Union Pacific (UNP) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 rose 7% year-over-year to $1.7 billion, with EPS of $2.74, reflecting improved operational efficiency, core pricing gains, and resilience amid coal and weather challenges.

• Operating income increased 9% to $2.4 billion, with operating ratio improving to 60.0% from 63.0%, aided by productivity gains, lower fuel prices, and a $46 million gain from intermodal equipment sale.

• Operating revenue grew 1% to $6.0 billion, with freight revenue up 1% to $5.6 billion, driven by strong pricing and higher international intermodal and automotive volumes.

• Demonstrated sequential and year-over-year improvements in safety, service, and operational excellence, with continued focus on business development and operational efficiency.

• Productivity and safety metrics improved despite weather-related network challenges.

Financial highlights

• Q2 2024 net income was $1.7 billion ($2.74 per share), up from $1.6 billion ($2.57 per share) in Q2 2023; operating income rose 9% to $2.4 billion.

• Operating revenue increased 1% year-over-year to $6.0 billion; freight revenue excluding fuel surcharges up 2%.

• Operating expenses decreased 4% year-over-year, with compensation and benefits down 6% and fuel expense down 6%.

• Free cash flow for the first half of 2024 was $853 million, up 43% from $596 million in 2023; $1.7 billion returned to shareholders year-to-date.

• Effective tax rate increased to 23.4% from 19.9% in Q2 2023.

Outlook and guidance

• Freight revenue expected to outpace volume growth in 2024, with continued pricing discipline and capital plan set at $3.4 billion.

• Second half 2024 volume outlook remains uncertain due to weak economic indicators and coal demand.

• Profitability outlook remains positive, supported by strong service, network efficiency, and solid pricing.

• Share repurchases projected at approximately $1.5 billion for 2024; dividend increased 3%, marking 18 consecutive years of growth.

• Inflationary pressures expected to persist near 5% for the year, with hopes for moderation in 2025.