Union Pacific Corporation

Thank you for accessing Union Pacific Corporation's 2021 Fourth Quarter Earnings Conference Call, held at 8.45 a.m. Eastern Time on January 20, 2022, in Omaha, Nebraska. This presentation and the accompanying materials include statements that contain estimates, projections, or expectations regarding the company's financial results and operations and future economic conditions. These statements are forward-looking statements, as defined by the federal securities laws. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. The materials accompanying this presentation include more detailed information regarding forward-looking information and these risks and uncertainties. In addition, please refer to the company's website and SEC filings for additional information about our risk factors. Thank you.

Greetings. Welcome to the Union Pacific Fourth Quarter Earnings Call. At this time, all participants are in listening mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. 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.

Thank you, Rob, and good morning. And welcome to Union Pacific's fourth quarter earnings conference call. With me today in Omaha are Kenny Rocker, Executive Vice President of Marketing and Sales, Eric Geringer, Executive Vice President of Operations, and Jennifer Heyman, our Chief Financial Officer. As we wrap up 2021, I want to start with a thank you to the Union Pacific team. This past year has been anything but easy as we dealt with massive weather events, wildfires, supply chain congestion, and continued impacts from the pandemic. Through all of those challenges, our employees did the hard work necessary to deliver a record financial year. I am so grateful for our team's strength and their determination. They give me confidence that our best days truly lie ahead. Turning to our fourth quarter results, this morning, Union Pacific is reporting 2021 fourth quarter net income of $1.7 billion or $2.66 per share. as compares to adjusted fourth quarter 2020 results of $1.6 billion, or $2.36 per share. You'll note that 2020 reported results included an impairment charge related to our Brazos yard investment. Our fourth quarter operating ratio of 57.4% deteriorated 180 basis points versus 2020's adjusted OR, largely driven by the headwind from fuel prices. For the full year, we achieved a record 57.2% operating ratio, an improvement of 130 basis points versus 2020 adjusted results. And as Jennifer will lay out in a few minutes, we're on track to achieve a full year operating ratio that starts with a 55 in 2022. Even with the challenges of the past year, we set fourth quarter and full year records for operating income and net income. comparison to 2019 further demonstrates the achievements of the team over the past two years. As you will hear in greater detail from Eric, our fourth quarter safety and service performance did not meet expectations. I am pleased, however, that as we exit the year, our network is healing. Reflecting back, 2021 was a difficult year in many ways, but through our commitment to PSR and delivering for our customers, we navigated each obstacle and are now better for having dealt with them. During 2021, we took significant steps to advance our ESG efforts, kept off by the release of our initial Climate Action Plan in December. This plan lays out a framework to achieve our 2030 greenhouse gas emission reduction targets and includes a commitment to net zero by 2050, and we are the only U.S. railroad to do so. One element of our plan is to reduce overall fuel consumption, and we made continued progress last year. Our full-year fuel consumption rate improved 1% for a new record low. This represents the third consecutive year we improved our fuel consumption rate on a year-over-year basis. And it helped our customers eliminate 22.9 million metric tons of greenhouse gas emissions by using rail versus truck. So let's get started with Kenny for an update on the business environment.