Baird 2016 Global Industrial Conference November 9, 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
Business Update 2016 Overview 2016 Outlook Strategic Plan to Reduce Costs and Accelerate Growth Capital Allocation Priorities 3
Financial Results Nine Months 2016 vs. 2015 ($ millions, except EPS) Strong cost controls resulted in a record 68.7% operating ratio 2016 2015 * $ % Railway operating revenues $ 7,398 $ 7,993 $ (595) (7%) $ 5,085 $ 5,751 $ 666 12% Railway operating expenses Income from railway operations $ 2,313 $ 2,242 $ 71 3% Railway operating ratio (%) 68.7 72.0 3.3 5% Net income $ 1,252 $ 1,195 $ 57 5% Earnings per share $ 4.21 $ 3.90 $ 0.31 8% (Unfavorable) Favorable * 2015 included restructuring costs of $44 million, which increased the railway operating ratio by 60 basis points. 4
Railway Operating Revenues Nine Months 2016 vs. 2015 RPU Less Fuel (1) Revenue RPU Volume $7.4 Billion $1,365 $1,334 5.4 Million units down (7%) down (3%) flat down (5%) Revenue Change $ in millions (1) Revenue $ in million & Y-o-Y Percent Change $7,993 ($269) Coal ($229) $1,085 (22%) ($169) $7,398 $73 ($1) Intermodal Merchandise $1,635 $4,678 (11%) (2%) YTD 2015 Coal ex. Fuel TCS ex. Merch ex. IM YTD 2016 Fuel Fuel Fuel ex.TCS ex. Fuel 1. Please see reconciliation to GAAP posted on our website. Low commodity prices pressured revenue line 5
Railway Operating Expenses Nine Months 2016 vs. 2015 ($ millions) Streamlining operations to strengthen NS and drive productivity $5,751 $236 $163 $139 $5,085 $128 $ --- Compensation Depreciation 2015 Fuel Purchased Materials & 2016 & Benefits Svcs & Rents Other 6
Efficiency Initiatives 3Q15 Consolidation of regional headquarters 3Q15 Acquisition of Delaware & Hudson South line 4Q15 Restructuring of Triple Crown operations 1Q15, Reductions in capital spending 1Q-2Q16 1Q16 Consolidation of operating divisions and regions 2Q16 Idling of Ashtabula Coal Terminal 2Q16 Idling of Knoxville, TN Yard operations 2Q16 Shortline of West VA Secondary 2Q16 Restructuring Pocahontas Land coal subsidiary 1Q-3Q16 Line rationalizations - concentrating flows & speed reductions 7
Service Metrics – Nine Months Velocity Remains Near Record Levels 90% Composite 2015 2016 Better ( ) 80% • Service Composite 14% 70% • Train Speed 11% • Dwell 9% 60% 50% 28 Speed (mph) Dwell (Hours) 25 Better ( ) Better ( ) 23 26 21 24 19 22 17 20 15 8
Economic Backdrop Dec 2015 Current 3Q Indicator 1Q 2Q 4Q (F) 2016 (F) 2016 (F) (Prelim) GDP +2.7% +0.8% +1.4% +2.9% +1.5% +1.5% Housing Starts (millions, annual rate) 1.15 1.16 1.18 1.15 1.16 1.23 N.A. Vehicle Production (millions, units) 4.5 4.7 4.5 4.5 18.2 18.2 Industrial Production +1.0% (1.6%) (1.0%) (0.8%) (0.4%) (1.0%) Real Consumer Spending (annual rate) +3.1% +2.4% +2.7% +2.8% +2.8% +2.7% Henry Hub Nat Gas Price ($/mmBtu) $2.88 $2.00 $2.14 $2.88 $2.83 $2.46 USD Exchange Rate With Major +4.7% +4.3% (0.4%) (1.7%) (2.5%) (0.1%) Trading Partners Indicator Dec 2015 Mar 2016 Jun 2016 Sep 2016 Oct 2016 Utility Coal Stockpiles (days, in NS 92.9 95.1 104.2 86.8 84.8 Territory, data from 1 month prior) Inventories/Sales Ratio (total business, 1.39 1.41 1.40 1.39 1.39 adjusted, data from 2 months prior) Source: Wells Fargo; IHS Markit; WardsAuto Forecast; EIA; EVA; Census Bureau; NYMEX 9
2016 Weekly Volume 160,000 Q1 Q2 Q3 Q4 155,000 2016 150,000 Weekly Volume 145,000 2015 140,000 135,000 130,000 125,000 120,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Week Volumes are ~ flat with last year in 4QTD 10
Coal Drivers Export Prices Utility: $220 ‒ Weather $200 $180 ‒ Natural gas prices $160 $140 ‒ Stockpiles $120 $100 Export: $80 $60 ‒ Market prices $40 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q ‒ Production availability 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 Natural Gas Prices - Henry Hub Utility - Total Stockpiles $7 100 $6 Dollars per MMBtu $5 80 Days of Burn $4 60 $3 40 $2 $1 20 $0 0 Source: EIA; Platts; SNL; NYMEX; EVA 11
Merchandise Drivers North American Vehicle Production +3.1% +1.4% 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 May-13 Jul-13 May-14 Jul-14 May-15 Jul-15 May-16 Jul-16 Jan-13 Mar-13 Sep-13 Nov-13 Jan-14 Mar-14 Sep-14 Nov-14 Jan-15 Mar-15 Sep-15 Nov-15 Jan-16 Mar-16 Sep-16 Manufacturing Brent WTI Source: EIA; WardsAuto; Federal Reserve 12
Intermodal Drivers Inventory/Sales Ratio Truck competition 1.55 1.50 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 Index Consumer Spending (% Change vs. Preceding Period, Seasonally Adj) 35 5.0 30 4.5 25 4.0 3.5 20 3.0 15 2.5 2.0 10 1.5 1.0 5 0.5 0 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2012 2013 2014 2015 2016 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 Source: Census Bureau; BEA; Truckstop.com 13
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 731.6 730.2 12,795; Intermodal 3% 3,010; MetCon 5% 1,676; Agriculture 3% 589; Automotive 1% (2,414); Paper (9%) (6,467); Chemicals (13%) (7,776); Coal (8%) 2015 2016 Lapping Triple Crown restructuring and inventory builds 14
4Q16 Revenue Outlook Volume Pricing Focus on Pricing Fourth quarter year-over-year, flat to 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 Volume and Resource Alignment Crown comparison − 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 15
Fuel Surcharge Revenue Revenue ($M) $200 $163 $150 $119 $113 $100 $82 $67 $50 $49 $50 $0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 fuel surcharge decline to moderate relative to lower prior year comp 16
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