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 ...

Union Pacific shares have lost about 3.4% since the beginning of the year versus the S&P 500's gain of 13.8%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. What's Next for Union Pacific? Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harne ...

Financial Performance - Second Quarter 2024 Earnings per Share (EPS) is $2.74[26] - Second Quarter 2024 Operating Revenue is $60 billion[26] - Second Quarter 2024 Operating Income is $24 billion[26] - Second Quarter 2024 Operating Ratio is 600%[26] - The company generated $40 billion in cash from operations year-to-date, a 5% increase[27] - The company returned $17 billion to shareholders year-to-date[27] Operational Efficiency - Freight Car Velocity is flat[26] - Locomotive Productivity is up 6%[26] - Share repurchases of approximately $15 billion are planned for 2024[22] Revenue Analysis - Total freight revenue increased by 1% to $5638 million compared to the second quarter of 2023[2] - Bulk revenue increased by 2% to $1721 million compared to the second quarter of 2023[2] - Industrial revenue increased by 2% to $2123 million compared to the second quarter of 2023[2] - Premium revenue increased by 4% to $1794 million compared to the second quarter of 2023[2]

[Union Pacific Q2 2024 Earnings Release](index=1&type=section&id=Union%20Pacific%20Reports%20Second%20Quarter%202024%20Results) [Q2 2024 Financial and Operational Highlights](index=1&type=section&id=Second%20Quarter%20Summary%3A%202024%20vs.%202023) Union Pacific reported strong Q2 2024 results, with net income and EPS up **7%**, operating income up **9%**, and a **300 basis point** operating ratio improvement Q2 2024 vs Q2 2023 Key Financial Metrics | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $1.7 billion | $1.6 billion | +7% | | Diluted EPS | $2.74 | $2.57 | +7% | | Operating Income | $2.4 billion | $2.2 billion | +9% | | Operating Revenue | $6.0 billion | $5.96 billion | +1% | | Operating Ratio | 60.0% | 63.0% | -300 bps | - The operating ratio improved by **300 basis points** to **60.0%**, positively impacted by a **70 basis point** gain from an intermodal equipment sale, and negatively impacted by lower fuel prices (**10 bps**) and an environmental remediation order (**30 bps**)[6](index=6&type=chunk) Q2 2024 vs Q2 2023 Key Operational Metrics | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Locomotive Productivity (GTMs/HP day) | 134 | 126 | +6% | | Average Maximum Train Length (feet) | 9,544 | 9,316 | +2% | | Workforce Productivity (car miles/employee) | 1,031 | 978 | +5% | | Freight Car Velocity (daily miles/car) | 201 | 202 | Flat | [2024 Outlook](index=2&type=section&id=2024%20Outlook) The 2024 outlook is cautious due to economic uncertainty, but positive profitability momentum is expected, with a **$3.4 billion** capital plan and **$1.5 billion** share repurchases affirmed - The volume outlook for the second half of the year is uncertain due to weak economic indicators and coal demand[10](index=10&type=chunk) - Profitability is expected to maintain positive momentum, supported by strong service, network efficiency, and pricing power that outpaces inflation[10](index=10&type=chunk) - The company affirmed its capital plan of **$3.4 billion** and plans to repurchase approximately **$1.5 billion** in shares during 2024[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) Union Pacific's financial statements show a **1%** rise in Q2 operating revenues, **9%** operating income growth, stable assets, decreased liabilities, and **$4.0 billion** in YTD operating cash flow [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2024 operating revenues increased **1%** to **$6.01 billion**, expenses decreased **4%**, resulting in a **9%** rise in operating income and a **7%** increase in net income Q2 2024 Income Statement Summary (vs Q2 2023) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | 6,007 | 5,963 | +1% | | Total Operating Expenses | 3,607 | 3,759 | -4% | | Operating Income | 2,400 | 2,204 | +9% | | Net Income | 1,673 | 1,569 | +7% | | Diluted EPS | $2.74 | $2.57 | +7% | [Freight Revenues Statistics](index=5&type=section&id=Freight%20Revenues%20Statistics) Total Q2 2024 freight revenues increased **1%** to **$5.64 billion**, driven by Premium and Industrial growth, while Bulk declined **2%** due to a **21%** drop in Coal & Renewables Q2 2024 Freight Revenue by Group (vs Q2 2023) | Freight Group | Revenue ($M) | YoY Change | Key Driver(s) | | :--- | :--- | :--- | :--- | | Bulk | 1,721 | -2% | Coal & Renewables (-21%) | | Industrial | 2,123 | +2% | Industrial Chemicals & Plastics (+9%) | | Premium | 1,794 | +4% | Automotive (+5%), Intermodal (+3%) | | **Total** | **5,638** | **+1%** | | - Revenue carloads for Coal & renewables decreased by **22%** YoY, while Fertilizer carloads increased by **29%** and Intermodal carloads grew by **7%**[16](index=16&type=chunk) [Condensed Consolidated Statements of Financial Position](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2024, total assets reached **$67.8 billion**, liabilities decreased to **$51.3 billion**, and shareholders' equity rose to **$16.5 billion** from year-end 2023 Balance Sheet Summary | Metric ($M) | Jun. 30, 2024 | Dec. 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 67,817 | 67,132 | +$685M | | Total Liabilities | 51,328 | 52,344 | -$1,016M | | Total Shareholders' Equity | 16,489 | 14,788 | +$1,701M | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) YTD June 30, 2024, operating cash flow was **$4.03 billion**, with **$1.59 billion** used in investing and **$2.37 billion** in financing, resulting in **$853 million** free cash flow Year-to-Date 2024 Cash Flow Summary (vs YTD 2023) | Metric ($M) | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Cash from Operating Activities | 4,033 | 3,858 | | Cash used in Investing Activities | (1,592) | (1,674) | | Cash used in Financing Activities | (2,368) | (2,328) | | Free Cash Flow | 853 | 596 | [Operating and Performance Statistics](index=8&type=section&id=Operating%20and%20Performance%20Statistics) Q2 2024 saw improved operational efficiency, with locomotive productivity up **6%**, train length up **2%**, and workforce productivity up **5%**, despite minor declines in train speed and dwell time Q2 2024 Key Performance Indicators (vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Freight car velocity (daily miles per car) | 201 | 202 | -% | | Average train speed (mph) | 23.3 | 24.1 | -3% | | Average terminal dwell time (hours) | 22.7 | 23.3 | -3% | | Locomotive productivity (GTMs/HP day) | 134 | 126 | +6% | | Train length (feet) | 9,544 | 9,316 | +2% | | Workforce productivity (car miles/employee) | 1,031 | 978 | +5% | - The average number of employees decreased by **5%** YoY to **30,556** in Q2 2024[22](index=22&type=chunk) [Non-GAAP Measures Reconciliation](index=11&type=section&id=Non-GAAP%20Measures%20Reconciliation%20to%20GAAP) This section reconciles GAAP to non-GAAP measures, showing an improved Adjusted Debt to Adjusted EBITDA ratio of **2.8** for the trailing twelve months ending June 30, 2024 Leverage Ratios (Trailing Twelve Months) | Ratio | Jun. 30, 2024 | Dec. 31, 2023 | | :--- | :--- | :--- | | Debt / Net Income (GAAP) | 4.9 | 5.1 | | Adjusted Debt / Adjusted EBITDA (Non-GAAP) | 2.8 | 3.0 | - The company believes the Adjusted Debt / Adjusted EBITDA ratio is important for evaluating its ability to sustain debt levels with cash generated from operations and is a measure used by credit rating agencies[28](index=28&type=chunk)

GERMANY - 2024/04/03: In this photo illustration, the Union Pacific Railroad logo seen displayed on ... [+] a tablet. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images) Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could UNP face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a strong jump? Going by our Union Pacific valuation of $254 per share, there seems ...

Core Viewpoint - Union Pacific (UNP) is facing challenges due to a downturn in the freight market, but its proactive expansion efforts, commitment to shareholder returns, and cost-cutting measures are positive factors that may enhance its performance in the long run [1][3][9]. Group 1: Expansion and Growth Initiatives - Union Pacific announced five new Focus Sites at the beginning of Q3 2024, aimed at integrating rail services into business supply chains, which can drive growth and optimize operations [1]. - The company is also committed to reducing greenhouse gas emissions by 50.4% by 2030 and increasing low-carbon fuel use to 20%, aligning with global sustainability trends [11]. Group 2: Financial Performance and Shareholder Returns - In July, Union Pacific raised its quarterly dividend by 3% to $1.34 per share, reflecting its long-standing tradition of rewarding shareholders [2]. - The company reported freight revenues of $5.62 billion, a decrease of 1% year over year, with freight revenues accounting for 93.2% of its total revenue [3]. Group 3: Cost Management and Efficiency - Union Pacific reduced operating expenses by 3% year over year in Q1 2024, aided by measures such as deploying longer trains and increasing freight car velocity [10]. - Fuel expenses decreased by 14%, and expenses on purchased services and materials fell by 6%, contributing to improved efficiency and profitability [10]. Group 4: Market Position and Stock Performance - Union Pacific's shares have appreciated by 11.7% over the past year, outperforming the industry average of 5.4% [12]. - The company currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the market [5].