- Union Pacific Corp UNP reported second-quarter operating revenue growth of 14% year-over-year to $6.30 billion, above the consensus of $6.12 billion.
- The revenue increase was driven by higher fuel surcharge revenue, volume growth, core pricing gains, and a positive business mix offset slightly by volume declines.
- Freight revenues increased by 14% Y/Y to $5.84 billion, with Bulk +10%, Industrial +12%, and Premium +19%.
- As measured by total revenue carloads, business volumes were down 1%.
- EPS of $2.93 topped the consensus of $2.83.
- Operating expenses increased by 25% Y/Y to $3.77 billion, and the operating ratio was 60%, deteriorating by 510 bps.
- Operating income increased by 1% Y/Y to $2.49 billion, and margin contracted by 513 bps to 39.8%.
- The company reported Q2 freight car velocity of 187 daily miles per car, a 12% decline; locomotive productivity of 123 gross ton-miles (GTMs) per horsepower day, a 12% decline.
- Lance Fritz, Union Pacific chairman & CEO, said, "As anticipated, the Second Quarter was a tough one as we limited carloadings and increased expenses to recover network fluidity."
- "We also experienced record high fuel prices and increasing inflation, adding pressure to our total costs," he added.
- Union Pacific generated cash from operating activities year-to-date of $4.17 billion versus $4.22 billion a year ago. Free cash flow was $1.07 billion.
- The company repurchased 3.1 million shares in Q2 at an aggregate cost of $722 million.
- FY22 Guidance: UNP noted that 1H22 results challenge previous full-year volume and operating ratio targets.
- UNP expects second-half volumes to produce full-year carload growth of 4% to 5%.
- It sees a full-year operating ratio of around 58% (prior view around ~55%). It sees 2H operating ratio improvement vs. 2021 and 2H incremental margins around 50%.
- Price Action: UNP shares traded lower by 1.88% at $210.41 on the last check Thursday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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