Union Pacific Corporation · NYSE:UNP
Union Pacific — Q1 2012 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Apr 19, 2012
Slide 1: First Quarter 2012 Results
First Quarter 2012 Earnings Release April 19, 2012 Jack Koraleski, CEO 1 First Quarter 2012 Results Positives Earnings Per Share • First Quarter Records First Quarter – Operating Revenue* +39% $1.79 – Operating Income Best-Ever First – Operating Ratio Quarter $1.29 – Earnings – Safety* $1.01 – Custo
Slide 2: Customer Satisfaction
First Quarter 2012 Marketing & Sales Review April 19, 2012 Eric Butler, Executive VP – Marketing & Sales 3 Customer Satisfaction 93 GOOD 92 92 91 91 Quarterly 90 90 89 Record 87 180 180 178 175 174 172 172 169 164 92 = Full Year Record 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2010 2011 2012 Customer Satisfaction
Slide 3: First Quarter Recap and Energy
First Quarter Recap Revenue Mix Volume Growth Intermodal 19% Automotive +15% Industrial 18% Agricultural Industrial +10% 18% Products Energy Autos 20% 9% Chemicals +8% Chemicals 16% Intermodal +1% Performance Improvement (Year-Over-Year Change) Agricultural -2% +14% +12% Sub Total (excl Energy) +4%
Slide 4: Agricultural Products and Automotive
Agricultural Products Revenue $858M (+6%) Volume 234K (-2%) ARC $3,664 (+8%) Export Grain* -39% Volume Mix 52.1 31.9 Grain Products 34% Food/ 2011 2012 Refrigerated 25% Biofuels* Grain +13% 41% 22.6 20.0 Quarterly Drivers 2011 2012 • Export Grain Declines versus Food & Refrigerated* +7% 59.1 Record
Slide 5: Chemicals and Industrial Products
Chemicals Revenue $768M (+16%) Volume 241K (+8%) ARC $3,184 (+7%) Petroleum Products* +63% 44.9 Volume Mix 27.5 Petroleum Other & LP Gas 5% 25% Fertilizer 2011 2012 Soda Ash 12% 10% Industrial Plastics Industrial Chemicals* 23% Chemicals +8% 25% 55.1 51.1 Quarterly Drivers 2011 2012 • Continued Grow
Slide 6: Intermodal and 2012 Outlook
Intermodal Revenue $909M (+15%) Volume 778K (+1%) ARC $1,169 (+13%) Volume Mix International* -3% 425.4 413.4 Domestic 47% International 53% 2011 2012 Domestic* Quarterly Drivers +6% • Soft Import Volumes Combined 364.3 with Contract Loss 344.3 • Highway Conversions Drive Domestic Growth 2011 2012 *
Slide 7: Operating Foundation, Safety Focus
First Quarter 2012 Operations Review April 19, 2012 Lance Fritz, Executive VP - Operations 13 Operating Foundation, Safety Focus First Quarter Employee Rail Equipment Public (Reportable Personal Injury (Reportable Derailment Incidents (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Per Mill
Slide 8: Market Shifts and Productivity Improvements
Market Shifts First Quarter 2012 vs. First Quarter 2011 Volume Growth Volume Growth By Region 6% Manifest +5% Premium +3% 1% -1% Bulk -4% Total Volume Growth +1% West South North Resource Realignment Manifest Growth Impact • Network Routing Nbr of Cars Switched +6% • Employee Assignments Yard & Loca
Slide 9: Network Performance and Full Year 2012
Network Performance First Quarter Velocity (as Reported to the AAR) 1% • Agility and Resiliency 27.2 26.3 26.2 26.1 Demonstrated with Resources and Service Plan • Volume Growth in 2009 2010 2011 2012 Southern Region Service Delivery* and IS&P • Favorable Weather Good Industry Spot & Pull % 95 ** 94
Slide 10: First Quarter Earnings Summary
First Quarter 2012 Financial Review April 19, 2012 Rob Knight, CFO 19 First Quarter Earnings Summary In Millions (except EPS) 2012 2011 % Operating Revenues $5,112 $4,490 14 Operating Expenses 3,602 3,353 7 Operating Income 1,510 1,137 33 Other Income 16 15 7 Interest Expense (135) (141) (4) Income
Slide 11: Freight Revenue and Core Pricing & Fuel Coverage Gains
Freight Revenue First Quarter (In Millions) + 14% + 5% $4,823 + 5% + 3% $4,248 + 1% Volume Mix Fuel Core Surcharge Price 2011 2012 21 Core Pricing & Fuel Coverage Gains 6% Added • Solid Pricing in 1Q 5% Fuel Surcharge 2012 4.5% • Improved Fuel Surcharge Coverage • Core Pricing Gains Impacted by Nega
Slide 12: Compensation & Benefits Expense and Fuel Expense
Compensation & Benefits Expense First Quarter 2012 $1,211M, +4% Compensation & Benefits (in Millions) +4% $1,211 $1,167 • Labor Inflation of 2% • Volume-Related Expenses 2011 2012 Workforce Levels (Quarterly Average) +4% 44,045 45,642 • Increased Capital Work (incl PTC) and Base Business Activity Ea
Slide 13: Expense Review
First Quarter 2012 Expense Review In Millions Purchased Services & Materials +11% $526 $475 • Higher Subsidiary Contract Expenses • Increased Locomotive and Freight Car Repair Costs 2011 2012 Other +15% $216 $188 • Higher Property Taxes • Higher Personal Injury Expense (2011 adjustment for prior yea
Slide 14: Operating Ratio Performance and Strong Financial Position
Operating Ratio Performance First Quarter (Percent) 75.1 Record 1st Quarter 74.7 • Solid Pricing 70.5 • Improved Fuel Surcharge Coverage • Volume Growth 2010 2011 2012 27 Strong Financial Position Three Month Period Ending March 31 ($ In Millions) Free Cash Flow* $637 $574 Before Dividends • Strong
Slide 15: Driving Strong Shareholder Value and Full Year 2012
Driving Strong Shareholder Value Cumulative Share Repurchases (In Millions) • First Quarter Activity 82.7 – Repurchases totaling $433 78.8 million, up $185 million versus 1Q 2011 64.1 – 3.9 million shares @ avg 47.4 price of $110.64 47.4 • Since 2007, repurchases total 82.7 million shares @ 25.2 avg
Slide 16: Positioned for Success in 2012
First Quarter 2012 Earnings Release April 19, 2012 Jack Koraleski, CEO 31 Positioned for Success in 2012 • Growth Opportunities Despite Coal Headwinds • Confidence in Strategy – Investments Supported by Higher Returns – Provide Increased Value to Customers and Shareholders – Targeting Record Financi
Slide 17: 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 regarding the Corporation’s expectations with respect to economic conditions and its performance for the