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Union Pacific Reports Fourth Quarter and Full Year 2017 Results
Omaha, Neb., January 25, 2018
Union Pacific Corporation (NYSE: UNP) today reported 2017 fourth quarter net income of $7.3 billion, or $9.25 per diluted share compared to $1.39 per diluted share in the fourth quarter 2016. Fourth quarter 2017 results include previously-disclosed adjustments reflecting the impact of corporate tax reform. Excluding those items, 2017 fourth quarter adjusted net income was $1.2 billion, or $1.53 per diluted share, 5 and 10 percent increases, respectively, when compared to 2016.
Financial Performance*
| Millions, Except Per Share Amounts and Percentages For the Three Months Ended December 31, 2017 | Operating Income | Income Taxes | Net Income | Diluted EPS | Operating Ratio |
|---|---|---|---|---|---|
| Reported results (GAAP) | $2,251 | ($5,186) | $7,278 | $9.25 | 58.7% |
| Factors Affecting Comparability: (Adjustments for Tax Cuts and Jobs Act) | |||||
| Equity-method affiliates | (212) | (73) | (139) | (0.18) | 3.9 pts |
| Deferred taxes | --- | 5,935 | (5,935) | (7.54) | --- |
| Adjusted results (non-GAAP) | $2,039 | $676 | $1,204 | $1.53 | 62.6% |
| 2016 Reported Results (GAAP) | $1,965 | $687 | $1,144 | $1.39 | 62.0% |
"I am pleased with the results the men and women of Union Pacific achieved by focusing on our six-track value strategy. While we have room for improvement in many areas, that doesn’t include the dedication and hard work of our employees as they Build America," said Lance Fritz, Union Pacific chairman, president and chief executive officer.
Fourth Quarter Summary
Operating revenue of $5.5 billion was up 5 percent in the fourth quarter 2017 compared to the fourth quarter 2016. Fourth quarter business volumes, as measured by total revenue carloads, increased 1 percent compared to 2016. Volume increases in industrial products and chemicals more than offset declines in agricultural products, automotive and coal. Intermodal volume was flat compared to 2016. In addition:
- Quarterly freight revenue increased 5 percent compared to the fourth quarter 2016, as increased fuel surcharge revenue, core pricing gains, positive volume and positive mix of traffic all contributed to the increase.
- Union Pacific’s adjusted operating ratio of 62.6 percent increased 0.6 points compared to the fourth quarter 2016.
- The $2.03 per gallon average quarterly diesel fuel price in the fourth quarter 2017 was 23 percent higher than the fourth quarter 2016.
- Quarterly train speed, as reported to the Association of American Railroads, was 25.1 mph, 5 percent slower than the fourth quarter 2016.
- Union Pacific repurchased 9.2 million shares in the fourth quarter 2017 at an aggregate cost of $1.1 billion.
Summary of Fourth Quarter Freight Revenues
- Industrial Products up 28 percent
- Chemicals up 7 percent
- Intermodal up 4 percent
- Automotive down 1 percent
- Agricultural Products down 4 percent
- Coal down 5 percent
2017 Full Year Summary
For the full year 2017, Union Pacific reported net income of $10.7 billion or $13.36 per diluted share, compared to $4.2 billion, or $5.07 per diluted share in 2016. Excluding the previously-disclosed adjustments reflecting the impact of corporate tax reform, adjusted net income was $4.6 billion, or $5.79 per diluted share, 10 and 14 percent increases, respectively, when compared to 2016.
Financial Performance*
| Millions, Except Per Share Amounts and Percentages For the Years Ended December 31, 2017 | Operating Income | Income Taxes | Net Income | Diluted EPS | Operating Ratio |
|---|---|---|---|---|---|
| Reported results (GAAP) | $8,061 | ($3,080) | $10,712 | $13.36 | 62.0% |
| Factors Affecting Comparability: (Adjustments for Tax Cuts and Jobs Act) | |||||
| Equity-method affiliates | (212) | (73) | (139) | (0.17) | 1.0 pts |
| Deferred taxes | --- | 5,935 | (5,935) | (7.40) | --- |
| Adjusted results (non-GAAP) | $7,849 | $2,782 | $4,638 | $5.79 | 63.0% |
| 2016 Reported Results (GAAP) | $7,272 | $2,533 | $4,233 | $5.07 | 63.5% |
Operating revenue totaled $21.2 billion as compared to $19.9 billion in 2016. Adjusted operating income totaled $7.8 billion, an 8 percent increase compared to 2016. In addition:
- Freight revenue totaled $19.8 billion, a 7 percent increase when compared to 2016. Carloadings were up 2 percent versus 2016, with increases in industrial products and coal business groups.
- Average diesel fuel prices increased 22 percent to $1.81 per gallon in 2017 from $1.48 per gallon in 2016.
- Union Pacific’s adjusted operating ratio improved to 63.0 percent, 0.5 points lower than 2016.
- Train speed, as reported to the Association of American Railroads, was 25.4 mph, 5 percent lower compared to the full year 2016.
- Union Pacific’s reportable personal injury rate of 0.79 incidents per 200,000 employee hours increased 5 percent compared to the full-year record achieved in 2016.
- Union Pacific’s capital program in 2017 totaled $3.1 billion.
- Union Pacific repurchased 36.4 million shares in 2017 at an aggregate cost of $4.0 billion.
2018 Outlook
"We are optimistic the economy will favor a number of our market segments leading to another year of positive volume growth. Increased unit volume, combined with inflation plus core pricing and G55-0 productivity initiatives, should result in another year of revenue growth and improved margins," said Fritz. "We will continue to execute our value-track strategy to benefit our employees, partner with the communities we serve, provide our customers an excellent experience, and generate strong returns for our shareholders."
Fourth Quarter 2017 Earnings Conference Call
Union Pacific will host its fourth quarter 2017 earnings release presentation live over the Internet and via teleconference on Thursday, January 25, 2018, at 8:45 a.m. Eastern Time. The presentation will be webcast live over the internet on Union Pacific’s website at www.up.com/investor. Alternatively, the webcast can be accessed directly through the following link. Participants may join the conference call by dialing 877/407-8293 (or for international participants, 201/689-8349).
ABOUT UNION PACIFIC
Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. In the past 10 years, 2008-2017, Union Pacific invested approximately $34 billion in its network and operations to support America’s transportation infrastructure. The railroad’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.
Union Pacific Investor contact: Mike Staffenbeal at 402-544-4227 or mstaffen@up.com
The statements and information contained in the news releases provided by Union Pacific speak only as of the date issued. Such information by its nature may become outdated, and investors should not assume that the statements and information contained in Union Pacific's news releases remain current after the date issued. Union Pacific makes no commitment, and disclaims any duty, to update any of this information.
Media Contact
Raquel Espinoza
402-544-5034
respinoza@up.com
@RaquelEspinoza