NEARS SPRING CONFERENCE “Harnessing Technology For Rail Efficiency” - Railcars

National Steel Car Limited April 19, 2018

National Steel Car Limited - Confidential Information 1 Our Company

 Founded in 1912, celebrating over 100 years of car building excellence

 Serving the North American and International railcar markets

 Largest, single-site railcar manufacturing plant in , employing over 2,000 team members

 All Types of Freight Cars: 12 different car types / over 75 models

 Capacity to produce over 15,000 railcars annually

 5 flexible production lines, 3 state of the art blast/paint/finishing lines

 Ongoing plant modernization

 Certified to AAR M-1003

 The only car builder certified to ISO 9001-2015 in North America

National Steel Car Limited - Confidential Information 2 NSC Company Portfolio Freight / Tank Cars

National Steel Car Limited - Confidential Information 3 North American Railcar Fleet (000’s)

Car Type # of Cars % of Fleet

Tank 415 26%

Covered Hopper 554 34%

Gondola 211 13%

Flatcars 196 12%

Open Top Hopper 135 8%

Boxcar 108 7%

TOTAL 1,619 100%

Average Age = 19.5 Years

40% are less than 286,000 lbs. GRL

National Steel Car Limited - Confidential Information 4 Evolution of North American Railcar Fleet

1974 - Interchange cars built before this year have 40-year interchange life; 50 years after 1974

1980 - Staggers Act deregulates railroad industry

1993 - Deprescription of car-hire including “grandfathering" of Class III

1995 - S-259 provides for uncontrolled interchange of 286,000 LB. GRL Railcars

2003 - M-976 requires new railcars to have , axle, ride performance and other components for 286K GRL

2015 - DOT 117 required for handling class 3 flammable commodities; tiered schedule by commodity

National Steel Car Limited - Confidential Information 5 Despite Recent Years of Robust New Car Deliveries, Fleet is Aging:

Source: AAR/UMLER Data National Steel Car Limited - Confidential Information 6 Counts at Year-End

National Steel Car Limited - Confidential Information 7 Source: UMLER Car deliveries since the 1979 record year:

Car Deliveries

100,000 89,581 89,581

90,000

82,296 82,296

80,824 80,824 74,832 74,832

80,000 74,729

74,044 74,044 68,612 68,612

70,000 67,228

63,156 63,156

62,433 62,433

60,615 60,615

59,954 59,954

58,904 58,904 57,342 57,342

60,000 55,791

53,269 53,269

53,050 53,050

49,891 49,891

47,350 47,350

46,871 46,871 46,300 46,300

50,000 45,086

40,000 35,336

34,258 34,258

32,184 32,184

31,900 31,900

29,649 29,649 25,261 25,261

30,000 24,589

22,500 22,500

21,682 21,682

17,714 17,714 17,400 17,400

20,000 16,535

13,800 13,800

12,000 12,000

11,900 11,900 11,600 11,600

10,000 5,900

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National Steel Car Limited - Confidential Information 8 Source: ARCI Grain Cars

 Traditional grain hopper cars were four hopper arrangements

 Between 4000 and 4800 CF

 263 GRL

 Longer over the pulling faces of couplers

 Modern grain hopper cars are three hopper arrangements

 Capacities greater than 5400 CF

 286 GRL

 Shorter over the pulling face of couplers

National Steel Car Limited - Confidential Information 9 Cement / Sand Covered Hopper Cars

 Small cube hoppers traditionally used to move cement

 Recently Frac Sand is the common commodity

 New small cube hoppers are through sill designs

 Volumes over 3200 CF

 Lower light weights

 Increase in carrying capacity

National Steel Car Limited - Confidential Information 10

 Traditional Autoracks either constructed as bi-level or tri-level cars

 Typically have radial or rave doors

 Modern Autoracks designed to be convertible between bi-level or tri-level

 Gives versatility to car owners

 Different door designs manufactured from composites

 Reduces weight/ eases operation

National Steel Car Limited - Confidential Information 11 Box Cars

 Older box cars still in use are 50’ Plate “C” cars

 Not suitable for transporting high value commodities

 Lack interior cleanliness and sufficient loading height

 New box cars are Plate “F”

 Designed/manufactured with high value commodities in mind

 Smooth interiors reduce damage to product

 Greater interior heights

National Steel Car Limited - Confidential Information 12 Tank Cars

 DOT 111 tank cars manufactured with 7/16” shells on jacketed cars and 1/2” shells on unjacketed cars

 Full height head shields not required

 No longer approved for transportation of flammable liquids

 DOT 117 tank cars designed for transportation of flammable liquids

 9/16” shells, jackets, full head shields and thermal protection

 Top fittings protection

 Disengaging BOV handles

National Steel Car Limited - Confidential Information 13 – M-976

 Prior to 2002 followed M-965 performance specifications

 Three piece trucks, constant damping, roller side bearings and standard bearing adaptors

 2002 AAR released M-976 specification

 Raised minimum performance standards for trucks applied to new cars built to S-286

 Continued to update the specification

 Special designation (M-976-LH) for trucks that meet loaded hunting criterion

National Steel Car Limited - Confidential Information 14 S-286 - Truck Components  2002 Standard S-286 adopted for free/unrestricted interchange of 286 GRL freight cars

 Required new cars be equipped with M-976 trucks/constant contact side bearings

 Cars previously equipped with roller type side bearings

 Bearings set up with gap between roller and body bolster wear plate

 Restrict the car body from rolling excessively  Constant contact side bearings stay in contact with the body bolster wear plate  Allow the truck to steer at all times

 Better control of car body roll

 Damping forces against truck hunting

 Restrict the trucks ability to steer

 M-976 truck approvals done with constant contact side bearings

National Steel Car Limited - Confidential Information 15 Freight Car Improvements

Over a number of years the AAR and industry has introduced several changes to the standards and regulations:

 Empty / Load sensor valves – Reduced braking ratios for empty cars  Single sided pipe brackets and aluminium valve portions introduced in the late 1990’s early 2000’s  Electronically Controlled Pneumatic (ECP) Brakes  Higher buff / draft loads for stub sill vs. through sill cars (500,000 lbs vs. 350,000 lbs)  Purpose designed cars for specific commodities  3 Million mile draft sills on tank cars  S-2044 Safety Appliances introduced in 2014 improving new car safety  Higher payload, lighter & shorter cars  286K GRL provides 9% weight payload advantage over 263K GRL

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