Union Pacific Corporation · NYSE:UNP
Union Pacific — Q2 2013 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Jul 18, 2013
Slide 1: Second Quarter 2013 Earnings Release: Record Results
Second Quarter 2013 Earnings Release July 18, 2013 Jack Koraleski, CEO 1 Second Quarter 2013 Record Results Earnings Per Share Positives Second Quarter +13% • Best-Ever Quarter $2.37 All-Time – Operating Revenue $2.10 Qtrly Record – Operating Income – Operating Ratio $1.59 – Earnings • Franchise Div
Slide 2: Marketing & Sales Review: Creating Customer Value
Second Quarter 2013 Marketing & Sales Review July 18, 2013 Eric Butler, Executive VP – Marketing & Sales 3 Creating Customer Value • Industry Leading Franchise • Strategic Investments • Excellent Service • Innovative Products • Strong Relationships 4
Slide 3: Second Quarter 2013 Recap; Agricultural Products
Second Quarter 2013 Recap Freight Revenue Mix Volume Growth Intermodal 19% Chemicals +10% Industrial 19% Agricultural 15% Automotive +4% Coal Autos 19% 11% Chemicals Industrial 17% Flat Products Coal Flat Freight Revenue Performance (Year-Over-Year Change) Intermodal -3% +5% +5% Agricultural -10% -1
Slide 4: Intermodal and Automotive
Intermodal Revenue $993M (-1%) Volume 822K (-3%) ARC $1,210 (+2%) International* Volume Mix -8% 466.3 429.6 Domestic 48% International 52% 2012 2013 Domestic* Quarterly Drivers +3% 391.8 380.1 • Soft Import Volumes Impact International • Highway Conversions Drive 2012 2013 Domestic Growth *Volume in
Slide 5: Chemicals and Coal
Chemicals Revenue $890M (+12%) Volume 287K (+10%) ARC $3,098 (+2%) Crude Oil** Volume Mix* +39% 46.9 33.7 Crude Oil Petroleum 16% & LP Gas 14% Fertilizer Soda Ash 18% 2012 2013 10% Industrial Plastics Petroleum Products & LP Gas** Chemicals 20% +10% 22% 38.8 35.4 Quarterly Drivers 2012 2013 • Contin
Slide 6: Industrial Products; Second Half 2013 Outlook
Industrial Products Revenue $977M (+7%) Volume 317K (Flat) ARC $3,079 (+6%) Non-Metallic Minerals* Volume Mix +18% 62.9 53.3 Lumber Minerals/ 10% Paper Consumer 9% 23% Gov’t/Waste 2012 2013 8% Construction 31% Lumber* Metals 19% +11% 29.9 27.0 2012 2013 Quarterly Drivers • Shale Drilling – Frac Sand
Slide 7: Operations Review: Dedicated Focus on Safety
Second Quarter 2013 Operations Review July 18, 2013 Lance Fritz, Executive VP - Operations 13 Dedicated Focus on Safety Second Quarter YTD Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles) Good 3.68 Goo
Slide 8: Network Performance and Productivity
Network Performance Second Quarter Velocity (as Reported to the AAR) Good -3% • Weather & Track 26.4 26.1 26.6 25.7 Renewal Program Impact • Continued Traffic Shifts • Agility & Resiliency 2010 2011 2012 2013 Demonstrated with Service Delivery* and IS&P Resources & Service Good Industry Spot & Pull
Slide 9: Capital Investments; Full Year 2013
Capital Investments Replacement, Growth & Productivity, and PTC YTD Track Replacement (% of Projects) 2013 Capital Investments ($ in Millions) Complete 51% In Progress 11% PTC $450 Remaining 38% Service, Growth & Productivity $975 YTD Capacity Cutovers Infrastructure • Sunset: 15 of 30 miles Replace
Slide 10: Financial Review: Second Quarter Income Statement
Second Quarter 2013 Financial Review July 18, 2013 Rob Knight, CFO 19 Second Quarter Income Statement In Millions (except EPS) 2013 2012 % Operating Revenues $5,470 $5,221 5 Operating Expenses 3,592 3,497 3 Operating Income 1,878 1,724 9 Other Income 23 21 10 Interest Expense (133) (135) (1) Income
Slide 11: Freight Revenue; Compensation & Benefits Expense
Freight Revenue Second Quarter (In Millions) +5% +4% $5,153 $4,913 +2% -0.5% -0.5% Volume Fuel Mix Core Surcharge Price 2012 2013 21 Compensation & Benefits Expense Second Quarter 2013 $1,185M, +3% Compensation & Benefits (in Millions) +3% $1,151 $1,185 • Inflation Costs • Shift in Traffic Mix • Low
Slide 12: Fuel Expense; Expense Review
Fuel Expense Second Quarter 2013 $863M, -2% Average Fuel Price (Per Gallon Consumed) -3% $3.21 $3.10 • Lower Average Diesel Fuel Price • GTMs Flat compared 2012 2013 to 2012 Gross-Ton-Miles (in Millions) • 2% Consumption Rate Flat Increase 234,483 235,396 2012 2013 23 Second Quarter 2013 Expense Rev
Slide 13: Expense Review (cont); Operating Ratio Performance
Second Quarter 2013 Expense Review (cont) In Millions Equipment & Other Rents • Container Costs - New +1% $302 Contract Arrangement $299 • Higher Freight Car Rental Expense • Lower Freight Car and 2012 2013 Locomotive Lease Expenses Other +15% $219 $190 • Higher Personal Injury Expense • Higher Prop
Slide 14: Strong Financial Position; Driving Strong Shareholder Value
Strong Financial Position Six Month Period Ending June 30 ($ In Millions) Free Cash Flow* $3,218 $2,776 • Solid Free Cash Flow ($1,882) ($1,739) of $833 Million ‒ Strong Cash from Ops ($575) ($646) 2012 2013 2012 2013 2012 2013 ‒ 12% Cash Dividend Cash from Investing Dividends Increase Ops Total Deb
Slide 15: 2013 Outlook
2013 Outlook Assuming an Improving Economy Second Half • Positive Volume Growth Full Year • Positive Volume Growth • Continued Real Core Pricing Gains • Record Earnings • Growing Returns • Increased Shareholder Value 29 Second Quarter 2013 Earnings Release July 18, 2013 Jack Koraleski, CEO 30
Slide 16: Positioned for Success; Cautionary Information
Positioned for Success • Economic Uncertainty • Reinvestible Pricing • Growth Opportunities • Growing Customer Value & Shareholder Returns • Well Positioned for the Future 31 Cautionary Information This press release and related materials contain statements about the Corporation’s future that are no
Slide 17: Question & Answer Session
Second Quarter 2013 Earnings Release July 18, 2013 Question & Answer Session 33