Union Pacific Corporation · NYSE:UNP
Union Pacific — Q1 2018 Earnings Presentation
15 slides from Union Pacific's earnings presentation, Apr 26, 2018
Slide 1: First Quarter 2018 Results
April 26, 2018 First Quarter 2018 Earnings Release Lance Fritz Chairman, President & CEO 1 First Quarter 2018 Results Earnings Per Share Operating Ratio First Quarter First Quarter +27% $1.68 -0.6 pts. $1.32 65.2 64.6 First Quarter Record First Quarter Record 2017 2018 2017* 2018 * Certain prior per
Slide 2: 1st Quarter 2018 Recap
April 26, 2018 First Quarter 2018 Marketing & Sales Review Beth Whited Executive VP & Chief Marketing Officer 3 1st Quarter 2018 Recap Volume Growth 7-Day Monthly Carloadings (000s) 210 Agricultural -4% Products 190 2014 @188 Premium +2% 2015 @177 Industrial +2% 170 2018 @167 2017 @168 2016 @164 Ene
Slide 3: Agricultural Products and Energy
Agricultural Products Revenue $1,098M (Flat) Volume 279K (-4%) ARC $3,942 (+5%) Grain* Grain Fertilizer Products Volume Mix -16% 103.9 86.9 +1% 77.8 78.9 +10% Food & 44.5 Refrigerated Grain 40.5 19% 37% 2017 2018 2017 2018 2017 2018 Fertilizer 16% Grain Quarterly Drivers Products 28% • Reduced Grain
Slide 4: Industrial and Premium
Industrial Revenue $1,340M (+6%) Volume 411K (+2%) ARC $3,262 (+4%) Construction Metals Specialized Markets 89 6 89.6 -6% 84.2 Volume Mix +11% +10% 45.3 44.1 48.4 Construction 40.8 Specialized 21% 12% Soda Ash 7% Forest Products 2017 2018 2017 2018 2017 2018 Plastics 14% 16% Industrial Quarterly Dri
Slide 5: 2018 Volume Outlook
2018 Volume Outlook Agricultural Products Industrial + Ethanol Exports + Plastics + Food and Refrigerated + Industrial Production ? Grain Energy Premium + Petroleum Products + Over the Road Conversions ? Frac Sand + New International Business – Coal Headwinds – Automotive Sales 9 April 26, 2018 Firs
Slide 6: Safety and Network Performance
Safety Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles) Good Good 1.10 -13% -17% 17% 2 95 2.95 3.18 0.85 0 89 0.89 2.86 0.75 0.74 2.65 2.76 First Qtr Record 1Q14 1Q15 1Q16 1Q17 1Q18 1Q14 1Q15 1Q16 1Q17
Slide 7: Service Recovery Initiatives; Volume & Performance Drive Resources
Service Recovery Initiatives • Aggressively Managing Freight Car Inventory • Focused on Southern Region • Identifying Id tif i & Prioritizing P i iti i Cars C with ith Excessive E i Dwell D ll • Adjusting the Transportation Plan • Shifting Volume to Balance Car Flows • PNW & Northern California Adju
Slide 8: Productivity and Operating Outlook
Productivity Train Size Performance • Continued Gains in Train Size (vs 1Q17) Good Manifest ** +3% • Productivity in Other Areas Grain * +2% Intermodal ** +2% • Engineering Auto ** +2% • Mechanical Coal -1% * Best-Ever Quarter **First-Quarter Record 15 Operating Outlook • Network Improvements • Main
Slide 9: First Quarter Income Statement
April 26, 2018 First Quarter 2018 Financial Review Rob Knight Executive VP & Chief Financial Officer 17 First Quarter Income Statement $ in Millions (except EPS) 2018 2017 % Operating Revenues $5,475 $5,132 7 O Operating ti Expenses* E * 3 536 3,536 3 344 3,344 6 Operating Income 1,939 1,788 8 Other
Slide 10: Freight Revenue and First Quarter Operating Expenses
Freight Revenue First Quarter ($ In Millions) +7% $5,122 $4,794 Up +2.0% +3.0% Slightly +2.0% Volume Fuel Mix Core Surcharge Price 2017 2018 19 First Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits +28% +1% $589 $1,262 $1,273 $460 2017* 2018 2017 2018 Purchased Services & • Net
Slide 11: Operating Expenses (cont) and Productivity Update
First Quarter Operating Expenses (cont) $ In Millions Depreciation Equipment & Other Rents +4% $543 $520 $ -4% $276 $266 2017 2018 2017 2018 Other Expenses • Higher g Depreciable p Asset Base +2% $260 $266 • Lower Locomotive & Freight Car Lease Expense 2017 2018 21 Productivity Update First Quarter
Slide 12: Cash Flow & Debt; Delivering Value to Shareholders
Cash Flow & Debt $ In Millions Cash From Ops +1% $1,901 • Higher Net Income $1,883 • Increased Adj. Debt $570 2017 2018 Million since Year-End Adjusted Debt* 2017 $19,480 $20,050 $17,390 $1 8 8 $17,878 $14,838 1.9 1.9 1.9 • Re-evaluating Optimal 1.4 1.7 Capital Structure 12/31/14 12/31/15 12/31/16 1
Slide 13: 2018 Outlook
2018 Outlook Full Year • Low Single Digit Volume 4Q14: $438 Growth • Price Above Inflation • Goal is an Improved O Operating Ratio Continued Focus on G55+0 25 April 26, 2018 First Quarter 2018 Earnings Release Lance Fritz Chairman, President & CEO 26
Slide 14: Looking Ahead; Cautionary Information
Looking Ahead • Solid First Quarter Results • Continue Momentum with Operating Improvements • Well Positioned for Growth 27 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically
Slide 15: Question & Answer Session
April 26, 2018 First Quarter 2018 Earnings Release Question & Answer Session 29