Stephens Fall Investment Conference November 8, 2016 Marta R. Stewart Executive Vice President Finance and Chief Financial Officer 1
Forward-Looking Statements Certain statements in this presentation are forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, as amended. In some cases, forward-looking statements may be identified by the use of words like “believe,” “expect,” “anticipate,” “estimate,” “plan,” “consider,” “project,” and similar references to the future. Forward-looking statements are made as of the date they were first issued and reflect the good-faith evaluation of Norfolk Southern Corporation’s (NYSE: NSC) (“Norfolk Southern” or the “Company”) management of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. These and other important factors, including those discussed under “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2015, as well as the Company’s other public filings with the SEC, may cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise, unless otherwise required by applicable securities law. 2
First Nine Months 2016 Highlights Improved service supported record OR Service Improvement 85% 24 80% Train Speed (mph) 22 % vs. 75% Performance Composite PY 20 70% Railway operating 65% 18 (7%) revenues 60% 16 55% Railway operating 50% 14 12% expenses Railway operating 5% Expense Improvement ($ in millions) ratio $5,751 Income from Net decrease of $666 / 12% 3% $236 railway operations $163 $139 $5,085 $128 $ --- EPS 8% Fuel Purchased Materials Comp Depreciation 2015 2016 Svcs & Rents & Other & Benefits 3
Current Railway Volume Fourth Quarter through Week 44 (ended November 5, 2016) Total Units (000’s) 0.2% Increase in Units 4QTD 2016 vs. 2015 730.2 731.6 12,795; Intermodal 3% 3,010; MetCon 5% 1,676; Agriculture 3% 589; Automotive 1% (2,414); Paper (9%) (6,467); Chemicals (13%) 2015 2016 (7,776); Coal (8%) Lapping Triple Crown restructuring and inventory builds 4
Coal Drivers Export Prices $220 Utility: $200 ‒ Weather $180 ‒ Natural gas prices $160 ‒ $140 Stockpiles $120 $100 Export: $80 ‒ Market prices $60 ‒ Production availability $40 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016* Queensland Coking Coal API 2 * API 2 for 4Q projected from forward curve Utility - Total Stockpiles Natural Gas Prices - Henry Hub $7 100 $6 80 Dollars per MMBtu Days of Burn $5 60 $4 $3 40 $2 20 $1 0 $0 Source: EIA; Platts; SNL; NYMEX; EVA 5
Merchandise Drivers North American Vehicle Production +1.4% +3.1% Industrial production muted +5.6% +4.4% Crude oil limited by low prices and narrow WTI/Brent spread 18,207 17,955 17,423 16,501 15,801 Automotive tied to North American vehicle production 2012 2013 2014 2015 2016 Brent and WTI Oil Prices Industrial Production (Index 2012 = 100) $140 106 $120 Dollars per Barrel 104 $100 $80 102 $60 100 $40 98 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 $20 Manufacturing Brent WTI Source: EIA; WardsAuto; Federal Reserve 6
Intermodal Drivers Inventory/Sales Ratio 1.55 1.50 Truck competition 1.45 1.40 Consumer demand 1.35 1.30 1.25 Retail inventory levels 1.20 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Retail Total Business Truckstop.com Market Demand Consumer Spending Index (% Change vs. Preceding Period, Seasonally Adj) 35 5.0 30 4.5 4.0 25 3.5 20 3.0 2.5 15 2.0 10 1.5 1.0 5 0.5 0 0.0 Jan Feb Mar Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2012 2013 2014 2015 2016 Source: Census Bureau; BEA; Truckstop.com 7
4Q16 Revenue Outlook Volume Pricing Fourth quarter year-over-year, flat to Focus on Pricing moderate growth expected, despite − 2016 pricing remains strong continued challenges − Domestic truck rates lower − Excess capacity in the trucking market − Leveraging value of service product − Stockpiles and weather impact coal volumes Long-term view of markets and pricing − Crude oil and Automotive declines − Stronger intermodal as we clear Triple Crown comparison Volume and Resource Alignment − Metals market laps fourth quarter 2015 Flexibility to adapt to changing market declines conditions and volume expectations Fourth quarter volumes stabilize, solid pricing leveraging value of service, mix headwinds continue 8
4Q16 Expense Outlook 3Q16 4Q16 Outlook vs. 3Q15 vs. 4Q15 Compensation and benefits: Headcount ~ 2,400 ~ 2,200 Wage and H&W rates $26M ~ $26M Incentive compensation $39M ~ $39M Triple Crown – purchased services $37M ~ $20M Price and consumption Fuel $40M driven Depreciation $17M ~ $25M Materials $15M ~ $15M Improving efficiencies and reducing costs to drive shareholder value 9
Strategic Plan Enhancing Shareholder Value NS well positioned to achieve 2016 financial and operational targets – Operating ratio below 70% – Productivity savings of ~ $250 million – Capital spending of ~ $1.9 billion – On track for $800M in share repurchases Dedicated team focus on delivering long-term shareholder value – $650M of annual productivity savings by 2020 – Top line growth – Operating ratio below 65% by 2020 – EPS double digit compound annual growth rate by 2020 – Returning capital to shareholders Agile NS team reliably delivers shareholder value in the near- and long- term 10
Thank you. www.nscorp.com 11
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