Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2010 Earnings Presentation
18 slides from Union Pacific's earnings presentation, Jan 20, 2011
Slide 1: Fourth Quarter Earnings Release
Fourth Quarter Earnings Release January 20, 2011 Jim Young, Chairman & CEO 1 Fourth Quarter Results • Reported EPS = $1.56, +44% • Operating Income +31% • Record Customer Satisfaction • Safe, Efficient Operations • Operating Ratio = 70.2% 2 1
Slide 2: Fourth Quarter Marketing & Sales Review
Fourth Quarter Marketing & Sales Review January 20, 2011 Jack Koraleski, Executive VP – Marketing & Sales 3 Record Customer Satisfaction 2010 Overall Satisfaction 91 91 91 GOOD 90 90 89 89 89 88 88 87 84 87 89 90 90 J F M A M J J A S O N D 4 2
Slide 3: Fourth Quarter Recap; Agricultural Products
Fourth Quarter Recap Volume Growth Freight Revenue Growth Industrial +23% Industrial +27% Chemicals +10% Intermodal +25% Intermodal +10% Energy +16% Agricultural +6% Agricultural +14% Energy +4% Chemicals +14% Automotive +3% Automotive +7% TOTAL +9% TOTAL +18% 5 Agricultural Products Revenue $840M (
Slide 4: Automotive; Chemicals
Automotive Revenue $323M (+7%) Volume 155K (+3%) ARC $2,100 (+5%) Revenue Mix Finished Vehicles* -0.5% Auto Parts 91.1 90.6 24% Finished Vehicles 76% 2009 2010 Auto Parts* Quarterly Drivers +7% 63.7 • Increased Vehicle Production 59.8 Drives Parts Growth • Repriced Contracts 2009 2010 *Volume in tho
Slide 5: Energy; Industrial Products
Energy Revenue $887M (+16%) Volume 519K (+4%) ARC $1,709 (+11%) Revenue Mix Southern Powder River Basin* Other +8% 6% 47.2 Colorado/ Utah 43.9 17% Southern Powder River Basin 77% 2009 2010 Quarterly Drivers Colorado/Utah* • Stronger Demand for SPRB 7.8 -14% Coal 6.7 • Source Competition and Changes
Slide 6: Intermodal; 2011 Economic Outlook
Intermodal Revenue $852M (+25%) Volume 841K (+10%) ARC $1,012 (+13%) Revenue Mix International* +15% 471 Domestic 408 51% International 49% 2009 2010 Domestic* Quarterly Drivers +4% 370 • Improved Consumer Demand 355 • Strong Service Attracts Highway Conversions • Price and Fuel Surcharge 2009 2010
Slide 7: 2011 Volume Outlook
2011 Volume Outlook Growth Strong Moderate Slow • Domestic Intermodal • Paper • Colorado / Utah Coal • International • Industrial Chemicals • Construction Intermodal • Fertilizer • Government / • Southern Powder River • Ethanol / DDGS Hazardous Basin Coal • Soda Ash • Finished Vehicles • Plastics •
Slide 8: Operating Foundation, Safety Focus; Excellent Service With Growing Volumes
Operating Foundation, Safety Focus Full Year Employee Customer Public (Reportable Personal Injury (Reportable Derailment Incidents (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Per Million Train Miles) Million Train Miles) Good Good Good -6% +10% -6% 3.17 2.32 1.45 2.98 2.11 1.37 2009 201
Slide 9: Leveraging Resources & Driving Productivity
Leveraging Resources & Driving Productivity 2010 Year-End Status Productivity Improvement Employees GTMs Per Employee Good (In Millions) 21.1 21.0 21.2 21.7 Furloughs 1,500 19.4 TE&Y Workforce +12% 2006 2007 2008 2009 2010 Locomotives GTMs Per Horsepower Day Good 115.8 117.6 120.0 Stored Units 1,050
Slide 10: Achieving Co-Dependent Goals
Achieving Co-Dependent Goals Safety, Service & Productivity Safety Reportables SDI* & CSI Good Good 1.73 Employee 1.69 Incidents* 88 89 1.59 CSI 83 1.45 79 1.37 72 64 SDI* Derailments / Million Train Miles 4.19 3.61 3.68 3.17 2.98 66 69 76 84 92 90 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2
Slide 11: Fourth Quarter Earnings Summary
Fourth Quarter Financial Review January 20, 2011 Rob Knight, CFO 21 Fourth Quarter Earnings Summary In Millions (except EPS) 2010 2009 % Operating Revenues $ 4,410 $ 3,754 17 Operating Expenses 3,097 2,755 12 Operating Income 1,313 999 31 Other Income 9 23 (61) Interest Expense (142) (153) (7) Incom
Slide 12: Continued Core Pricing Gains
Continued Core Pricing Gains Quarterly Pricing Trend 6.0% • Solid Freight Demand 6.0% 6.0% 5.5% 5.5% • Improved Value 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 4.0% 4.5% Proposition 3.5% 3.5% 3.0% • Legacy Contract Renewals 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2009 2010 Price Excluding RCAF Fuel Impact Reported Core Price (
Slide 13: Fuel Expense
Fuel Expense Fourth Quarter 2010 $687M, +27% Average Fuel Price (Per Gallon Consumed) • Highest Quarterly Fuel +20% $2.29 $2.24 $2.46 Price in Two Years $2.16 • Gross Ton-Miles $2.05 $1.87 $1.57 Increased 9% $1.51 • Fuel Consumption Rate Improved 3% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2009 2010 25 Fourth Quarte
Slide 14: Achieving Record Operating Ratios
Achieving Record Operating Ratios Fourth Quarter Full Year (Percent) (Percent) 79.5 79.3 77.4 76.1 73.4 73.4 70.2 70.6 2007 2008 2009 2010 2007 2008 2009 2010 27 Full Year Income Statement In Millions (Except EPS) 2010 2009 % Operating Revenues $ 16,965 $ 14,143 20 Operating Expenses 11,984 10,764 1
Slide 15: Strong Cash Flows, Balance Sheet and Returns
Strong Cash Flows, Balance Sheet and Returns Free Cash Flow After Dividends* Return On Invested Capital* (In Millions) (Percent) $1,415 10.8 8.2 $699 2009 2010 2009 2010 Total Debt* (Adjusted, In Millions) • 100+% Increase in Free $14,376 Cash Flow After Dividends $13,139 versus 2009 46.1% 42.5% • R
Slide 16: Driving Strong Shareholder Value
Driving Strong Shareholder Value 2010 Declared Dividend Per Share • Announced Two Quarterly $0.38 $0.27 $0.33 $0.33 Dividend Increases – +41% to $0.38 per share 1Q 2Q 3Q 4Q • Repurchased Stock Totaling $1.25B Cumulative Share Repurchases – Resumed repurchases in (In Millions) May 64.1 47.4 47.4 – Bo
Slide 17: Positioned For Success In 2011
Fourth Quarter Earnings Release January 20, 2011 Jim Young, Chairman & CEO 33 Positioned For Success In 2011 • Expect Slow, Steady Recovery • Excellent Service Drives Growth • Investments Supported by Higher Returns • Continuous Improvement – Raised the bar in 2010 – Targeting record results in 2011
Slide 18: 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 under the caption “2011 Outlook” in this press release, which include statements regarding the Corporati