Union Pacific Railroad reported its third-quarter 2022 net income rose 13% to $1.9 billion, or $3.05 per diluted share, from $1.7 billion, or $2.57 per diluted share, in the same quarter a year ago.
The results included a $114 million charge for a change to prior period accounting estimates related to new, tentative and ratified labor agreements. Excluding the effects of that charge, adjusted Q3 net income was $2.0 billion, or $3.19 per diluted share.
UP's results produced quarterly records for operating revenue, operating income, net income and earnings per share, UP officials said in a press release.
The company’s operating revenue spiked 18% to $6.6 billion, driven by higher fuel surcharge revenue, volume growth and core pricing gains. Business volumes, measured by total revenue carloads, climbed 3%. The Class I posted an operating ratio (OR) of 59.9%, up from 56.3% in Q3 2021.
The Class I posted adjusted operating income of $2.7 billion, up 13%.
In addition, UP reported that in Q3 2022 compared with Q3 2021:
• freight-car velocity was 191 daily miles per car, a 2% decline;
• locomotive productivity was 124 gross ton-miles per horsepower day, a 2% decline; and
• average maximum train length increased 1% to 9,483 feet.
"We made positive strides in the third quarter to increase network fluidity and better meet customer demand," said UP Chairman, President and CEO Lance Fritz.
Inflation and operational inefficiencies remain challenges, he added.
"We reported strong revenue and operating income growth in the quarter through increased fuel surcharge revenue, volume gains and solid core pricing," Fritz said. "As we close out 2022, we will maintain strong price discipline while improving efficiency and service to capitalize on the available demand."
UP updated its full-year guidance to include those challenges. For the year, UP is now expecting full-year carload growth to be about 3%; a full-year operating ratio of 60%; and $3.4 billion in capital expenditures.