Second Quarter 2012 Results Donald W. Seale Executive Vice - PowerPoint PPT Presentation

Second Quarter 2012 Results Donald W. Seale Executive Vice President and Chief Marketing Officer 1

Railway Operating Revenue Second Quarter 2012 vs. 2011 Components of Revenue Growth $ in Millions $20 ($12) $2,874 $2,866 Revenue $2.9 Billion, up $8 Million 2Q 2011 Volume RPU 2Q 2012 RPU $1,597, down ($7) per unit 2Q 2012 Revenue $ in Millions & y-o-y Percent Change Coal $755 Volume (15%) Merchandise $1,556 1,799,300 units, up 12,400 +9% Intermodal $563 loads +4% 2

Revenue Per Unit Second Quarter 2012 vs. 2011 Second Quarter vs. 2011 vs. 2011 RPU Abs. % Chg. Agriculture $2,464 $4 -- MetCon $2,047 $201 11% Paper $2,593 $173 7% Chemicals $3,844 $117 3% Automotive $2,431 $97 4% Merchandise $2,576 $115 5% Intermodal $671 ($3) -- Coal $2,126 ($91) (4%) Total $1,597 ($7) -- 3

Railway Volume Second Quarter 2012 vs. 2011 2Q 2012 Volume (000’s) Total volume up 1% & y-o-y Percent Change Coal down (12%) 1,799.3 1,786.9 (21%) decline in Utility 2,000 6% gain in Export 2% gain in Domestic Met (12%) Coal 1,500 Intermodal up 5% 10% gain in Domestic more than Intermodal +5% offsets (1%) decline in 1,000 International Merchandise up 4% 500 Gains in Automotive, MetCon Merchandise +4% and Chemicals more than offset decline in Paper 0 2Q 2011 2Q 2012 4

Coal Comparisons Second Quarter 2012 vs. 2011 Revenue $755 Million, down (15%) RPU $2,126, down (4%) Volume 354,800 units, down (12%) Crew Starts Reduced by (14%) 5

Coal Market Second Quarter 2012 vs. 2011 2Q 2012 Volume (000’s) & Volume of 354,800 units, down (12%) y-o-y Percent Change Utility Continued competition from natural gas and reduced electric demand from mild temperatures Industrial Utility 17.7 Export 204.0 (4%) Lamberts Point down (6%) (21%) Met Baltimore up 27% 53.1 New export steam coal +2% Domestic Met Export Strong demand for automotive 80.0 steel offset by reduced volumes +6% due to plant closure 6

Coal Market Relative Length of Haul in Coal Market Segments Utility North Utility South Export Domestic Industrial Met % of 2Q 28% 29% 23% 15% 5% Volume 7

Intermodal Comparisons Second Quarter 2012 vs. 2011 Revenue $563 Million, up 4% RPU $671, down ($3) per unit Volume 840,400 units, up 5% 8

Intermodal Market Second Quarter 2012 vs. 2011 Volume of 840,400 units, up 5% 2Q 2012 Volume (000’s) & y-o-y Percent Change Domestic Continued highway conversions Tightening truck capacity Premium Domestic Increased volumes with key Triple Crown 427.4 accounts 75.0 +10% (1%) Premium International 64.5 Negative comp partially offset by +3% other gains across International International customer base 273.5 (1%) Triple Crown Modest retail decline 9

Intermodal Market Improved Efficiency Percent of Containers on Stack Cars 100 87% 77% 75 50 Intermodal Efficiency 2Q 2012 vs. 2011 25 +5% Volume 0 Crew Starts (3%) 2Q 2011 2Q 2012 10

Intermodal Corridors 2Q 2012 1H 2012 Corridor vs. 2011 vs. 2011 Pan Am 3% 9% Southern Crescent 22% 22% Corridor Heartland 27% 23% Corridor Meridian 14% 12% Speedway 11

Merchandise Comparisons Second Quarter 2012 vs. 2011 Revenue $1.6 Billion, up 9% RPU $2,576, up 5% Volume 604,100 units, up 4% Crew Starts Up 2% 12

Merchandise Market Second Quarter 2012 vs. 2011 Volume of 604,100 units, up 4% 2Q 2012 Volume (000’s) & y-o-y Percent Change Automotive Increased light vehicle production and project gains MetCon Agriculture Increased domestic steel production 150.1 and strong demand in materials for -- natural gas drilling Automotive Chemicals MetCon 98.4 Growth in crude oil and plastics 180.2 +16% Agriculture +4% Fewer corn shipments offset by Paper increased feed 76.9 Paper Chemicals (3%) Declines in waste, pulp and graphic 98.5 paper partially offset by gains in +3% lumber 13

Business Outlook Coal Utility coal impacted by high stockpiles and competition from natural gas Moderating strength, but continued growth in the domestic metallurgical market to support steel production Weaker demand in European market for both met and steam coal Continued opportunities in Asian market Intermodal Increasing opportunities for highway conversion - tightening truck capacity July 1 opening of new Memphis terminal Growth with NS international shipping partners Expansion in premium market segment Merchandise Project growth in crude oil and demand for plastics Moderate growth in materials for natural gas drilling operations Solid automotive/steel production and new business development projects Weather related concerns with the U.S. corn crop 14

Thank You 15