9%, an improvement of 10 basis points.
• Operating income of $2.4 billion was flat.

Operating Performance: Improved Resource Utilization Drives Strong Service Metrics and Fluid Network; Fourth Quarter Record for Workforce Productivity

• Quarterly freight car velocity was 217 daily miles per car, a 14% improvement.
• Quarterly locomotive productivity was 140 gross ton-miles (GTMs) per horsepower day, a 14% improvement.
• Average maximum train length was 9,413 feet, a 2% increase.
• Quarterly workforce productivity improved 4% to 1,051 car miles per employee.
• Fuel consumption rate of 1.091, measured in gallons of fuel per thousand GTMs, deteriorated 3%.

Full Year Summary: 2023 vs. 2022

Financial Results: Lower Fuel Surcharge Revenue and Volume Drive Reduced Operating Revenue

• Operating revenue of $24.1 billion was down 3% driven by lower fuel surcharge revenue, business mix, and volume declines partially offset by core pricing gains.
• Revenue carloads declined 1%.
• Union Pacific's 62.3% reported operating ratio deteriorated 220 basis points. Lower fuel prices positively impacted the operating ratio by 50 basis points.
• Operating Income of $9.1 billion was down 8%.
• Union Pacific's 2023 capital program totaled $3.7 billion.
• The company repurchased 3.5 million shares in 2023 at an aggregate cost of $712 million.

Operating Performance: Improving Resource Availability and Utilization Through the Year Results in Fluid Operations to End 2023

• Union Pacific's reportable derailment rates improved, while reportable personal injury rates did not improve.
• Freight car velocity was 204 daily miles per car, a 7% improvement.
• Locomotive productivity was 129 GTMs per horsepower day, a 3% increase.
• Average maximum train length of 9,356 feet was flat.
• Workforce productivity of 1,000 car miles per employee declined 3%.
• Fuel consumption rate of 1.088, measured in gallons of fuel per thousand GTMs, deteriorated 1%.

2024 Outlook

• Volume outlook muted by international intermodal business loss, lower coal demand, and soft economic conditions
• Pricing dollars in excess of inflation dollars
• No change to long-term capital allocation strategy
  • Capital plan of $3.4 billion
  • No first quarter share repurchases

Fourth Quarter 2023 Earnings Conference Call

Union Pacific will webcast its fourth quarter 2023 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, January 25, 2024, 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 potential impacts of public health crises, including pandemics, epidemics and the outbreak of other contagious diseases, such as the coronavirus and its variant strains (COVID); the Russia-Ukraine and Israeli wars and any impacts on our business operations, financial results, liquidity, and financial position, and on the world economy (including customers, employees, and supply chains), including as a result of fluctuations in volume and carloadings; expectations as to general macroeconomic conditions, including slowdowns and recessions, domestically or internationally, and future volatility in interest rates and fuel prices; closing of customer manufacturing, distribution, or production facilities; expectations as to operational or service improvements; expectations as to hiring challenges; availability of employees; expectations regarding the effectiveness of steps taken or to be taken to improve operations, service, infrastructure improvements, and transportation plan modifications; expectations as to cost savings, revenue growth, and earnings; the time by which goals, targets, or objectives will be achieved; projections, predictions, expectations, estimates, or forecasts as to business, financial, and operational results, future economic performance, and planned capital investments ; proposed new products and services; estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, cyberattacks or other matters. 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 2022, which was filed with the SEC on February 10, 2023. 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 the Company's 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.

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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,		2023				2022				%				2023				2022				%
Operating Revenues
Freight revenues		$	5,801			$	5,768				1	%		$	22,571			$	23,159				(3)	%
Other revenues			358				412				(13)				1,548				1,716				(10)
Total operating revenues			6,159				6,180				-				24,119				24,875				(3)
Operating Expenses
Compensation and benefits			1,169				1,174				-				4,818				4,645				4
Fuel			759				853				(11)				2,891				3,439				(16)
Purchased services and materials			645				633				2				2,616				2,442				7
Depreciation			589				569				4				2,318				2,246				3
Equipment and other rents			229				238				(4)				947				898				5
Other			361				301				20				1,447				1,288				12
Total operating expenses			3,752				3,768				-				15,037				14,958				1
Operating Income			2,407				2,412				-				9,082				9,917				(8)
Other income, net			108				92				17				491				426				15
Interest expense			(331)				(333)				(1)				(1,340)				(1,271)				5
Income before income taxes			2,184				2,171				1				8,233				9,072				(9)
Income tax expense			(532)				(533)				-				(1,854)				(2,074)				(11)
Net Income		$	1,652			$	1,638				1			$	6,379			$	6,998				(9)
Share and Per Share
Earnings per share - basic		$	2.71			$	2.67				1	%		$	10.47			$	11.24				(7)	%
Earnings per share - diluted		$	2.71			$	2.67				1			$	10.45			$	11.21				(7)
Weighted average number of shares - basic			608.9				612.7				(1)				609.2				622.7				(2)
Weighted average number of shares - diluted			609.9				613.7				(1)				610.2				624.0				(2)
Dividends declared per share		$	1.30			$	1.30				-			$	5.20			$	5.08				2
Operating Ratio			60.9	%			61.0	%			(0.1)	pts			62.3	%			60.1	%			2.2	pts
Effective Tax Rate			24.4	%			24.6	%			(0.2)				22.5	%			22.9	%			(0.4)

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)
		4th Quarter												Full Year
For the Periods Ended December 31,		2023				2022				%				2023				2022				%
Freight Revenues (Millions)
Grain & grain products		$	986			$	974				1	%		$	3,644			$	3,598				1	%
Fertilizer			194				171				13				757				712				6
Food & refrigerated			264				265				-				1,041				1,093				(5)
Coal & renewables			494				523				(6)				1,916				2,134				(10)
Bulk			1,938				1,933				-				7,358				7,537				(2)
Industrial chemicals & plastics			538				502				7				2,176				2,158				1
Metals & minerals			540				548				(1)				2,194				2,196				-
Forest products			335				325				3				1,347				1,465				(8)
Energy & specialized markets			665				624				7				2,521				2,386				6
Industrial			2,078				1,999				4				8,238				8,205				-
Automotive			600				594				1				2,421				2,257				7
Intermodal			1,185				1,242				(5)				4,554				5,160				(12)
Premium			1,785				1,836				(3)				6,975				7,417				(6)
Total		$	5,801			$	5,768				1	%		$	22,571			$	23,159				(3)	%
Revenue Carloads (Thousands)
Grain & grain products			216				208				4	%			798				798				-	%
Fertilizer			47				41				15				191				190				1
Food & refrigerated			42				44				(5)				175				187				(6)
Coal & renewables			217				215				1				867				885				(2)
Bulk			522				508				3				2,031				2,060				(1)
Industrial chemicals & plastics			161				151				7				645				637				1
Metals & minerals			189				196				(4)				793				785				1
Forest products			52				52				-				213				241				(12)
Energy & specialized markets			153				140				9				582				552				5
Industrial			555				539				3				2,233				2,215				1
Automotive			197				198				(1)				820				778				5
Intermodal [a]			782				743				5				3,028				3,116				(3)
Premium			979				941				4				3,848				3,894				(1)
Total			2,056				1,988				3	%			8,112				8,169				(1)	%
Average Revenue per Car
Grain & grain products		$	4,580			$	4,681				(2)	%		$	4,567			$	4,509				1	%
Fertilizer			4,085				4,167				(2)				3,962				3,749				6
Food & refrigerated			6,174				5,957				4				5,929				5,844				1
Coal & renewables			2,281				2,431				(6)				2,211				2,410				(8)
Bulk			3,712				3,799				(2)				3,623				3,658				(1)
Industrial chemicals & plastics			3,353				3,335				1				3,374				3,388				-
Metals & minerals			2,860				2,790				3				2,765				2,797				(1)
Forest products			6,326				6,264				1				6,310				6,092				4
Energy & specialized markets			4,347				4,459				(3)				4,335				4,320				-
Industrial			3,742				3,711				1				3,689				3,704				-
Automotive			3,061				3,007				2				2,955				2,902				2
Intermodal [a]			1,515				1,672				(9)				1,504				1,656				(9)
Premium			1,824				1,953				(7)				1,813				1,905				(5)
Average		$	2,822			$	2,902				(3)	%		$	2,782			$	2,835				(2)	%

[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		2023				2022
Assets
Cash and cash equivalents		$	1,055			$	973
Short-term investments			16				46
Other current assets			3,077				2,933
Investments			2,605				2,375
Properties, net			57,398				56,038
Operating lease assets			1,643				1,672
Other assets			1,338				1,412
Total assets		$	67,132			$	65,449
Liabilities and Common Shareholders' Equity
Debt due within one year		$	1,423			$	1,678
Other current liabilities			3,683				3,842
Debt due after one year			31,156				31,648
Operating lease liabilities			1,245				1,300
Deferred income taxes			13,123				13,033
Other long-term liabilities			1,714				1,785
Total liabilities			52,344				53,286
Total common shareholders' equity			14,788				12,163
Total liabilities and common shareholders' equity		$	67,132			$	65,449
Return on Average Common Shareholders' Equity			47.3	%			53.2	%
Return on Invested Capital as Adjusted (ROIC)*			15.5	%			17.3	%

*	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,		2023				2022
Operating Activities
Net income		$	6,379			$	6,998
Depreciation			2,318				2,246
Deferred and other income taxes			117				262
Other - net			(435)				(144)
Cash provided by operating activities			8,379				9,362
Investing Activities
Capital investments*			(3,606)				(3,620)
Other - net			(61)				149
Cash used in investing activities			(3,667)				(3,471)
Financing Activities
Dividends paid			(3,173)				(3,159)
Debt repaid			(2,190)				(2,291)
Debt issued			1,599				6,080
Share repurchase programs			(705)				(6,282)
Other - net			(156)				(235)
Cash used in financing activities			(4,625)				(5,887)
Net change in cash, cash equivalents, and restricted cash			87				4
Cash, cash equivalents, and restricted cash at beginning of year			987				983
Cash, cash equivalents, and restricted cash at end of year		$	1,074			$	987
Free Cash Flow**
Cash provided by operating activities		$	8,379			$	9,362
Cash used in investing activities			(3,667)				(3,471)
Dividends paid			(3,173)				(3,159)
Free cash flow		$	1,539			$	2,732

*	Capital investments include locomotive and freight car early lease buyouts of $57 million in 2023 and $70 million in 2022.
**	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,		2023				2022				%				2023				2022				%
Operating/Performance Statistics
Freight car velocity (daily miles per car)*			217				191				14	%			204				191				7	%
Average train speed (miles per hour)*			24.9				23.8				5				24.2				23.8				2
Average terminal dwell time (hours)*			22.7				24.5				(7)				23.4				24.4				(4)
Locomotive productivity (GTMs per horsepower day)			140				123				14				129				125				3
Gross ton-miles (GTMs) (millions)			214,570				208,949				3				837,502				843,443				(1)
Train length (feet)			9,413				9,191				2				9,356				9,329				-
Intermodal car trip plan compliance (%)**			85				73				12	pts			78				67				11	pts
Manifest/Automotive car trip plan compliance (%)**			70				58				12	pts			65				59				6	pts
Workforce productivity (car miles per employee)			1,051				1,010				4				1,000				1,036				(3)
Total employees (average)			30,559				31,120				(2)				31,490				30,717				3
Locomotive Fuel Statistics
Average fuel price per gallon consumed		$	3.16			$	3.70				(15)	%		$	3.09			$	3.65				(15)	%
Fuel consumed in gallons (millions)			234				222				5				911				909				-
Fuel consumption rate***			1.091				1.064				3				1.088				1.078				1
Revenue Ton-Miles (Millions)
Grain & grain products			21,166				20,683				2	%			77,717				79,725				(3)	%
Fertilizer			2,960				2,701				10				12,031				11,769				2
Food & refrigerated			4,586				4,576				-				18,286				17,965				2
Coal & renewables			21,876				21,847				-				88,604				91,824				(4)
Bulk			50,588				49,807				2				196,638				201,283				(2)
Industrial chemicals & plastics			7,040				6,626				6				28,837				29,572				(2)
Metals & minerals			8,712				9,367				(7)				36,121				37,827				(5)
Forest products			5,447				5,546				(2)				22,447				25,438				(12)
Energy & specialized markets			10,349				9,575				8				39,286				37,068				6
Industrial			31,548				31,114				1				126,691				129,905				(2)
Automotive			4,369				4,384				-				18,080				17,018				6
Intermodal			18,438				17,622				5				71,890				72,546				(1)
Premium			22,807				22,006				4				89,970				89,564				-
Total			104,943				102,927				2	%			413,299				420,752				(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,	2023
Except Per Share Amounts and Percentages,	1st Qtr			2nd Qtr				3rd Qtr				4th Qtr				Full Year
Operating Revenues
Freight revenues		$	5,656			$	5,569			$	5,545			$	5,801			$	22,571
Other revenues			400				394				396				358				1,548
Total operating revenues			6,056				5,963				5,941				6,159				24,119
Operating Expenses
Compensation and benefits			1,179				1,269				1,201				1,169				4,818
Fuel			766				664				702				759				2,891
Purchased services and materials			653				650				668				645				2,616
Depreciation			572				577				580				589				2,318
Equipment and other rents			235				248				235				229				947
Other			357				351				378				361				1,447
Total operating expenses			3,762				3,759				3,764				3,752				15,037
Operating Income			2,294				2,204				2,177				2,407				9,082
Other income, net			184				93				106				108				491
Interest expense			(336)				(339)				(334)				(331)				(1,340)
Income before income taxes			2,142				1,958				1,949				2,184				8,233
Income tax expense			(512)				(389)				(421)				(532)				(1,854)
Net Income		$	1,630			$	1,569			$	1,528			$	1,652			$	6,379
Share and Per Share
Earnings per share - basic		$	2.67			$	2.58			$	2.51			$	2.71			$	10.47
Earnings per share - diluted		$	2.67			$	2.57			$	2.51			$	2.71			$	10.45
Weighted average number of shares - basic			610.6				608.7				608.7				608.9				609.2
Weighted average number of shares - diluted			611.5				609.5				609.8				609.9				610.2
Dividends declared per share		$	1.30			$	1.30			$	1.30			$	1.30			$	5.20
Operating Ratio			62.1	%			63.0	%			63.4	%			60.9	%			62.3	%
Effective Tax Rate			23.9	%			19.9	%			21.6	%			24.4	%			22.5	%

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Freight Revenues Statistics (unaudited)
		2023
	1st Qtr			2nd Qtr				3rd Qtr				4th Qtr				Full Year
Freight Revenues (Millions)
Grain & grain products		$	943			$	890			$	825			$	986			$	3,644
Fertilizer			186				183				194				194				757
Food & refrigerated			263				255				259				264				1,041
Coal & renewables			505				429				488				494				1,916
Bulk			1,897				1,757				1,766				1,938				7,358
Industrial chemicals & plastics			536				545				557				538				2,176
Metals & minerals			536				562				556				540				2,194
Forest products			332				347				333				335				1,347
Energy & specialized markets			613				632				611				665				2,521
Industrial			2,017				2,086				2,057				2,078				8,238
Automotive			587				625				609				600				2,421
Intermodal			1,155				1,101				1,113				1,185				4,554
Premium			1,742				1,726				1,722				1,785				6,975
Total		$	5,656			$	5,569			$	5,545				5,801				22,571
Revenue Carloads (Thousands)
Grain & grain products			202				197				183				216				798
Fertilizer			45				48				51				47				191
Food & refrigerated			44				44				45				42				175
Coal & renewables			216				203				231				217				867
Bulk			507				492				510				522				2,031
Industrial chemicals & plastics			157				164				163				161				645
Metals & minerals			188				210				206				189				793
Forest products			52				55				54				52				213
Energy & specialized markets			139				144				146				153				582
Industrial			536				573				569				555				2,233
Automotive			200				213				210				197				820
Intermodal [a]			734				749				763				782				3,028
Premium			934				962				973				979				3,848
Total			1,977				2,027				2,052				2,056				8,112
Average Revenue per Car
Grain & grain products		$	4,668			$	4,527			$	4,486			$	4,580			$	4,567
Fertilizer			4,135				3,830				3,818				4,085				3,962
Food & refrigerated			5,963				5,740				5,847				6,174				5,929
Coal & renewables			2,341				2,107				2,114				2,281				2,211
Bulk			3,743				3,568				3,465				3,712				3,623
Industrial chemicals & plastics			3,402				3,336				3,406				3,353				3,374
Metals & minerals			2,853				2,677				2,688				2,860				2,765
Forest products			6,384				6,337				6,197				6,326				6,310
Energy & specialized markets			4,408				4,388				4,201				4,347				4,335
Industrial			3,760				3,646				3,612				3,742				3,689
Automotive			2,944				2,928				2,894				3,061				2,955
Intermodal [a]			1,573				1,471				1,459				1,515				1,504
Premium			1,866				1,794				1,769				1,824				1,813
Average		$	2,861			$	2,748			$	2,702			$	2,822			$	2,782

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

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Non-GAAP Measures Reconciliation to GAAP (unaudited)
Debt / Net Income
Millions, Except Ratios		2023				2022
Debt		$	32,579			$	33,326
Net income		$	6,379			$	6,998
Debt / net income			5.1				4.8
Adjusted Debt / Adjusted EBITDA*
Millions, Except Ratios		2023				2022
Net income		$	6,379			$	6,998
Add:
Income tax expense			1,854				2,074
Depreciation			2,318				2,246
Interest expense			1,340				1,271
EBITDA		$	11,891			$	12,589
Adjustments:
Other income, net			(491)				(426)
Interest on operating lease liabilities**			58				54
Adjusted EBITDA		$	11,458			$	12,217
Debt		$	32,579			$	33,326
Operating lease liabilities			1,600				1,631
Adjusted debt		$	34,179			$	34,957
Adjusted debt / adjusted EBITDA			3.0				2.9
Comparable Adjusted Debt / Adjusted EBITDA*
		2023				2022
Adjusted debt / Adjusted EBITDA			3.0				2.9
Factors Affecting Comparability:
Labor accrual adjustment [a]			-				(0.1)
Comparable adjusted debt / adjusted EBITDA			3.0				2.8

[a]	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 OPEB (other post retirement benefit) obligations 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 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 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, other information provided in accordance with GAAP. The most comparable GAAP measure is debt to net income ratio. The tables above provide reconciliations from net income to adjusted EBITDA, debt to adjusted debt, debt to net income to adjusted debt to adjusted EBITDA, and adjusted debt to adjusted EBITDA to comparable adjusted debt to adjusted EBITDA. At December 31, 2023 and 2022, the incremental borrowing rate on operating lease liabilities was 3.6% and 3.3%, respectively.  Pension and OPEB were funded at December 31, 2023 and 2022.
**	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 (unaudited)
Return on Average Common Shareholders' Equity
Millions, Except Percentages		2023				2022
Net income		$	6,379			$	6,998
Average equity		$	13,476			$	13,162
Return on average common shareholders' equity			47.3	%			53.2	%
Return on Invested Capital as Adjusted (ROIC)*
Millions, Except Percentages		2023				2022
Net income		$	6,379			$	6,998
Interest expense			1,340				1,271
Interest on average operating lease liabilities			58				56
Taxes on interest			(315)				(304)
Net operating profit after taxes as adjusted		$	7,462			$	8,021
Average equity		$	13,476			$	13,162
Average debt			32,953				31,528
Average operating lease liabilities			1,616				1,695
Average invested capital as adjusted		$	48,045			$	46,385
Return on invested capital as adjusted			15.5	%			17.3	%
Comparable Return on Invested Capital as Adjusted (Comparable ROIC)*
		2023				2022
Return on invested capital as adjusted			15.5	%			17.3	%
Factors Affecting Comparability:
Labor accrual adjustment [a]			-				0.1
Comparable return on invested capital as adjusted			15.5	%			17.4	%

[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, 2023 and 2022, the incremental borrowing rate on operating lease liabilities was 3.6% and 3.3%, respectively.

 

UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES
Non-GAAP Measures Reconciliation to GAAP (unaudited)
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 EPS (earnings per share), 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.

 

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SOURCE Union Pacific Corporation

FAQ

What was Union Pacific's fourth quarter net income and earnings per diluted share?

Union Pacific's fourth-quarter net income was $1.7 billion, or $2.71 per diluted share, up 1% from 2022.

What is Union Pacific's ticker symbol?

Union Pacific's ticker symbol is UNP.

What was Union Pacific's full-year earnings per diluted share?

Union Pacific's full-year earnings per diluted share were $10.45, down 7% from 2022.

What was Union Pacific's full-year net income?

Union Pacific's full-year net income was $6.4 billion, down 9% from 2022.

What was Union Pacific's capital program in 2023?

Union Pacific's capital program in 2023 totaled $3.7 billion.

How many shares did Union Pacific repurchase in 2023?

Union Pacific repurchased 3.5 million shares at an aggregate cost of $712 million in 2023.

What is Union Pacific's outlook for 2024?

Union Pacific's 2024 outlook is affected by muted volume, lower coal demand, and soft economic conditions.

When will Union Pacific webcast its fourth-quarter 2023 earnings release presentation?

Union Pacific will webcast its fourth-quarter 2023 earnings release presentation live at www.up.com/investor and via teleconference on Thursday, January 25, 2024, at 8:45 a.m. Eastern Time.