First Quarter 2011 Results. Norfolk Southern Corporation

Transcription

1 First Quarter 2011 Results Norfolk Southern Corporation

2 First Quarter 2011 Results Donald W. Seale Executive Vice President and Chief Marketing Officer

3 Railway Operating Revenue First Quarter 2011 vs Q 2011 Revenue in $ Millions & y-o-y Percent Change Coal $ % Intermodal $ % Merchandise $1, % $2.6 Billion in Railway Operating Revenue Increase of $382 Million, or 17% Revenue Per Unit up 8% Volume up 8% Components of Revenue Growth In $ Millions 1Q Q 2011 Revenue in $ Millions $2,238 $181 $201 $2,620 $2,238 $2,430 $2,456 $2,392 $2,620 1Q 2010 Volume Rev/Unit 1Q Q Q Q Q Q 2011

4 Revenue Per Unit First Quarter 2011 vs Q 2011 RPU Abs. Vs. 1Q 2010 % Chg. Agriculture $2,257 $203 10% Chemicals $3,532 $283 9% Metals & Construction $1,810 $130 8% Paper $2,303 $153 7% Automotive $2,258 ($8) (0%) Merchandise $2,364 $151 7% Intermodal $649 $44 7% Coal $2,009 $283 16% Total $1,531 $117 8%

5 Railway Volume First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Total Volume of 1,711,200 Units Increase of 128,300 units, or 8% Merchandise % 52-week high loadings for Paper, Automotive and total volume Coal % Intermodal % 1Q Q 2011 Volume in (000) 1, , , , , Q Q Q Q Q 2011

6 Coal Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Total Coal revenue of $816 million, up $187 million, or 30% Second highest revenue quarter Industrial % Metallurgical 40.8 (8%) Export % Utility % Total Coal volume of 406,100, up 41,800 or 11% Strong utility and export growth Metallurgical volume down due to product being drawn to export market Network investment to improve service Addition of AC locomotives to fleet Production of 1,500 new coal cars 30% Year-over-Year Change 11% 16% Revenue Volume Rev/Car

7 Export Coal Market Total export volume of 70,900 carloads, up 14,000 or 25% Highest volume since Conrail acquisition Lamberts Point up 16% Baltimore up 49% Tightened global supply 10% increase in global steel production April 1 contract pricing increase Export Carloads 1Q Q ,121 59,078 59,663 45,873 40,995 45,107 59,933 56,863 61,557 50,156 49,234 70,851 22,238 1Q Q Q Q Q Q Q Q Q Q Q Q Q 2011

8 Utility Coal Market Total utility volume of 276,700 carloads, up 31,500 or 13% Utility North - up 2% Utility South - up 26% Stockpile replenishment Inventories remain under target New business Utility Carloads 1Q Q , , , , , , , , , , , , ,349 1Q Q Q Q Q Q Q Q Q Q Q Q Q 2011

9 Intermodal Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Total Intermodal revenue of $485 million, up $75 million or 18% Triple Crown % Premium % Domestic % International % Total Intermodal volume of 746,900, up 70,300, or 10% Domestic volume up 18%, led by tightening truck capacity & recovering economy Premium volume up 19%, driven by gains in parcel and LTL markets and new business International volume up 2%, driven by improving global demand 18% Year-over-Year Change 10% 7% Revenue Volume Rev/Unit

10 Intermodal Terminal Expansion Update GroundBreaking Date Completion Date Annual Volume Capability (Lifts) Mechanicville, NY July 2010 Spring ,000 Memphis, TN January 2011 Fall ,000 Greencastle, PA June 2011 Fall ,000 Birmingham, AL June 2011 Fall ,000 Charlotte, NC Summer 2011 Summer ,000

11 Merchandise Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Total Merchandise revenue of $1.3 billion, up $120 million, or 10% Record Agriculture revenue Automotive % Agriculture (2%) MetCon % Chemicals 95.7 (1%) Paper % Total Merchandise volume of 558,200 carloads up 16,200, or 3% 3 of 5 business segments up year-over-year Strong comparisons in Agriculture and Chemicals from 1Q % Merchandise Year-over-Year Change 3% 7% Revenue Volume Rev/Unit

12 Merchandise Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Automotive % Agriculture (2%) MetCon % Chemicals 95.7 (1%) Paper % Automotive increase driven by new business, increased vehicle production & quality hold releases MetCon volume growth driven by new frac sand & metals business & 8% increase in domestic steel production Paper volume growth led by higher pulpboard demand Chemicals volume driven by new business & projects Record Agriculture revenue despite 2% volume decline 10% Merchandise Year-over-Year Change 3% 7% Revenue Volume Rev/Unit

13 Merchandise Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Automotive % Agriculture (2%) MetCon % Chemicals 95.7 (1%) Paper % Automotive increase driven by new business, increased vehicle production & quality hold releases MetCon volume growth driven by new frac sand & metals business & 8% increase in domestic steel production Paper volume growth led by higher pulpboard demand Chemicals volume driven by new business & projects Record Agriculture revenue despite 2% volume decline 10% Merchandise Year-over-Year Change 7% 3% Revenue Volume Rev/Unit

14 Merchandise Comparisons First Quarter 2011 vs Q 2011 Volume (000) & y-o-y Percent Change Automotive % Agriculture (2%) MetCon % Chemicals 95.7 (1%) Paper % Automotive increase driven by new business, increased vehicle production & quality hold releases MetCon volume growth driven by new frac sand & metals business & 8% increase in domestic steel production Paper volume growth led by higher pulpboard demand Chemicals volume driven by new business & projects Record Agriculture revenue despite 2% volume decline 10% Merchandise Year-over-Year Change 3% 7% Revenue Volume Rev/Unit

15 Outlook Business Portfolio Automotive Metals & Construction Agriculture Chemicals Utility Coal Export Coal Domestic Metallurgical Coal International Intermodal Domestic & Premium Intermodal New business, improved auto production and sales Increased domestic steel production, increased highway spending & new business Continued build-out of Agribusiness network Improving manufacturing economy Falling stockpiles & increased electricity generation Rising European and Asian demand Increased domestic steel production Increasing imports/exports Highway conversions Paper & Forest Products Continued uncertainty in housing & paper markets

16 First Quarter 2011 Results Mark Manion Executive Vice President And Chief Operating Officer

17 Quarterly Safety Performance By Quarters (Injury Ratio per 200,000 Employee-Hours) % st Qtr 2nd Qtr 3rd Qtr 4th Qtr

18 Composite Service Performance By Quarters % 75.84% 72.04% 76.57% 77.95% 76.39% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

19 Train Speed By Month Miles per Hour Jan Feb Mar Apr* May Jun Jul Aug Sep Oct Nov Dec * April 2011 data through April 22

20 Terminal Dwell By Month Average Hours Jan Feb Mar Apr* May Jun Jul Aug Sep Oct Nov Dec * April 2011 data through April 22

21 T&E Employment Count Total Qualified T&E Employees plus Trainees 13,000 12,500 12,000 11,500 11,000 10,500 10,000 Dec-11 Nov-11 Oct-11 Sep-11 Aug-11 Jul-11 Jun-11 May-11 Apr-11 Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Qualified Employees Trainees

22 Productivity Scorecard 1 st Quarter vs Carload Volume +8% Crew Starts +5% Railroad Employees +7% GTMs per Employee +2% GTMs per Gallon -2% GTMs per Train Hour +3%

23 First Quarter 2011 Results James A. Squires Executive Vice President Finance and Chief Financial Officer

24 Operating Results First Quarter 2011 vs ($ Millions) First Qtr First Qtr Favorable (Unfavorable) $ % Railway operating revenues $ 2,620 $ 2,238 $ %

25 Operating Results First Quarter 2011 vs ($ Millions) First Qtr First Qtr Favorable (Unfavorable) $ % Railway operating revenues $ 2,620 $ 2,238 $ % Railway operating expenses 2,020 1,683 (337) (20%) Income from railway operations $ 600 $ 555 $ 45 8% Railway operating ratio (OR) (1.9) (3%) *OR excl. arbitration % *OR excl. arbitration and fuel lag % *Please see reconciliation to GAAP posted on our web site.

26 Railway Operating Expense Analysis First Quarter 2011 vs ($ Millions) + $135 + $81 + $66 + $48 + $7 Fuel Materials and other Compensation and benefits Purchased services and rents Depreciation Total Increase $337 Million / 20%

27 Fuel Expense Analysis First Quarter 2011 vs ($ Millions) + $104 + $31 $389 $254 First Qtr 2010 Higher Prices Increased Consumption First Qtr 2011

28 Locomotive Diesel Fuel Average Prices $3.00 $2.00 $1.39 $1.55 $1.85 $1.98 $2.13 $2.24 $2.19 $2.46 $2.88 $1.00 $0.00 6

29 Diesel Fuel Price Analysis First Quarter 2011 vs ($ per gallon) $2.88 $0.64 $2.13 $0.26 WTI $2.24 WTI $1.87 Other WTI First Qtr 2011 First Qtr 2010

30 Railway Operating Expense Analysis First Quarter 2011 vs ($ Millions) + $135 + $81 + $66 + $48 + $7 Fuel Materials and other Compensation and benefits Purchased services and rents Depreciation Total Increase $337 Million / 20%

31 Railway Operating Expense Analysis First Quarter 2011 vs ($ Millions) + $135 + $81 + $66 + $48 + $7 Fuel Materials and other Compensation and benefits Purchased services and rents Depreciation Total Increase $337 Million / 20%

32 Compensation and Benefits Analysis First Quarter 2011 vs ($ Millions) (Increase) Volume-related payroll $ (20) Payroll taxes (12) Medical benefits (11) Incentive and stock-based compensation (5) Pensions (4) Wage rates (3) Other (11) Total increase $ (66)

33 Railway Operating Expense Analysis First Quarter 2011 vs ($ Millions) + $135 + $81 + $66 + $48 + $7 Fuel Materials and other Compensation and benefits Purchased services and rents Depreciation Total Increase $337 Million / 20%

34 Other Income - Net First Quarter 2011 vs ($ Millions) First Qtr First Qtr Favorable $ % Coal royalties $ 19 $ 15 $ 4 27% Interest on uncertain tax positions 2 (1) 3 --% All other % Other income - net $ 27 $ 20 $ 7 35% Interest expense on debt $ 112 $ 119 $ 7 6%

35 Income Before Income Taxes First Quarter ($ Millions) Change vs. Prior Period: + 13% $456 $

36 Income Taxes First Quarter ($ Millions) Change vs. Prior Period: -5% $199 $

37 Net Income and Diluted Earnings per Share First Quarter ($ Millions except per share) Net Income Diluted Earnings per Share Change vs. Prior Period: + 26% Change vs. Prior Period: + 32% $325 $257 $0.68 $

38 Cash Flows First Quarter 2011 vs ($ Millions) Increase (Decrease) Cash from operating activities $ 652 $ 758 $ (106) Capital expenditures (423) (256) 167 *Free cash flow $ 229 $ 502 $ (273) Share repurchases $ 343 $ -- $ 343 Dividends $ 142 $ 126 $ 16 Cash and cash equivalents at March 31 $ 236 $ 1,161 $ (925) *Please see reconciliation to GAAP posted on our web site.