. . | --- | --- | |----------------------------------------|-------| | | | | Mountain Uranium Project, Wyoming, USA | | September 23, 2024 7:30 AM EDT | Source: Myriad Uranium Corp. Myriad Uranium holds a 75% earnable interest in the Copper Mountain Uranium Project which saw C$117m (2024$) in exploration and development expenditures by Union Pacific during the 1970s. Union Pacific drilled approximately 2,000 boreholes, discovered 7 historical uranium deposits, and developed a 6-pit mine plan at Copper Mount ...

Union Pacific Corporation (UNP) issued a regulatory filing ahead of its investor day event on Sept. 19. In the filing, management stated that the company expects its revenues (excluding those from fuel surcharge) to grow faster than volumes (excluding coal) in the next three years, outpacing the markets served by the railroad operator. UNP expects to maintain an industry-leading operating ratio (operating expenses as a % of revenues) in the next three years with the help of high revenues. We should note tha ...

Core Insights - Myriad Uranium Corp. is advancing its exploration efforts at the Copper Mountain Uranium Project, focusing on the Canning Deposit, which has significant historical uranium resource estimates [8][24] - The company has completed a high-resolution ground magnetometer survey that revealed previously unknown magnetic lows potentially related to uranium mineralization, and plans to commence drilling soon [7][9][10] Group 1: Project Overview - Myriad holds a 75% earnable interest in the Copper Mountain Uranium Project, which underwent approximately US$78 million in exploration and development expenditures by Union Pacific during the 1970s [3][24] - Union Pacific drilled over 2,000 boreholes and discovered 7 uranium deposits at Copper Mountain, with estimated resources between 15.7 and 30.1 million pounds of U3O8 [4][24] - The Canning Deposit is the largest historical estimate at Copper Mountain, containing between 8.79 and 19 million pounds of U3O8, and Myriad intends to focus its initial exploration efforts there [5][24] Group 2: Exploration Activities - The recent ground magnetometer survey covered approximately 571 acres and is part of Myriad's maiden 2024 exploration program, with drilling anticipated to start in the coming weeks [8][12] - The survey results are being integrated with historical drilling data to optimize the upcoming drilling strategy, targeting high-grade zones and deeper structures [7][10][11] - Myriad's exploration program aims to convert historical uranium resources into current categories under National Instrument 43-101, leveraging modern analysis techniques [10][11] Group 3: Historical Estimates and Data Interpretation - Historical estimates from Union Pacific are considered relevant but not current under NI 43-101, and Myriad is cautious about relying on these estimates as indicators of current resources [6][18] - The magnetometer survey has improved the understanding of the geological structures believed to control mineralization, indicating potential for higher grades at greater depths than previously explored [15][17] - The company plans to verify historical estimates through digitization of available data, re-logging, and re-drilling to establish current mineral resources [20][22]

Company Overview - Union Pacific (UNP) is based in Omaha and operates in the Transportation sector, with a year-to-date share price change of 4.26% [3] Dividend Information - Union Pacific currently pays a dividend of $1.34 per share, resulting in a dividend yield of 2.09%, which is higher than the Transportation - Rail industry's yield of 1.42% and the S&P 500's yield of 1.54% [3] - The company's annualized dividend of $5.36 has increased by 3.1% from the previous year, and over the last five years, it has raised its dividend three times, averaging an annual increase of 8.85% [4] - The current payout ratio for Union Pacific is 49%, indicating that it pays out 49% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year 2024, the Zacks Consensus Estimate for Union Pacific's earnings is $11.11 per share, reflecting a year-over-year growth rate of 6.32% [5] Investment Considerations - Union Pacific is considered a compelling investment opportunity due to its strong dividend performance and current Zacks Rank of 3 (Hold) [7]

Core Insights - Union Pacific's (UNP) cost-cutting measures are positively impacting its financial performance, although the freight market downturn is a significant challenge [1][6] - The company is committed to shareholder returns through dividends and share repurchases, with a recent announcement of a 3% quarterly dividend increase [2][3] Financial Performance - Core pricing gains, improved operational efficiency, and the sale of intermodal equipment are enhancing Union Pacific's financial results [2] - In Q2 2024, UNP reported a 4% year-over-year decrease in operating expenses to $3.6 billion, driven by productivity improvements and a 6% reduction in compensation and benefits expenses due to a 5% decrease in headcount [4] - The company plans to repurchase approximately $1.5 billion in shares by the end of 2024, having already bought back over $100 million in shares in the latter part of Q2 2024 [3][2] Liquidity Position - Union Pacific's liquidity is strong, with a current ratio of 1.05 at the end of Q2 2024, up from 0.81 at the end of 2023, and cash and cash equivalents of $1.15 billion against a current debt load of $727 million [5] Market Performance - Shares of Union Pacific have increased by 13.6% over the past year, outperforming the industry growth of 9.9% during the same period [6]

Core Viewpoint - Union Pacific is showing signs of recovery and potential growth under the leadership of new CEO Jim Vena, with improved operational metrics and a focus on profitability despite a challenging manufacturing environment [2][6][22]. Financial Performance - In Q1 2024, Union Pacific reported a 1% increase in volumes and a 3% growth in operating income, with an adjusted debt/EBITDA ratio below 3x, indicating improved financial health [6][15]. - Q2 2024 results showed operating revenues of $6 billion, slightly missing estimates by $60 million, while quarterly EPS was $2.74, beating consensus by $0.03 [7][8]. - The company achieved a 60% operating ratio, a significant accomplishment in a high-cost environment, with operating income increasing by 9% to $2.4 billion [7][8][14]. Revenue Breakdown - Revenue from bulk commodities decreased by 2% year-over-year, primarily due to a 21% decline in coal, while industrial revenue increased by 2%, driven by chemicals and plastics [10][11][12]. - The premium segment, including automotive and intermodal, saw increases of 5% and 3% respectively, although automotive volumes are expected to decelerate [13][11]. Operational Efficiency - Fuel efficiency improved by 1% to 1.08 fuel per 1,000 GTMs, reflecting enhanced operational performance [9]. - Operating expenses decreased by 4% year-over-year, indicating effective cost management despite rising input costs [14]. Market Outlook - The industrial sector is showing signs of recovery, with strategists optimistic about renewed demand for machinery and industrial products as manufacturing activity stabilizes [7][12]. - Union Pacific's outlook remains mixed, with uncertainty in second-half volumes, but the company is committed to a $1.5 billion share repurchase program by 2024 [15][22]. Valuation and Growth Potential - Union Pacific is trading at a forward PE of 19.7 for 2025, suggesting it is undervalued compared to the S&P 500's PE of 27.5, with expected EPS growth of 10-12% per year [20][21]. - The combination of a 2.2% dividend yield, share buybacks, and operational improvements could lead to annual returns exceeding 15%, with stock prices projected to rise above $310 by 2026 [22].

Core Viewpoint - The U.S. economy is projected to reach a nominal GDP of $28.8 trillion in 2024, accounting for 26.3% of global GDP, significantly ahead of China by $10 trillion, indicating strong economic dominance and diversification [1][2] Company Performance - Union Pacific (UNP) reported a 0.7% year-over-year increase in operating revenue, reaching over $6 billion, although it fell short of analyst expectations by $60 million [3][4] - Freight revenue grew by 1.2% to $5.6 billion, driven by core pricing gains and modest volume growth [4][5] - Diluted EPS increased by 6.6% year-over-year to $2.74, exceeding analyst consensus by $0.03, with an improved operating ratio of 60%, reflecting productivity gains and a reduced headcount [6][11] Financial Health - The adjusted debt to EBITDA ratio improved from 2.9x in Q1 2024 to 2.8x in Q2 2024, with an interest coverage ratio of 7.7, indicating strong financial stability [11] - The company is expected to continue share repurchases of approximately $1.5 billion in 2024, maintaining a long-term capital allocation strategy of $3.4 billion [7][10] Dividend Growth - UNP increased its quarterly dividend by 3.1% to $1.34, marking the first hike since Q2 2022, with a five-year compound annual growth rate of 9.1% [13][14] - The diluted EPS payout ratio is projected to be in the high-40% range for 2024, below the preferred 60% payout ratio by rating agencies [15] Market Outlook - The outlook for 2024 is balanced, with coal demand under pressure but stabilization in grain markets and favorable conditions in petroleum and petrochemical sectors [8][9] - The consensus predicts a 6.6% growth in diluted EPS to $11.14 in 2024, with further growth projected in subsequent years [10] Valuation - UNP's current P/E ratio of 21 aligns with its 10-year average, and the fair value estimate is $252 per share, indicating a 7% discount to fair value at the current price of $234 [12]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☐ Yes ☑ No As of July 19, 2024, there were 609,197,628 shares of the Registrant's Common Stock outstanding. TABLE OF CONTENTS UNION PACIFIC CORPORATION AND SUBSIDIARY COMPANIES PART I. FINANCIAL INFORMATION Union Pacific Corporation and Subsidiary Companies [a] Net of deferred taxes of $0 million and ($3) million during the three months ended June 30, 2024 and 2023, respectively. Table of Contents UNION PACIFIC CORPORATION (Exact name o ...

Financial Data and Key Metrics Changes - The company reported a net income of $1.7 billion or $2.74 per share for Q2 2024, compared to $1.6 billion or $2.57 per share in Q2 2023, reflecting a 7% year-over-year increase in both net income and earnings per share [57][62] - Operating revenue for the quarter was $6 billion, up 1% year-over-year, supported by solid pricing gains despite a negative business mix and lower fuel surcharge revenue [44][57] - The operating ratio improved by 300 basis points year-over-year to 60.0%, indicating enhanced operational efficiency [43][62] Business Line Data and Key Metrics Changes - Bulk segment revenue decreased by 2% year-over-year due to a 5% decrease in volume, although excluding coal, Bulk revenue increased by 4% with a 6% volume growth [50][94] - Premium revenue rose by 4% on a 6% increase in volume, despite a 2% decrease in average revenue per car due to negative mix and lower fuel surcharges [51][96] - Industrial revenue increased by 2% with a 3% decrease in volume, driven by strong business development in petroleum and petrochemicals [66] Market Data and Key Metrics Changes - Coal volume declined by 23% due to ongoing market challenges, while fertilizer volumes increased due to strong export demand [94] - The company noted that international intermodal volumes remained strong, contributing positively to overall performance [59][96] - The outlook for the grain market appears stable, with expectations for positive demand driven by renewable diesel production [67] Company Strategy and Development Direction - The company is focused on driving operational excellence and efficiency, with a commitment to improving service levels and customer satisfaction [75][92] - There is an emphasis on business development efforts to capture new opportunities, particularly in the petroleum and petrochemical markets [66][68] - The company plans to continue share repurchases and has announced a 3% increase in dividends, marking the 18th consecutive year of annual dividend increases [64][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to improve operating ratios and margins despite a challenging economic environment [34][110] - There is uncertainty regarding the recovery of certain markets, particularly coal, but management remains optimistic about growth in other segments [49][67] - The company is committed to leveraging its network and operational capabilities to navigate market challenges and capitalize on growth opportunities [80][155] Other Important Information - The company experienced operational challenges due to severe weather but managed to recover effectively, demonstrating resilience [69][98] - The workforce was adjusted, with a 1% increase in train service employees to support operations, while overall headcount decreased by 9% [46][60] - The company is implementing new technologies and processes to enhance productivity and operational efficiency [73][92] Q&A Session Summary Question: How does the company view operational improvement and customer growth over the past year? - Management highlighted significant progress in operational improvements and customer engagement, emphasizing a focus on service quality and business development [108][110] Question: What are the expectations for pricing and mix in the second half of the year? - Management noted that while mix challenges persist, solid margin improvements are expected, with a focus on driving pricing in line with inflation [113][125] Question: How does the company plan to address the challenges in the coal market? - Management acknowledged the difficulties in the coal market but emphasized a proactive approach to leverage strengths in other segments and optimize operations [80][155] Question: What is the outlook for intermodal pricing and domestic growth? - Management indicated that international intermodal growth is strong, with some spillover into domestic markets, and remains optimistic about future performance [128][149]

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Operating Ratio: 60% versus the five-analyst average estimate of 60.6%. Average revenue per car - Bulk: $3,692 compared to the $3,718.09 average estimate based on four analysts. Revenue Carloads - Bulk: 466 thousand versus 465.54 t ...