Slide 1: First Quarter 2023 Earnings Release
FIRST QUARTER 2023 EARNINGS RELEASE Lance Fritz, Chairman, President, & CEO April 20, 2023
Slide 2: First Quarter 2023 Results
First Quarter 2023 Results Earnings Per Share Operating Ratio 62.1% $2.57 $2.67 59.4% 2.7 pts 4% vs 2022 vs 2022 1Q 2022 1Q 2023 1Q 2022 1Q 2023 Key Themes Excess Service Costs and Higher Fuel Surcharges and Significant Weather Interruptions Inflationary Pressure Core Pricing Gains 2
Slide 3: Marketing & Sales Review
FIRST QUARTER 2023 MARKETING & SALES REVIEW Kenny Rocker Executive Vice President – Marketing & Sales 3
Slide 4: Bulk
FIRST QUARTER 2023 Bulk Revenue $1,897 (+4%) Volume 507K (-3%) ARC $3,743 (+7%) Major Markets Grain & Fertilizer Food & Coal & Grain Products Refrigerated Renewables 225 216 205 202 -1% -4% 45 45 47 44 Flat -6% 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 Quarterly Drivers Service
Slide 5: Industrial
FIRST QUARTER 2023 Industrial Revenue $2,017 (+5%) Volume 536K (Flat) ARC $3,760 (+5%) Major Markets Industrial Chemicals Metals & Forest Energy & & Plastics Minerals Products Specialized 182 188 160 157 +3% 131 139 -2% +6% 64 52 -19% 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 Q
Slide 6: Premium
FIRST QUARTER 2023 Premium Revenue $1,742 (+3%) Volume 934K (-1%) ARC $1,866 (+5%) Major Markets Automotive Intermodal 757 734 -3% 190 200 +5% 1Q 2022 1Q 2023 1Q 2022 1Q 2023 Quarterly Drivers Increased Inland International High Retail Inventories & Continued Autos Strength Intermodal Shipments Incr
Slide 7: 2023 Volume Outlook
2023 Volume Outlook Bulk Industrial Premium Grain Industrial Production Domestic Intermodal Coal Forest Products International Intermodal Biofuels Metals Automotive Construction 7
Slide 8: Operations Review
FIRST QUARTER 2023 OPERATIONS REVIEW Eric Gehringer Executive Vice President – Operating 8
Slide 9: March Toward Zero Safety Incidents
March Toward Zero Safety Incidents • Rail is the safest way to move freight over land • Derailment prevention initiatives are fundamental to safe train operations at Union Pacific – State-of-the-art technology – Operating Practices Command Center – More than 7,000 wayside detection devices UP Derail
Slide 10: Building Network Resiliency
Building Network Resiliency FREIGHT CAR VELOCITY (Daily Miles per Car) 202 177 2023 2022 Jan Feb Mar Apr Train, Engine, & Yard Employees OPERATING INVENTORY 201,334 +5% 11,874 11,544 11,519 11,571 11,261 178,114 2023 2022 Jan Feb Mar Apr Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Active Trainees 10 * As reported
Slide 11: Key Performance Metrics
FIRST QUARTER 2023 Key Performance Metrics FREIGHT CAR VELOCITY INTERMODAL TRIP PLAN MANIFEST/AUTO (Daily Miles per Car) COMPLIANCE TRIP PLAN COMPLIANCE (% of Boxes On Time) (% of Cars On Time) 71 72 198 62 61 196 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 4Q 2022: 191 4Q 2022: 73 4Q 2022: 58 Q
Slide 12: Key Performance Metrics
FIRST QUARTER 2023 Key Performance Metrics LOCOMOTIVE WORKFORCE TRAIN LENGTH PRODUCTIVITY PRODUCTIVITY (Max on Route, in Feet) (GTMs Per HP Day) (Daily Miles per FTE) 9,205 9,159 1,056 991 130 123 1Q 2022 1Q 2023 1Q 2022 1Q 2023 1Q 2022 1Q 2023 4Q 2022: 123 4Q 2022: 1,010 4Q 2022: 9,191 Quarterly Dr
Slide 13: 2023 Operating Success Drivers
2023 Operating Success Drivers World Class Safety Engagement Service Productivity • Enhance and drive • Improve quality of life for • Consistent and reliable • Recover lost productivity robust Safety craft professionals • Increase resiliency • Pursuing tech enabled Management Systems process initiat
Slide 14: Financial Review
FIRST QUARTER 2023 FINANCIAL REVIEW Jennifer Hamann Executive Vice President & Chief Financial Officer 14
Slide 15: First Quarter Income Statement
First Quarter Income Statement 2023 vs. 2023 2022 2022 Operating Revenues $6,056- $5,860- 3---- % Operating Expenses 3,762- 3,483- 8)--- Operating Income 2,294- 2,377- (3)--- Other Income 184- 47- F)--- Interest Expense (336) (307) 9)--- Income Taxes (512) (487) 5 )-- Net Income $1,630 $1,630 -----
Slide 16: Fuel Surcharge and Core Pricing Gains Offset Negative Mix and Lower Volumes
Fuel Surcharge and Core Pricing Gains Offset Negative Mix and Lower Volumes Freight Revenues $ in Millions 4% $5,656 $258 $38 $5,440 ($80) Volume Fuel Surcharge Price/Mix 158 (1.50%) 4.75% 0.75% 155 1Q 1Q 2022 2023 16 7 Day Volume (000s)
Slide 17: Service Recovery, Inflation, and Weather Impact Cost Structure
Service Recovery, Inflation, and Weather Impact Cost Structure Operating Expenses $ in Millions 8% $3,762 $20 $20 $17 $3,483 $92 $52 $78 7% 7% 16% 9% 3% 6% Compensation Fuel Purchased Equipment Depreciation Other & Benefits Services & & Other Materials Rents 1Q 1Q 2022 2023 17
Slide 18: Cash Generation & Returns to Shareholders
Cash Generation & Returns to Shareholders Cash From Operations ($ in millions) $2,236 • Generated $1.8 Billion in Cash From Operations $1,840 – Decrease driven by Presidential Emergency Board back pay Cash Flow 85% Conversion* settlements of $383 million 66% • Returned $1.4 Billion to Shareholders 1
Slide 19: Maintaining 2023 Full Year Guidance
Maintaining 2023 Full Year Guidance • Carloads to Exceed Industrial Production – Current Industrial Production Forecast: -0.7% • Operating Ratio Improvement • Pricing Dollars in Excess of Inflation Dollars • Capital Allocation: – Capital Spending Less than 15% of Revenue • Capital Plan of $3.6 Billi
Slide 20: First Quarter 2023
FIRST QUARTER 2023 Lance Fritz Chairman, President & CEO 20
Slide 21: 2023 Success Drivers
2023 Success Drivers Safety & Right Business, Service Right Price Reliability Rebuild & Invest Wisely; Engage Drive Efficiency 21
Slide 22: 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 im
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Slide 24: Appendix
APPENDIX First Quarter Operating Ratio and EPS
Slide 25: First Quarter Operating Ratio and EPS
First Quarter Operating Ratio and EPS Favorable / (Unfavorable) Operating Ratio EPS First Quarter 2022 (59.4% ($2.57 Fuel Price (net) (1.9 pts (($0.25 Core Results (4.6) pts ($0.29) Real Estate Gain ((N/A ($0.14 First Quarter 2023 (62.1% ($2.67 25
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