Union Pacific Corporation · NYSE:UNP
Union Pacific — Q2 2010 Earnings Presentation
15 slides from Union Pacific's earnings presentation, Jul 22, 2010
Slide 1: Second Quarter Earnings Release
Second Quarter Earnings Release July 22, 2010 Jim Young, Chairman & CEO 1 Record Setting Quarter Second Quarter 2010 Results • Reported EPS = $1.40, +52% – Operating income +71% • Record Quarterly Operating Ratio – 69.4% • Best Ever Customer Satisfaction • Operated A Safe, Productive Railroad 2 1
Slide 2: Second Quarter Marketing & Sales Review
Second Quarter Marketing & Sales Review July 22, 2010 Jack Koraleski, Executive VP – Marketing & Sales 3 Customer Satisfaction Index Second Quarter 89 87 83 80 2007 2008 2009 2010 4 2
Slide 3: Second Quarter 2010 Recap; Agricultural Products
Second Quarter 2010 Recap Freight Revenue Growth 7-Day Carloading Trends (In Thousands) 200 Automotive +105% Intermodal +35% 180 Industrial +30% Chemicals +19% 160 Energy +17% 140 Agricultural +13% January December TOTAL +27% 2006 2007 2008 2009 2010* *As of 6/30/10 5 Agricultural Products Revenue $
Slide 4: Automotive and Chemicals
Automotive Revenue $334M (+105%) Volume 159K (+71%) ARC $2,094 (+19%) Revenue Mix Finished Vehicles* +77% 93.9 Auto Parts 22% 53.2 Finished Vehicles 78% 2009 2010 Auto Parts* Quarterly Drivers +67% 65.9 • Increased Vehicle Production 39.4 • Repriced Contracts 2009 2010 *Volume in thousands of carloa
Slide 5: Energy and Industrial Products
Energy Revenue $836M (+17%) Volume 486K (+3%) ARC $1,722 (+13%) Revenue Mix Southern Powder River Basin* +5% Other 43.1 6% Colorado/ 40.9 Utah 19% Southern Powder River Basin 75% 2009 2010 Quarterly Drivers Colorado/Utah* Flat • Increased SPRB Shipments to 7.1 7.1 Midwest and Southern Utilities • Co
Slide 6: Intermodal and Second Half 2010 Outlook
Intermodal Revenue $804M (+35%) Volume 827K (+24%) ARC $974 (+10%) Revenue Mix International* +23% 457.1 372.9 Domestic 51% International 49% 2009 2010 Domestic* Quarterly Drivers +24% 369.4 • Increased Imports 297.1 • Domestic Highway Conversions • Price and Fuel Surcharge 2009 2010 *Volume in thou
Slide 7: Second Quarter Operations Review; Delivering Service Excellence
Second Quarter Operations Review July 22, 2010 Dennis Duffy, Vice Chairman – Operations 13 Delivering Service Excellence Service Delivery Index Industry Spot & Pull (Includes Early Deliveries) (Percent) Good Good 92.0 92.1 93.2 90.4 88.9 88.5 86.1 84.0 2008 2009 Q1 Q2 2008 2009 Q1 Q2 2010 2010 2010
Slide 8: Volume Variable Operations; Productivity Creates Capacity
Volume Variable Operations Second Quarter GTMs Per Employee Upside Leverage (In Millions) (2010 versus 2009) Good 5.4 4.6 Carloads +18% 2009 2010 Freight Car Utilization (Cycle Days) Total First Crew Good +7% 8.6 Starts 8.4 Through Freight +12% 2009 2010 GTMs Per Horsepower Day Good 120.0 Yard & Loc
Slide 9: Second Half 2010 Operating Initiatives
Second Half 2010 Operating Initiatives • Handling Growth with Excellent Service • Volume Variable • Capital Efficiency • Continuous Safety Improvement 17 Second Quarter Financial Review July 22, 2010 Rob Knight, CFO 18 9
Slide 10: Second Quarter Earnings Summary; Core Price Improvement
Second Quarter Earnings Summary In Millions (except EPS) 2010 2009* % Operating Revenues $ 4,182 $ 3,303 27 Operating Expenses 2,903 2,555 14 Operating Income 1,279 748 71 Other Income 19 135 (86) Interest Expense (152) (150) 1 Income Taxes (435) (268) 62 Net Income $ 711 $ 465 53 Weighted Average D
Slide 11: Compensation & Benefits; Workforce Increasing Less Than Volumes
Compensation & Benefits Second Quarter 2010 $1,051M, +8% 7-Day Carloads (In Thousands) +18% 168.8 • Great Workforce 143.4 Productivity • Wage Inflation 2009 2010 – 4.5% wage increase Workforce Levels – Health & welfare costs (In Thousands) 43.7 -3% • Volume Costs 42.6 • Equity & Incentive Compensati
Slide 12: Fuel Expense; Second Quarter 2010 Expense Review
Fuel Expense Second Quarter 2010 $608M, +64% Average Fuel Price (Per Gallon Consumed) $3.60 $2.29 • Higher Diesel Fuel Prices $1.57 Added $186 Million 2008 2009 2010 • Volume Growth Added $48 Million Fuel Consumption (Million Gallons) • 1% Increase in Fuel 313 257 Efficiency 229 2008 2009 2010 23 Se
Slide 13: Sub-70 Operating Ratio; Shareholders Rewarded by Financial Strength
Sub-70 Operating Ratio! Second Quarter* (Percent) 81.8 Delivering on Project 80.6 79.7 77.4 Operating Ratio • Volume Leverage 69.4 • Price Gains • Operating Efficiency 2006 2007 2008 2009 2010 *Certain prior year amounts have been adjusted for the retrospective change in accounting principle for rai
Slide 14: Third Quarter 2010 Drivers
Third Quarter 2010 Drivers • Continued Volume Leverage • Operating Ratio Focus • “Real” Pricing Gains • Strong Financial Performance 27 Second Quarter Earnings Release July 22, 2010 Jim Young, Chairman & CEO 28 14
Slide 15: Cautionary Information
Cautionary Information This presentation and related materials contain statements about the Corporation’s future that are not statements of historical fact, including specifically the statements under the caption “Outlook” in this press release, which include statements regarding the Corporation’s p