Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2023 Earnings Presentation
24 slides from Union Pacific's earnings presentation, Oct 19, 2023
Slide 1: Third Quarter 2023 Earnings
UNION PACIFIC CORPORATION THIRD QUARTER 2023 EARNINGS OCTOBER 19, 2023 1 THIRD QUARTER 2023 EXECUTIVE SUMMARY Jim Vena Chief Executive Officer 2 2
Slide 2: Executive Summary
UNION PACIFIC CORPORATION THIRD QUARTER 2023 EARNINGS OCTOBER 19, 2023 1 THIRD QUARTER 2023 EXECUTIVE SUMMARY Jim Vena Chief Executive Officer 2 2
Slide 3: Third Quarter Highlights & Executive Summary
Third Quarter Highlights & Executive Summary Highlights Executive Summary $2.51 Earnings per Share • Aligning team with a strategy of safety, service, and operational $2.2B Operating Income excellence to drive growth $5.9B Operating Revenue • Financial performance impacted by lower revenue and misma
Slide 4: Financial Review
Third Quarter Highlights & Executive Summary Highlights Executive Summary $2.51 Earnings per Share • Aligning team with a strategy of safety, service, and operational $2.2B Operating Income excellence to drive growth $5.9B Operating Revenue • Financial performance impacted by lower revenue and misma
Slide 5: Third Quarter Income Statement
Third Quarter Income Statement Freight Revenue Drivers: 2023 2022 Variance Operating Revenues $5,941- $6,566- (10) Price/Mix 1.50% Operating Expenses 3,764- 3,933- (4) Fuel Surcharge (8.00%) Operating Income 2,177- 2,633- (17) % Volume (2.75%) Other Income 106 124- (15) Operating Expense Drivers: In
Slide 6: Cash Generation & Returns to Shareholders
Third Quarter Income Statement Freight Revenue Drivers: 2023 2022 Variance Operating Revenues $5,941- $6,566- (10) Price/Mix 1.50% Operating Expenses 3,764- 3,933- (4) Fuel Surcharge (8.00%) Operating Income 2,177- 2,633- (17) % Volume (2.75%) Other Income 106 124- (15) Operating Expense Drivers: In
Slide 7: 2023 Full Year Outlook Remains Relatively Unchanged
2023 Full Year Outlook Remains Relatively Unchanged • Year to Date Softness in Consumer-Related Volumes Likely Drive Full Year Volumes Below Industrial Production • Pricing Dollars in Excess of Inflation Dollars – Elevated Cost Impact to Operating Ratio Not Fully Offset • 2023 Capital Allocation: –
Slide 8: Marketing & Sales Review
2023 Full Year Outlook Remains Relatively Unchanged • Year to Date Softness in Consumer-Related Volumes Likely Drive Full Year Volumes Below Industrial Production • Pricing Dollars in Excess of Inflation Dollars – Elevated Cost Impact to Operating Ratio Not Fully Offset • 2023 Capital Allocation: –
Slide 9: Third Quarter Commodity Review
Third Quarter Commodity Review Commodity Revenue Volume ARC Quarterly Drivers • Tight Grain Supplies Ending 2022-2023 Crop Bulk $1,766 510K $3,465 • Coal Pressures from Low Natural Gas Prices vs. 3Q’22 10% 4% 6% • Reduced Import Beer Shipments • Weak Housing & Corrugated Box Demand Industrial $2,057
Slide 10: Fourth Quarter 2023 Volume Outlook
Third Quarter Commodity Review Commodity Revenue Volume ARC Quarterly Drivers • Tight Grain Supplies Ending 2022-2023 Crop Bulk $1,766 510K $3,465 • Coal Pressures from Low Natural Gas Prices vs. 3Q’22 10% 4% 6% • Reduced Import Beer Shipments • Weak Housing & Corrugated Box Demand Industrial $2,057
Slide 11: Operations Review
THIRD QUARTER 2023 OPERATIONS REVIEW Eric Gehringer Executive Vice President – Operations 11 11 THIRD QUARTER 2023 Key Performance Metrics Year to Date Reportable Personal Injury & Derailment Rates Improved Freight Car Intermodal Trip Manifest/Auto Trip Velocity Plan Compliance Plan Compliance (Dail
Slide 12: Key Performance Metrics
THIRD QUARTER 2023 OPERATIONS REVIEW Eric Gehringer Executive Vice President – Operations 11 11 THIRD QUARTER 2023 Key Performance Metrics Year to Date Reportable Personal Injury & Derailment Rates Improved Freight Car Intermodal Trip Manifest/Auto Trip Velocity Plan Compliance Plan Compliance (Dail
Slide 13: Key Efficiency Metrics
THIRD QUARTER 2023 Key Efficiency Metrics Locomotive Workforce Train Productivity Productivity Length (GTMs per HP Day) (Daily Car Miles per FTE) (Max on Route, in Feet ) 129 985 9,537 4% 6% 1% Quarterly Drivers Right Sizing Higher Workforce Optimizing Locomotive Fleet Levels Transportation Plan 13
Slide 14: How We Win
THIRD QUARTER 2023 Key Efficiency Metrics Locomotive Workforce Train Productivity Productivity Length (GTMs per HP Day) (Daily Car Miles per FTE) (Max on Route, in Feet ) 129 985 9,537 4% 6% 1% Quarterly Drivers Right Sizing Higher Workforce Optimizing Locomotive Fleet Levels Transportation Plan 13
Slide 15: How We Win: Safety, Service & Operational Excellence
HOW WE WIN SAFETY + SERVICE & OPERATIONAL EXCELLENCE 15 15 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the Company’s expectations with respect
Slide 16: Cautionary Information
HOW WE WIN SAFETY + SERVICE & OPERATIONAL EXCELLENCE 15 15 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the Company’s expectations with respect
Slide 17: Question & Answer Session
QUESTION & ANSWER SESSION THANK YOU 17 APPENDIX 18 18
Slide 18: Appendix
QUESTION & ANSWER SESSION THANK YOU 17 APPENDIX 18 18
Slide 19: Bulk
THIRD QUARTER 2023 Bulk Revenue $1,766 (-10%) Volume 510K (-4%) ARC $3,465 (-6%) Major Markets Grain & Fertilizer Food & Coal & Grain Products Refrigerated Renewables 243 231 190 183 -5% -4% 51 51 48 45 Flat -6% 3Q 2022 3Q 2023 3Q 2022 3Q 2023 3Q 2022 3Q 2023 3Q 2022 3Q 2023 Quarterly Drivers Tight
Slide 20: Industrial
THIRD QUARTER 2023 Bulk Revenue $1,766 (-10%) Volume 510K (-4%) ARC $3,465 (-6%) Major Markets Grain & Fertilizer Food & Coal & Grain Products Refrigerated Renewables 243 231 190 183 -5% -4% 51 51 48 45 Flat -6% 3Q 2022 3Q 2023 3Q 2022 3Q 2023 3Q 2022 3Q 2023 3Q 2022 3Q 2023 Quarterly Drivers Tight
Slide 21: Premium
THIRD QUARTER 2023 Premium Revenue $1,722 (-12%) Volume 973K (-4%) ARC $1,769 (-9%) Major Markets Automotive Intermodal 811 763 -6% 198 210 +6% 3Q 2022 3Q 2023 3Q 2022 3Q 2023 Quarterly Drivers Strong OEM Production & Domestic Penetration Offset by Weak West Coast Imports Business Development Wins P
Slide 22: Third Quarter Operating Ratio and EPS
THIRD QUARTER 2023 Premium Revenue $1,722 (-12%) Volume 973K (-4%) ARC $1,769 (-9%) Major Markets Automotive Intermodal 811 763 -6% 198 210 +6% 3Q 2022 3Q 2023 3Q 2022 3Q 2023 Quarterly Drivers Strong OEM Production & Domestic Penetration Offset by Weak West Coast Imports Business Development Wins P
Slide 23: Core Pricing Gains Offset by Reduced Fuel Surcharge, Lower Volumes, and Unfavorable Mix
Core Pricing Gains Offset by Reduced Fuel Surcharge, Lower Volumes, and Unfavorable Mix Freight Revenues $ in Millions $6,109 ($167) ($482) (2.75%) $85 $5,545 163 (8.00%) +1.50% 159 3Q Volume Fuel Surcharge Price/Mix 3Q 2022 2023 23 7 Day Volume (000s) 23 Lower Fuel Prices and Volume Reduce Expenses
Slide 24: Lower Fuel Prices and Volume Reduce Expenses
Core Pricing Gains Offset by Reduced Fuel Surcharge, Lower Volumes, and Unfavorable Mix Freight Revenues $ in Millions $6,109 ($167) ($482) (2.75%) $85 $5,545 163 (8.00%) +1.50% 159 3Q Volume Fuel Surcharge Price/Mix 3Q 2022 2023 23 7 Day Volume (000s) 23 Lower Fuel Prices and Volume Reduce Expenses