22 February 2018 Trucking U.S. Transportation Figure 1 I: U.S. GDP growth has picked up In recent quarters... 6% 1 5 ,1 1 f. 496 1 4 AsIs 2% -i a4 . rill i g ! I ▪ e. t 0. Itifirli 1 II. I. (2%) -1 0 Q ••• O ul in in in to u> u> N N n E./ ea ei a 'era ,- en a a si Es .1.13 GOP Growth Rate by Quarter Son* o_. On, slew now Figure 12: ....Amidst an acceleration Production 108 e .2 107 g 106 .? 105 7 a. 104 5.* 103 ig 102 S 101 N N N N N N San Clan:ft as, aces. Rail volumes tell a moderately different story as weakness in certain commodities such as agricultural products, coal, and auto's are weighing on overall carload growth. However, demand for intermodal, which is more truck competitive, has been growing steadily and is expected to remain strong in 2018 amidst tight truck capacity. Figure 13: Carload traffic ex-intermodal has been somewhat constrained due to weakness in ag, coal, and auto's 15% 1111111" W WWWWW N N N N N N co C eta rut, 3 2 2 a 0. > C ill V1 N 0 to in U.S. Industrial N N N N N r iittkO <U, 03 tt;tattgt )—) Industrial Production Index ....4•YoY Change Figure 14: While Interrnodal traffic (more truck. competitive) has been growing solidly 15% 10% to 5% ro .c U (10%) II thimildi W WNNNNNN CO .3 4. 2 0. N > o (1,3 w 0 > w m z 2 2 N z c CO San* Onen••••0. MN ! Sans Dan*. 8•-• We are also playing a bit of catch-up following a busy 40 reporting season by putting our final touches on select models. See details below and updated models within this report. • GWR Est./PT revisions: We are lowering our estimates for GWR post 40 results to $3.75 (from $4.20) in 2018 and $4.60 (from $4.84) in 2019. Our price target moves to $84, reflecting an unchanged 18.3x our 2019E EPS estimate. Although mgmt. gave a favorable outlook for all three markets (North America, UK/Europe, and Australia). we remain on the sidelines due to uncertainties largely around operational execution and our preference remains for CSX and CP within our rail coverage. Risks to the upside include accretive acquisitions, better than expected Page 8 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0089211 CONFIDENTIAL SDNY_GM_00235395 EFTA01387108