Union Pacific Corporation · NYSE:UNP
Union Pacific — Q2 2019 Earnings Presentation
14 slides from Union Pacific's earnings presentation, Jul 18, 2019
Slide 1: Second Quarter 2019 Earnings Release
July 18, 2019 Second Quarter 2019 Earnings Release Lance Fritz Chairman, President & CEO 1 Second Quarter 2019 Results Earnings Per Share Operating Ratio Second Quarter Second Quarter +12% $2.22 $1.98 -3.4 pts. 63.0 59.6 All-Time Quarterly Record 2018 2019 2018 2019 2
Slide 2: Second Quarter 2019 Recap
July 18, 2019 Second Quarter 2019 Marketing & Sales Review Kenny Rocker Executive Vice President – Marketing & Sales 3 Second Quarter 2019 Recap Volume Growth 7-Day Monthly Carloadings (000s) 190 Energy -9% 180 2018 @174 Premium -5% 2017 @168 170 Agricultural Flat 2019 @165 160 Industrial +2% 150 TO
Slide 3: Agricultural Products and Energy
Agricultural Products Revenue $1,155M (+4%) Volume 284K (Flat) ARC $4,057 (+4%) Grain* Grain Fertilizer Products & Sulfur -7% Volume Mix 88.9 -1% 82.9 78.7 78.1 +12% Food & 54.5 Refrigerated 48.4 18% Grain 35% Fertilizer 2018 2019 2018 2019 2018 2019 19% Grain Quarterly Drivers Products 28% • Reduce
Slide 4: Industrial and Premium
Industrial Revenue $1,494M (+4%) Volume 460K (+2%) ARC $3,242 (+2%) Construction Plastics Forest Products +4% 109.5 113.6 Volume Mix +6% 70.5 74.5 -10% 63.2 56.8 Specialized 12% Soda Ash Construction 7% 25% Plastics Forest 2018 2019 2018 2019 2018 2019 16% Products 12% Metals Industrial Quarterly Dr
Slide 5: 2019 Volume Outlook
2019 Volume Outlook Agricultural Products Industrial + Biofuels + Plastics + Food and Beverage + Construction ? Grain – Housing Starts Energy Premium + Petroleum Products + Light Truck / SUV Sales – Sand – Domestic Market – Coal Headwinds ? Trade & Economy 9 July 18, 2019 Second Quarter 2019 Operati
Slide 6: Unified Plan 2020 Key Performance Indicators
Unified Plan 2020 Key Performance Indicators Freight Car Terminal Dwell Freight Car Velocity Good (Hours) (Daily Miles per Car) Good +4% -14% 195 29.5 188 25.5 Full Year Record 2Q18 2Q19 2Q18 2Q19 Train Speed (Miles per Hour) • Year-over-Year Improvement Good 24.7 -6% • Continued Focus on Asset 23.1
Slide 7: Unified Plan 2020 Update
Unified Plan 2020 Update Terminal Rationalization & Network Changes System Train Length (Max on route, in feet) 7,700 ~720 ft +10% 7,500 7,300 7,100 6,900 6,700 6,500 Jan-18 Mar-18 Jan-19 Mar-19 May-18 Jul-18 Sep-18 Nov-18 May-19 13 Operating Outlook • Unified Plan 2020 • Resilient Network • Continu
Slide 8: Second Quarter Operating Ratio and EPS
July 18, 2019 Second Quarter 2019 Financial Review Rob Knight Executive Vice President & Chief Financial Officer 15 Second Quarter Operating Ratio and EPS Favorable / (Unfavorable) Operating Ratio EPS Second Quarter 2018 63.0% $1.98 Weather Impact (0.6) pts ($0.07) Lost Revenue (Net of Volume Saving
Slide 9: Second Quarter Income Statement and Freight Revenue
Second Quarter Income Statement $ in Millions (except EPS) 2019 2018 % Operating Revenues $5,596 $5,672 (1) Operating Expenses 3,336 3,573 (7) Operating Income 2,260 2,099 8 Other Income 57 42 36 Interest Expense (259) (203) 28 Income Taxes (488) (429) 14 Net Income $1,570 $1,509 4 Weighted Average
Slide 10: Second Quarter Operating Expenses
Second Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits -13% $643 -8% $560 $1,241 $1,145 2018 2019 2018 2019 Purchased Services & • Force Levels, Payroll Tax Refund and Materials Wage Inflation -9% $630 • Lower Diesel Fuel Prices and Gallons $573 Consumed • Reduced Mechanical Re
Slide 11: Productivity Update and Cash Flow & Debt
Productivity Update Second Quarter Results: Initiatives & 2Q19 Results ($ in millions) ~$195 4Q14: $438Million of Productivity $37 Network and Fuel, Unified Plan 2020, Starts, partially offset by weather Train Operations • Operational Challenges Resulted in a $25 Million Headwind $78 Equipment Mecha
Slide 12: Delivering Value to Shareholders and 2019 Outlook
Delivering Value to Shareholders $ In Millions Dividends Share Repurchases $1,248 $6,693 $1,125 • 10% Dividend Increases ASR $4,148 $3,600 in Third Quarter 2018 ASR $2,500 and First Quarter 2019 $3,093 $1,648 1H 2018 1H 2019 1H 2018 1H 2019 • Share Repurchases: − $1.6 Billion of Open Cash Returned t
Slide 13: Looking Ahead
July 18, 2019 Second Quarter 2019 Earnings Release Lance Fritz Chairman, President & CEO 25 Looking Ahead • Record Second Quarter Results • Unified Plan 2020 • Consistent and Reliable Service • Focus on Shareholder Returns 26
Slide 14: Cautionary Information
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 to economic conditions; its ability to generate financial r