Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2019 Earnings Presentation
14 slides from Union Pacific's earnings presentation, Oct 17, 2019
Slide 1: Third Quarter 2019 Earnings Release
October 17, 2019 Third Quarter 2019 Earnings Release Lance Fritz Chairman, President & CEO 1 Third Quarter 2019 Results Earnings Per Share Operating Ratio Third Quarter Third Quarter +3% $2.15 $2.22 -2.2 pts. 61.7 59.5 All-Time Quarterly Record 2018 2019 2018 2019 2
Slide 2: Third Quarter 2019 Recap
October 17, 2019 Third Quarter 2019 Marketing & Sales Review Kenny Rocker Executive Vice President – Marketing & Sales 3 Third Quarter 2019 Recap Volume Growth 7-Day Monthly Carloadings (000s) 190 Energy -15% 180 2018 @174 Premium -11% 2017 @168 170 Agricultural -2% 2019 @165 160 Industrial +2% 150
Slide 3: Agricultural Products and Energy
Agricultural Products Revenue $1,123M (-1%) Volume 278K (-2%) ARC $4,042 (+2%) Grain* Grain Fertilizer Products & Sulfur Volume Mix 86.4 -3% 83.7 Flat 79.9 79.8 Food & 51.5 -5% 48.7 Refrigerated 18% Grain 36% Fertilizer 2018 2019 2018 2019 2018 2019 17% Grain Quarterly Drivers Products 29% • Reduced
Slide 4: Industrial and Premium
Industrial Revenue $1,485M (-1%) Volume 467K (+2%) ARC $3,178 (-3%) Construction Plastics Forest Products +16% 124.7 107.9 Volume Mix +7% 70.7 75.9 -11% 61.6 55.1 Specialized 12% Soda Ash Construction 6% 27% Plastics 2018 2019 2018 2019 2018 2019 16% Forest Products Metals 12% Quarterly Drivers 10%
Slide 5: 2019 Volume Outlook
2019 Volume Outlook Agricultural Products Industrial + Biofuels + Plastics + Food and Beverage + Construction ? Grain – Forest Products Energy Premium + Petroleum Products ? Light Truck / SUV Sales – Sand – Domestic Intermodal – Coal Challenges – Trade & Economy 9 October 17, 2019 Third Quarter 2019
Slide 6: Unified Plan 2020 Key Performance Indicators
Unified Plan 2020 Key Performance Indicators Freight Car Terminal Dwell Freight Car Velocity Good (Hours) (Daily Miles per Car) Good +10% -20% 213 29.3 193 23.4 Full Year Record 3Q18 3Q19 3Q18 3Q19 Train Speed (Miles per Hour) • Year-over-Year Improvement Good -1% • Continued Focus on Asset 24.0 23.
Slide 7: Unified Plan 2020 Update and Operating Outlook
Unified Plan 2020 Update Terminal Rationalization & Network Changes System Train Length (Max on route, in feet) ~1,050 ft +15% 8,000 7,500 7,000 6,500 Jan-19 Feb-19 Mar-19 Jun-19 Q118 Q218 Q318 Q418 Apr-19 May-19 Jul-19 Sep-19 Aug-19 13 Operating Outlook • Continue Unified Plan 2020 Implementation •
Slide 8: Third Quarter Operating Ratio and EPS
October 17, 2019 Third Quarter 2019 Financial Review Rob Knight Executive Vice President & Chief Financial Officer 15 Third Quarter Operating Ratio and EPS Favorable / (Unfavorable) Operating Ratio EPS Third Quarter 2018 61.7% $2.15 Rail Equipment Incidents (0.5) pts ($0.02) Fuel Impact 0.9 pts $0.0
Slide 9: Third Quarter Income Statement and Freight Revenue
Third Quarter Income Statement $ in Millions (except EPS) 2019 2018 % Operating Revenues $5,516 $5,928 (7)-- Operating Expenses 3,282 3,659 (10)-- Operating Income 2,234 2,269 (2)-- Other Income 53 48 10 Interest Expense (266) (241) 10 Income Taxes (466) (483) (4)-- Net Income $1,555 $1,593 (2)-- We
Slide 10: Third Quarter Operating Expenses
Third Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits -24% $659 -10% $504 $1,262 $1,134 2018 2019 2018 2019 Purchased Services & • Force Levels Down 13% Materials • Lower Diesel Fuel Prices and Gallons -9% $632 Consumed $574 • Reduced Mechanical Repair Costs and Contract Servic
Slide 11: Productivity Update and Cash Flow & Debt
Productivity Update Third Quarter Results: Initiatives & 3Q19 Results ($ in millions) ~$170 4Q14: $438Million of Productivity $56 Network and Fuel, Unified Plan 2020, Car Velocity Train Operations • Rail Equipment Incidents Resulted in a $25 Million Headwind Mechanical Productivity, $75 Equipment Ca
Slide 12: Delivering Value to Shareholders; 2019 Outlook
Delivering Value to Shareholders $ In Millions Dividends Share Repurchases $1,925 $7,034 $1,716 $5,204 Third Quarter Year-to-Date ASR $3,600 ASR $2,500 • Returned $7.1 Billion to $3,434 $2,704 Shareholders YTD 2018 YTD 2019 YTD 2018 YTD 2019 • 10% Dividend Increases in First Quarter and Cash Returne
Slide 13: Looking Ahead
October 17, 2019 Third Quarter 2019 Earnings Release Lance Fritz Chairman, President & CEO 25 Looking Ahead • Build on Unified Plan 2020 Successes • Prioritize Safety • Focus on Highly Consistent and Reliable Service Product • Drive Long-Term Shareholder Value 26
Slide 14: 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; its ability to generate financial r