Union Pacific Corporation (UNP) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 20, 2023 8:45 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Union Pacific First Quarter 2023 Conference Call. 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 begin.

Lance Fritz - Chairman, President and CEO

Thank you, Rob, and good morning, everyone, and welcome to Union Pacific's first 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. The story of the past quarter for Union Pacific is one of resiliency, battling heavy snow, Arctic temperatures, flooding and tornadoes, the team maintained service levels and exited the quarter on a positive trajectory. Persevering through those harsh conditions, our employees delivered for our customers, which demonstrates again that our people are the foundation for the great things that lie ahead.

Turning to the first quarter results. This morning, Union Pacific is reporting 2023 first quarter net income of $1.6 billion or $2.67 per share. This compares to first quarter 2022 results of $1.6 billion or $2.57 per share. Our first quarter operating ratio of 62.1% deteriorated 270 basis points versus 2022 driven by excess costs, inflation and lower volumes.

A series of weather events throughout the quarter had a real impact on our ability to capture demand, especially within our coal business as well as added cost to the network. Through those events, our service products showed greater and greater resiliency, quickly rebounding each time as we were better positioned with crew resources to support our customers. And with April month-to-date, freight car velocity is about 200 miles per day. We are operating a network that is positioned for consistent and reliable service. While a more difficult start to the year than expected, it doesn't reduce our expectations for 2023. As you'll hear from the team, all of our goals are still in front of us.

Let me turn it over to Kenny for an update on the business environment.

Kenny Rocker - Executive Vice President, Marketing and Sales