Bernstein Strategic Decisions Conference
Transcript of Bernstein Strategic Decisions Conference
Bernstein Strategic Decisions
Conference
Jim Squires, President
May 27, 2015 | www.nscorp.com
We Connect Markets to the World
Major connections, serving 75% of US population and all major Eastern Seaports
A Diverse, Wide-Reaching Franchise
Networks reach 65% of US manufacturing and 55% of US energy consumption
Coal
17%
Industrial and
Other 33%
Intermodal
50%
2014 Volume Composition
Our Vision
Safest, most customer-focused and successful transportation company in world
Deliver safe, reliable, efficient service
Maximize incremental margin
Reinvest in the core franchise
Return funds to shareholders
Advance shareholder interests
Five Guiding Principles
*NI and EPS exclude 2013 Michigan land sale gain - please see reconciliation to GAAP posted on our web site.
Revenue $11,624 3%
Income From Ops $3,575 10%
Operating Ratio 69.2 3%
Net Income* $2,000 8%
Earnings per Share* $6.39 9%
Record Financial Results
2014 vs. 2013 % ($ in millions, except per share)
Record Results
Double Digit EPS CAGR over Five- and Ten-years
34%
42%
24% 33%
50%
17%
2009 Volume 2014 Volume
Coal Intermodal Merchandise
6
Managing shifting mix
Volume
Cash Flow Utilization
Reinvested in franchise and returned funds to shareholders
0
0.5
1
1.5
2
2.5
2004 20140
0.5
1
1.5
2
2.5
2004 20140
1
2
3
4
5
6
7
8
9
2006 2014
Capital Expenditures
$ in billions
Dividends per Share Repurchases
cumulative $ in billions
Added Crews, Locomotives, Capacity
People | Equipment | Rail Capacity
We invested throughout 2014 to meet high demand and improve service
2015 Outlook
Moderated revenue with lower expenses
REVENUE
Volume growth in most markets
Increased core pricing in most markets
Coal volume down
Softer steel volumes
Further declines in fuel surcharge revenue
EXPENSES
Fuel costs down
Service-related costs decline in second half
Front-end loaded hiring
Front-end loaded wage rate increases
Roanoke relocation costs in 2Q and 3Q
Energy
Coal continues in the mix
Oil production – new and projected
Natural gas production and expansion
Manufacturing
Cost of US manufacturing
FDI in the United States
Highway Conversions
$700B in US trucking revenues
Trucking industry is challenged
Highway congestion
Driver availability
Intermodal and carload growth ahead
10
Broad Opportunities for Growth
Cash Deployment 2015
Capital Budget
$2.4 Billion
Reinvesting in franchise, returning funds to shareholders, strategic investment
71%
20%
9%
} Renewal
Growth
PTC
Quarterly Dividend/Share
$0.59 4%
Share Repurchases
$1.2-$1.3 Billion
D&H Strategic Investment
$0.2 Billion
Bernstein Strategic Decisions
Conference
Jim Squires, President
Norfolk Southern Corp. | www.nscorp.com