Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2019 Earnings Presentation
15 slides from Union Pacific's earnings presentation, Jan 23, 2020
Slide 1: Fourth Quarter 2019 Earnings Release
FOURTH QUARTER 2019 EARNINGS RELEASE Lance Fritz – Chairman, President & CEO January 23, 2020 Fourth Quarter 2019 Results Earnings Per Share Operating Ratio $2.12 $2.02 -5% 61.6 59.7 1 9 pts. -1.9 t 2018 2019 2018 2019 2
Slide 2: Fourth Quarter 2019 Recap
FOURTH QUARTER 2019 MARKETING & SALES REVIEW Kenny Rocker Executive Vice President – Marketing & Sales 3 Fourth Quarter 2019 Recap Volume Growth 7-Day Monthly Carloadings (000 ) (000s) 190 Energy -20% 2018 @174 180 Premium -15% 170 2017 @168 Agricultural -2% 160 2019 @163 Industrial Flat 150 TOTAL -
Slide 3: Agricultural Products and Energy
Agricultural Products Revenue $1,099M (-2%) Volume Mix Volume 270K (-2%) ARC $4,070 (Flat) Food & Refrigerated Grain* Grain Fertilizer 17% Grain Products & Sulfur 37% Fertilizer 81.2 80.2 79.1 81.0 16% -1% +2% Grain 51.1 Products 44.6 30% -13% 13% 2018 2019 2018 2019 2018 2019 Quarterly Drivers Redu
Slide 4: Industrial and Premium
Industrial Revenue $1,407M (Flat) Volume Mix Volume 431K (Flat) ARC $3,268 (Flat) Specialized 12% Construction Soda Ash 23% Construction Plastics Forest 7% Products Forest Plastics 96.1 101.1 17% Products 12% +5% 71.0 72.1 57.5 Industrial 53.2 Metals Chemicals +2% 11% 18% -8% 2018 2019 2018 2019 201
Slide 5: 2020 Volume Outlook
2020 Volume Outlook Bulk Industrial Premium Coal Sand Auto Sales Biofuels Plastics ? Domestic Intermodal Food and Beverage Construction ? Trade and Economy ? Grain Petroleum Products 9 FOURTH QUARTER 2019 OPERATIONS REVIEW Jim Vena Chief Operating Officer 10
Slide 6: Unified Plan 2020 Key Performance Indicators
Unified Plan 2020 Key Performance Indicators Freight Car Velocity* Freight Car Terminal Dwell** Train Speed** (Daily Miles per Car) (Hours) (Miles per Hour) 220 26.0 26.2 26.9 209 +5% +1% 23.3 -13% Good Good G d Good 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 Continued Focus on Asset Utilization Year-over-Year I
Slide 7: Unified Plan 2020 Update and Strengthening the Franchise
Unified Plan 2020 Update Terminal Rationalization & Network Changes System Train Length • Stopped pp Humpingp g Cars at Davidson Yard ((Max on Route,, in Feet)) in Fort Worth 8,500 ~1,100 ft • Curtailed Operations at Armourdale Yard +16% in Kansas City 8,000 • Adjusting Local Operations to Align wit
Slide 8: Operating Outlook
Operating Outlook • Safety First • Continue Unified Plan 2020 Implementation • Drive Service Improvements • Focus on Asset Utilization and Network Efficiency 15 FOURTH QUARTER 2019 FINANCIAL REVIEW Jennifer Hamann Executive Vice President & Chief Financial Officer 16
Slide 9: Fourth Quarter Operating Ratio, EPS and Income Statement
Fourth Quarter Operating Ratio and EPS Favorable / (Unfavorable) Operating Ratio EPS Fourth Quarter 2018 61.6% $2.12 Insurance Recovery 0.5 pts $0.03 Fuel Impact 0.2 pts ($0.01) Core Results 1.2 pts ($0.12) Fourth Quarter 2019 59.7% $2.02 17 Fourth Quarter Income Statement $ in Millions (except EPS)
Slide 10: Fourth Quarter Freight Revenue and Operating Expenses
Fourth Quarter Freight Revenue $ in Millions -10% $ $5,387 $4,851 -11.0% -1.0% + 2.5% Volume Fuel Surcharge Price/Mix 2018 2019 19 Fourth Quarter Operating Expenses $ in Millions Compensation & Benefits Fuel Purchased Services & Materials $640 $512 $582 $1,280 -20% $531 $1,049 -9% -18% 2018 2019 201
Slide 11: Fourth Quarter Operating Expenses and Productivity Update
Fourth Quarter Operating Expenses $ in Millions Depreciation Equipment & Other Rents Other Expenses $555 $559 +1% $269 $230 $221 $231 -14% +5% 2018 2019 2018 2019 2018 2019 Lower Equipment Lease Expense Increased Casualty Costs and Higher Depreciable Asset Base and Volume Related Costs State & Local
Slide 12: Full Year Results and Shareholder Returns
Full Year Results Favorable / (Unfavorable) Operating Ratio EPS 2019 Highlights Full Year 2018 62.7% $7.91 • Total Revenue of $21.7 Billion, Down 5% on 6% Less Volume Payroll Tax Refund 0.3 pts $0.11 • Operating Income flat at Weather/Incidents* (0.7) pts ($0.23) $8.6 Billion Fuel Impact 0 6 pts 0.6
Slide 13: Balance Sheet Strength and A Look Ahead to 2020
Balance Sheet Strength Adjusted Debt Fourth Quarter Year-to-Date ($ in millions) $27,433 $25,118 • Adj Adjusted t d Debt D bt IIncreased d $2.3 $2 3 Billion Billi since i 2.5 $17,390 $17,878 $19,480 -2% 2.3 Year-End 2018 1.9 1.9 • Adjusted Debt / EBITDA of 2.5x 1.7 2015 2016 2017 2018 2019 ‒ Still T
Slide 14: Looking Ahead
FOURTH QUARTER 2019 Lance Fritz Chairman, President & CEO 27 Looking Ahead • Committed to Safety • Deliver a Highly Consistent and Reliable Service Product • Drive Margin Improvement • Increase Shareholder Returns 28
Slide 15: Question & Answer Session / 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