Union Pacific Corporation · NYSE:UNP
Union Pacific — Q1 2019 Earnings Presentation
15 slides from Union Pacific's earnings presentation, Apr 18, 2019
Slide 1: First Quarter 2019 Earnings Release
April 18, 2019 First Quarter 2019 Earnings Release Lance Fritz Chairman, President & CEO 1 First Quarter 2019 Results Earnings Per Share Operating Ratio First Quarter First Quarter +15% $1.93 -1.0 pts. 64.6 63.6 $1.68 2018 2019 2018 2019 2
Slide 2: First Quarter 2019 Recap
April 18, 2019 First Quarter 2019 Marketing & Sales Review Kenny Rocker Executive Vice President – Marketing & Sales 3 First Quarter 2019 Recap Volume Growth 7-Day Monthly Carloadings (000s) 190 Energy -15% 180 2018 @174 Agricultural -7% 2017 @168 170 Premium +2% 2019 @165 160 Industrial +4% 150 TOT
Slide 3: Agricultural Products and Energy
Agricultural Products Revenue $1,067M (-3%) Volume 259K (-7%) ARC $4,123 (+5%) Grain* Grain Food & Products Beverage Volume Mix -7% 86.9 -6% 81.2 78.9 74.1 Food & -10% 51.7 Refrigerated 46.5 18% Grain 37% Fertilizer 2018 2019 2018 2019 2018 2019 16% Grain Quarterly Drivers Products 29% • Reduced Gra
Slide 4: Industrial and Premium
Industrial Revenue $1,410M (+5%) Volume 429K (+4%) ARC $3,292 (+1%) Construction Plastics Metals +12% 94.3 Volume Mix 84.2 +8% 65.9 70.9 +6% Specialized 45.3 48.1 12% Soda Ash Construction 7% 22% Plastics Forest 2018 2019 2018 2019 2018 2019 17% Products 13% Metals Industrial Quarterly Drivers 11% C
Slide 5: 2019 Volume Outlook
2019 Volume Outlook Agricultural Products Industrial + Biofuels + Plastics + Food and Beverage + Industrial Production ? Grain Energy Premium + Petroleum Products + Light Truck / SUV Sales – Sand ? International – Coal Headwinds ? Trade & Economy 9 April 18, 2019 First Quarter 2019 Operations Review
Slide 6: Significant Weather Impact and Unified Plan 2020 KPIs
Significant Weather Impact • Heavy Snowfall in the Midwest & PNW, Followed by Catastrophic Flooding • Significant Track Outages, Including East/West Mainline for 13 Days • Network Fluidity Negatively Impacted Flooding along the Falls City Subdivision • Team Worked Around the Clock to Safely and Effi
Slide 7: Unified Plan 2020 Key Performance Indicators and Update
Unified Plan 2020 Key Performance Indicators Locomotive Productivity Workforce Productivity (GTMs per Horsepower Day) (Daily Car Miles per FTE) Good Good +6% -2% 111 826 812 105 Full Year Record 1Q18 1Q19 1Q18 1Q19 Car Trip Plan Compliance • ~1,900 Stored Locomotives as (% Cars On Time) Good of Marc
Slide 8: Operating Outlook
Operating Outlook • Resilient Network • Key Operating Metrics Improving • Continued Focused On: – Safety – Network Efficiency – Service Reliability 15 April 18, 2019 First Quarter 2019 Financial Review Rob Knight Executive Vice President & Chief Financial Officer 16
Slide 9: First Quarter Operating Ratio and EPS; Income Statement
First Quarter Operating Ratio and EPS Favorable / (Unfavorable) Operating Ratio EPS First Quarter 2018 64.6% $1.68 Weather Impact (1.6) pts ($0.15) Lost Revenue (Net of Volume Savings) (0.8) pts ($0.11) Additional Operating Costs (0.8) pts ($0.04) Payroll Tax Refund 0.8 pts $0.07 Fuel Impact 0.9 pts
Slide 10: First Quarter Freight Revenue and Operating Expenses
First Quarter Freight Revenue $ In Millions -2% $5,122 $5,010 -2.0% +1.0% -4.0% +2.75% Volume Fuel Mix Core Surcharge Price 2018 2019 19 First Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits -10% $589 -5% $531 $1,273 $1,205 2018 2019 2018 2019 Purchased Services & • Payroll Tax
Slide 11: Operating Expenses and Productivity Update
First Quarter Operating Expenses $ In Millions Depreciation Equipment & Other Rents +1% $543 $549 -3% $266 $258 2018 2019 2018 2019 Other Expenses • Higher Depreciable Asset Base +15% $305 • Lower Equipment Lease Expense $266 and Volume Related Costs • Increased Casualty Costs 2018 2019 21 Productiv
Slide 12: Cash Flow & Debt; Delivering Value to Shareholders
Cash Flow & Debt $ In Millions Cash From Operations +3% • Higher Net Income $1,901 $1,959 • Free Cash Flow Conversion Rate: 84% of Net Income 1Q 2018 1Q 2019 • Increased Adjusted Debt $2.5 Adjusted Debt* Billion since Year-End 2018 $27,638 − Includes $3.0 Billion Debt $25,118 2.6 Offering in Februar
Slide 13: 2019 Outlook Unchanged
2019 Outlook Unchanged • Low Single Digit Volume Growth • Continued Pricing Gains In Excess of Inflation Dollars • Capital Expenditures of ~$3.2 Billion • Significant Productivity Savings from G55 + 0, Including Unified Plan 2020 − At Least $500 Million of Productivity in 2019 • Operating Ratio Guid
Slide 14: Looking Ahead; Cautionary Information
Looking Ahead • Record First Quarter Results • Unified Plan 2020 • Consistent and Reliable Service • Focus on Shareholder Returns 27 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including spec
Slide 15: Question & Answer Session
April 18, 2019 First Quarter 2019 Earnings Release Question & Answer Session 29