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

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

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J.P Morgan Aviation, Transportation & Defense Conference March 24, 2011 Wick Moorman Chairman, President & CEO Norfolk Southern Corporation Norfolk Southern Corporation 2 Agenda NS Business Outlook Resource Initiatives

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SLIDE 1

J.P Morgan Aviation, Transportation & Defense Conference

March 24, 2011

Wick Moorman Chairman, President & CEO Norfolk Southern Corporation

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SLIDE 2

Norfolk Southern Corporation

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SLIDE 3

Agenda

 NS Business Outlook  Resource Initiatives  Financial Objectives

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SLIDE 4

Chicago

January 31, 2011

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SLIDE 5

Railway Volume

First Quarter through Week 11 2011 vs. 2010

1QTD 2011 vs. 2010 Units Abs. % Chg.

Agriculture 134,522 (3,673) (3%) Chemicals 81,309 (1,795) (2%) MetCon 124,266 8,262 7% Paper 68,960 1,259 2% Automotive 66,313 5,266 9% Merchandise 475,370 9,319 2% Intermodal 641,750 57,019 10% Coal 345,212 34,149 11% Total 1,462,332 100,487 7% Source: AAR carloadings, which are reported weekly and may not equal NS' reported volumes.

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SLIDE 6

Responding to Growth

  • Employees
  • Equipment:

– Locomotives and Freight Cars

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SLIDE 7

T&E Employment Count

Net of Furloughs, Trainees, and Projected Attrition

10,000 10,500 11,000 11,500 12,000 12,500 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

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SLIDE 8

Resource Initiatives - Locomotives

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SLIDE 9

Productivity Scorecard

Two Months 2011 vs. 2010

Carload Volume Crew Starts Railroad Employees GTMs per Employee GTMs per Gallon GTMs per Train Hour

8% 5% 6% 3% 0% 2%

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SLIDE 10

Railway Volume

First Quarter through Week 11 2011 vs. 2010

1QTD 2011 vs. 2010 Units Abs. % Chg.

Agriculture 134,522 (3,673) (3%) Chemicals 81,309 (1,795) (2%) MetCon 124,266 8,262 7% Paper 68,960 1,259 2% Automotive 66,313 5,266 9% Merchandise 475,370 9,319 2% Intermodal 641,750 57,019 10% Coal 345,212 34,149 11% Total 1,462,332 100,487 7% Source: AAR carloadings, which are reported weekly and may not equal NS' reported volumes.

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SLIDE 11

Outlook – Business Portfolio

General Merchandise

  • Manufacturing recovery

Chemicals

  • Build out of ethanol network and export grain

growth Agriculture

  • New business, improved auto production and

sales Automotive

  • Recovery in global steel production

Steel

  • Uncertainty in housing, but improving paper

markets Forest Products

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SLIDE 12

Outlook – Business Portfolio

Intermodal

  • Truckload conversions

Domestic Intermodal

  • Improving imports/exports

International Intermodal

  • New business opportunity

Premium

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SLIDE 13

Within our service territory:  74% of the 2009 US population  58% of total energy consumption in U.S.  63% of U.S. manufacturing  One study suggests that at least 30 million truck shipments over 550 miles touch our service territory

U.S. Demographics

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SLIDE 14

Truck Volume in 2007

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SLIDE 15

Projected Truck Volume in 2040

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SLIDE 16

Chicago Cincinnati Columbus Pritchard Roanoke Norfolk Detroit Philadelphia Ayer Atlanta

Charlotte

Lynchburg Corinth Shreveport Meridian New Orleans

Memphis

NY/NJ Bethlehem Titusville Jacksonville

Corridor Volume Increases 2010 vs. 2009 Premier Route 18% PanAm Southern 32% Crescent Corridor 31% Meridian Speedway 36% Titusville 146%

NS Corridor Strategy

Greencastle Mechanicville Birmingham

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SLIDE 17

Outlook – Business Portfolio

Coal

  • Falling stockpiles and increased electricity

generation Utility Coal

  • Improving exports

Export Coal

  • Recovery in global steel production

Domestic Met Coal

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SLIDE 18

Northern Appalachia 2009-41.3 M 2010-45.3 M Central Appalachia 2009-62.3 M 2010-64.8 M Illinois 2009-10.8 M 2010-11.1 M Powder River Basin 2009-30.1 M 2010-32.8 M

2009-2010 NS Origin Coal Volume (Tons)

Notes: Excludes coke and iron ore volume.

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SLIDE 19

Lamberts Point Coal Docks

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SLIDE 20

Outlook – Business Portfolio

  • Manufacturing recovery

Chemicals

  • Build out of ethanol network and export grain

growth Agriculture

  • Truckload conversions

Domestic Intermodal

  • Improving imports/exports

International Intermodal & Export Coal

  • Recovery in global steel production

Domestic Met Coal & Steel

  • Falling stockpiles and increased electricity

generation Utility Coal

  • New business, improved auto production and

sales Automotive

  • Uncertainty in housing, but improving paper

markets Forest Products

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SLIDE 21

Financial Objectives

  • Margin Expansion
  • Operating Ratio Reductions
  • Cash Flow Improvement

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SLIDE 22

Margin Expansion and Operating Ratio Improvement

  • Operating Leverage
  • Productivity
  • Pricing

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SLIDE 23

Margin Expansion and Operating Ratio Improvement

  • Continued global demand for coal
  • Price to the market
  • Intermodal growth

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SLIDE 24

Balanced Cash Flow Utilization

2006-2010 $6.8 Billion $6.3 Billion

Share Repurchases Capital Expenditures Dividends $2.1 Billion $4.2 Billion

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SLIDE 25

Total Shareholder Distributions

Relative to Free Cash Flow* 2006-2010

*See reconciliation to GAAP posted on our website Dividends Share Repurchases Free Cash Flow

$6.3 Billion $5.0 Billion

  • All of NS’ Free Cash

Flow Returned to Shareholders

$2.1 Billion $4.2 Billion

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SLIDE 26

One line, infinite possibilities

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