Union Pacific Corporation · NYSE:UNP
Union Pacific — Q1 2010 Earnings Presentation
17 slides from Union Pacific's earnings presentation, Apr 22, 2010
Slide 1: First Quarter Earnings Release: Strong Start to 2010
First Quarter Earnings Release April 22, 2010 Jim Young, Chairman & CEO 1 Strong Start to 2010 First Quarter Results • EPS = $1.01, +40% • Significant Volume Leverage – Capital investments – Process & technology • Satisfied Customers • Pricing Gains • Best First Quarter Operating Ratio • Strong Free
Slide 2: First Quarter 2010 Recap
First Quarter Marketing & Sales Review April 22, 2010 Jack Koraleski, Executive VP – Marketing & Sales 3 First Quarter 2010 Recap Freight Revenue Growth Return to Quarterly Volume Growth +13% Automotive +88% Intermodal +25% Flat Chemicals +14% -3% -5% -5% Agricultural +10% -12% Industrial +10% -15%
Slide 3: Agricultural Products and Automotive
Agricultural Products Revenue $730M (+10%) Volume 228K (+8%) ARC $3,202 (+3%) Revenue Mix Export Whole Grains* +28% 41.1 Grain 32.2 Products 42% Food/ Refrigerated 23% Whole Grains 35% 2009 2010 Quarterly Drivers Ethanol* 28% 18.6 • Strong Gulf Wheat Exports 14.5 • Continued Export Demand for Soybea
Slide 4: Chemicals and Energy
Chemicals Revenue $587M (+14%) Volume 203K (+13%) ARC $2,893 (+2%) Fertilizer* Revenue Mix +39% 31.2 Petroleum 22.5 & Other 24% Plastics Soda Ash 19% 16% 2009 2010 Industrial Fertilizer 16% Chemicals 25% Industrial Chemicals* +14% 50.4 44.4 Quarterly Drivers 2009 2010 • Improved Fertilizer Demand So
Slide 5: Coal Stockpiles and Industrial Products
Coal Stockpiles Feb 2010 Source: Energy Ventures Analysis, Inc. 9 Industrial Products Revenue $598M (+10%) Volume 242K (+9%) ARC $2,474 (+1%) Hazardous Waste* Revenue Mix +445% 16.9 Lumber Minerals/ 16% 3.1 Consumer Paper 21% 14% 2009 2010 Government/ Waste Construction 9% 14% Metals 26% Steel & Scr
Slide 6: Intermodal and Domestic Intermodal Opportunities
Intermodal Revenue $691M (+25%) Volume 742K (+21%) ARC $930 (+4%) Revenue Mix International* +12% 402 359 Domestic 51% International 49% 2009 2010 Domestic* Quarterly Drivers +33% 340 • Growth in Imports 256 • Domestic Share Gains • UMAX Equipment Program 2009 2010 *Volume in (000s) of units 11 Deli
Slide 7: Customer Satisfaction Index; Second Quarter Business Drivers
Customer Satisfaction Index First Quarter 87 87 81 79 2007 2008 2009 2010 13 Second Quarter Business Drivers 7-Day Carloading Trends (000s) • Economic Stability 200 • Gains in Industrial Production 180 • Seasonality • Strong Value Proposition 160 • Price Gains 140 January December 2006 2007 2008 200
Slide 8: Operations Review: Operating Summary
First Quarter Operations Review April 22, 2010 Dennis Duffy, Vice Chairman – Operations 15 Operating Summary First Quarter 2010 SDI* & AAR Velocity Speed Good 92 (MPH) 89 • Safety Gains 78 27.2 26.2 • Continued Strong 22.2 Network Performance 2008 2009 2010 – Seasonal challenges * Includes early del
Slide 9: Growth Readiness – Working Resources
Upside Leverage Throughput Inventory Management Key Initiatives 7-Day & Volume* Carloads • Inventory (000s) 335 225 220 7-Day Carloads Network (000s) Capacity 325 Management 200 200 315 • Train Design 180 305 175 • Terminal Current Level ~170 164.2 Productivity 295 160 150 • Locomotive 285 Inventory
Slide 10: Operating Outlook; First Quarter Financial Review
Operating Outlook • Continuing Safety & Performance • Hardening the Rail Infrastructure • Leveraging Network Productivity • Improving Value Proposition for Our Customers 19 First Quarter Financial Review April 22, 2010 Rob Knight, CFO 20 10
Slide 11: First Quarter Earnings Summary; Core Pricing Gains
First Quarter Earnings Summary In Millions (except EPS) 2010 2009* % Operating Revenue $ 3,965 $ 3,415 16 Operating Expense 2,977 2,744 8 Operating Income 988 671 47 Other Income 1 23 (96) Interest Expense (155) (141) 10 Income Taxes (318) (191) 66 Net Income $ 516 $ 362 43 Weighted Average Diluted
Slide 12: Compensation & Benefits; Fuel Expense
Compensation & Benefits First Quarter 2010 $1,059M, -1% 7-Day Carloads (000s) -10% Quarterly Drivers 182.1 +13% 164.2 145.5 • Reduced Workforce Levels • Improved Labor Efficiency 2008 2009 2010 – GTMs/Employee +16% Workforce Levels (000s) • Higher Agreement Health -14% 49.1 45.0 -6% & Welfare Costs
Slide 13: First Quarter 2010 Expense Review; Volume Leverage Drives Results
First Quarter 2010 Expense Review (In Millions) Purchased Services Equipment & Other & Materials Other Rents $475 $242 $226 $246 $432 $342 $317 $404 $290 2008 2009 2010 2008 2009 2010 2008 2009 2010 • Increased Contract • 2009 Lease • $45M One-Time Services Restructuring CSXI Payment • Less Material
Slide 14: Record First Quarter Operating Ratio; Solid Financial Position
Record First Quarter Operating Ratio (%) First Quarter* 83.8 Negative Impact 81.3 81.6 80.4 • Higher Fuel Prices • One-Time CSXI Payment 75.1 Positive Impact • Volume Leverage • Price Gains 2006 2007 2008 2009 2010 *Certain prior year amounts have been adjusted for the retrospective change in accoun
Slide 15: Second Quarter 2010 Drivers
Second Quarter 2010 Drivers • Expect Volume Growth & Leverage – Labor cost pressures – Diesel fuel prices • “Real” Pricing Gains • Improved Operating Ratio • Generate Strong Cash Flows • Deliver Increased Shareholder Returns 29 First Quarter Earnings Release April 22, 2010 Jim Young, Chairman & CEO
Slide 16: Solid Foundation for Growth and Returns; Cautionary Information
Solid Foundation for Growth and Returns • Opportunities for • Strong UP Value Volume Growth in More Proposition Stable Economy – Attracts business – Future visibility limited – Supports pricing – Staying flexible • Reward Shareholders 31 Cautionary Information This presentation and related materials
Slide 17: Question and Answer Session
First Quarter Earnings Release April 22, 2010 Question and Answer Session 33 17