Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2010 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Oct 21, 2010
Slide 1: Third Quarter Earnings Release: Record Third Quarter Results
Third Quarter Earnings Release October 21, 2010 Jim Young, Chairman & CEO 1 Record Third Quarter Results • Reported EPS = $1.56, +54% • Operating Income +46% • New Customer Service “Best” • Safety & Efficiency Gains • Record Operating Ratio = 68.2% 2 1
Slide 2: Third Quarter Marketing & Sales Review
Third Quarter Marketing & Sales Review October 21, 2010 Jack Koraleski, Executive VP – Marketing & Sales 3 Third Quarter Recap Volume Growth Freight Revenue Growth Intermodal +24% Automotive +36% Industrial +20% Intermodal +34% Automotive +18% Industrial +25% Chemicals +9% Agricultural +16% Agricult
Slide 3: Record Setting Customer Satisfaction; Agricultural Products
Record Setting Customer Satisfaction Excellent Service Drives Improved Value as Volume Climbs 90 89 88 88 87 87 87 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2009 2010 5 Agricultural Products Revenue $750M (+16%) Volume 229K (+7%) ARC $3,271 (+8%) Export Whole Grains* Revenue Mix +47% 40.4 27.4 Grain Products 35% Food/ R
Slide 4: Automotive and Chemicals
Automotive Revenue $309M (+36%) Volume 146K (+18%) ARC $2,114 (+16%) Revenue Mix Finished Vehicles* Auto Parts +32% 88.0 22% 66.4 Finished Vehicles 78% 2009 2010 Auto Parts* Quarterly Drivers Flat 57.8 57.8 • Increased Vehicle Production • Hurricane Alex Disrupts Mexico Business • Repriced Contracts
Slide 5: Energy and Industrial Products
Energy Revenue $922M (+11%) Volume 535K (+1%) ARC $1,721 (+10%) Revenue Mix Southern Powder River Basin* Other +4% 6% 48.8 Colorado/ 47.1 Utah 17% Southern Powder River Basin 77% 2009 2010 Quarterly Drivers Colorado/Utah* -12% 8.5 • Strengthened Demand for 7.5 SPRB Coal • Weak Demand and Changes in
Slide 6: Intermodal; Fourth Quarter Outlook
Intermodal Revenue $880M (+34%) Volume 903K (+24%) ARC $974 (+8%) Revenue Mix International* +30% 518 398 Domestic 49% International 51% 2009 2010 Domestic* Quarterly Drivers +16% 385 • Near Record Loadings 331 • Strength in International and Domestic Volumes • Price and Fuel Surcharge 2009 2010 *Vo
Slide 7: Third Quarter Operations Review: Safety A Top Priority
Third Quarter Operations Review October 21, 2010 Lance Fritz, Executive VP – Operations 13 Safety: A Top Priority Employee Safety (Reportable Personal Injury Incidents Per 200,000 Man-Hours) • Continuous Good 1.59 Improvement 1.45 1.36 • Focus on Severity • Onboarding Process 2008 2009 3Q YTD 2010 1
Slide 8: Service Focus Drives Results
Service Focus Drives Results 7-Day Carloadings (000s) Good 180.0 179.8 182.4 • Strong Service Levels 166.5 173.3 as Volumes Increase 151.8 • Leveraging Growth 2008 2009 1st Half Jul Aug Sep 2010 2010 2010 2010 • Agility Demonstrated Velocity & Service* Good SDI* with Resources and 92.0 90.5 89.8 89.
Slide 9: Productivity Gains Continue; Resource Update
Productivity Gains Continue Third Quarter Cost Control (2010 versus 2009) • Increased Gross Ton- Miles Per Employee Carloads 14% • Train Length Improvement Total First Crew 8% Starts • Solid Freight Car Utilization Through Freight 12% Yard & Local 3% 17 Resource Update 2010 TE&Y Employees Locomotive
Slide 10: 2010 Capital Plan; Strong Finish to 2010
2010 Capital Plan Replacement, Growth and Productivity $2.6 Billion Capital Plan* (In Millions) • “Hardening” the Infrastructure Infrastructure Replacement $1,650 • Completed Joliet PTC $100 Intermodal Capacity/ Commercial Facilities • Timing of PTC Spend $275 $150 • Restart Sunset $200 Technology/
Slide 11: Third Quarter Financial Review: Earnings Summary
Third Quarter Financial Review October 21, 2010 Rob Knight, CFO 21 Third Quarter Earnings Summary In Millions (except EPS) 2010 2009* % Operating Revenues $ 4,408 $ 3,671 20 Operating Expenses 3,007 2,710 11 Operating Income 1,401 961 46 Other Income 25 14 79 Interest Expense (153) (156) (2) Income
Slide 12: Sequentially Improving Core Price; Compensation & Benefits
Sequentially Improving Core Price Quarterly Pricing Trend 6% • Legacy Renewals 6% 6% 5.5% • Stronger Freight 5% 5% 5% 5% 5% 4% 4.5% Demand 3.5% 3.5% 3% • High Quality Service 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2009 2010 Price Excluding RCAF Fuel Impact Reported Core Price (Including RCAF Fuel Impact) 23 Compensat
Slide 13: Fuel Expense; Third Quarter Expense Review
Fuel Expense Third Quarter 2010 $608M, +30% Average Fuel Price (Per Gallon Consumed) $3.70 $2.24 • 20% Increase in Diesel Fuel $1.87 Prices added $97 Million 2008 2009 2010 • 9% More Gross Ton-Miles added $42 Million Fuel Consumption (Million Gallons) • 1% Improvement in Fuel 297 242 261 Efficiency
Slide 14: Record Operating Ratio; Generating & Returning Cash to Shareholders
Record Operating Ratio Operating Ratio (Percent) 81.6 • Volume Leverage 79.3 77.4 76.1 75.1 • Operating Efficiency and Service 69.4 68.2 • Price Gains • Fuel Surcharge Recovery 2006 2007 2008 2009 1Q 2Q 3Q 2010 2010 2010 *Certain prior year amounts have been adjusted for the retrospective change in
Slide 15: Wrapping Up a Record Year
Wrapping Up a Record Year Fourth Quarter 2010 Outlook • Volume Leverage • Tougher Cost Comparison • Efficiency Gains • Pricing Focus • Improving Financial Returns 29 Third Quarter Earnings Release October 21, 2010 Jim Young, Chairman & CEO 30 15
Slide 16: 2010 – On Track for a Record Year; Cautionary Information
2010 – On Track for a Record Year • Leverage The Franchise • Drivers of Success: – Capital investments – Productivity – Service – Pricing • Increasing Shareholder Value 31 Cautionary Information This press release and related materials contain statements about the Corporation’s future that are not s
Slide 17: Question and Answer Session
Third Quarter Earnings Release October 21, 2010 Question and Answer Session 33 17