Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2012 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Oct 18, 2012
Slide 1: Third Quarter 2012 Earnings Release
Third Quarter 2012 Earnings Release October 18, 2012 Jack Koraleski, CEO 1 Third Quarter 2012 Results Earnings Per Share Positives Third Quarter • All-Time Quarterly Records +18% $2.19 – Operating Revenue All-Time $1.85 Quarterly – Operating Income Record – Operating Ratio $1.56 – Earnings – Custome
Slide 2: Marketing & Sales Review: Customer Satisfaction
Third Quarter 2012 Marketing & Sales Review October 18, 2012 Eric Butler, Executive VP – Marketing & Sales 3 Customer Satisfaction 93 93 94 GOOD 92 92 All-Time 91 91 90 90 Quarterly 89 Record 87 180 180 181 178 175 175 174 172 172 169 164 92 = Full Year Record 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2010 2
Slide 3: Third Quarter Recap; Agricultural Products
Third Quarter Recap Revenue Mix Volume Growth Intermodal 20% Chemicals s +18% Industrial 17% Agricultural 16% Automotive ve +13% Autos Coal 9% 21% Intermodal +1% Chemicals 17% Industrial -2% Products Freight Revenue Performance Agricultural -2% (Year-Over-Year Change) +4% +4% Sub Total (excl Coal) +
Slide 4: Automotive and Chemicals
Automotive Revenue $436M (+15%) Volume 181K (+13%) ARC $2,407 (+2%) Finished Vehicles* Volume Mix +13% 104.5 Auto Parts 92.2 42% Finished Vehicles 58% 2011 2012 Auto Parts* +12% Quarterly Drivers 76.5 68.1 • Pent-up Demand to Replace Aging Vehicles • Improved Consumer Credit 2011 2012 *Volume in tho
Slide 5: Coal and Industrial Products
Coal Revenue $1,058M (-5%) Volume 501K (-12%) ARC $2,111 (+9%) Volume Impact Southern Powder River Basin* (Weekly Carloadings) -13% 47,000 51.5 Other 13% 43,000 44.7 39,000 Southern Powder 2011 35,000 River Basin2012 74% 31,000 2011 2012 27,000 1Q 2Q 3Q 4Q Colorado/Utah* Quarterly Drivers +2% 8.2 8.
Slide 6: Intermodal; Fourth Quarter 2012 Outlook
Intermodal Revenue $1,022M (+8%) Volume 857K (+1%) ARC $1,192 (+7%) Volume Mix International* +1% 465.2 469.9 Domestic 45% International 55% 2011 2012 Domestic* Quarterly Drivers +1% 387.3 382.3 • Slow Economic Recovery Continues • Highway Conversions 2011 2012 *Volume in thousands of units 11 Fourt
Slide 7: Operations Review: Operating Foundation, Safety Focus
Third Quarter 2012 Operations Review October 18, 2012 Lance Fritz, Executive VP - Operations 13 Operating Foundation, Safety Focus Third Quarter YTD Employee Rail Equipment Public (Reportable Personal Injury (Reportable Rail Equipment (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Incident
Slide 8: Network Performance and Productivity
Network Performance Third Quarter Velocity (as Reported to the AAR) Good 27.4 +6% • Agility and Resiliency 23.7 All-Time Quarterly 25.7 24.6 26.1 Demonstrated with Record Resources and Service Plan 2008 2009 2010 2011 2012 • Volume Growth in Service Delivery* and IS&P Southern Region Industry Spot &
Slide 9: Agility and Resource Readiness; 2012 Operating Outlook
Agility and Resource Readiness Volume Growth TE&Y Active Workforce (YTD 2012 vs. YTD 2011) 6% 5% South 10% Flat North -2% Flat West -2% South Total South Total 3Q12 vs. 3Q11 YTD12 vs. YTD11 Total 1% Active Locomotive Fleet (YTD 2012 vs. YTD 2011) • Volumes in South Back to Pre- Recession Levels Sout
Slide 10: Financial Review: Third Quarter Earnings Summary
Third Quarter 2012 Financial Review October 18, 2012 Rob Knight, CFO 19 Third Quarter Earnings Summary In Millions (except EPS) 2012 2011 % Operating Revenues $5,343 $5,101 5 Operating Expenses 3,557 3,523 1 Operating Income 1,786 1,578 13 Other Income 28 17 65 Interest Expense (137) (142) (4) Incom
Slide 11: Freight Revenue; Compensation & Benefits Expense
Freight Revenue Third Quarter (In Millions) +4% +5% $5,019 $4,836 -1% -1% +1% Volume Fuel Fuel Core & Mix Surcharge Surcharge Price (Lag (Improved Impact) Coverage) 2011 2012 21 Compensation & Benefits Expense Third Quarter 2012 $1,188M, Flat Compensation & Benefits (in Millions) • Lower GTMs and Tr
Slide 12: Fuel Expense; Expense Review
Fuel Expense Third Quarter 2012 $880M, -4% Gross-Ton-Miles (in Millions) • Reduced Costs driven -2% 250,855 by Lower Volumes 245,415 • Coal Declines driving GTMs down 2% 2011 2012 Average Fuel Price (Per Gallon Consumed) • Diesel Fuel Prices Flat $3.18 Flat $3.19 Compared to 2011 • Rising Fuel Price
Slide 13: Expense Review (cont); Operating Ratio Performance
Third Quarter 2012 Expense Review (cont) In Millions Equipment & Other Rents +2% • Higher Short-Term Freight $300 $293 Car Rental Expense • Lower Locomotive and Freight Car Lease Expenses 2011 2012 Other • Lower Equipment & Freight -3% $207 Damage Expenses $200 • Lower Volume-Related Costs & Cost Co
Slide 14: Strong Financial Position; Driving Strong Shareholder Value
Strong Financial Position Nine Month Period Ending September 30 ($ In Millions) Free Cash Flow* $4,334 $4,366 • Solid Free Cash Flow ($2,241) ($2,866) ԟ Larger Capital Spend ($860) ԟ 42% Cash Dividend ($607) Increase 2011 2012 2011 2012 2011 2012 Cash from Investing Dividends • Strong Cash from Ops
Slide 15: 2012 Outlook
2012 Outlook Fourth Quarter • Uncertain Economic Environment • Volumes likely Flat to Modestly Negative • Sub-70 Operating Ratio Full Year • Sub-70 Operating Ratio & Record Earnings • Longer-Term Prospects • Growing Shareholder Returns 29 Third Quarter 2012 Earnings Release October 18, 2012 Jack Kor
Slide 16: Union Pacific's Prospects Going Forward; Cautionary Information
Union Pacific’s Prospects Going Forward • Economic Uncertainties • Remain Agile in Changing Environment • Positive on Longer- Term Opportunities • Strategic Investments • Increase Customer Value • Generate Strong Shareholder Returns 31 Cautionary Information This press release and related materials
Slide 17: Question & Answer Session
Third Quarter 2012 Earnings Release October 18, 2012 Question & Answer Session 33