Of course, I’m being sarcastic. We all know very well that there will be no benefits. This question basically asks how long are they going to keep the lie going. The truth is that they started letting people go a long time ago and a lot of what their plan has been already implemented. If it was such a brilliant idea, shouldn’t we see at least some positive effects of this by now?
14 replies (most recent on top)
While you are talking finances and stocks,
We have to remember the real assets UP
Has destroyed. They have sold 2 million dollar cranes capable of lifting a locomotive for 2 thousand dollars .
They have sc-apped million dollar fuel and oil systems , they have shut down wheel truing machines and drop pits that keep this railroad safe. Pennies on the Dollar is not the way to do business . All this is done while they create urban blight. With abandoned rail yards and abandoned
Shops . They are in the Real estate business also while they wait for offers
For contaminated yards and shops .
@1arr actually that’s exactly what companies are doing right now. To prop up there stock prices - and because the tax reform erased huge tax deferred liabilities - public companies have been issuing debt to buyback shares at an accelerated rate. Rather than give that money to investment or employees it went to shareholders. But companies know it’s not sustainable, if it was they would have increased dividend payments. Once a company pays a higher dividend they can’t reduce it without a huge crash in the stock price! But they can easily buyback shares in a “one time accelerated purchase”
UP did exactly this- they issued $10 billion in debt (so far) over the past year for one time accelerated purchase plans. They have both disclosed this is exactly their plan and they will have debt at 2.7 times EBITDA. This was done mainly because they had $6 billion less in tax liability. So their debt really flipped from tax debt to bonds, and some of the debt is 40-50 year term.
The cash flow from operations will more than cover this increased debt over time just as it would have the deferred tax liability. But they will not purchase shares at this level after this year. It remains to be seen if they cut back on capital investment, so far it has been constant.
@1kzi: It is doubtful that you know much about UP financials or about the stock market in general. There are errors in your response to 1flv that show this.
"They increased debt to buy back shares. They will stop buying shares to cover the debt"
Neither of these events follows from the other. They are in contradiction.
Now that you've been exposed as troll, you can move on to another thread.
I’m seeing the benefits, I’m making more money than I ever have.
@1flv cash flow from ops more than covers the debt service. They increased debt to buyback shares. They will stop buying back shares to cover the debt. Nothing to worry about here.
On the mechanical side, morale is at an all time low. UP is making money hand over fist but we're getting cut left and right. And somehow people are still getting bonuses. They try to work us like we're flipping burgers or something. Then they shop hop to see who to cut next. Newsflash, you need us craftmen to continue getting your bonuses. And guess what, the handfuls of people left are not going to do the work of a full shop. Secondly, if you are not getting new business and are cutting out the smaller customers how do you expect to survive? They are probably projecting a favorable recall of workers, but I only see a few returning. So BRAVO!! In hiring a retired competitor to run this company into the ground.
@1iam: Thats's true, stock is up (from a one-month low). Analysts project that it will be mostly sunshine for the next three years. At $167/share the price is slightly overvalued, but not far off from future cash flow projections. There's a lot to feel good about - for the moment.
A closer look at their balance sheet (UP is publicly traded, so it is easy to check) tells a different story. UP currently has 141% debt, and their debt exceeds their net worth by 40%. For comparison, the debt level for UP was 48% five years ago. UP's short term commitments (over the next year) exceed the current value of their holdings and available cash. That's one reason why they're laying people off to juice their stock. Even with the post 2017 TC&J buyback they couldn't get the share price high enough. In business this known as "poor management".
UP is driving down their operating ratio at all costs because they need to get the operating cash flow percentage up as high as possible to cover their debt. The good news is that UP bonds yields are high enough to where interest payments on debt cover earnings.
Tariffs applied to Mexico will disrupt UP's operating cash flow, and they will most likely be announced by tweet.
One tweet away! Give me a break - Trump doesn’t work for UP. And the amount of corporate debt is very minor. Looks at UPs cash flow- even with half the volume they have now they’d still generate cash. Stock is going nowhere but up!!! Union guys need to realize that UP Corp SERIOUSLY increased the amount of stock comp for all non-agreement. Anyone in non agreement is working as a stockholder to figure out how to cut more costs.
@wwr: Check the macro-trends for the P/E ratio and the reported value of the company at the end of Q1 FY2019. Everything points to UP stock being inflated (the number you see on the NYSE is almost double the reported value of the company in Q1).
That isn't necessarily a problem in the short term, but UP (which has a near monopoly on U.S./Mexico freight transport) is one tweet away from losing hundreds of millions of dollars in business to/from Mexico. Spook investors, and they'll bolt from the stock (probably to BNSF). UP can lose up to 50% of their stock market value. If you know someone else who is compensated in company stock, pass that along, and be sure to check Twitter often.
Then there are the underfunded liabilities (pensions. etc.) that layoffs will do nothing to reduce, not to mention a surprising amount corporate debt that will eventually need to be serviced, otherwise it can lead to the degradation of UP bonds.
Can't say better than this. You get what you get when you have your workforce give up their personal life and work these ridiculous hours. I see a lot of people doing their best to do the right thing but eventually enough is enough.
Stock has never been better. So glad they started giving management shares a few years ago! I’m going to be a millionaire thanks to this plan! I can’t wait to see what one man crews do to the results - about time we did this!
I’ll take “What is yes” for $5000 Alex
whenever you sell off all the assets and run it like a stolen car you're going to see profit in the short term. how profitable were the banks that made the bad loans and contributed to the last recession? pretty good until it fell apart. make no mistake it may be ten or fifteen years later but UP can't sustain what they are doing now. These people aren't geniuses that figured out a new way to railroad in the past few years. Yes, there is waste that can be eliminated at any company, but the company has been around 150 years and Lance and his crew aren't smarter than everyone that has come before them. Why did there used to be relief positions for managers to cover sick days and vacation days? So when people get sick or take vacation there is someone to cover the shift much like the conductor extra board. Hey, why don't we just eliminate the management relief positions it'll save some money? And they did but guess what now there's noone to cover, so if someone gets sick they're screwed. There's been managers work 48 hours in a row because they didn't have anyone else to cover lol. 48 hours? So, you might have a few gullible people that will do that for you but eventually everyone starts quitting. And you've got the situation you have now where the remaining managers couldn't switch their way out of a paper sack, but they'll tell you a better way to do it. I'm not really trying to change anyone's mind. I'm just enjoying the show and doing some commentary for the dvd.
We have. Stock is good and operating ratio is dropping. That’s the plan