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Union Pacific(UNP) - 2024 Q4 - Annual Report
UNPUnion Pacific(UNP)2025-02-07 17:12
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Financial Performance - In 2024, the company generated total freight revenues of 22.8billion,withBulkshipmentsaccountingfor3222.8 billion, with Bulk shipments accounting for 32%, Industrial shipments for 37%, and Premium shipments for 31% of total revenues[37][39][40][42]. - Total operating revenues for 2024 were 24,250 million, a slight increase from 24,119millionin2023[257].−Freightrevenuesaccountedfor24,119 million in 2023[257]. - Freight revenues accounted for 22,811 million in 2024, compared to 22,571millionin2023,reflectingagrowthof1.0622,571 million in 2023, reflecting a growth of 1.06%[257]. - Net income for 2024 was 6,747 million, up from 6,379millionin2023,representinganincreaseof5.786,379 million in 2023, representing an increase of 5.78%[257]. - Operating income increased to 9,713 million in 2024 from 9,082millionin2023,markingagrowthof6.959,082 million in 2023, marking a growth of 6.95%[257]. - Total operating expenses decreased to 14,537 million in 2024 from 15,037millionin2023,areductionof3.3215,037 million in 2023, a reduction of 3.32%[257]. - Earnings per share (diluted) rose to 11.09 in 2024, compared to 10.45in2023,anincreaseof6.1410.45 in 2023, an increase of 6.14%[257]. - The company reported a comprehensive income of 6,638 million for 2024, compared to 6,347millionin2023,anincreaseof4.586,347 million in 2023, an increase of 4.58%[258]. - Cash provided by operating activities increased to 9,346 million in 2024, compared to 8,379millionin2023,markingariseof11.58,379 million in 2023, marking a rise of 11.5%[261]. - Total assets as of December 31, 2024, were 67,715 million, a slight increase from 67,132millionin2023[260].−Totalliabilitiesdecreasedto67,132 million in 2023[260]. - Total liabilities decreased to 50,825 million in 2024 from 52,344millionin2023,representingareductionof2.952,344 million in 2023, representing a reduction of 2.9%[260]. - Retained earnings rose to 65,628 million in 2024, up from 62,093millionin2023,indicatingagrowthof8.162,093 million in 2023, indicating a growth of 8.1%[263]. - The company declared cash dividends of 3,212 million in 2024, compared to 3,173millionin2023,reflectinganincreaseof1.23,173 million in 2023, reflecting an increase of 1.2%[263]. - Other income for 2024 totals 350 million, down from 491millionin2023,primarilyduetoaone−timetransactionin2023[351].−Totalincometaxexpensefor2024is491 million in 2023, primarily due to a one-time transaction in 2023[351]. - Total income tax expense for 2024 is 2,047 million, an increase from 1,854millionin2023[353].−Theeffectivetaxratefor2024is23.31,854 million in 2023[353]. - The effective tax rate for 2024 is 23.3%, compared to 22.5% in 2023[354]. Workforce and Diversity - The workforce as of December 31, 2024, consisted of 32,439 employees, with a representation of 34.3% people of color and 5.2% females[46][52]. - The company aims to double female representation to 11% and reach 40% people of color in its workforce by 2030[52]. Environmental Commitment - The company is committed to reducing greenhouse gas emissions, with rail transport reducing emissions by up to 75% compared to trucking[67]. - The company performs environmental assessments on properties with identified environmental issues and expenses the cost of assessments as incurred[300]. - The beginning balance of environmental liability for 2024 was 245 million, compared to 253millionin2023and253 million in 2023 and 243 million in 2022[402]. - Accruals for environmental liability increased to 129millionin2024from129 million in 2024 from 99 million in 2023 and 84millionin2022[402].−Paymentsmadetowardsenvironmentalliabilitywere84 million in 2022[402]. - Payments made towards environmental liability were 106 million in 2024, slightly down from 107millionin2023andupfrom107 million in 2023 and up from 74 million in 2022[402]. - The ending balance of environmental liability at December 31, 2024, was 268million,anincreasefrom268 million, an increase from 245 million in 2023 and 253millionin2022[402].−Environmentalliabilityincludesfuturecostsforremediationandrestoration,excludinganticipatedrecoveriesfromthirdparties[402].−Estimatesofliabilitymayvaryovertimeduetochangesinenvironmentallawsandregulations[403].−Currentobligationsarenotexpectedtomateriallyaffectthecompany′sconsolidatedresultsofoperations,financialcondition,orliquidity[403].OperationalMetrics−Thecompanyoperates32,880routemiles,connectingkeyU.S.portsandfacilitatingfreightmovementacrossNorthAmerica[37].−ThecompanyisthelargestautomotivecarrierwestoftheMississippiRiver,operatingoraccessing39vehicledistributioncenters[43].−Thecompany’srailnetworksupportsthetransportationofcoalshipments,withthePowderRiverBasinbeingthelargestsourceofcoalbusiness[39].−Thecompanymaintainsacomprehensivesecurityplanandhasnotexperiencedanymaterialdisruptionduetocyberthreats[61].−Thecompanycontinuestofaceregulatoryscrutinyfromvariousfederalandstateagencies,impactingoperationalcostsandcompliance[71].StockandCompensation−Thecompanyrecognizesfreightrevenuesovertimeasfreightmovesfromorigintodestination,withexpensesrecognizedasincurred[283].−AsofDecember31,2024,1,203,484stockoptionsand1,218,529retentionshareswereoutstandingunderthe2021StockIncentivePlan[309].−Thecompanyhasseveralstock−basedcompensationplanswith31,063,392sharesauthorizedandavailableforgrantasofDecember31,2024[311].−Totalstock−basedcompensationbeforetaxfor2024was253 million in 2022[402]. - Environmental liability includes future costs for remediation and restoration, excluding anticipated recoveries from third parties[402]. - Estimates of liability may vary over time due to changes in environmental laws and regulations[403]. - Current obligations are not expected to materially affect the company's consolidated results of operations, financial condition, or liquidity[403]. Operational Metrics - The company operates 32,880 route miles, connecting key U.S. ports and facilitating freight movement across North America[37]. - The company is the largest automotive carrier west of the Mississippi River, operating or accessing 39 vehicle distribution centers[43]. - The company’s rail network supports the transportation of coal shipments, with the Powder River Basin being the largest source of coal business[39]. - The company maintains a comprehensive security plan and has not experienced any material disruption due to cyber threats[61]. - The company continues to face regulatory scrutiny from various federal and state agencies, impacting operational costs and compliance[71]. Stock and Compensation - The company recognizes freight revenues over time as freight moves from origin to destination, with expenses recognized as incurred[283]. - As of December 31, 2024, 1,203,484 stock options and 1,218,529 retention shares were outstanding under the 2021 Stock Incentive Plan[309]. - The company has several stock-based compensation plans with 31,063,392 shares authorized and available for grant as of December 31, 2024[311]. - Total stock-based compensation before tax for 2024 was 118 million, an increase of 10.3% from 107millionin2023[312].−Theweighted−averagegrant−datefairvalueofoptionsgrantedin2024was107 million in 2023[312]. - The weighted-average grant-date fair value of options granted in 2024 was 61.75, up from 48.31in2023,representinga27.848.31 in 2023, representing a 27.8% increase[313]. - The intrinsic value of stock options exercised in 2024 was 35 million, an increase of 52.2% from 23millionin2023[315].−Thetotalunrecognizedcompensationexpenserelatedtononvestedretentionawardsattheendof2024was23 million in 2023[315]. - The total unrecognized compensation expense related to nonvested retention awards at the end of 2024 was 70 million, expected to be recognized over 1.1 years[316]. Debt and Liabilities - Total debt decreased to 31.192billionin2024from31.192 billion in 2024 from 32.579 billion in 2023, a reduction of approximately 4.25%[385]. - The fair value of total debt was estimated at 25.3billionasofDecember31,2024,whichisapproximately25.3 billion as of December 31, 2024, which is approximately 5.9 billion less than the carrying value[383]. - The company had 20millioninshort−terminvestmentsasofDecember31,2024,upfrom20 million in short-term investments as of December 31, 2024, up from 16 million in 2023, marking a 25% increase[382]. - The total lease liabilities decreased to 1.380billionin2024from1.380 billion in 2024 from 1.758 billion in 2023, a decline of approximately 21.5%[394]. - The company recorded a personal injury liability of 379millionattheendof2024,downfrom379 million at the end of 2024, down from 383 million in 2023, a decrease of 1.04%[401]. - The total principal of debt maturities as of December 31, 2024, is 32.885billion,withsignificantmaturitiesoccurringin2025and2026[386].−Thecompanyhad32.885 billion, with significant maturities occurring in 2025 and 2026[386]. - The company had 2.0 billion of credit available under its revolving credit facility as of December 31, 2024[386]. Pension and Benefits - The projected benefit obligation (PBO) at the end of 2024 was 3.513billion,downfrom3.513 billion, down from 3.880 billion at the end of 2023, a decrease of 9.5%[324]. - The fair value of plan assets at the end of 2024 was 4.068billion,downfrom4.068 billion, down from 4.400 billion at the end of 2023, a decrease of 7.5%[324]. - The net periodic pension cost for 2024 was (3)million,comparedto(3) million, compared to 0 million in 2023, indicating a shift to a net benefit[330]. - The accumulated benefit obligation (ABO) for all defined benefit pension plans was 3.3billionattheendof2024,downfrom3.3 billion at the end of 2024, down from 3.6 billion in 2023[327]. - The discount rate for benefit obligations increased to 5.61% in 2024 from 5.00% in 2023[328]. - Expected benefit payments for 2025 are projected at 231million,withatotalof231 million, with a total of 1,177 million for the years 2030-2034[333]. - The pension plan's target asset allocation for 2025 includes 20% to 30% in equity securities and 70% to 80% in debt securities, aiming for a long-term return of 5.25%[334]. - The average credit rating of the debt portfolio remains at AA- with a weighted-average maturity of 22 years[335].