Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2013 Earnings Presentation
16 slides from Union Pacific's earnings presentation, Oct 17, 2013
Slide 1: Third Quarter 2013 Record Results
Third Quarter 2013 Earnings Release October 17, 2013 Jack Koraleski, CEO 1 Third Quarter 2013 Record Results Earnings Per Share Positives Third Quarter +13% • Best-Ever Quarter $2.48 – Operating Revenue $2.19 Best-Ever Quarter – Operating Income $1.85 – Operating Ratio – Earnings • Franchise Diversi
Slide 2: Third Quarter 2013 Recap
Third Quarter 2013 Marketing & Sales Review October 17, 2013 Eric Butler, Executive VP – Marketing & Sales 3 Third Quarter 2013 Recap Freight Revenue Mix Volume Growth Intermodal 19% Industrial +9% Industrial Products 18% Agricultural 15% Autos Automotive +8% Coal 10% 21% Chemicals 17% Chemicals +3%
Slide 3: Agricultural Products and Automotive
Agricultural Products Revenue $771M (-2%) Volume 210K (-4%) ARC $3,679 (+2%) Grain* -9% Volume Mix 69.9 63.8 Grain Products 36% 2012 2013 Food & Refrigerated 27% Grain Products* Grain 37% +3% 75.2 73.2 2012 2013 Quarterly Drivers Food & Refrigerated* • Limited Corn Supply -4% 58.7 • Replenishment of
Slide 4: Coal and Industrial Products
Coal Revenue $1,082M (+2%) Volume 468K (-7%) ARC $2,312 (+10%) Volume Impact (Weekly Carloadings) Southern Powder River Basin* -8% Other 44.7 45,000 13% 41.1 41,000 2011 37,000 Southern Powder River Basin 33,000 74% (7%) 2012 29,000 WY 2012 2013 (19%) Flat Blizzard 2013 25,000 1Q 2Q 3Q 4Q Colorado/U
Slide 5: Intermodal and Chemicals
Intermodal Revenue $1,027M (Flat) Volume 848K (-1%) ARC $1,211 (+2%) Volume Mix International* -5% 469.9 Domestic 444.1 48% International 52% 2012 2013 Domestic* Quarterly Drivers +4% 404.2 • Port Transloading Impacts 387.3 International • Highway Conversions Drive Domestic Growth 2012 2013 *Volume
Slide 6: Union Pacific Crude-by-Rail and Fourth Quarter 2013 Outlook
Union Pacific Crude-by-Rail Crude Oil Carloads (000s) 45.6 46.9 • Dynamic & Evolving 36.7 40.5 41.3 38.5 33.7 Marketplace 22.0 • Spreads Impact Crude St. James Flows FY 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2011 2012 2013 • New Destination Facilities Being Developed • Long-term Fundamentals Remain Solid 11 Fourth Qu
Slide 7: Dedicated Focus on Safety
Third Quarter 2013 Operations Review October 17, 2013 Lance Fritz, Executive VP - Operations 13 Dedicated Focus on Safety Third Quarter YTD Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles) Good Good -3
Slide 8: Network Performance and Productivity
Network Performance Third Quarter Velocity (as Reported to the AAR) Good • Sequential and Year-Over- 25.7 26.1 +1% 26.3 Year Improvement 24.6 • Colorado Flooding Impact • Agility & Resiliency 2010 2011 2012 2013 Demonstrated with Service Delivery* and IS&P Resources & Service Plan Good Industry Spot
Slide 9: Full Year 2013 / Financial Review
Full Year 2013 • Safety, Service and Network Productivity • Resource Agility • Effective Capital Deployment • Well Positioned for Growth with Excellent Service 17 Third Quarter 2013 Financial Review October 17, 2013 Rob Knight, CFO 18
Slide 10: Third Quarter Income Statement and Freight Revenue
Third Quarter Income Statement In Millions (except EPS) 2013 2012 % Operating Revenues $5,573 $5,343 4 Operating Expenses 3,611 3,557 2 Operating Income 1,962 1,786 10 Other Income 28 28 - Interest Expense (138) (137) 1 Income Taxes (701) (635) 10 Net Income $1,151 $1,042 10 Weighted Average Diluted
Slide 11: Compensation & Benefits and Fuel Expense
Compensation & Benefits Expense Third Quarter 2013 $1,196M, +1% Compensation & Benefits (in Millions) $1,188 +1% $1,196 • Inflation Costs • Higher Training Costs • Productivity Gains • Flat Volume 2012 2013 Workforce Levels (Quarterly Average) +1% 46,605 • Increased Workforce 46,205 – TE&Y Training
Slide 12: Third Quarter 2013 Expense Review
Third Quarter 2013 Expense Review In Millions Purchased Services & Materials +8% $588 • Increased Locomotive & $542 Freight Car Repair Costs • Joint Facility Maintenance • Logistics Management Fees 2012 2013 Depreciation Flat • Higher Depreciable Asset $447 $447 Base • New Equipment Rate Study • Tim
Slide 13: Operating Ratio Performance and Strong Financial Position
Operating Ratio Performance Third Quarter (Percent) Best-Ever Quarter 69.1 • Solid Core Pricing -1.8 pts 66.6 64.8 • Productivity Gains & Best-Ever Network Efficiencies Quarter • Flat Volumes YTD Operating Ratio = 66.5% Reiterate Full Year Sub- 65 Operating Ratio 2011 2012 2013 Goal by 2017 25 Stron
Slide 14: Driving Strong Shareholder Value / Looking Ahead to 2014
Driving Strong Shareholder Value Quarterly Share Repurchases ($ In Millions) $575 • Repurchase Activity $463 $433 $415 $394 $378 ‒ 3.7 Million Shares in 3Q $248 ‒ 9.6 Million Shares YTD 2012 2013 2012 2013 2012 2013 2012 1Q 2Q 3Q 4Q • Cash Returned to Shareholders in Dividends & Share Repurchases Di
Slide 15: Potential of the UP Franchise
Third Quarter 2013 Earnings Release October 17, 2013 Jack Koraleski, CEO 29 Potential of the UP Franchise • Well Positioned for Economic Recovery – Capitalize on Opportunities – Navigate through Challenges • Reinvestible Pricing • Leverage Capital Investments • Grow Customer Value & Shareholder Retu
Slide 16: 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 future economic improvement and its ability to