Cowen and Company 8 th Annual Global Transportation Conference - - PowerPoint PPT Presentation

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cowen and company 8 th annual global transportation
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Cowen and Company 8 th Annual Global Transportation Conference - - PowerPoint PPT Presentation

Nov 11, 2022 15 likes •148 views

Cowen and Company 8 th Annual Global Transportation Conference September 9, 2015 Alan H. Shaw Executive Vice President and Chief Marketing Officer 1 Long-Term Focus Well-positioned relative to changes in the U.S. economy Intermodal

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SLIDE 1

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Cowen and Company 8th Annual Global Transportation Conference

September 9, 2015

Alan H. Shaw Executive Vice President and Chief Marketing Officer

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SLIDE 2
  • Well-positioned relative to changes in the U.S. economy

‒ Intermodal ‒ Energy ‒ Manufacturing ‒ Housing

  • Target revenue growth through pricing and volume gains

‒ Near-term headwinds associated with declining commodity prices and fuel surcharge ‒ Pricing: Market-based and above inflation

  • Improved service

‒ Increased capacity ‒ Increased value of our product

Long-Term Focus

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SLIDE 3

Guiding Principles

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  • Deliver safe, reliable, efficient

service

  • Maximize incremental margin
  • Reinvest in the core franchise
  • Return funds to shareholders
  • Advance shareholder interests
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SLIDE 4

International Balancing Domestic Headwinds

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  • Short-term domestic intermodal challenges:

‒ Increased truck capacity limiting near term growth ‒ Service impacting ability to continue truck conversions

  • International intermodal volume continues to grow:

‒ Volume growth at both East and West Coast ports

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SLIDE 5

Long-Term Domestic Opportunity

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  • Confident about long-term volume and rate growth

‒ Demographics of trucking industry and increased regulation ‒ Improving economy ‒ Price increases, though not at pace of last year

$1.20 $1.40 $1.60 $1.80

Dollars per Mile

TL Dry Van Contract Rates (excl. FSC)

Source: Truckloadrate.com, Bloomberg

Source: FTR; Truckloadrate.com; Bloomberg

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SLIDE 6

Shifting Energy Markets

Opportunities:

  • Ethanol

‒ Increased gasoline consumption ‒ Low corn prices

  • Natural Gas Liquids

‒ Increased fractionator productivity in Marcellus Utica region

Challenges:

  • Utility Coal

‒ Low natural gas prices ‒ Higher stockpiles

  • Crude Oil

‒ Low commodity prices

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SLIDE 7

Growth in Manufacturing Sectors

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  • Third quarter North American light

vehicle production projected to be up 5.4% in 3Q vs. 2014 ‒ Production increases at key NS-served plants

  • July US auto sales at 17.5 million

SAAR ‒ Sales up 4.6% year to date

  • Continued growth projected for

production of basic chemicals and plastics

90.00 100.00 110.00 120.00 130.00

Index 2007=100

Industrial Production of Basic Chemicals and Plastic Products

Basic Chemicals Plastic Products

Source: WardsAuto; IHS

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SLIDE 8
  • July housing starts rose to highest level since October 2007

– Single-family starts up 12.8%

  • Household formations increasing
  • Home builder confidence rising

– NAHB/Wells Fargo Housing Market Index at highest level since 2005

  • Benefits:

– Lumber and wood products – Aggregates – Plastics

Strength in Housing and Construction

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SLIDE 9

Low Commodity Prices and Strong US Dollar Impacting Demand for US Product

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  • Export coal
  • API2 and Queensland Coking Coal benchmark prices continue to fall
  • US producers struggle to compete in reduced global demand

environment

  • Crude oil
  • Concerns over global supply glut combined with reduced global

demand causing downward price pressure

  • Production being controlled/curtailed in response
  • Steel
  • US production falling as result of global oversupply and low prices
  • Imports of steel products up 9% versus 2014 through July
  • Export grain
  • Strong competition in the world market; strong South American crops
  • f corn and soybeans eroding US market share in Asia
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SLIDE 10

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Pricing Improvements

$1,714 $529 $2,387 $1,354 $1,600 $545 $2,429 $1,339 $0 $1,000 $2,000 $3,000

Coal Intermodal Merchandise Total

2Q14 2Q15 (1%) +2% +3%

(7%)

  • Intermodal and Merchandise

RPU less fuel increased in 2Q ‒ Pricing gains

  • Overall RPU less fuel

impacted by mix: ‒ Lower export coal volume ‒ Increased international intermodal volume ‒ Reduced steel and frac sand

Second Quarter Revenue per Unit Less Fuel* Please see non-GAAP reconciliation posted on our website.

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SLIDE 11
  • Capital

‒ Key strategic capacity investments

  • Crews

‒ Increased T&E employees ‒ Addressing geographic needs

  • Temporary transfers
  • Furloughs

‒ Now hiring for attrition

Resources Aligned for Improved Service

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SLIDE 12

Current Railway Volume and Outlook

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4% 4% 1% 1% (2%) (7%) (17%) Automotive Agriculture Chemicals Intermodal % Change in Units 3QTD 2015 vs. 2014

(through September 5, 2015)

Paper MetCon Coal Total Volume: 1,336,217 units, down (3%)

Opportunities this year and beyond

‒ Intermodal ‒ Energy ‒ Manufacturing ‒ Housing

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SLIDE 13

Thank You

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