Union Pacific Corporation · NYSE:UNP
Union Pacific — Q2 2012 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Jul 19, 2012
Slide 1: Second Quarter 2012 Earnings Release
Second Quarter 2012 Earnings Release July 19, 2012 Jack Koraleski, CEO 1 Second Quarter 2012 Results Earnings Per Share Positives Second Quarter • All-Time Quarterly Records +32% $2.10 – Operating Revenue All-Time Quarterly – Operating Income Record $1.59 – Operating Ratio $1.40 – Earnings – Custome
Slide 2: Marketing & Sales Review: Customer Satisfaction
Second Quarter 2012 Marketing & Sales Review July 19, 2012 Eric Butler, Executive VP – Marketing & Sales 3 Customer Satisfaction GOOD 93 93 92 92 91 91 Tie 90 90 Quarterly 89 Record 87 180 180 178 175 175 174 172 172 169 164 92 = Full Year Record 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2010 2011 2012 Customer
Slide 3: Second Quarter Recap and Coal
Second Quarter Recap Revenue Mix Volume Growth Intermodal 20% Automotive +15% Industrial 19% Agricultural 17% Chemicals +12% Coal Autos 18% 10% Industrial Chemicals +6% Products 16% Intermodal +3% Agricultural Freight Revenue Performance -2% (Year-Over-Year Change) Sub Total (excl Coal) +5% +7% +6%
Slide 4: Agricultural Products and Automotive
Agricultural Products Revenue $854M (+1%) Volume 233K (-2%) ARC $3,665 (+2%) Export Grain* -32% Volume Mix 39.6 26.9 Grain Products 33% 2011 2012 Food/ Refrigerated 26% Soybean Meal* Grain -6% 41% 18.8 17.6 2011 2012 Quarterly Drivers Food & Refrigerated* • Softer Export Grain Markets +3% 59.8 57.8
Slide 5: Chemicals and Industrial Products
Chemicals Revenue $795M (+13%) Volume 261K (+12%) ARC $3,044 (+1%) Petroleum Products* Volume Mix +92% 55.2 Other 28.8 Petroleum 9% & LP Gas Fertilizer 26% 11% 2011 2012 Soda Ash 9% Plastics Industrial 22% Plastics* Chemicals +7% 23% 57.8 53.8 Quarterly Drivers 2011 2012 • Continued Growth in Crude
Slide 6: Intermodal and Second Half 2012 Outlook
Intermodal Revenue $1,003M (+10%) Volume 846K (+3%) ARC $1,185 (+7%) Volume Mix International* +3% 466.3 451.7 Domestic 45% International 55% 2011 2012 Domestic* Quarterly Drivers +3% 380.1 • International Growth as Slow 367.8 Economic Recovery Continues • Highway Conversions Drive Domestic Growth 2
Slide 7: Operations Review: Operating Foundation, Safety Focus
Second Quarter 2012 Operations Review July 19, 2012 Lance Fritz, Executive VP - Operations 13 Operating Foundation, Safety Focus Second Quarter YTD Employee Rail Equipment Public (Reportable Personal Injury (Reportable Derailment Incidents (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Per
Slide 8: Network Performance and Network Productivity
Network Performance Second Quarter Velocity (as Reported to the AAR) +2% Good 27.4 26.4 26.1 26.6 • Agility and Resiliency 22.8 Demonstrated with Resources and Service Plan 2008 2009 2010 2011 2012 • Volume Growth in Service Delivery* and IS&P Southern Region Industry Spot & Pull % 95 ** 95 ** 93 Go
Slide 9: Southern Region Performance and Capital Investments
Southern Region Performance Volume Growth 7% 6% • Growth in Manifest and Premium 2% Flat • Volumes Back to Pre- South Total South Total Recession Levels vs. 2Q 2011 vs. 1Q 2012 • Resource Realignment & Network Routing Performance Improvement (vs. 1Q 2012) • Improving Network Manifest Terminal Dwell
Slide 10: Full Year 2012 Results; Financial Review
Full Year 2012 • Improved Safety Results • Excellent Service with Growth • Productivity / Volume Leverage • Capital Effectiveness • Critical Initiatives 19 Second Quarter 2012 Financial Review July 19, 2012 Rob Knight, CFO 20 10
Slide 11: Second Quarter Earnings Summary and Freight Revenue
Second Quarter Earnings Summary In Millions (except EPS) 2012 2011 % Operating Revenues $5,221 $4,858 7 Operating Expenses 3,497 3,466 1 Operating Income 1,724 1,392 24 Other Income 21 26 (19) Interest Expense (135) (148) (9) Income Taxes (608) (485) 25 Net Income $1,002 $785 28 Weighted Average Dil
Slide 12: Compensation & Benefits Expense and Fuel Expense
Compensation & Benefits Expense Second Quarter 2012 $1,151M, -1% Compensation & Benefits (in Millions) -1% $1,166 • Labor Inflation of 1.5% $1,151 • Mild Weather Conditions & Lower Training Costs • Efficient Operations & 2011 2012 Productivity Gains Workforce Levels (Quarterly Average) +2% 44,971 45
Slide 13: Second Quarter 2012 Expense Review
Second Quarter 2012 Expense Review In Millions Purchased Services & Materials +5% $542 • Higher Subsidiary Contract $516 Expenses • Increased Engineering, Locomotive and Freight Car Repair Costs 2011 2012 Other -3% • Lower Personal Injury Expense $196 $190 • Higher Equipment & Freight Damage Expense
Slide 14: Operating Ratio Performance and Strong Financial Position
Operating Ratio Performance Second Quarter (Percent) • All-Time Quarterly -4.3 pts. 71.3 Record 69.4 • Solid Pricing 67.0 All-Time • Improved Fuel Quarterly Record Surcharge Coverage • Efficient Operations • Lower Fuel Prices 2010 2011 2012 27 Strong Financial Position Six Month Period Ending June 3
Slide 15: Driving Strong Shareholder Value; Full Year 2012
Driving Strong Shareholder Value Cumulative Share Repurchases ($ In Billions) • Second Quarter Activity $6.5 – Repurchases totaling $5.7 $415 Million – 3.8 Million Shares @ avg $4.2 Price of $110.02 • Since 2007, 86.5 Million $3.0 $3.0 Shares Repurchased, Totaling $6.5 Billion $1.5 • 20.2 Million Sh
Slide 16: Positioned for Success in 2012
Second Quarter 2012 Earnings Release July 19, 2012 Jack Koraleski, CEO 31 Positioned for Success in 2012 • Growth Opportunities Despite Coal Headwinds • Confidence in Strategy – Provide Safe and Efficient Service to Customers – Remain Agile in Changing Environment – Target Growing Profitability, Imp
Slide 17: Cautionary Information
Cautionary Information This press release and related materials contain statements about the Corporation’s future that are not statements of historical fact, including specifically the statements regarding the Corporation’s expectations with respect to economic conditions and its ability to take adv