Union Pacific Corporation · NYSE:UNP
Union Pacific — Q1 2011 Earnings Presentation
18 slides from Union Pacific's earnings presentation, Apr 20, 2011
Slide 1: First Quarter Earnings Release
First Quarter Earnings Release April 20, 2011 Jim Young, Chairman & CEO 1 First Quarter Results Positives • First Quarter Records – Earnings – Operating Income – Operating Ratio – Free Cash Flow – Customer Satisfaction • Economic Growth Challenges • Fuel Price • Weather Impact - Nationwide 2 1
Slide 2: First Quarter Marketing & Sales Review
First Quarter Marketing & Sales Review April 20, 2011 Jack Koraleski, Executive VP – Marketing & Sales 3 Customer Satisfaction Overall Satisfaction 91 GOOD 90 90 89 88 88 87 87 87 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2009 2010 2011 4 2
Slide 3: First Quarter Recap; Agricultural Products
First Quarter Recap Daily 7-Day Carloads Volume Growth 180 (000s) 170 Chemicals +10% 160 Industrial 150 +9% Products 140 Agricultural +4% 130 1/8 1/22 2/5 2/19 3/5 3/19 Automotive +4% Performance Improvement (Year-Over-Year Change) Energy +4% +13% +8% Intermodal +4% +5% TOTAL +5% Volume ARC Freight
Slide 4: Automotive; Chemicals
Automotive Revenue $342M (+12%) Volume 157K (+4%) ARC $2,175 (+8%) Revenue Mix Finished Vehicles* 5% Auto Parts 90.0 24% 85.9 Finished Vehicles 76% 2010 2011 Auto Parts* Quarterly Drivers +4% • Increased Production as 64.8 67.3 Industry Recovery Continues • Contract Price Increases 2010 2011 *Volume
Slide 5: Energy; Industrial Products
Energy Revenue $952M (+13%) Volume 538K (+4%) ARC $1,770 (+8%) Revenue Mix Southern Powder River Basin* Other +5% 7% 47.4 Colorado/ Utah 45.3 17% Southern Powder River Basin 76% 2010 2011 Quarterly Drivers Colorado/Utah* • New Business Drives SPRB Gains 7.7 -5% 7.3 • Colorado/Utah Export Growth Offs
Slide 6: Intermodal; 2011 Outlook
Intermodal Revenue $793M (+15%) Volume 770K (+4%) ARC $1,031 (+11%) Revenue Mix International* +6% 425.5 402.9 Domestic 52% International 48% 2010 2011 Domestic* Quarterly Drivers • Repriced Contracts +1% 344.2 339.6 • Improved Consumer Demand • Continued Highway Conversions 2010 2011 *Volume in tho
Slide 7: Operations Review; Operating Foundation, Safety Focus
First Quarter Operations Review April 20, 2011 Lance Fritz, Executive VP – Operations 13 Operating Foundation, Safety Focus First Quarter Employee Customer Public (Reportable Personal Injury (Reportable Derailment Incidents (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Per Million Train M
Slide 8: Service Focus Drives Results; Productivity Improvement Initiatives
Service Focus Drives Results First Quarter 7-Day Carloadings (000s) Good 172 164 • Strong Service Levels 146 as Volumes Increase • Agility Demonstrated 2009 2010 2011 with Resources and Velocity* & Service Service Plan SDI** 92 89 87 Good • Resilient Network 27.2 26.2 26.1 • Leveraging Growth Speed
Slide 9: Growth Readiness – Working Resources; 2011 Capital Plan
Growth Readiness – Working Resources TE&Y Furloughs 4,500 2,800 GTMs per Employee 820 4/15/09 4/15/10 4/15/11 Locomotives Stored 1,900 GTMs per 1,330 Horsepower 800 Day 4/15/09 4/15/10 4/15/11 Freight Cars Parked 66,000 Freight Car 38,000 26,000 Utilization 4/15/09 4/15/10 4/15/11 17 2011 Capi
Slide 10: Operating Outlook; First Quarter Financial Review
Operating Outlook • Building a Total Safety Culture • Leveraging Network Productivity • Growing Value Proposition for our Customers • Positioning for Growth 19 First Quarter Financial Review April 20, 2011 Rob Knight, CFO 20 10
Slide 11: First Quarter Earnings Summary; Freight Revenue
First Quarter Earnings Summary In Millions (except EPS) 2011 2010 % Operating Revenues $ 4,490 $ 3,965 13 Operating Expenses 3,353 2,977 13 Operating Income 1,137 988 15 Other Income 15 1 F Interest Expense (141) (155) (9) Income Taxes (372) (318) 17 Net Income $ 639 $ 516 24 Weighted Average Dilute
Slide 12: Pricing Gains & Leverage; Compensation & Benefits
Pricing Gains & Leverage Core Pricing Incremental Margins 5.5% 5.5% 60% 60% 58% 5.0% 4.5% 48% 45% * 3.5% +18% +13% +14% +9% +5% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Year-over-year volume growth * Adjusted for fuel price & 2010 one-time CSXI payment. See Union Pacific website u
Slide 13: Fuel Expense; First Quarter 2011 Expense Review
Fuel Expense First Quarter 2011 $826M, +42% Average Fuel Price (Per Gallon Consumed) +33% $2.88 • Higher Diesel Fuel Prices $1.51 $2.16 Added $200 Million to Costs • Current Spot Price = $3.35 2009 2010 2011 • Third Highest Quarterly Fuel Price on Record Fuel Consumption (Million Gallons) 278 • Nega
Slide 14: Expense Review (cont); Achieving Record Operating Ratio
First Quarter 2011 Expense Review (cont) In Millions Equipment & Other Rents • Higher Container Lease $317 $290 $302 Expense • Increased Car Hire • Lower Freight Car Lease Expense 2009 2010 2011 Other • „10 CSXI Payment $226 $246 • Reduced Personal Injury $188 and Other Casualty Expenses • Higher Pr
Slide 15: Solid Financial Position; Driving Strong Shareholder Value
Solid Financial Position First Quarter – $ In Millions Free Cash Flow* $637 Before Dividends $561 • Record First Quarter $426 $451 After Dividends Free Cash Flow 2010 2011 • 38 Percent Cash Dividend Increase Total Debt * (Adjusted) • Maintain Solid $13,139 $12,900 Investment Grade 42.5% 41.7% YE 201
Slide 16: Full Year 2011; First Quarter Earnings Release
Full Year 2011 • Continued Volume Growth • “Real” Pricing Gains • Ongoing Productivity Focus • Incremental Margin Improvement • Record Earnings Despite Cost Headwinds 31 First Quarter Earnings Release April 20, 2011 Jim Young, Chairman & CEO 32 16
Slide 17: Positioned For Success; Cautionary Information
Positioned For Success • Strong UP Value Proposition – Price/Service – Franchise • Reward Shareholders 33 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 statement
Slide 18: Question & Answer Session
First Quarter Earnings Release April 20, 2011 Question & Answer Session 35 18