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November 4, 2015
Goldman Sachs
Industrials
Conference 2015
Rob Knight
CFO
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 statements regarding the Corporation’s expectations with respect to
economic conditions, government regulation, and demand levels; and its ability to generate financial returns,
improve network performance and cost efficiency, and provide returns to its shareholders. These statements are, or
will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.
F
Forward-looking
d l ki
statements
t t
t also
l
generally
ll include,
i l d
without
ith t limitation,
li it ti
i f
information
ti
or statements
t t
t regarding:
di
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.
Forward-looking 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 10K for 2014, which was filed with the SEC on February 6, 2015. 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
The Strength of a
Unique Franchise
Excellent Network
Strategic Terminal Locations
Broad Port Access
Border and Interchange Coverage
Business Mix
Sep 2015 YTD Freight Revenue: $15.5B
Intermodal
20%
Autos
11%
Automotive Distribution Centers
Industrial
Products
19%
Intermodal Terminals
Manifest Terminals
Ports
Coal
16%
Border Crossings, Gateways and Interchanges
Agricultural
Products
17%
Chemicals
17%
3
Third Quarter 2015 Results
Earnings Per Share
Third Quarter
$1.53
-2%
• Earnings Per Share
Down 2%
$1.50
• Softness in Demand
$1.24
• Solid Core Pricing
2013
2014
2015
• Record Operating
Ratio
4
2015 Volumes
4QTD 2015 Volumes*
7-Day Monthly Carloadings
(vs 2014)
(000s)
+7%
Automotive
200
190
2015 YTD
Down 5%*
2006
@192
2014
@188
2011
@176
2013
@ 176
2012
@176
180
170
-4%
Chemicals
Intermodal
Dom: Flat
Int’l: -16%
Industrial Products
Coal
160
January
December
-1%
Agricultural Products
-8%
-15%
-17%
-8%
TOTAL
*Through October 28, 2015
5
Resourcing to Demand
Significant Progress in Third Quarter
• TE&Y Workforce
Total TE&Y**
18,054 18,100 18,115 17,965
17,393 17,422 17,115
16,220
15,687
• Furlough
F l
h / AWTS:
AWTS ~ 2,900*
2 900*
• September Down 10% vs June
Jan
• Locomotives
• Storage:
g ~ 1,050*
,
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Active Locomotive Fleet
7,929
7,791
7 613
7,613
7,641
7 452
7,452
7,270
7,297
7,207
7,130
Jun
Jul
Aug
Sep
• Aligning Other Resources
Jan
* As of October 31, 2015
Feb
Mar
Apr
** Full-time Equivalent
May
6
Network Performance
UP Velocity
(As reported to the AAR, in mph)
Good
26.8
26.2
25.8
• Solid Improvement
26.5
25.6
24.5
23.9
24.6
23.8
24.6
23.8
• Dynamic Environment
4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
Week
40
Week
41
Week
42
• Leverage Franchise
Strengths
4Q15 Trend
UP Terminal Dwell
(As reported to the AAR, in hours)
Good
30.7
28.0
29.8
29.7
31.0
30.6
28.4
28.7
4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
27.8
27.6
27.5
Week
40
Week
41
Week
42
•F
Focus on Further
F th
Improving Service &
Costs
4Q15 Trend
7
Coal Trends
Powder River Basin
Coal Stockpiles
Volume Impact
(Days of Burn)
(Weekly Carloadings)
2014
30,000
2013 -15 Inventory
100
50,000
5-Year Average
79
59
60
20
2015*
20
Jan
2013
PRB
Flooding
10,000
1Q
2Q
3Q
4Q
Jul
2013
Jan
2014
50%
% from natural gas
50%
48%
48%
47%
38%
40% 42%
Apr ’12:
32%
20%
19%
2009
21%
37%
35%
35%
27%
17%
2007
*Through October 31, 2015
Sep
2015
Electricity Generation Market Share*
% from coal
• Natural Gas Prices
• Coal Inventory Levels
• Exports
Jan
2015
Jul
2014
25%
24%
28%
20%
2011
*U.S. Energy Information Administration (EIA)
2013
Aug ‘15
8
Shale-Related Volumes
3.3% of 2015 YTD Total Volume
YTD 2015
Through September
Frac Sand*
Volume
% Incr
(000s)
(vs 2014)
% of Total
UP Volume
144
-22%
2.1%
Crude Oil
70
-36%
1.0%
Pipe
15
-40%
0.2%
229
-28%
3.3%
• Lower Energy Prices / Lower Rig Counts
• Enhanced Fracking Technology
• Crude Oil By Rail Market Drivers
• Lower Crude Oil Prices
• Unfavorable Price Spreads
2,500
UNP Montthly Carloads
Ave. Month
hly U.S.
Rig Cou
unts
Total Shale
• Frac Sand Drivers
30,000
2,000
20 000
20,000
1,500
1,000
10,000
500
0
0
Jan-14
May-14
Sep-14
U.S. Rig Count**
Jan-15
May-15
Sep-15
UNP Frac Sand Carloads*
UNP Crude Oil Carloads
Grain Volumes
* Includes barites
** Source: Baker Hughes
9
U.S. Grain Stocks*
(Bushels in 000s)
Sept. 1, 2014
Sept. 1, 2015
Export Grain Flows
+10%
1,907
+41%
2,089
1,731
1 232
1,232
+108%
Major UP-Served
Grain Producing
Region
191
92
Corn
Soybeans
Wheat
*Source: USDA
AAR Weekly Grain Carloads
9,000
,
(UNP)
2015*
2015
2014
7,500
6,000
4,500
3,000
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
*Through October 31, 2015
10
Anticipated North American Expansions
Plastic Resins
2016
Overall New U.S.
Chemical Industry
Investment: $100+
Billion*
Sarnia, ON
2017
Joffre, AB
2016
2018
La Porte, TX
Lake Charles, LA
La Porte, TX
2016
Plaquemine, LA
2017
2017
Baytown, TX
Plaquemine, LA
Freeport, TX
2018
Sweeny, TX
2015
2016
Point Comfort, TX
Corpus
Christi, TX
Coatzacoalcos, VL
*American Chemistry Council
Intermodal
11
2015 Volume Mix
YTD Through September
Seattle
Tacoma
International
49%
Portland
Twin Cities
Domestic
D
ti
51%
Chicago
Sparks
Council Bluffs
Salt Lake City
Lathrop
Oakland
St.
Louis
Kansas City
Denver
Memphis
Las Vegas
LA
Long Beach
International
Tucson
Dallas
Nogales
Intermodal Terminals
Ports
Interchange Points
Required Average Daily
Transit Miles
400
Shreveport
Santa Teresa /
San Antonio
El Paso
Eagle Pass
Domestic Truckload
600
Houston
New Orleans
Domestic Premium
60
0
800 - 1,000
Laredo
12
U.S. Vehicle Sales
2015 Volume Mix
YTD Through September
Eastport
Seattle
Auto Parts
43%
Duluth
Portland
Finished
Vehicles
57%
Twin Cities
Chicago
Omaha
Oakland
Salt
Lake
City
Denver
Kansas
City
Los
Angeles
St. Louis
U.S. Light Vehicle SAAR*
Memphis
17.3
16 5
16.5
Dallas
18.2
17.8
18.1
17.7
16 4
16.4
New
Orleans
Houston
Borders & Interchange
10.4
Distribution Centers/Ports
(UP Owned/Leased and Private)
2006
2009
2014 2015E 2016E 2017E 2018E 2019E
Assembly Centers (UP served)
*Source: October 2015 IHS Global Insight forecast
13
Mexican Automotive Production Growth
2014: 80% of Finished Vehicles Exported
Mexico Auto
Production*
• 7th Largest Automotive Manufacturer
(In Millions)
• 4th Largest Automotive Exporter
4.1
3.4
32 3
2 9 3.2
2.9
• No.
N 2S
Supplier
li off Vehicles
V hi l to
t U.S.
US
4.5
4.7
3.4
1.6
New Car Plants, 2005-19
'05
Toyota
Tupelo, Miss.
SOUTHERN U.S.
FACTORIES
MEXICO
FACTORIES
Hyundai
Montgomery,
Montgomery Ala.
Ala
'13
'14
* October 2015 IHS Global Insight
Kia
Volkswagen
West Point,
Point Ga.
Ga Cattanooga,
Cattanooga Tenn.
Tenn
Projected to begin production
2010
2005
GM
San Luis Potosi
*Sources: ProMexico, Mexican Economy Secretary (Mexico free-trade agreements);
Office of the U.S. Trade Representative (U.S. free-trade agreements);
Center for Automotive Research
'15E '16E '17E '18E '19E
2020
2015
Nissan
Aguascalientes
Honda
Celaya
Audi
San Jose
Chiapa
Mazda
Salamanca
Kia
Pesqueria
Nissan /
Mercedes-Benz
Aguascalientes
BMW
San Louis
Potosi
Toyota
Guanajuato
Ford
Chihuahua &
Guanajuato
(Timeline not
announced)
14
UP Positioned for Mexico Growth
Strong Investments – Foreign & Domestic
Volume Growth
(Carloads in Thousands)
+8%
+3%
+5%
+9%
708
764 776 743
750
817
857
956
882
600
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
2015 Volume Mix
YTD Through September
Autos
47%
Ag Products
14%
Chemicals
7%
Industrial Intermodal
22%
10%
Coal
<1%
15
Capital Program Supported by Returns
Capital Program* & Returns**
(Capital in Billions)
ROIC**
$4.1
$3 7
$3.7
~$4.2
$
$3.6
$3.2
$2.5
•
•
16.2%
10.8%
2010
• Safe and Resilient
Infrastructure
• Continued Capacity
Spending
Southern Region
Network Strategies
• Equipment Acquisitions
2011
2012
2013
2014
2015E
Infrastructure Replacement
Locomotives / Equipment
Capacity / Commercial Facilities
Technology / Other
Positive Train Control
* Includes cash capital, leases and other non-cash capital.
2014 Capital excludes buyout of lease on Headquarters building.
•
•
•
218 New Locomotives
800 Freight Cars
More than 6,000 Containers &
6,500 Chassis
** See Union Pacific website under Investors for a reconciliation to GAAP.
16
Debt & Leverage
($ In Millions)
Total Debt*
• Strong Balance
Sheet
(Adjusted)
$16,493
$14,905
44.5%
41.3%
12/31/2014
• Investment Grade
Credit Rating
9/30/2015
Adjusted Debt to Capital
EBITDA*
Adjusted Debt / Adjusted EBITDA
1.6
1.4
• $3
$3.35
35 Billion
o YTD
Debt Issuance
• Includes $1.1 Billion
Issued in October
12/31/2014
9/30/2015
* See Union Pacific website under Investors for a reconciliation to GAAP.
17
Driving Strong Shareholder Value
Quarterly Share Repurchases
• Repurchase Activity
($ In Millions)
$1,238
$683
$807
$806
$834
$856
2015
2014
2015
2014
2014
1Q
2Q
• 28.7
28 7 Million Shares YTD
2015
3Q
Dividends & Share Repurchases*
($ In Millions)
Share Repurchases
Dividends
+22%
%
• 13.8 Million Shares in 3Q
$4,318
• ~ 59 Million Shares Remain
Under Current Authorization
• Cash Returned to
Shareholders up 22%
$3,531
2014 YTD
2015 YTD**
* Through September ** Excludes 4Q14 dividend payment made Jan. 2, 2015
18
Closing Out 2015
Will Fall Short of Fourth Quarter & Full Year 2014 EPS Records
• Lower Year-over-Year
Volumes
• Business Mix
Challenges
• Focus on Core Pricing
• Continued Productivity
& Cost Improvement
19
Growing Shareholder Value
KEY DRIVERS
2015
2019
Moderate Economy
Diverse Franchise Opportunities
Positive Volume Growth
Strong Value Proposition - Reinvestability
Real Core Price Gains
Volume + Pricing + Productivity
Operating Ratio 60%+/-
Replacement
R
l
t&P
Productivity
d ti it
Growth with High Returns
CapEx of ~16% - 17% of Revenue
Increasing Cash Generation
Low to Mid 40’s Adj. Debt/Cap
1.5x “Plus” (<2x) Adj. Debt / Adj. EBITDA
Strong Investment Grade
Dividend Payout Target of 35%
Opportunistic Share Repurchases
20