Stifel Transportation and Logistics Conference€¦ · Stifel Transportation and Logistics...
Transcript of Stifel Transportation and Logistics Conference€¦ · Stifel Transportation and Logistics...
Stifel Transportation and Logistics Conference
Marta R. Stewart Executive Vice President Chief Financial Officer February 11, 2014
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Norfolk Southern Update
2013 Overview
First Quarter Update
Business Outlook
Long Term Productivity Opportunities
Capital Allocation
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2011 2012 2013
Coal GM Intermodal
$11,172
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Railway Operating Revenues 2011 – 2013 ($ in millions)
$11,040 $11,245
23% 20%
18%
32% 33% 33%
45% 47%
49%
2011 2012 2013
Coal GM Intermodal
Traffic Volume Changes Percentage of Total Volumes
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7,114.7 7,107.2 7,340.9
2011 2012 2013
Volumes
Total Volumes 2011 – 2013 (Units in thousands)
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$7,959 $7,916 $7,988
2011 2012 2013
Operating Expenses
Railway Operating Expenses 2011 – 2013 ($ in millions)
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75.9%
83.1% 83.3%
2011 2012 2013
Composite Service Metric
Composite Service Performance 2011 – 2013
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Volume and Crew Start Variances 2013 vs. 2012
0%
4%
Coal
-9%
-5%
Merchandise
Intermodal
0%
6%
-3%
3%
Shipments
Crew Starts
Shipments
Crew Starts
Shipments
Crew Starts
Total
Shipments
Crew Starts
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-10%
-9%
5%
1%
Train and Engine Service Overtime
Re-Crews
Carloads/Units per Locomotive
Gross Ton Miles per Gallon
Year-Over-Year Percent Improvement
Operating Efficiencies 2013 vs. 2012
Norfolk Southern Update
2013 Overview
First Quarter Update
Business Outlook
Long Term Productivity Opportunities
Capital Allocation
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801.1 764.7
2013 2014
Units (000)
Current Railway Volume First Quarter through Week 6 (February 8, 2014)
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2014 Volume: 764,700 units, down (5%)
13%
(1%)
(5%)
(7%)
(8%)
(10%)
(15%)
Change in Units
1QTD14 vs. 2013
Chemicals
Intermodal
Agriculture
MetCon
Paper
Automotive
Coal
Current Railway Operating Expenses First Quarter through January
Increased labor hours
Increased overtime
Increased locomotives in service
Increased fuel consumption
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Severe Weather Effects
Train Speed 1Q11 – 1QTD14
20.9
23.4
24.2
22.7
19.0
20.0
21.0
22.0
23.0
24.0
25.0
Mile
s p
er
Ho
ur
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Better
Terminal Dwell 1Q11 – 1QTD14
20.0
21.0
22.0
23.0
24.0
25.0
26.0
27.0
Ho
urs
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Better
Norfolk Southern Update
2013 Overview
First Quarter Update
Business Outlook
Long Term Productivity Opportunities
Capital Allocation
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Business Outlook for 2014
COAL • Utility coal impacted by
reduced demand for electricity
and natural gas competition
• Strong competition in the
Atlantic metallurgical market
• Soft demand and oversupply of
thermal coal
• Flat domestic met coal
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Business Outlook for 2014
COAL • Utility coal impacted by
reduced demand for electricity
and natural gas competition
• Strong competition in the
Atlantic metallurgical market
• Soft demand and oversupply of
thermal coal
• Flat domestic met coal
INTERMODAL • Continued opportunities for
highway conversion
• Continued growth in Crescent
Corridor services
• Growth with International
shipping partners
• Continued growth – opened
Charlotte Terminal December 9
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Business Outlook for 2014
COAL • Utility coal impacted by
reduced demand for electricity
and natural gas competition
• Strong competition in the
Atlantic metallurgical market
• Soft demand and oversupply of
thermal coal
• Flat domestic met coal
INTERMODAL • Continued opportunities for
highway conversion
• Continued growth in Crescent
Corridor services
• Growth with International
shipping partners
• Continued growth – opened
Charlotte Terminal December 9
MERCHANDISE • Project growth in crude oil,
increased volume for shale
related liquid petroleum gases
and asphalt
• Gains in steel, frac sand
• Continued automotive growth
• Favorable corn and soybean
crop for 2013 – puts and takes
• Improved housing & related
construction materials market
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Continued Strength in Automotive
• NSC Automotive volume up 7% in 2013
• North American light vehicle
production forecasted at 17.1 million
units for 2014, up 3.6% vs. last year
• Average vehicle age at all-time high
Source: WardsAuto Forecast, Polk 19
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
US Vehicle Sales (M)
Vehicle Age (yrs.)
U.S. Vehicle Age vs. Sales
Merchandise Network Automotive Facilities
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Atlanta
Charlotte
Chicago
Columbus
Detroit
Savannah
Miami
Cincinnati
Harrisburg
Norfolk
New Orleans
Memphis
Dallas
Jacksonville
Charleston
Lexington
Kansas City St Louis
Louisville
Baltimore
Toledo Cleveland
Pittsburgh
Ayer Albany Buffalo
Titusville
NY/NJ
Philadelphia
Birmingham
Meridian
Chattanooga
NS Automotive Network NS Automotive Network and Haulage
27 Assembly Plants
Assembly Plant on Short Line
connecting with NS
Ft. Wayne
Supply Chain Routing An East Coast Refinery Illustration
Most direct route to East Coast
refineries
Resiliency in yard and routing
infrastructure
Demonstrated service performance
(36-40 hr. transit from Chicago)
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NS Chicago to the East Coast Crude Corridor
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Norfolk Southern Update
2013 Overview
First Quarter Update
Business Outlook
Long Term Productivity Opportunities
Capital Allocation
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Roanoke Hump Closure
Roanoke
Atlanta
Norfolk
Charleston
Philadelphia Columbus
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Sheffield, AL
Bellevue Yard Expansion
Bellevue, OH
Allentown, PA
Macon, GA
Birmingham, AL
Enola, PA
Elkhart, IN
Conway, PA
Linwood, NC Chattanooga, TN Knoxville, TN
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Bellevue Yard Expansion
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UTCS - Movement Planner
All 11 Divisions on Base System
5 of 11 Divisions on
Movement Planner with remaining in 2014
Realizing benefits in
velocity, productivity, and schedule adherence
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Norfolk Southern Update
2013 Overview
First Quarter Update
Business Outlook
Long Term Productivity Opportunities
Capital Allocation
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2011 2012 2013 2014 Budget
$2,160 $2,241
$1,971
$2,200
Capital Expenditures ($ millions)
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2014 Capital Improvement Budget Core vs. Growth vs. PTC
66%
24%
10%
Core/Replacement Investments
Rail, Tie, Ballast programs
Locomotive rebuild program
Coal car replacements
Growth/Productivity Investments
New locomotives
Yard expansions
Technology
Infrastructure improvements
Positive Train Control
Maintain the franchise, invest in business growth.
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2011 2012 2013
$3,227 $3,065 $3,078
$2,160 $2,241 $1,971
Cash from Operations Capital Expenditures
Cash From Ops and Capital Expenditures ($ millions)
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Weighted Avg Interest Rate & Maturities
2008 – 2013
Dec08
Dec09
Dec10
Dec11
Dec12
Dec13
6.75% 6.69% 6.57%
6.14%
5.51% 5.44%
Weighted Avg Interest Rate
Dec08
Dec09
Dec10
Dec11
Dec12
Dec13
20.5 19.4 22.0
26.3
23.6 22.9
Weighted Avg Maturities (yrs)
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Balanced Cash Flow Utilization 2006 through 2013
Capital Expenditures Share Repurchases Dividends
$13.2 Billion $12.1 Billion*
$8.1 Billion
$4.0 Billion
* See reconciliation of Total Shareholder Distributions to GAAP posted on our website, www.nscorp.com.
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$0.36 $0.48
$0.68
$0.96
$1.22 $1.36 $1.40
$1.66
$1.94 $2.04 $2.16
Annual Dividend Per Share
Compound annual
growth rate of 20% for
2004 through 2014
+33% +42% +41% +27% +11% +3% +19% +17% +4% +4%
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Thank You
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