J.P. Morgan Aviation, Transportation & Defense Conference March - - PowerPoint PPT Presentation

J.P. Morgan Aviation, Transportation & Defense Conference

James A. Squires Executive Vice President Finance and Chief Financial Officer

March 15, 2012

Norfolk Southern Update

• Current Status
• 1st Qtr-to-date Volumes
• 1st Qtr-to-date Service Performance
• Business Outlook
• Corridors and Terminals
• Capital Structure
• 2012 Capital Budget
• Shareholder Returns
• Debt Issuance

Current Railway Volume

First Quarter through Week 10 (March 10, 2012)

1,233 1,325 1,316 2010 2011 2012

Units (000) Quarter-to-date Change in Units QTD12 vs. QTD11

7%

21% 10% 2%

• 1%
• 2%
• 5%
• 13%

Automotive MetCon Intermodal Agriculture Chemicals Paper Coal

Heating Degree Days in NS Region

January-February 2012 vs. 2011

Heating Degree Days January-February

500 1,000 1,500 2,000 2011 2012

(21%)

Source: NOAA Average heating degree days within NS region in January & February.

Train Speed

2011 through March 9, 2012

18.0 19.0 20.0 21.0 22.0 23.0 24.0 25.0

NS Train Speed (miles per hour) Better

Source: As reported publicly to the AAR

Train Speed

2011 through March 9, 2012

18.0 19.0 20.0 21.0 22.0 23.0 24.0 25.0

NS Train Speed (miles per hour) Better

Source: As reported publicly to the AAR

Train Speed

2011 through March 9, 2012

18.0 19.0 20.0 21.0 22.0 23.0 24.0 25.0

NS Train Speed (miles per hour) Better

Source: As reported publicly to the AAR

Terminal Dwell

2011 through March 9, 2012

17.0 19.0 21.0 23.0 25.0 27.0 29.0 31.0 33.0

NS Terminal Dwell (hours) Better

Source: As reported publicly to the AAR

Composite Service Performance

1Q10 – 1Q12*

70% 72% 74% 76% 78% 80% 82% 84% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12*

* 1Q12 reflects February year-to-date.

Merchandise

• Project growth in crude oil and waste products
• Growth in ethanol to terminals
• Increasing demand for materials in natural gas drilling operations
• Stronger domestic steel and automotive production

2012 Business Outlook

Coal

• Impact of mild winter and competition from natural gas
• New opportunities for Illinois Basin coal
• Export driven by port capacity improvements, new coal production

and new steam coal opportunities Merchandise

• Project growth in crude oil and waste products
• Growth in ethanol to terminals
• Increasing demand for materials in natural gas drilling operations
• Stronger domestic steel and automotive production

2012 Business Outlook

Coal

• Impact of mild winter and competition from natural gas
• New opportunities for Illinois Basin coal
• Export driven by port capacity improvements, new coal production

and new steam coal opportunities Merchandise

• Project growth in crude oil and waste products
• Growth in ethanol to terminals
• Increasing demand for materials in natural gas drilling operations
• Stronger domestic steel and automotive production

2012 Business Outlook

Intermodal

• Increasing opportunities for highway conversion
• Tightening truck capacity

R to the Power of 3!

The Goal is to Maximize Train Density:

• 53’ Containers in Doublestack Cars
• 40’ Containers in 40’ Doublestack Cars
• Right

ght Box

• Right

ght Ca Car

• Right

ght Lane Lane

R3 - Phases

• Phase I - Only 53’ Doublestack Cars Between

Western Points Eastern Points Atlanta Erail Chicago 47th Morrisville Kansas City Harrisburg Memphis

• St. Louis
• Phase 1A – 53’ doublestack cars for containers between 47th

and Ayer/Albany

• Phase 2 – Eliminate 53’ stacks to the Piers (West to East)
• Phase 3 – Focus on main service triangle

Chicago Cincinnati Columbus Pritchard Roanoke Norfolk Detroit Philadelphia Ayer Atlanta

Charlotte

Lynchburg Corinth Shreveport Meridian New Orleans

Memphis

NY/NJ Bethlehem

NS Corridor Strategy

Greencastle Mechanicville Birmingham

X Crescent Corridor

Crescent Corridor

Terminal Under Construction

16

Intermodal Terminal Expansion Update

Ground Breaking Date Completion Date Annual Volume Capability (Lifts) Memphis, TN January 2011 Fall 2012 200,000 Greencastle, PA June 2011 Fall 2012 85,000 Birmingham, AL June 2011 Fall 2012 100,000 Charlotte, NC Summer 2011 Summer 2013 200,000

Memphis (Rossville) TN Intermodal Facility

21

Birmingham (McCalla) AL Intermodal Facility

21

Greencastle, PA Intermodal Facility

21

2012 Capital Improvement Budget

Replacement/Core -- Growth -- PTC

67% 10% 23%

Replacement/Core Positive Train Control Growth/Productivity

Total Spending = $2.4 billion

2012 Capital Improvement Budget

Replacement/Core vs. Growth vs. PTC

• Strengthen the franchise
• Renew the coal fleet
• Grow Intermodal network
• Invest in business growth

67% 10% 23%

Replacement/Core Positive Train Control Growth/Productivity

Total Spending = $2.4 billion

2006 2007 2008 2009 2010 2011

$1,178 $1,341 $1,558 $1,299 $1,470 $2,160

Capital Expenditures

($ millions)

21

2006 2007 2008 2009 2010 2011

$2,206 $2,333 $2,715 $1,860 $2,714 $3,227 $1,178 $1,341 $1,558 $1,299 $1,470 $2,160

Cash from Operations Capital Expenditures

Cash From Ops and Capital Expense

($ millions)

21

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

$0.26 $0.30 $0.36 $0.48 $0.68 $0.96 $1.22 $1.36 $1.40 $1.66

Annual Dividend Per Share

Compound annual growth rate of 23% for 2002 through 2011

+15% +20% +33% +42% +41% +27% +11% +3% +19%

Balanced Cash Flow Utilization

2006 through 2011

Dividends Share Repurchases Capital Expenditures

$8.9 Billion* $9.0 Billion

$6.2 Billion $2.7 Billion

* See reconciliation to GAAP of Total Shareholder Distributions posted on our website, www.nscorp.com.

1

$1,218 7% $8,693 50% $7,540 43%

12/31/11

Common Stock Retained Earnings Debt

$806 6% $5,694 41% $7,364 53%

12/31/02

Common Stock Retained Earnings Debt

Capital Structure Change

2002 vs 2011

($ millions)

Debt Maturities as of December 31, 2011

($ millions)

$51 $47 $447 $3 $500 $550 $600 $585 $314 $83 $367 $440 $350 $473 $133 $295 $596 $138 $273 $550 $404

'12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '25 '27 '29 '31 '35 '37 '41 '43 '97 2105 2111

Pro Forma Debt Maturities

($ millions)

$51 $47 $447 $3 $500 $550 $600 $585 $314 $83 $600 $367 $440 $350 $473 $133 $295 $596 $138 $273 $550 $404

'12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '25 '27 '29 '31 '35 '37 '41 '43 '97 2105 2111

Funding of Organic Growth

Trend in Weighted Avg Interest Rate & Maturities 2007 – 2011

Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 6.79% 6.84% 6.77% 6.57% 6.09%

Weighted Avg Interest Rate

Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 21.4 20.4 19.3 21.9 25.9

Weighted Avg Maturities (yrs)

Thank You