Goldman Sachs Global Industrials Conference

Transcription

1 Goldman Sachs Global Industrials Conference November 2, 1 Cautionary Information This presentation and related materials contain statements about the Corporation s future that are not statements of historical fact, including specifically the Corporation s outlook regarding: economic conditions and growth opportunities; future safety and operating performance; future capital investments; and its ability to generate volume leverage, increase returns to shareholders, and attract new business. These statements are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of Forward-looking statements also generally include, without limitation, information or statements regarding: projections, predictions, expectations, estimates or forecasts as to the Corporation s and its subsidiaries business, financial, and operational results, and future economic performance; and management s beliefs, expectations, goals, and objectives and other similar expressions concerning matters that are not historical facts. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forwardlooking information, including expectations regarding operational and financial improvements and the Corporation s future performance or results are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statement. Important factors, including risk factors, could affect the Corporation s and its subsidiaries future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Information regarding risk factors and other cautionary information are available in the Corporation s Annual Report on Form 10-K for, which was filed with the SEC on February 4,. The Corporation updates information regarding risk factors if circumstances require such updates in its periodic reports on Form 10-Q and its subsequent Annual Reports on Form 10-K (or such other reports that may be filed with the SEC). Forward-looking statements speak only as of, and are based only upon information available on, the date the statements were made. The Corporation assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Corporation does update one or more forward-looking statements, no inference should be drawn that the Corporation will make additional updates with respect thereto or with respect to other forward-looking statements. References to our website are provided for convenience and, therefore, information on or available through the website is not, and should not be deemed to be, incorporated by reference herein. 2 1

2 Record Setting September YTD Volumes up 3% EPS = $4.74, +19% Operating Income up 12% Operating Ratio = 71.6% Negative Fuel Price Impact of (2.0) points versus Free Cash Flow = $1.5B* Solid Service Strong Employee Safety * See Union Pacific website under Investors for a reconciliation to GAAP. 192 $2.05 Earnings Per Share 7-Day Volume (000s) $3.98 $ Continued Operating Efficiency September YTD Good AAR Velocity (MPH) SDI + Early Deliveries % Train Size (Units) 94 +2% % % Manifest Grain Coal Intermdl 48,697 Total Employees (Average full-time-equivalent) Workforce down 8% Volume down 4% 44,841 GTMs per Employee (In Millions)

3 Business Levels Day Monthly Carloadings (000s) Q2 Vol Growth = 3% Q1 Vol Growth = 5% uary * Q3 Vol Growth = 1% October MTD 7-Day Volume* 2006 ember Chemicals Industrial Products Automotive Agricultural TOTAL *As of 10/24/ Year-to-Date Growth* -2% +4% +3% +3% +7% +6% Units (excl ) +6% +9% 5 The Strength of a Unique Franchise To/From Asia To/From Asia Seattle Portland Oakland Los Angeles Calexico Nogales Borders & Interchange Ports Fastest Growing States Salt Lake City Eastport El Paso Denver Eagle Pass Laredo Twin Cities Omaha Dallas Kansas City Duluth Chicago Memphis Houston St. Louis New Orleans Brownsville To Europe, South America and Africa Diverse Business Mix Fastest Growing States Broad Port Access Interchange Traffic & Border Crossings Freight Revenue $13.7B Sept YTD 22% Industrial Industrial 16% 17% Agricultural Agricultural 19% 18% 20% Autos 8% Chemicals Chemicals 15% 15% 6 3

4 Mexico Opportunities Business Mix ($1.3B Sept YTD ) Calexico Nogales El Paso 1% 10% Industrial 19% Agricultural 27% Hermosillo Chihuahua Eagle Pass Laredo Chemicals 9% Automotive 34% Ferromex (FXE) KCSM Ferrosur (FSRR) Short Lines Torreón Culiacán Aguascalientes Guadalajara Manzanillo Monclova Saltillo Lázaro Cárdenas Mexico City San Luis Potosí Monterrey Querétaro Puebla Brownsville Tampico Salina Cruz Veracruz Growing Population Faster Economic Recovery Favorable Macro Drivers Growing Near-Shoring Skilled Labor Base Rising Transpacific and Chinese Labor Costs Coatzacoalcos 7 7 Day Volume Trends Through October 24, 22,000 20,000 18,000 16,000 Agricultural 74,000 66,000 58,000 50,000 46,000 44,000 42,000 40,000 38,000 36,000 14,000 42,000 34,000 October MTD 7-Day Volume Improved World Grain Supply Softens U.S. Export Demand 4 th Qtr Ag Volumes down 5 6% Going Forward International Volumes Lagging Strong Domestic Volumes & Highway Conversions Low Stockpiles New Plant On-line CO/UT Increased Production 8 4

5 7 Day Volume Trends (cont) Through October 24, 15,000 13,000 11,000 9,000 7,000 Automotive 20,000 18,000 16,000 14,000 12,000 Chemicals 25,000 23,000 21,000 19,000 17,000 Industrial Products 5,000 10,000 15,000 October MTD 7-Day Volume Continued Growth in U.S. Auto Sales Recovery from Disaster in Japan Going Forward Continued Growth in Crude Oil Fertilizer Rebounding with Seasonal Demand Drilling Demand Drives Non-Metallic Minerals and Steel Iron Ore Exports to China 9 Global Demand for Diverse Opportunities for UP Sources Coal Ethanol Wind Petroleum/LPG Oil Sands, Related Markets Frac Sand Pipe Other Materials 10 5

6 Global Demand for Integrated Strategy Frac Sand Minerals Steel Pipe Crude Oil Projected Volume Growth* * Indexed to Volumes Canadian Oil Sands Formations Bakken Niobrara Permian Drilling Sand (Proppants) Originating Railroads UP Route (Crude) UP Route (Sand) Eagle Ford Industrial Sand Haynesville To Marcellus 11 Pricing Gains and Opportunities Core Pricing Gains 6.0% 6.0% 5.0% 4.5% 4.5% 4.5% 4.5% Legacy Contracts ($2 Billion Remaining)* 2012 $300M 2013 $350M 2014 $100M $750M International $500M Remaining Legacy* Q 2Q 3Q ~65% ~25% All Other ~10% *Based on freight revenue for 12-months ended ember 31, 12 6

7 Operating Ratio Trend Operating Ratio (Percent) Targeting a 65% to 67% Full Year Operating Ratio by point improvement from 2006 to E 7-Day Volume (000s) 13 Investing in America Infrastructure In, rails spent a record $10.7 billion on capital expenditures UP s capital investment plan = record $3.3 billion Jobs Freight Rails spend over $18 billion annually in wages and benefits Since 2005, UP has hired nearly 25,000 new employees *AAR statistics 14 7

8 Solid Financial Position September YTD ($ In Millions) Free Cash Flow* $1,447 $438 $1,009 $607 $1,486 9/30/ 9/30/ Total Debt* (Adjusted) $13,139 $13, % 41.4% $2,093 Before Dividends Dividends After Dividends Record Cash from Operations and Free Cash Flow 39% Cash Dividend Increase YTD Targeted Dividend Payout Ratio of 30% Maintain Solid Investment Grade Rating YE 9/30/ Adjusted Debt to Capital * See Union Pacific website under Investors for a reconciliation to GAAP. 15 Delivering Value to Shareholders Cash To Shareholders (Cumulative) (Dividends + Share Repurchases, in Billions) $6.2 $7.9 Performance Drives Dividend Increases YTD * = $607 Million Moving Toward Target Payout Ratio $1.7 $3.8 $4.4 Share Repurchases 3Q = $428 Million YTD * = $1.04 Billion 31.7 Million Shares Remaining in Current Authorization* * * Activity through September

9 Total Shareholder Return Average Annual Total Return* Time Frame** UP S&P Yrs 10.9% 6.0% 10 Yrs 16.8% 3.5% 5 Yrs 19.7% 0.8% 3 Yrs 25.0% 17.4% 1 Yr 22.3% 10.9% * Assumes dividends are reinvested in company stock ** Periods ending October 27, 17 Union Pacific Prospects Remain Positive Continued Volume Growth Real Pricing Gains Ongoing Productivity Focus Record Earnings Improved Shareholder Returns 18 9

10 Question & Answer Session 19 10