Stifel Nicolaus Transportation and Logistics Conference€¦ · Stifel Nicolaus Transportation and...
Transcript of Stifel Nicolaus Transportation and Logistics Conference€¦ · Stifel Nicolaus Transportation and...
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Stifel NicolausTransportation and Logistics Conference
Donald W. SealeExecutive Vice Presidentand Chief Marketing Officer
Agenda
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• Fourth Quarter and Full Year Results
• First Quarter-to-Date
• Business Outlook
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Revenue
$2.7 Billion, down (4%)
RPU
$1,498, down (3%)
Volume
1,792,100 units, down (1%)
4Q 2011 Price/Mix Volume Fuel 4Q 2012
$2,797$2,684
($105)($23) $15
4Q 2012 Revenue $ in Millions & y-o-y Percent Change
Components of Revenue Change $ in Millions
Railway Operating RevenueFourth Quarter 2012 vs. 2011
Merchandise$1,443+4%
Coal$657(23%)
Intermodal$584+5%
4Q 2012 Volume (000’s) & y-o-y Percent Change
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0
500
1,000
1,500
2,000
4Q 2011 4Q 2012
Coal
Merchandise
Intermodal
+1%
+4%
(13%)
1,806.7 1,792.1Coal down (13%) (16%) decline in Utility (17%) decline in Domestic Met0.5% rise in Export
Intermodal up 4% 9% gain in Domestic more than offset (1%) decline in International
Merchandise up 1% Strength in Chemicals and Automotive more than offset decline in MetCon
Total volume down (1%)
Railway Volume Fourth Quarter 2012 vs. 2011
(Unfavorable)Favorable
2012 2011 $ %
Railway operating revenues $ 2,684 $ 2,797 $ (113) (4%)
Railway operating expenses 1,970 1,997 27 1%
Income from railway operations $ 714 $ 800 $ (86) (11%)
Railway operating ratio 73.4 71.4 (2.0) (3%)
Operating ResultsFourth Quarter 2012 vs. 2011 ($ Millions)
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Revenue
$11 Billion, down (1%)
RPU
$1,553, down (1%)
Volume
7,107,200 units, down (0.1%)
2011 Price/Mix Volume Fuel 2012
$11,172$11,040($143)
($12) $23
2012 Revenue $ in Millions & y-o-y Percent Change
Components of Revenue Change $ in Millions
Railway Operating Revenue2012 vs. 2011
Merchandise$5,920+6%
Coal$2,879(17%)
Intermodal$2,241+5%
2012 Volume (000’s) & y-o-y Percent Change
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0
2,000
4,000
6,000
8,000
2011 2012
Coal
Merchandise
Intermodal
+2%
+5%
(13%)
7,114.7 7,107.2Coal down (13%) (17%) decline in Utility (5%) decline in Domestic Met(2%) decline in Export
Intermodal up 5% 11% gain in Domestic more than offset (1%) decline in International
Merchandise up 2% Strength in Automotive, Chemicals and MetCon more than offset declines in Paper and Agriculture
Total volume down (0.1%)
Railway Volume 2012 vs. 2011
(Unfavorable)Favorable
2012 2011 $ %
Railway operating revenues $ 11,040 $ 11,172 $ (132) (1%)
Railway operating expenses 7,916 7,959 43 1%
Income from railway operations $ 3,124 $ 3,213 $ (89) (3%)
Railway operating ratio 71.7 71.2 (0.5) (1%)
Operating Results2012 vs. 2011 ($ Millions)
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60%
65%
70%
75%
80%
85%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
72.2
%
76.6
%
78.2
%
76.3
%
82.8
%
82.9
%
83.3
%
83.4
%
20112012
Improving Overall ServiceComposite Service Performance By Quarter 2011-2012
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16% 16%20%
25%
35%
28%
32%
42%
8% 9%
14% 14%
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Train & Engine Service Overtime Re-Crews Equipment Rents (Velocity Driven)
Operating EfficienciesYear-over-year Percentage Improvement, by Quarter
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19%
34%
11%
3%
1%
Train and EngineService Overtime
Re-Crews
Equipment Rents(Velocity Driven)
Carloads/Unitsper Locomotives
in Service
Gross Ton Milesper Gallon
Year-Over-Year Percent Improvement
Operating EfficienciesFull Year 2012 vs. 2011
Agenda
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• Fourth Quarter and Full Year Results
• First Quarter-to-Date
• Business Outlook
664,100 units, up 3%
10%
8%
4%
0.2%
(1%)
(3%)
(10%)
Change in Units1QTD13 vs. 2012
646.1 664.1
2012 2013
Units (000)
Current Railway VolumeFirst Quarter through Week 5 (February 2, 2013)
Intermodal
Chemicals
Paper
Agriculture
Automotive
MetCon
Coal
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Agenda
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• Fourth Quarter and Full Year Results
• First Quarter-to-Date
• Business Outlook
• Continued opportunities for highway conversion
• New Intermodal service lanes ahead as new corridor terminals open
• Growth with international shipping partners
• Expansion in premium market segment
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Business Outlook
• Utility coal impacted by reduced demand for electricity, competition from natural gas and higher stockpiles
• Softer domestic metallurgical market to support steel production
• Weak demand in European market for both met and steam coal, marginal improvement in Asia
Coal Intermodal Merchandise
• Project growth in crude oil, increased plastics due to low-cost feedstock
• Gains in steel, but weaker aggregate market
• Continued automotive growth despite tougher comps
• Reduced U.S. corn and soybean crop
• Improved housing & related construction materials market
16 Excludes coke, iron ore & outbound Wheelersburg
Illinois Basin
20.4 M Tons14%
Northern Appalachia41.1 M Tons
27%
Western26.3 M Tons
18%
CentralAppalachia57.6 M Tons
39%SouthernAppalachia3.3 M Tons
2% Norfolk SouthernRailway and its Railroad Operating Subsidiaries
- - - NS Trackage and Haulage Rights
Dynamics of Coal Market2012
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Business Outlook
• Utility coal impacted by reduced demand for electricity, competition from natural gas and higher stockpiles
• Softer domestic metallurgical market to support steel production
• Weak demand in European market for both met and steam coal, marginal improvement in Asia
• Continued opportunities for highway conversion
• New Intermodal service lanes ahead as new corridor terminals open
• Growth with international shipping partners
• Expansion in premium market segment
Coal Intermodal Merchandise
• Project growth in crude oil, increased plastics due to low-cost feedstock
• Gains in steel, but weaker aggregate market
• Continued automotive growth despite tougher comps
• Reduced U.S. corn and soybean crop
• Improved housing & related construction materials market
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2012 Intermodal ScorecardYear-over-year Percent Improvement
6%
3%
6%
3%
0% 2% 4% 6%
Percentage of Containers on
Stack Cars
Units per Train
Train Speed
Platform Utilization
Intermodal DriversOver 30 New Crescent Corridor Lanes Launch in 2013
Volume over the Crescent Corridor was up 18% during the fourth quarter, and up 21% in 2012 versus 2011
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Business Outlook
• Utility coal impacted by reduced demand for electricity, competition from natural gas and higher stockpiles
• Softer domestic metallurgical market to support steel production
• Weak demand in European market for both met and steam coal, marginal improvement in Asia
• Continued opportunities for highway conversion
• New Intermodal service lanes ahead as new corridor terminals open
• Growth with international shipping partners
• Expansion in premium market segment
Coal Intermodal Merchandise
• Project growth in crude oil, increased plastics due to low-cost feedstock
• Gains in steel, but weaker aggregate market
• Continued automotive growth despite tougher comps
• Reduced U.S. corn and soybean crop
• Improved housing & related construction materials market
0.0
1.0
2.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
N.A. Vehicle ProductionU.S. Housing StartsU.S. Industrial Production - Basic Chemicals
Merchandise Fundamentals are Positive
20 Source: Global Insight, Ward’s
• Positive signs ahead, though housing still not
back to pre-recession levels
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Thank You