Union Pacific(UNP) - 2024 Q2 - Quarterly Results

Union Pacific Q2 2024 Earnings Release Q2 2024 Financial and Operational Highlights 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] 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 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] - Profitability is expected to maintain positive momentum, supported by strong service, network efficiency, and pricing power that outpaces inflation[10] - The company affirmed its capital plan of $3.4 billion and plans to repurchase approximately $1.5 billion in shares during 2024[10] Financial Statements 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 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 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] Condensed Consolidated Statements of Financial Position 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 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 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] Non-GAAP Measures Reconciliation 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]