Union Pacific Corporation · NYSE:UNP
Union Pacific — Q2 2017 Earnings Presentation
15 slides from Union Pacific's earnings presentation, Jul 20, 2017
Slide 1: Second Quarter 2017 Results
July 20, 2017 Second Quarter 2017 Earnings Release Lance Fritz Chairman, President & CEO 1 Second Quarter 2017 Results Earnings Per Share Operating Ratio Second Quarter Second Quarter +24% $1.45 -3.4 pts. 65.2 $1.17 Second 61.8 Quarter Second Record Quarter Record 2016 2017 2016 2017 2
Slide 2: Second Quarter 2017 Recap
July 20, 2017 Second Quarter 2017 Marketing & Sales Review Beth Whited Executive VP & Chief Marketing Officer 3 Second Quarter 2017 Recap Volume Growth 7-Day Monthly Carloadings (000s) Coal +17% 210 Industrial Products +15% 2006 @192 190 2014 @188 Agricultural Products +3% 170 2017 @165 2015 @177 In
Slide 3: Agricultural Products and Automotive
Agricultural Products Revenue $907M (+7%) Volume 237K (+3%) ARC $3,813 (+3%) Grain* Grain Food & Products* Refrigerated* +11% % 92.4 Volume Mix 83.1 -3% 76.2 74.0 +3% 53.0 54.5 Food & Refrigerated 23% Grain 2016 2017 2016 2017 2016 2017 46% Grain Products 31% Quarterly Drivers • Continued Wheat Expo
Slide 4: Chemicals and Coal
Chemicals Revenue $898M (+4%) Volume 269K (-2%) ARC $3,334 (+6%) Petroleum & LPG* Plastics* Fertilizer* Volume Mix +6% 66 8 66.8 62.9 Petrol. -20% & LP Gas 56.2 +13% 17% 50.7 Fertilizer 45.2 44.7 Soda Ash 19% 11% Soda Ash 12% Industrial Plastics 2016 2017 2016 2017 2016 2017 Chemicals 25% 28% Quarte
Slide 5: Industrial Products and Intermodal
Industrial Products Revenue $1,030M (+24%) Volume 315K (+15%) ARC $3,271 (+8%) Specialized Minerals* Markets* +73% 76.8 Volume Mix Other Lumber 44.4 +20% 35.6 Minerals 11% Paper 29.6 6% 8% Frac Sand* 18% Construction 2016 2017 2016 2017 Specialized 32% Markets 12% Metals M t l Quarterly Drivers 13%
Slide 6: 2017 Volume Outlook
2017 Volume Outlook Agricultural Products Coal + Food and Refrigerated ? Price of Natural Gas ? Grain - Year Over Year Comparisons Automotive Industrial Products + Over the Road Conversions + Frac Sand - Consumer Demand - Construction Products Chemicals Intermodal + Plastics + Over the Road Conversi
Slide 7: 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 1.12 1.06 3.19 -4% 3 13 3.13 3 01 3.01 0.82 +9% 2.71 0.70 0.76 2.61 First Half Record 1H13 1H14 1H15 1H16 1H17 1H13 1H14 1H15 1H16 1H1
Slide 8: Resources and Productivity
Resources TE&Y (Full-Time Equivalent) TE&Y +4% 13,761 14,282 • Volume Increase • Network Disruptions • Productivity Offsets 2Q16 2Q17 Mechanical & Engineering ((Full-Time Equivalent) q ) Mechanical & Engineering -5% 20,175 19,149 • Fewer Capital Employees Driven by Productivity 2Q16 2Q17 15 Producti
Slide 9: Operating Outlook
Operating Outlook • Continue Generating Positive Safety Results • Leverage Franchise Strengths • Focus on Productivity & Customer Experience 17 July 20, 2017 Second Quarter 2017 Financial Review Rob Knight Executive VP & Chief Financial Officer 18
Slide 10: Second Quarter Income Statement and Freight Revenue
Second Quarter Income Statement $ in Millions (except EPS) 2017 2016 % Operating Revenues $5,250 $4,770 10 O Operating ti Expenses E 3 245 3,245 3 110 3,110 4 Operating Income 2,005 1,660 21 Other Income 43 77 (44) Interest Expense (179) (173) 3 Income Taxes (701) (585) 20 Net Income $1,168 $979 19
Slide 11: Second Quarter Operating Expenses
Second Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits +3% +25% $434 $1,160 , $1,197 $346 2016 2017 2016 2017 Purchased Services & • Inflation and Volume Related Materials Increases +5% $597 $570 • Solid Productivity Gains • Higher Diesel Fuel Prices 2016 2017 21 Second Quarter
Slide 12: Cash Flow & Debt; Delivering Value to Shareholders
Cash Flow & Debt $ In Millions Cash From Operations $3,525 -2% $3,459 • Higher Net Income • 2016 Bonus Depreciation 1H 2016 1H 2017 Benefit Adjusted Debt* $17,390 $17 878 $17,878 $18 440 $18,440 • Increased Adj Adj. Debt $14,838 1.9 1.9 ~$5.7 Billion since 2013 $12,751 1.4 1.7 1.4 12/31/13 12/31/14
Slide 13: Productivity and 2017 Outlook
Productivity Initiatives: 2017 YTD Results ($ in millions) Network and TE&Y / Train length g / Train Ops Joint facility $110 $90 $36 Equipment Active fleet / Car repair / $36 (Loco and Car) Equip rental costs $21 $22 Engineering / Fuel conservation / $53 Other Ops, Intermodal & Premium Ops / Admin /
Slide 14: Looking Ahead
July 20, 2017 Second Quarter 2017 Earnings Release Lance Fritz Chairman, President & CEO 27 Looking Ahead Full Year: • Top Line Growth • Margin Improvement • Greater Shareholder Returns 28
Slide 15: 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