Union Pacific Corporation's (UNP) CEO Lance Fritz on Q2 2022 Results - Earnings Call Transcript

Union Pacific Corporation (NYSE:UNP) Q2 2022 Earnings Conference Call July 21, 2022 8:45 AM ET

Company Participants

Lance Fritz - Chairman, President and CEO

Kenny Rocker - Executive Vice President, Marketing and Sales

Eric Gehringer - Executive Vice President, Operations

Jennifer Hamann - Chief Financial Officer

Conference Call Participants

Justin Long - Stephens

Allison Poliniak - Wells Fargo

Tom Wadewitz - UBS

Scott Group - Wolfe Research

Amit Mehrotra - Deutsche Bank

Bascome Majors - Susquehanna

Chris Wetherbee - Citi

Walter Spracklin - RBC

Brian Ossenbeck - JPMorgan

Jon Chappell - Evercore ISI

Ken Hoexter - Bank of America

Jason Seidl - Cowen

Ben Nolan - Stifel

Ravi Shanker - Morgan Stanley

Jordan Alliger - Goldman Sachs

Jeff Kauffman - Vertical Research

David Vernon - Bernstein

Jairam Nathan - Daiwa

Operator

Greetings. Welcome to the Union Pacific’s Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

As a reminder, this conference is being recorded and the slides for today’s presentation are available on Union Pacific’s website. It is now my pleasure to introduce your host, Mr. Lance Fritz, Chairman, President and CEO for Union Pacific. Thank you, Mr. Fritz. You may now begin.

Lance Fritz

Thank you, Rob, and good morning. And welcome to Union Pacific’s second quarter earnings conference call. With me today in Omaha are Kenny Rocker, Executive Vice President of Marketing and Sales; Eric Gehringer, Executive Vice President of Operations; and Jennifer Hamann, our Chief Financial Officer.

As we expected and shared back in April during our first quarter earnings call, the second quarter was a tough quarter. Our initiatives to restore fluidity limited car loadings and increased operating costs. Those actions are working. We made solid progress improving the network with increased car velocity, reduced Cardwell and reduced excess inventory. But before we get into that discussion, I want to recognize the Union Pacific team that is making it happen. Our people truly are special and they are the foundation of our long-term success.

Now turning to our second quarter results. This morning, Union Pacific’s reporting 2022 second quarter net income of $1.8 billion or $2.93 per share. This compares to the second quarter 2021 results of $1.8 billion or $2.72 per share.

Our second quarter operating ratio of 60.2% deteriorated 510 basis points versus 2021. Network recovery efforts and record high fuel prices were headwinds. However, fuel surcharge revenue, strong core pricing gains and a positive business mix offset these pressures to produce operating income growth.