Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2018 Earnings Presentation
16 slides from Union Pacific's earnings presentation, Jan 24, 2019
Slide 1: Fourth Quarter 2018 Results
January 24, 2019 Fourth Quarter 2018 Earnings Release Lance Fritz Chairman, President & CEO 1 Fourth Quarter 2018 Results Earnings Per Share Operating Ratio Fourth Quarter Fourth Quarter $9.25 -1.1 pts. +39% $2.12 62.7 61.6 $1.53 58.8 Fourth Quarter Record 2017 2017 2018 2017 2017 2018 Reported Adju
Slide 2: Marketing & Sales Review
January 24, 2019 Fourth Quarter 2018 Earnings Release Jim Vena Chief Operating Officer 3 January 24, 2019 Fourth Quarter 2018 Marketing & Sales Review Kenny Rocker Executive Vice President – Marketing & Sales 4
Slide 3: Fourth Quarter 2018 Recap / Agricultural Products
Fourth Quarter 2018 Recap Volume Growth 7-Day Monthly Carloadings (000s) 190 Energy -9% 180 2018 @174 Agricultural -2% 2017 @168 170 Industrial +6% 2016 @164 160 P Premium i +9% 150 TOTAL +3.5% 140 January December 5 Agricultural Products Revenue $1,124M (+5%) Volume 275K (-2%) ARC $4,079 (+7%) Grai
Slide 4: Energy and Industrial
Energy Revenue $1,110M (-8%) Volume 404K (-9%) ARC $2,748 (Flat) Coal* Sand* Petroleum, LPG & Renewables 310.0 -6% 6% Volume Mix 291.9 -47% +25% Sand* 73.3 73.4 10% 58.5 Petroleum, 38.6 LPG & Renewables PRB Coal** 18% 55% 2017 2018 2017 2018 2017 2018 Other Coal 17% Quarterly Drivers • Continued Coa
Slide 5: Premium and 2019 Volume Outlook
Premium Revenue $1,748M (+15%) Volume 1,132K (+9%) ARC $1,546 (+6%) Domestic* International Finished +3% Intermodal Vehicles 545.0 561.7 +21% 21% 446.7 Volume Mix 369.7 Flat 115.4 115.8 International Intermodal 39% Domestic* 2017 2018 2017 2018 2017 2018 50% Quarterly Drivers Finished Vehicles • New
Slide 6: Operations Review: Safety
January 24, 2019 Fourth Quarter 2018 Operations Review Tom Lischer Executive Vice President - Operations 11 Safety Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles) Good Good +12% 3.10 3.28 0 98 0.98 +4
Slide 7: Unified Plan 2020 Update
Unified Plan 2020 Update Unified Plan 2020 Phases • Phase I Implementation Began October 1st • Implementation Underway for Phase 2 • Phase 3 Planning to Begin January 28th • Full Implementation by Mid 2019 Mid-2019 Phase 1: Mid-America Phase 2: Sunset & LA-Chicago Phase 3: PNW, Nor Cal & I5 13 Unifi
Slide 8: Unified Plan 2020 KPIs / Strengthening the Franchise
Unified Plan 2020 Key Performance Indicators Locomotive Productivity Car Trip Plan Compliance (GTMs per Horsepower Day) (% Cars On Time) Good 114 +5% - 10% Good 75% +15 15 +/- / pts. 107 61% Sep 2018 Current* 2019 Year-End Sep 2018 Current* 2019 Year-End Goal Range^ Goal Range^ Workforce Productivit
Slide 9: Operating Outlook
Operating Outlook • Great Start to Unified Plan 2020 • Key Metrics Improving • Focused On: • Safety • Service Reliability • Network Efficiency 17 January 24, 2019 Fourth Quarter 2018 Financial Review Rob Knight Executive Vice President & Chief Financial Officer 18
Slide 10: Fourth Quarter Income Statement
Fourth Quarter Income Statement $ in Millions (except EPS) 2018 2017* % Operating Revenues $5,757 $5,450 6 O Operating ti Expenses E 3 547 3,547 3 415 3,415 4 Operating Income 2,210 2,035 9 Other Income 46 33 39 Interest Expense (240) (188) 28 Income Taxes (462) (676) (32) Net Income $1,554 $1,204 2
Slide 11: Fourth Quarter Operating Expenses
Fourth Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits +17% $640 +4% $547 $1 280 $1,280 $1 236 $1,236 2017 2018 2017 2018 Purchased Services & • Workforce Reduction Charge and Materials Volume Related Costs $585 -1% $582 • Higher Diesel Fuel Prices • Lower Mechanical Repair & J
Slide 12: Productivity Update and Full Year Income Statement
Productivity Update 4Q18 2018 Net Productivity by Category • Productivity Gains of $65 ($ in millions) Million,, Offset by y ~$20 $ 4Q14: $438 $10 ($55) Network and Fuel consumption, consumption slower velocity Million of Service Related Train Ops & TE&Y recrew partially offset by HDC, volume levera
Slide 13: Cash Flow & Debt; Delivering Value to Shareholders
Cash Flow & Debt $ In Millions Cash From Ops ROIC* +20% $8,686 +1.4 pts. 15.1% • Higher Net Income, Lower $7,230 13.7% Federal Tax Payments • Improved ROIC 2017 2018 2017 2018 • Increased Adj. Debt $5.6 Adjusted Debt* Billion since Year-End $25,118 2017 $17,878 $19,480 2.3 − Includes $6 Billion Debt
Slide 14: A Look Ahead to 2019
A Look Ahead to 2019 • Volume Up Low Single Digits • Pricing Will Exceed Inflation Dollars • Significant Benefits from G55 + 0, Including Unified Plan 2020 − At Least $500 Million of Productivity in 2019 • Operating Ratio Guidance: − Sub-61% S b 61% iin 2019 − Below 60% by 2020 • Capex of ~$3.2 Bill
Slide 15: Looking Ahead / Cautionary Information
Looking Ahead • Record Fourth Quarter Results • Optimistic about the Economy • Improved Margins in 2019 • Unified Plan 2020 29 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifical
Slide 16: Question & Answer Session
January 24, 2019 Fourth Quarter 2018 Earnings Release Question & Answer Session 31