UNP - Union Pacific Corporation (UNP) Q4 2023 Earnings Call Transcript
2024-01-25 14:00:05 ET
Union Pacific Corporation (UNP)
Q4 2023 Earnings Conference Call
January 25, 2024, 08:45 AM ET
Company Participants
Jim Vena - Chief Executive Officer
Jennifer Hamann - Chief Financial Officer
Kenny Rocker - Executive Vice President of Marketing and Sales
Eric Gehringer - Executive Vice President of Operations
Conference Call Participants
Chris Wetherbee - Citigroup
Walter Spracklin - RBC Capital Markets
Scott Group - Wolfe Research
Tom Wadewitz - UBS
Jon Chappell - Evercore ISI
Amit Mehrotra - Deutsche Bank
Allison Poliniak - Wells Fargo
Brandon Oglenski - Barclays
Bascome Majors - Susquehanna
Ken Hoexter - Bank of America
Justin Long - Stephens
Ben Nolan - Stifel
Ravi Shanker - Morgan Stanley
Brian Ossenbeck - JPMorgan
Jordan Alliger - Goldman Sachs
Jason Seidl - TD Cowen
Jeff Kauffman - Vertical Research Partners
Jairam Nathan - Daiwa
David Vernon - Bernstein
Presentation
Operator
Greetings. Welcome to the Union Pacific Fourth Quarter Earnings Call. At this time, all participants are in 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. Jim Vena, Chief Executive Officer for Union Pacific. Mr. Vena, you may now begin.
Jim Vena
Thanks, Rob. Good morning, and thank you for joining us today to discuss Union Pacific's fourth quarter and full year results. I'm joined in Omaha by our Chief Financial Officer, Jennifer Hamann, our Executive Vice President of Marketing and Sales; Kenny Rocker and our Executive Vice President of Operations, Eric Gehringer. The Union Pacific team is executing our multiyear strategy to lead the industry in safety, service and operational excellence. Our fourth quarter shows a lot of what's possible and demonstrate that we're on the right path to achieving those goals. We exited 2023 with strong momentum, which gives me great confidence that we have a winning strategy. There's work to do, but we're building the foundation for future success.
Now let's turn to Slide 3. This morning, Union Pacific reported 2023 fourth quarter net income of $1.7 billion or $2.71 per share. This compares to 2022 fourth quarter net income of $1.6 billion or $2.67 per share.
Fourth quarter operating revenue was flat as increased volumes and core pricing gains were offset by lower fuel surcharge revenue and business mix. Expenses year-over-year were also flat as lower fuel expenses and productivity gains were offset by inflation, volume-related costs and higher casualty expenses.
Our fourth quarter operating ratio of 60.9% improved 10 basis points versus last year. And more importantly, we demonstrated strong sequential OR improvement of 250 basis points from the third quarter. We are taking the right actions to increase the efficiency of our railroad while also improving service for our customers.
Key to our strategy is excelling in what we control. We made great progress in those areas this quarter. That provides further proof that we're on the right path for future success.
So with that, let me hand it over to Jennifer to provide more details on the fourth quarter and full year financials.
Jennifer Hamann
Thanks, Jim, and good morning. Let's begin by walking through our fourth quarter income statement on Slide 5. Starting with the top line. Operating revenue of $6.2 billion was flat versus 2022 on a 3% volume increase. Breaking it down further, freight revenue totaled $5.8 billion, up 1%. The biggest driver of freight revenue in the quarter was fuel.
Lower year-over-year fuel prices reduced fuel surcharge revenue and impacted freight revenue 375 basis points as fuel surcharges declined $180 million versus 2022 to $795 million....
Union Pacific Corporation (UNP) Q4 2023 Earnings Call Transcript