j.p morgan aviation, transportation & defense conference · j.p morgan aviation, transportation...
TRANSCRIPT
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J.P Morgan Aviation, Transportation & Defense ConferenceMarch 24, 2011
Wick MoormanChairman, President & CEONorfolk Southern Corporation
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Norfolk Southern Corporation
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Agenda
NS Business Outlook
Resource Initiatives
Financial Objectives
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ChicagoJanuary 31, 2011
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Railway VolumeFirst 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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Responding to Growth
• Employees
• Equipment:– Locomotives and Freight Cars
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T&E Employment CountNet 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-1
0
Aug-
10
Sep-
10
Oct
-10
Nov
-10
Dec
-10
Jan-
11
Feb-
11
Mar
-11
Apr-
11
May
-11
Jun-
11
Jul-1
1
Aug-
11
Sep-
11
Oct
-11
Nov
-11
Dec
-11
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Resource Initiatives - Locomotives
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Productivity ScorecardTwo 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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Railway VolumeFirst 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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Outlook – Business PortfolioGeneral Merchandise
• Manufacturing recoveryChemicals
• Build out of ethanol network and export grain growthAgriculture
• New business, improved auto production and salesAutomotive
• Recovery in global steel productionSteel
• Uncertainty in housing, but improving paper marketsForest Products
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Outlook – Business PortfolioIntermodal
• Truckload conversionsDomestic Intermodal
• Improving imports/exportsInternational Intermodal
• New business opportunityPremium
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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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Truck Volume in 2007
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Projected Truck Volume in 2040
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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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Outlook – Business PortfolioCoal
• Falling stockpiles and increased electricity generationUtility Coal
• Improving exportsExport Coal
• Recovery in global steel productionDomestic Met Coal
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Northern Appalachia2009-41.3 M2010-45.3 M
Central Appalachia2009-62.3 M2010-64.8 M
Illinois2009-10.8 M2010-11.1 M
Powder River Basin2009-30.1 M2010-32.8 M
2009-2010 NS Origin Coal Volume
(Tons)
Notes: Excludes coke and iron ore volume.
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Lamberts Point Coal Docks
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Outlook – Business Portfolio
• Manufacturing recoveryChemicals
• Build out of ethanol network and export grain growthAgriculture
• Truckload conversionsDomestic Intermodal
• Improving imports/exportsInternational Intermodal & Export Coal
• Recovery in global steel productionDomestic Met Coal & Steel
• Falling stockpiles and increased electricity generationUtility Coal
• New business, improved auto production and salesAutomotive
• Uncertainty in housing, but improving paper marketsForest Products
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Financial Objectives
• Margin Expansion
• Operating Ratio Reductions
• Cash Flow Improvement
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Margin Expansion and Operating Ratio Improvement
• Operating Leverage
• Productivity
• Pricing
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Margin Expansion and Operating Ratio Improvement
• Continued global demand for coal
• Price to the market
• Intermodal growth
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Balanced Cash Flow Utilization2006-2010
$6.8 Billion$6.3 Billion
Share Repurchases Capital ExpendituresDividends
$2.1 Billion
$4.2 Billion
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Total Shareholder DistributionsRelative 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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One line, infinite possibilities
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