Wells Fargo Securities 2012 Industrial and Construction Conference - PowerPoint PPT Presentation

Wells Fargo Securities 2012 Industrial and Construction Conference May 8, 2012 Deb Butler Executive Vice President Planning and CIO

Agenda  First Quarter Recap  Improvements in Operating Metrics  Looking Ahead

First Quarter Results: Operating Revenue First Quarter 2012 vs. 2011 Components of Revenue Growth $ in Millions $2,789 $30 $139 Revenue $2,620 $2.8 Billion, up 6% 1Q 2011 RPU Volume 1Q 2012 RPU $1,611, up 5% 1Q 2012 Revenue $ in Millions & y-o-y Percent Change Coal $766 Volume (6%) Merchandise $1,496 1,730,800 units, up 1% +13% Intermodal $527 +9%

Current Railway Volume Second Quarter through Week 18 (May 5, 2012) Units (000) Change in Units Quarter-to-date QTD12 vs. QTD11 698 12% Automotive 7% MetCon 688 1% 5% Intermodal 5% Chemicals 670 3% 1% Agriculture Paper -2% -11% Coal 2010 2011 2012

First Quarter Results: Operating Expenses First Quarter 2012 vs. 2011 ($ Millions) + $24 + $21 + $13 + $8 Materials and other Fuel Compensation Depreciation Purchased and benefits services and rents - $42 Net Increase $24 Million / 1%

First Quarter Results ($ Millions except per share) Net Income Diluted Earnings per Share Change vs. Prior Period: + 26% Change vs. Prior Period: + 37% $410 $325 $1.23 $0.90 2011 2012 2011 2012

Agenda  First Quarter Recap  Improvements in Operating Metrics  Looking Ahead

Improving Overall Service Composite Service Performance By Quarters 2011 - 2012 2011 2012 82.8% 78.2% 76.3% 72.2% 76.6% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Increasing Velocity By Quarter 2011 - 2012 2011 Better 23 2012 22 21 Miles per Hour 20 19 20.9 21.4 21.1 18 21.4 23.4 17 16 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Train Speed 2011 through April 27, 2012 NS Train Speed Better (miles per hour) 25.0 24.0 23.0 22.0 21.0 20.0 19.0 18.0 Source: As reported publicly to the AAR

Keeping Cars Moving Terminal Dwell By Quarter 2011 - 2012 2011 28 Better 2012 27 26 Average Hours 25 24 23 22 21.8 23.6 24.5 23.9 26.2 21 20 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Terminal Dwell 2011 through April 27, 2012 NS Terminal Dwell Better (hours) 33.0 31.0 29.0 27.0 25.0 23.0 21.0 19.0 17.0 Source: As reported publicly to the AAR

Improving Productivity 1 st Quarter - 2012 vs. 2011 Train & Engine Service Overtime Reduced 15% Re-Crews Reduced 35% Equipment Rents (Velocity Driven) Reduced 9% Locomotives In Service Reduced 3% Fuel Consumption Reduced 2% Gross Ton Miles per Gallon Improved 1% Gross Ton Miles per Train Hour Improved 4%

UTCS – Movement Planner Unified Train Control System  Improved locomotive utilization  Improved schedule adherence  Increased capacity  Disaster recovery capability  Improved Network Velocity; 2-4 MPH  Estimate completion by end of 2013

Remote Intelligent Terminal (RIT)  Real Time Inventory Reporting  Improved Workforce Productivity  Improved Asset Utilization  Estimate completion by end of 2012

LEADER • Next Phases • In Service

Agenda  First Quarter Recap  Improvements in Operating Metrics  Looking Ahead

Business Outlook Coal Impact of mild temperatures and competition from natural gas Continued strength within the domestic metallurgical market due to robust domestic demand for steel Weaker demand in European market, partially offset by new steam coal opportunities Improving world met coal prices and tighter supply Intermodal Increasing opportunities for highway conversion amidst tightening truck capacity Favorable international trade patterns Growth in premium Merchandise Project growth in crude oil and waste products Growth in ethanol to terminals Increasing demand for materials in natural gas drilling operations Stronger steel/automotive production and new business gains

Future Track Drivers  Safety  Service Improvement  Revenue Growth  Fuel Efficiency  Workforce Productivity  Asset Utilization

Thank you