stifel nicolaus transportation and logistics conference€¦ · stifel nicolaus transportation and...

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Stifel NicolausTransportation and Logistics Conference

Donald W. SealeExecutive Vice Presidentand Chief Marketing Officer

Agenda

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• Fourth Quarter and Full Year Results

• First Quarter-to-Date

• Business Outlook

3

Revenue

$2.7 Billion, down (4%)

RPU

$1,498, down (3%)

Volume

1,792,100 units, down (1%)

4Q 2011 Price/Mix Volume Fuel 4Q 2012

$2,797$2,684

($105)($23) $15

4Q 2012 Revenue $ in Millions & y-o-y Percent Change

Components of Revenue Change $ in Millions

Railway Operating RevenueFourth Quarter 2012 vs. 2011

Merchandise$1,443+4%

Coal$657(23%)

Intermodal$584+5%

4Q 2012 Volume (000’s) & y-o-y Percent Change

4

0

500

1,000

1,500

2,000

4Q 2011 4Q 2012

Coal

Merchandise

Intermodal

+1%

+4%

(13%)

1,806.7 1,792.1Coal down (13%) (16%) decline in Utility (17%) decline in Domestic Met0.5% rise in Export

Intermodal up 4% 9% gain in Domestic more than offset (1%) decline in International

Merchandise up 1% Strength in Chemicals and Automotive more than offset decline in MetCon

Total volume down (1%)

Railway Volume Fourth Quarter 2012 vs. 2011

(Unfavorable)Favorable

2012 2011 $ %

Railway operating revenues $ 2,684 $ 2,797 $ (113) (4%)

Railway operating expenses 1,970 1,997 27 1%

Income from railway operations $ 714 $ 800 $ (86) (11%)

Railway operating ratio 73.4 71.4 (2.0) (3%)

Operating ResultsFourth Quarter 2012 vs. 2011 ($ Millions)

5

6

Revenue

$11 Billion, down (1%)

RPU

$1,553, down (1%)

Volume

7,107,200 units, down (0.1%)

2011 Price/Mix Volume Fuel 2012

$11,172$11,040($143)

($12) $23

2012 Revenue $ in Millions & y-o-y Percent Change

Components of Revenue Change $ in Millions

Railway Operating Revenue2012 vs. 2011

Merchandise$5,920+6%

Coal$2,879(17%)

Intermodal$2,241+5%

2012 Volume (000’s) & y-o-y Percent Change

7

0

2,000

4,000

6,000

8,000

2011 2012

Coal

Merchandise

Intermodal

+2%

+5%

(13%)

7,114.7 7,107.2Coal down (13%) (17%) decline in Utility (5%) decline in Domestic Met(2%) decline in Export

Intermodal up 5% 11% gain in Domestic more than offset (1%) decline in International

Merchandise up 2% Strength in Automotive, Chemicals and MetCon more than offset declines in Paper and Agriculture

Total volume down (0.1%)

Railway Volume 2012 vs. 2011

(Unfavorable)Favorable

2012 2011 $ %

Railway operating revenues $ 11,040 $ 11,172 $ (132) (1%)

Railway operating expenses 7,916 7,959 43 1%

Income from railway operations $ 3,124 $ 3,213 $ (89) (3%)

Railway operating ratio 71.7 71.2 (0.5) (1%)

Operating Results2012 vs. 2011 ($ Millions)

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60%

65%

70%

75%

80%

85%

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

72.2

%

76.6

%

78.2

%

76.3

%

82.8

%

82.9

%

83.3

%

83.4

%

20112012

Improving Overall ServiceComposite Service Performance By Quarter 2011-2012

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16% 16%20%

25%

35%

28%

32%

42%

8% 9%

14% 14%

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Train & Engine Service Overtime Re-Crews Equipment Rents (Velocity Driven)

Operating EfficienciesYear-over-year Percentage Improvement, by Quarter

10

11

19%

34%

11%

3%

1%

Train and EngineService Overtime

Re-Crews

Equipment Rents(Velocity Driven)

Carloads/Unitsper Locomotives

in Service

Gross Ton Milesper Gallon

Year-Over-Year Percent Improvement

Operating EfficienciesFull Year 2012 vs. 2011

Agenda

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664,100 units, up 3%

10%

8%

4%

0.2%

(1%)

(3%)

(10%)

Change in Units1QTD13 vs. 2012

646.1 664.1

2012 2013

Units (000)

Current Railway VolumeFirst Quarter through Week 5 (February 2, 2013)

Intermodal

Chemicals

Paper

Agriculture

Automotive

MetCon

Coal

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Agenda

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• Continued opportunities for highway conversion

• New Intermodal service lanes ahead as new corridor terminals open

• Growth with international shipping partners

• Expansion in premium market segment

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Business Outlook

• Utility coal impacted by reduced demand for electricity, competition from natural gas and higher stockpiles

• Softer domestic metallurgical market to support steel production

• Weak demand in European market for both met and steam coal, marginal improvement in Asia

Coal Intermodal Merchandise

• Project growth in crude oil, increased plastics due to low-cost feedstock

• Gains in steel, but weaker aggregate market

• Continued automotive growth despite tougher comps

• Reduced U.S. corn and soybean crop

• Improved housing & related construction materials market

16 Excludes coke, iron ore & outbound Wheelersburg

Illinois Basin

20.4 M Tons14%

Northern Appalachia41.1 M Tons

27%

Western26.3 M Tons

18%

CentralAppalachia57.6 M Tons

39%SouthernAppalachia3.3 M Tons

2% Norfolk SouthernRailway and its Railroad Operating Subsidiaries

- - - NS Trackage and Haulage Rights

Dynamics of Coal Market2012

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Business Outlook














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2012 Intermodal ScorecardYear-over-year Percent Improvement

6%

3%

6%

3%

0% 2% 4% 6%

Percentage of Containers on

Stack Cars

Units per Train

Train Speed

Platform Utilization

Intermodal DriversOver 30 New Crescent Corridor Lanes Launch in 2013

Volume over the Crescent Corridor was up 18% during the fourth quarter, and up 21% in 2012 versus 2011

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Business Outlook














0.0

1.0

2.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

N.A. Vehicle ProductionU.S. Housing StartsU.S. Industrial Production - Basic Chemicals

Merchandise Fundamentals are Positive

20 Source: Global Insight, Ward’s

• Positive signs ahead, though housing still not

back to pre-recession levels

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Thank You

stifel nicolaus transportation and logistics conference€¦ · stifel nicolaus transportation and...

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