Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2016 Earnings Presentation
16 slides from Union Pacific's earnings presentation, Jan 19, 2017
Slide 1: Fourth Quarter 2016 Earnings Release
January 19, 2017 Fourth Quarter 2016 Earnings Release Lance Fritz Chairman, President & CEO 1 Fourth Quarter 2016 Results Earnings Per Share Operating Ratio Fourth Quarter Fourth Quarter +6% $1.31 $1.39 -1.2 pts 63.2 62.0 2015 2016 2015 2016 2
Slide 2: Marketing & Sales Review
Creating Value the UP Way 3 January 19, 2017 Fourth Quarter 2016 Marketing & Sales Review Beth Whited Executive VP & Chief Marketing Officer 4
Slide 3: Fourth Quarter 2016 Recap; Agricultural Products
Fourth Quarter 2016 Recap Volume Growth 7-Day Monthly Carloadings (000s) Agricultural Products +8% 210 Intermodal -1% 2006 @192 190 2014 @188 Automotive -3% 2013 @176 170 2015 @177 Chemicals -5% 2016 @164 Industrial Products -5% 150 Coal -9% 130 January December TOTAL -3% 5 Agricultural Products Rev
Slide 4: Automotive and Chemicals
Automotive Revenue $517M (-6%) Volume 219K (-3%) ARC $2,362 (-3%) Finished Vehicles* Auto Parts* 129.7 -6% 121.9 Volume Mix +2% 94.6 97.0 Auto Parts Finished 44% Vehicles 56% 2015 2016 2015 2016 Q Quarterly t l Drivers Di • Contract Changes • Strong Year End Vehicle Demand • Continued Parts Strength
Slide 5: Coal and Industrial Products
Coal Revenue $699M (-6%) Volume 320K (-9%) ARC $2,183 (+4%) Powder River Basin* Other Regions (Tons in MM) (Tons in MM) Volume Impact -16% (Weekly Carloadings) 34.9 50 50,000 000 29.3 +24% 40,000 2014 8.2 6.6 30,000 2015 2015 2016 2015 2016 20,000 2016 Q Quarterly t l Drivers Di 10,000 • Mild Start
Slide 6: Intermodal and 2017 Volume Outlook
Intermodal Revenue $969M (Flat) Volume 827K (-1%) ARC $1,172 (+1%) Domestic* International* 448.5 +2% 457.2 Volume Mix -4% 387 2 387.2 369 9 369.9 International Domestic 45% 55% 2015 2016 2015 2016 Quarterly Drivers • Increased Retail Sales Supports Domestic Growth • Continued Effects of Ocean Carri
Slide 7: Operations Review: Safety
January 19, 2017 Fourth Quarter 2016 Operations Review Cameron Scott Executive VP & Chief Operating Officer 13 Safety Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles*) Good Good 1.06 1.10 -3% 0 98 0.98
Slide 8: Network Performance; Volume & Performance Drive Resources
Network Performance Velocity Terminal Dwell (As Reported to the AAR, in mph) (As Reported to the AAR, in hours) Good Good -2% -1% 27.0 29.4 29.0 26.5 4Q15 4Q16 4Q15 4Q16 Recrew Rate Good ((%)) • Solid Operating Results 2.4 Flat 2.4 • FY 2016 Record Recrew Rate 4Q15 4Q16 15 Volume & Performance Drive
Slide 9: Strengthening the Franchise; Operating Outlook
Strengthening the Franchise Replacement, Growth & Productivity, and PTC 2017 Capital Plan: ~$3.1 Billion* • Safe & Resilient Infrastructure ($ in Millions) Locomotives/ E i Equipmentt • Capacity C it Investments I t t $435 Technology/ • Southern Region Other $240 • Network Strategies Infrastructure
Slide 10: Fourth Quarter Income Statement
January 19, 2017 Fourth Quarter 2016 Financial Review Rob Knight Executive VP & Chief Financial Officer 19 Fourth Quarter Income Statement $ in Millions (except EPS) 2016 2015 % Operating Revenues $5,168 $5,208 (1) O Operating ti Expenses E 3 203 3,203 3 290 3,290 (3) Operating Income 1,965 1,918 2
Slide 11: Freight Revenue; Fourth Quarter Operating Expenses
Freight Revenue Fourth Quarter ($ In Millions) -1.0% $4,863 $4,832 -3.0% -0.5% +1.5% +1.0% Volume Fuel Mix Core Surcharge Price 2015 2016 21 Fourth Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits -3% $1,220 $1,186 +2% $424 $431 2015 2016 2015 2016 Purchased Services & • Full Ye
Slide 12: Operating Expenses (cont); Full Year Income Statement
Fourth Quarter Operating Expenses (cont) $ In Millions Depreciation Equipment & Other Rents +1% $517 $520 $ -8% $305 $280 2015 2016 2015 2016 Other Expenses 2017 Outlook: $235 -1% $233 • Depreciation up ~ 4% to 5% • Other Expenses up slightly 2015 2016 23 Full Year Income Statement $ in Millions (ex
Slide 13: Cash Flow & Debt; Delivering Value to Shareholders
Cash Flow & Debt $ In Millions Cash From Ops Capex $7,344 +2% $7,525 • Lower Net Income -19% $4,317 $ ,3 $3,481 • Bonus B D Depreciation i ti 2015 2016 2015 2016 • Capital Investments Adjusted Debt* • 2016 YTD Debt Issuance: $17 390 $17,390 $17,878 ~ $1.9 Billion $14,838 1.90 • Increased Adj. Debt o
Slide 14: A Look Ahead to 2017
2016 Core Price, Productivity, and Rail Inflation • Positive Core Price • Challenging Market Environment • Committed to Returns • ~$450 $ Million Productivity y • Low Inflation 27 A Look Ahead to 2017 2017 Expectations Operating Ratio • Low Single Digit Volume 4Q14: $438 (%) Gro Growth th 63.5 • Pri
Slide 15: Looking Ahead
January 19, 2017 Fourth Quarter 2016 Earnings Release Lance Fritz Chairman, President & CEO 29 Looking Ahead • Fairly Optimistic on Macro Economic Drivers • New Year Uncertainties • Well Positioned to Leverage Volume I Increases • Strong Returns for Shareholders 30
Slide 16: 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 and demand levels; its ability to ge