Union Pacific Corporation · NYSE:UNP
Union Pacific — Q3 2017 Earnings Presentation
16 slides from Union Pacific's earnings presentation, Oct 26, 2017
Slide 1: Third Quarter 2017 Earnings Release
October 26, 2017 Third Quarter 2017 Earnings Release Lance Fritz Chairman, President & CEO 1 Third Quarter 2017 Results Earnings Per Share Operating Ratio Third Quarter Third Quarter +10% $1.50 $1.36 +0.7 pts. 62.1 62.8 2016 2017 2016 2017 2
Slide 2: Third Quarter 2017 Recap
October 26, 2017 Third Quarter 2017 Marketing & Sales Review Beth Whited Executive VP & Chief Marketing Officer 3 Third Quarter 2017 Recap Volume Growth 7-Day Monthly Carloadings (000s) Industrial Products +15% 210 Intermodal Flat 2006 @192 190 2014 @188 Coal -3% 170 2015 @177 Automotive -5% 2017 @1
Slide 3: Agricultural Products and Automotive
Agricultural Products Revenue $914M (-2%) Volume 232K (-10%) ARC $3,951 (+9%) Grain* Grain Food & Products* Refrigerated* -19% 105.1 Volume Mix -10% 84.7 84.3 75.7 +5% Food & 51.1 53.5 Refrigerated 23% Grain 44% 2016 2017 2016 2017 2016 2017 Grain Products 33% Quarterly Drivers • Reduced Grain and G
Slide 4: Chemicals and Coal
Chemicals Revenue $896M (+2%) Volume 259K (-5%) ARC $3,457 (+8%) Petroleum & LPG* Plastics* Fertilizer* Volume Mix -6% 65 65.8 8 61.9 Petrol. -17% & LP Gas 53.1 +6% 17% 48.8 Fertilizer 44.2 46.2 Soda Ash 19% 12% Soda Ash 12% Industrial Plastics 2016 2017 2016 2017 2016 2017 Chemicals 24% 28% Quarter
Slide 5: Industrial Products and Intermodal
Industrial Products Revenue $1,079M (+26%) Volume 325K (+15%) ARC $3,325 (+10%) Minerals* Specialized Markets* +80% 87.6 Volume Mix 48.8 Other Lumber +23% Minerals 10% Paper 36.5 29.6 6% 8% Frac Sand* 22% Construction 2016 2017 2016 2017 30% Specialized Markets Metals Quarterly Drivers 11% 13% • Imp
Slide 6: 2017 Volume Outlook
2017 Volume Outlook Agricultural Products Coal + Food and Refrigerated + Exports - Grain ? Natural Gas Prices Automotive Industrial Products + Over-the-Road Conversions + Frac Sand ? Consumer Demand - Construction Products Chemicals Intermodal + Plastics + Over-the-Road Conversions + Fertilizer ? In
Slide 7: Safety and Network Performance
Safety Employee Rail Equipment (Reportable Personal Injury Incidents Per (Reportable Derailment Incidents 200,000 Employee-Hours) Per Million Train Miles*) Good Good 1.10 -5% 0 98 0.98 1% +1% 3 10 3.10 3 13 3.13 2 97 2.97 0.87 2.84 0.77 0.78 2.65 YTD Record FY13 FY14 FY15 YTD16 YTD17 FY13 FY14 FY15
Slide 8: Resources and Productivity
Resources TE&Y (Full-Time Equivalent) +3% 14,065 14,438 • Total Operating Workforce Down Nearly 550 3Q16 3Q17 • Increase in TE&Y Training Mechanical & Engineering ((Full-Time Equivalent) q ) • Fewer Capital Employees 19,697 -4% Driven by Productivity 18,878 3Q16 3Q17 15 Productivity Train Size Perfo
Slide 9: Operating Outlook
Operating Outlook • Generate Positive Safety R Results lt in i 2017 • Solid Productivity Gains • Continue Running a Safe, R li bl and Reliable d Efficient Effi i t Network 17 October 26, 2017 Third Quarter 2017 Financial Review Rob Knight Executive VP & Chief Financial Officer 18
Slide 10: Third Quarter Income Statement and One-Time Items
Third Quarter Income Statement $ in Millions (except EPS) 2017 2016 % Operating Revenues $5,408 $5,174 5 O Operating ti Expenses E 3 396 3,396 3 214 3,214 6 Operating Income 2,012 1,960 3 Other Income 151 29 F Interest Expense (180) (184) (2) Income Taxes (789) (674) 17 Net Income $1,194 $1,131 6 We
Slide 11: Freight Revenue and Operating Expenses
Freight Revenue Third Quarter ($ In Millions) +4% $5,050 $4,837 $4 837 +2% +2% -1% +1% Volume Fuel Mix Core Surcharge Price 2016 2017 21 Third Quarter Operating Expenses $ In Millions Compensation & Fuel Benefits +15% +9% $450 $1,298 $392 $1 191 $1,191 2016 2017 2016 2017 Purchased Services & • Work
Slide 12: Operating Expenses (cont) and Cash Flow & Debt
Third Quarter Operating Expenses (cont) $ In Millions Depreciation Equipment & Other Rents +3% $528 $512 -2% $282 $275 2016 2017 2016 2017 Other Expenses • Higher Depreciable Base -15% • Lower Locomotive and Freight $271 $230 Car Lease Expense • Lower State & Local Taxes, Easier Bad Debt Comparison
Slide 13: Delivering Value to Shareholders and Productivity
Delivering Value to Shareholders $ In Millions Dividends Share Repurchases • Repurchased 27.1 Million $1,382 $1,460 $2,911 Shares Totaling Over $2.9 $2,165 Billion in 2017 • Increased ~34% from 2016 YTD 2016 YTD 2017 YTD 2016 YTD 2017 • ~32% of Outstanding Shares Since 2007 Cash Returned to Sharehol
Slide 14: Looking Ahead
Looking Ahead • 4Q Volume Slightly Operating Ratio 4Q14: $438 (%) Positive 63.5 60 +/- • Full Year Volume Up Low 55 Single Digits • Continued Focus on 2016 2019 Target Realizing 55 “G55 + 0” Initiatives Improved OR in 2017 27 October 26, 2017 Third Quarter 2017 Earnings Release Lance Fritz Chairman,
Slide 15: Closing Out the Year; Cautionary Information
Closing Out the Year • Focus on Executing Our Value Strategy S • Build Upon Our Recent Success • Create Value for Our Stakeholders 29 Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including spe
Slide 16: Question & Answer Session
October 26, 2017 Third Quarter 2017 Earnings Release Question & Answer Session 31