Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2011 Earnings Presentation
19 slides from Union Pacific's earnings presentation, Jan 19, 2012
Slide 1: Fourth Quarter Earnings Release
Fourth Quarter Earnings Release January 19, 2012 Jim Young, Chairman & CEO 1 Union Pacific Achieves 2011 Milestones Earnings Per Share Positives 4th Quarter +28% • Record Financial $1.99 Best-Ever Results Achieved in 4th Quarterly Record Quarter and Full Year $1.56 $1.30 • Employee Safety $1.08 • Gr
Slide 2: Customer Satisfaction
Fourth Quarter Marketing & Sales Review January 19, 2012 Jack Koraleski, Executive VP – Marketing & Sales 3 Customer Satisfaction GOOD 92 92 91 91 90 90 Quarterly Quarterly 89 Record Record 87 180 180 178 175 174 172 169 164 92 = Full Year Record 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 Customer Satisfacti
Slide 3: Fourth Quarter Recap and Agricultural Products
Fourth Quarter Recap Revenue Mix Volume Growth Intermodal 20% Automotive +10% Industrial 17% Agricultural 18% Chemicals +10% Energy Autos 22% 8% Chemicals 15% Energy +8% Industrial Performance Improvement Products +7% (Year-Over-Year Change) +16% Intermodal -3% +13% Agricultural -5% +3% TOTAL +3% Vo
Slide 4: Automotive and Chemicals
Automotive Revenue $408M (+26%) Volume 171K (+10%) ARC $2,378 (+13%) Finished Vehicles* Revenue Mix +14% 103.4 Auto Parts 90.6 21% Finished Vehicles 79% 2010 2011 Auto Parts* Quarterly Drivers +7% 68.0 63.7 • Industry Sales Continue to Gain Momentum • Improving Vehicle Inventory Levels 2010 2011 *Vo
Slide 5: Energy and Industrial Products
Energy Revenue $1,070M (+21%) Volume 558K (+8%) ARC $1,917 (+12%) Southern Powder River Basin* Revenue Mix +7% Other 4% 50.3 Colorado/ 47.2 Utah 19% Southern Powder River Basin 77% 2010 2011 Colorado/Utah* Quarterly Drivers +10% 7.4 • New Business Drives SPRB 6.7 Growth • Solid Production and Export
Slide 6: Intermodal and 2012 Economic Outlook
Intermodal Revenue $959M (+13%) Volume 817K (-3%) ARC $1,175 (+16%) International* Revenue Mix -7% 471.7 436.7 Domestic 53% International 47% 2010 2011 Domestic* Quarterly Drivers +3% 380.6 • Weak Imports and 2Q Contract 369.6 Loss Impact International • Record Domestic Volume 2010 2011 *Volume in t
Slide 7: 2012 Volume Growth Potential
2012 Volume Growth Potential Solid Moderate Slow to Negative • Minerals • Domestic Grain • SPRB Coal • Petroleum • Grain Products • International • Domestic (ex. Biofuels) Intermodal Intermodal • Industrial Chemicals • Paper • Finished Vehicles • Plastics • Government / • Auto Parts • Soda Ash Hazar
Slide 8: Operating Foundation, Safety Focus
Operating Foundation, Safety Focus Full Year Employee Rail Equipment Public (Reportable Personal Injury (Reportable Derailment Incidents (Crossing Accidents Per Incidents Per 200,000 Man-Hours) Per Million Train Miles) Million Train Miles) Good Good Good -9% 2.32 10% 1.45 -16% 3.28 1.37 3.17 2.11 2.
Slide 9: Service and Efficiency
Service and Efficiency 4th Quarter Slow Order Miles GTMs per Employee 1,723 Good (In Millions) +2% Good 5.62 5.52 1,008 -11% 5.20 5.22 660 590 Best-Ever Quarter 2008 2009 2010 2011 2008 2009 2010 2011 Train Size Service Delivery* and IS&P (Average Units per Train) Industry Spot Good 171 ** Good & Pu
Slide 10: 2012 Capital Plan
2012 Capital Plan Replacement, Growth & Productivity 2012 vs. 2011 Capital* ($ In Millions) • $3.6+ Billion in 2012 $1,908 $1,920 • Safe and Resilient Infrastructure $1,345 • Increased Capacity $1,084 Spending $160 – Santa Teresa Facility – Southern Region Projects $335 $224 • 200 New Locomotives 20
Slide 11: Fourth Quarter Earnings Summary
Fourth Quarter Financial Review January 19, 2012 Rob Knight, CFO 21 Fourth Quarter Earnings Summary In Millions (except EPS) 2011 2010 % Operating Revenues $5,108 $4,410 16 Operating Expenses 3,491 3,097 13 Operating Income 1,617 1,313 23 Other Income 54 9 F Interest Expense (141) (142) (1) Income T
Slide 12: Freight Revenue and Pricing Gains
Freight Revenue Fourth Quarter (In Millions) + 16% $4,829 + 6% + 5% $4,171 + 5% Volume Core Fuel & Mix Price Surcharge 2010 2011 23 Pricing Gains & Leverage Core Pricing Incremental Margins 59% 5.0% 57% 5.0% 4.5% 4.5% 4.5% 45% 13% 41% 36% 5% 3% 3% 1% 2010 1Q11 2Q11 3Q11 4Q11 2010 1Q11 2Q11 3Q11 4Q11
Slide 13: Compensation & Benefits and Fuel Expense
Compensation & Benefits Fourth Quarter 2011 Compensation & Benefits (in Millions) +4% $1,155 $1,112 • Labor Inflation of 4.5% • Volume-Related Expenses Offset by Productivity 2010 2011 Workforce Levels (Quarterly Average) +3% 43,462 44,922 • Base Business Activity and Increased Capital Work (incl PT
Slide 14: Fourth Quarter 2011 Expense Review
Fourth Quarter 2011 Expense Review In Millions Purchased Services & Materials +9% $508 • Increased Contract Services $467 • Locomotive & Freight Car Materials Usage • Crew Lodging & Transportation 2010 2011 Costs Other +10% $191 $173 • Higher Property Taxes • Lease Buy-Out Expense 2010 2011 27 Fourt
Slide 15: Operating Ratio and Full Year Income Statement
Operating Ratio Performance Fourth Quarter Full Year (Percent) (Percent) 77.4 76.1 73.4 73.4 70.6 70.7 70.2 1.7 pts 68.3 0.8 pts 2008 2009 2010 2011 2008 2009 2010 2011 Fuel Price Impact 29 Full Year Income Statement In Millions (except EPS) 2011 2010 % Operating Revenues $19,557 $16,965 15 Operatin
Slide 16: Solid Financial Position
Solid Financial Position Twelve-Month Period Ending December 31 ($ In Millions) Free Cash Flow* $2,754 • Record Cash from Before Dividends $2,017 $837 Dividends Operations and Free $602 $1,917 After Dividends Cash Flow $1,415 • 39% Cash Dividend 12/31/2010 12/31/2011 Increase YTD Total Debt* (Adjust
Slide 17: Delivering Value to Shareholders
Delivering Value to Shareholders Declared Dividend Per Share +58% $0.60 +26% $0.475 $0.475 • Performance Drives $0.33 $0.33 $0.38 $0.38 Dividend Increases $0.27 – Declared Dividend Increase of 58% in 2011 – Targeted Payout Ratio of 30% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 • Opportunistic Share Cumulati
Slide 18: Positioned for Success in 2012
Fourth Quarter Earnings Release January 19, 2012 Jim Young, Chairman & CEO 35 Positioned for Success in 2012 • Expect Slow, Continued Growth despite Economic Uncertainties • Confidence in Strategy – Investments Supported by Higher Returns – Provide Increased Value to Customers and Shareholders – Tar
Slide 19: 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 its ability to take advantage of growth opportu