UNP - Earnings call transcript Q4 2019 | Union Pacific Corporation

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Operator

Greetings and welcome to the Union Pacific Fourth Quarter Earnings Call. At this time, all participants will be in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

As a reminder, this conference is being recorded and the slides for today’s presentation are available on Union Pacific’s website. pleasure your my Mr. now is to host, introduce It Union and Lance President for Pacific. Fritz, Chairman, CEO Mr. Fritz, you may begin.

Lance Fritz

With Omaha Rob. Financial welcome President Operating fourth call. Officer; to you, of Union today Thank Good Jim Hamann, Pacific’s quarter morning, Marketing and and earnings Vena, Executive Jennifer Kenny Officer. Rocker, are everybody, Sales; and me Vice in Chief conference Chief our

$X.X is of share. Pacific Union of reporting or to $X.X This or morning quarter quarter income XXXX share This net per per billion $X.XX compares fourth in billion $X.XX fourth the XXXX.

in Our quarterly operating XX.X%, percentage ratio the of came point to improvement XXXX. fourth quarter at compared X.X a

a experienced fourth a with ratio with represents remarkable an in This the operating That’s starts achievement challenges volume XXXX. record straight given and we the third that quarter XX. quarter a

further, women employees our achievements Before want we for in men and transforming go railroads. and XXXX. are of service their any all to Pacific our productivity recognize of The I remarkable Union

Step more cars and efficient. velocity change changing in to fewer and ingenuity, XXXX and initiative implementation Unified using takes the safer, more Plan fundamental and compliance teamwork while network of increases be is trip through locomotives reliable, one-third the plan and our in team, ways car

With results. more over that, I’ll to our turn provide details on it Kenny to

Kenny Rocker

Lance you, and Thank good morning.

X% the offset a and down XX% in For be business the by fourth drove quarter. quarter, and group. volume our freight XX% per primarily the car Energy Premium partially to decrease volume to declines average was in due revenue down The revenue in improvement

X%, revenue on X% revenue fewer by and in domestic in Starting were business offset modest for performance was decrease in down gains each Grain down off shipments as average X% at the a take Let’s look exports. quarter a an car. with were products, Ag the closer carloads partially groups. volumes per flat for the of

Coast to from markets. carloads were in up to for down driven Volume Fertilizer increase due Midwest potash. XX% grain by sulfur X% the export an primarily East ethanol products was in and weakness

to to down to down decrease the on impact were as negative a XX%, per Sand revenue volume. slowdown was carloads due coupled car of sand as local related a X% XX% Energy, long-haul declined XX%, volume Moving mix with sand as in of loss the market average revenue in with activity. well

and weaker market resulting from Coal due and a natural export down lower gas was coke volume demand. to XX%, soft prices conditions

volume in In impacted the addition, contract changes also quarter.

the was on trend crude an positive spreads driver primary note, for for a in to expect petroleum, the in LPG, renewable and the favorable price XXXX. oil XX% drove shipments, oil oil to this increase continue and in positive see increase which However, crude crude we quarter for carloads

have XXXX revenue and Both shipments to as fourth of volume well. quarter and per continued car the quarter. plastic Industrial strong were all favorable construction be and in for average flat revenue been the in

carloads to increased by strong plant demand. demand tempered soft to Construction volume rock X% domestic for but expansion due south Plastics market shipments. in the X%, due increased driven primarily

paper markets. and volume by lumber softness decreased in driven Forest product the X%

coupled XX% primarily X%, volume, revenue was driven quarter in peak revenue intermodal to a X%. seasons. truck while Premium, with supply, Turning XX% volume by for improved on car abundant the an down declined per during average softer Domestic by demand decrease

to seeking during fourth XXXX in XX% by accelerated quarter volume trade weak year-over-year challenging driven and quarter, avoid down tariffs. comp the related was intermodal International reflecting a uncertainty, market to conditions shipments

sales from auto reflecting and GM car with down truck sales, offset weak And XXXX. down XX% fully for SUV the quarter U.S. coupled year-over-year demand. light sales finally, labor vehicle were quarter Fourth finished not X% declining the strike. shipments auto were did Strong approximately

and Industrial on will business to we Premium. begin our three Bulk, groups, forward, report Going

to experience demand. coal For New we XXXX, a in for and with be conditions continued our volume always factor in Year coal will the challenges expect weather segment, Bulk

anticipate in a feedstock we continued on strength shipments increase positive advanced demand. biofuel in note, and an However, associated to due

with our penetration across shipments food long-term multiple growth business. We segments of refrigerated also expect and beer stronger along

with trade signing recent of In latter the resume the year. exports those to deal addition, see expect China, in with I Phase the of the half Ag we

For Industrial, local further impact sand supply will volume. continue to

driven south. continued anticipate in an we plant strength well market year as in increase expansion the coming a the However, shipments as plastic largely this online construction by in

price Additionally, results spreads oil positive petroleum for we to drive expect favorable products. crude

Premium, SUVs XXXX. light between from X% sales vehicle Sedans for down decline preference XX.X units, continue for partially U.S. offset lastly, the will in And the for over Consumer million X% car to forecast XXXX to is demand.

be is the Domestic market by of mid-XXXX, impacted to first year. more demand of we truck second however, by sit half supply we strengthening, expect truck volume the in in sequentially supports From a continue the XXXX. today, will competitiveness the balanced during half where intermodal competition intermodal which

slow early intermodal seasonal international faces in accelerated the expect to quarter avoid but to XXXX. comparisons increases nominal to a tariff year-over-year return in to seeking first We the due tough shipments

XXXX, really where we feel about I good began As headed. we are

benefits our product for table us is set of the significantly has to improved for and customers. with an chain am to customers. improved business grow excited service continue Our see I our supply win and the

operating it on performance. our And an over with now to turn Jim update that, I’ll for

Jim Vena

Thanks, Kenny.

As continue what strong we for heard this possible. think is which deliver results to I you’ve volumes morning, already speaks

better as product result, are Our service seeing improve and a operating continue our we metrics customers. for to a

more I to productivity responded structure our couldn’t again driving challenge in cost be rightsizing once the of volumes declining team face of significant The also proud. the and while

For outpaced operating we outstanding. Unified the actions XXXX This, along carloads example, Plan the quarter experienced. in ratio drove down with in starts and which XX.X%, an decline our was XX% XX% of were crew

productivity, cannot of While safety. we the will continue cost to drive come it at

As our at always, safety priority one remains Pacific. Union number

I’d slide now on you six to to performance update indicators. Turning XX, like our key

part XXXX. efficiency of result on relentless of is network to direct continue in our focus as year-over-year Plan We our a improving see improvement Unified reliability service significant This metrics. and

asset freight compared dwell led in speed car quarter per fewer classifications to velocity quarter the XX% improvement XX.X the X% X% utilization fourth in terminal Train improvement car and freight miles compared car hour, for to a of improvement increased to fourth XXXX. and a XXXX. Continued to in

trends to the to Now continuing slide improved locomotive fleet last third quarter, efforts more to to XX, the from our us use as productivity turning XX% efficiently versus enabled park units. year

stored, excludes levels, volume were despite As or decrease. XXst, our of units X,XXX the workforce that sold X% we Driven a around retired. XX% had year-over-year by decrease locomotives force which in increased December either productivity XXX

car commitment to delivering improved dwell consistent demonstrating team’s points velocity for Car driven trip and year-over-year our lower X increased compliance and service customers. product a reliable by freight our

our with service going We and XXXX are progress forward. improvement continued pleased our see to expect product in we in

Slide XX have humping Yard cars we at Worth. highlights Fort stopped the Davidson part network of made as the of recent recently We some in Unified XXXX. changes Plan

reduced also area our in at We Englewood work switching the the and Yard Houston shifted nearby Settegast Yard. to

third earnings a quarter the City talked cars Kansas On in we humping at to about change Neff stop call, the Yard.

for XXth to yard complex. recently single Building our City on we Armourdale that at work location operations and a Yard entire Kansas the moved the change Street curtailed at

the align with In to local operations delivering quality demand customer service focused continue on addition, we our product. to remaining while adjust

for opportunities on we forward, car our to rationalization ways leading look terminal continue to network. reduce will additional Going touches to

fourth fourth areas are the existing capacity or one focus Increasing XXXX of products increased to XXXX utilize we feet more quarter and remains train XXXX to excellent putting trains, progress quarter over of main our network the since on system train we our length XX% in XXXX. across making fewer approximately our have size by by of feet of

forward, talk the transportation expect slide. changes about in more that on train Looking next continued combination and a will to plan capital through targeted I I investments improvement see length of

billion spending XXXX, infrastructure by In $X.X final extensions. our for $XXX targeting Board $X.XX million of strategic an base with additional pending we in Directors we billion approval approximately for capital invested siding XXXX, are of railroad

About our and is XXXX capital improve spending XX% is our replacing of infrastructure, the network. to replacement and harden investment older of safety replace to spending the assets resiliency to planned –

and in although our will XXXX, locomotives to acquisitions Targeted modernize new replacements we fleet. opportunities. freight no purchase both continue growth will car will support We existing

on We operations investments Chicago. to capacity consolidation intermodal in to network the support will of projects efficiency operational productivity and continue to including invest our improve in

We also in train to number capability increasing by we initiatives long targeted efficiency strategic our reducing support increase starts. can thus length siding the each trains plan for will direction locations. extensions crew in These of sidings operate demand

management consumption. tremendous. energy changes will on enhancement our spending up, fuel To made operation we reduce testing year number have of and control have the system to train last Positive the results in to to in interoperability our a an been focus wrap

efficiency. further opportunities ahead are there asset lot However, of utilization network of improve to safety, still and us a

safe, us operations. forward, job railroad a is move making our continue transform that as one we we committed is As team look the stakeholders reliable and for pushing all to for to our and efficient envelope happen. of our Running

over And will I with turn Jennifer. to that, it

Jennifer Hamann

good X.X to all-time and operating year-over-year ratio quarter and an per our XX.X%. Union quarter with points and for of in ratio starting Jim, are $X.XX our third is we morning. fourth Thanks, of reporting consecutive Pacific quarter share Today best XX%. operating earnings improvement a This fourth

of fourth million of Slide million experienced EPS the to we with point. expense as of first half quarter a received in well on a adding the associated shown XX, the operating million quarter operating $XX flooding helping half $X.XX $XX recovery by XXXX. ratio As reduced insurance partial $XX as of the the

operating although compared surcharge prices impact had impacted favorably year-over-year Lower fuel the actually XXXX. points, lag X.X our negative by fuel a EPS $X.XX to ratio quarterly

our news the core of face The of company true margin that These are is having success that great in results quarter. good statement volume X.X the initiatives team running proof UP is we improvement to headwinds, a efficient in network. reliable the drove productivity, more a significant improve points

XX% more decrease to with quarter revenue fourth we net a statement, versus operating operating our $X.X an volume to income at than versus on variable X% results XX% now Operating volume $X.X decrease. last of decreased cost ability our X% XXXX. billion as Looking billion, down income demonstrated year billion, be structure. to expense our $X.X totaled These

Below XX% higher increased gains. reduced and estate X% driven benefit on expense rate. Quarterly environmental tax a line, partially lower the real income income sale tax other by increased effective costs offset by plan

XX%. around expect be rate we annual tax XXXX, year full to For effective our

last of net down versus continued to $X.X impact. share roughly income half XX% our $X.XX quarter decreased only of per billion earnings offset repurchase our fourth share income share activity as Although the X% per year, was

a provides by decline. fourth a the volume billion, decrease quarter XXXX XX% XX% XX which revenue Slide versus $X.X totaled breakdown freight of driven our primarily

to X% surcharge $XXX revenue, had million. down fuel $XXX a Additionally, negative to revenue impact million

positive point impact rail freight impact on offset ongoing fuel, and inflation combination year volumes well of throughout able our guidance, for total mix the a to actions in pricing the our our actions pricing with not our XXXX, costs. X.X exceeded quarterly business Consistent our dollars from Although revenue. had the of generated

and begin reporting in Kenny volumes we of our market new the to segments under As beyond our the and pro available our years. weekly mid-February, a make team business mentioned, new start call, will will time, miles also provide providing we volume new carload the will revenue quarter same structure three At teams. first mapping for key revenue business we at groups business ton prior forma across

XXXX. about of XX $X or with Starting this XX% billion and Slides decreased XXXX category a FTEs fourth to our expenses. driven compensation summary a operating by expense, XX workforce versus and benefits provides reduction XX% quarter

Our productivity and our while mechanical initiatives, a management, with XX%. together workforces train resulted engineering decreased in XX% lower engine coupled and workforce, volumes in decrease

declined efficient $XXX prices a combination and Fuel of fewer fuel diesel of lower expense operations as $XXX consumed mechanical result fell million costs services materials, more and to through and materials our services gallons million. expense and reduced contract less through and transportation, purchased XX% purchased a lower to repair X%

expense XX, to to of less $XXX lower decreased Turning costs. $XXX XX% X% depreciation equipment of million other compared XXXX. volume-related expense and driven increased lease million and rents by Equipment Slide primarily

recovery offset million, as $XXX result casualty of cost local by increased to previously insurance state partially X%, mentioned. I higher the increased expense and and a taxes Other

year-over-year about For other increase depreciation roughly to year be to expect and X%. expense expense we up XXXX, full X%

year initiatives for significantly an and which savings Looking productivity X guidance of These the results our least fourth XXXX million full productivity, $XXX Pacific. annual approximately XXXX million productivity marks $XXX now bring net Plan from + our high and at savings to net yielded quarter. million $XXX exceeded at Union Unified totaled GXX our all-time in productivity

This environment. really we accomplishment unprecedented is the the considering team weakening a this remarkable a for flooding and UP backdrop against achieved

$X.XX of full facing respectively. and of share, X% versus a XXXX, at per XXXX earnings volume look reported revenue to back X% Stepping we year a share and X% despite declines increase

flat strong held the $X.X of operating result I we billion. just discussed, at a income productivity gains as Importantly, year-over-year

of ratio our of As was you year in course met but operating items all for we the a which you different over versus XXXX. measure and points impacted we guidance ratio know, performance, the sub number when is earnings, improvement that that our us a XXXX, of as XX% important X had set better nearly aside, our last operating for core

And can’t could year we of of acknowledging not achieved about without the results without talk work and been our operating XX.X% have a hard full them. ratio workforce. dedication These

off hats the So to teams.

conversion $X.X our our flow resulting equal both as generation of another returns, free income. was Turning now rate shareholders capital cash billion totaled after nearly strong and year to of net flow a XX% cash in returns XXXX cash cash cash to to and investments

of two quarters ratio XX% shareholders increases the we Beyond we third our bringing payout as strong continuing in with XX% over program and our distributed to rewarded dividend just capital $X.X dividend billion. first investments,

year We share repurchased an at XXXX. balance cost versus our by shares our billion full XX average also million of all-in common stock $X.X reducing X% of

the our a to repurchases total of of billion cash $X.X dividends up added and return to In combination, share shareholders.

XXXX. addition year strength of balance We up to part of of cash cash generating the funded this business, debt an from sheet. ended all-in $XX.X return billion In our with balance adjusted to of XXXX UP’s the billion, $X.X end we power

at ratings as Plus position debt-to-EBITDA issue BAAX. of of our to of X.X debt we billion to new rate Our by BBB to the very finished partially With solid previously the maturities. leverage guided credit an of times, attractive minimum us ratio debt and a allowed adjusted times of during repayment are target XXXX, continuing that, while $X the X.X increase and investment-grade offset we market credit rating maintaining year

with with on return our as environment. spend XXXX in stay challenging a at came we Finally, capital invested disciplined basically capital volume XX% in flat our

Let view the me of close our out with today ahead. year

expect overall. declines volumes volumes, expected X% takes year in XXXX, intermodal account on look comparisons of full we or ledger inflect that the Kenny basis This we to sand tough coal well to as positive view year-over-year growing As see into side the as a the so mentioned. and

products the XXXX continue fully integral to expectation, and a cost. pursue strategy the return dollars our service This our gain customers is inflation our by we volume this to exceed will pricing is where supported are Against we objectives. rail XXXX and providing expectation great to achieving long-term

expect around we inflation, inflation in to to to labor regard XXXX X.X%. With with overall X% be closer inflation

We year productivity a expect or pursue a record at $XXX XXXX, and and we identify of of Coming down around least million so team Jim X% another be to XXXX efficiency our in full to expect performance off workforce basis. savings as to savings. on in continue also yield productivity

and we a achieve ratio. fuel our our while in like in experienced step ratio operating XXXX, we believe we are result don’t to activities ability confident in operating tailwind we in Together, a strong sub-XX another these should down anticipate

should looks In XX. a like with fact, we close believe, out full more that we a year XXXX number

As it for relates structure our spending, our capital to and capital of high-level unchanged. free guidance cash allocation, flow use remains capital

for billion first and over expect than cash capital less revenue is the long-term which to of XXXX. $X.X investment, The be our XX% still call we on

repurchase dividends, billion plan After leaving complete to ratio returning previously That this XX% now our to and billion the XX% of is shares capital XX% complete repurchase year cash expenditures, end approximately $XX plan payout of to should form we we of year. shareholders about of announced $X our maintaining the will XXXX. of in continue three earnings to by targeted

year positive core significant another generation contribute summary, expect we and volume, cash productivity gains In strong of will solid all and pricing full to year improvements. margin

another positive ratio operating target our taking a on path with ratio. XX% are We in to the operating our forward longer-term step of XXXX

back it Lance. to that, I’ll turn with So

Lance Fritz

Thank you, Jennifer.

deliver financial to productivity strong Plan service better improved Unified a leveraged full fourth we as and productivity continues catalyst to quarter serve product. XXXX and today, discussed a As results. solid year for

safe to customers improve to and the a on committed XXXX, providing margins. efficient for focusing consistent, railroad highly reliable grow to opportunities operating and and our ahead while we service Looking are business

performance free in our business network, generating flow we’ll to that and improve operating leverage efficiently we XXXX us strong attract cash it very Our gives confidence results. as strong financial

This is going network us in position excess to to cash and to shareholders. our continue investing returning our

that, line with So the for open let’s your questions. up

Operator

Group first of our Research. And you. line Thank Scott from Wolfe the Instructions] [Operator comes with question

Scott Group

thanks. Hey, guys. Morning

Lance Fritz

morning. Good

Kenny Rocker

Good morning.

Scott Group

So, I for on year. wanted to headcount the reduction start the X%

an if for beginning here. it I reductions average year from a because, seem so any number, imply to is Or of Just doesn’t an that the end is additional full average, really year? to that understand, it’s headcount just

want just to I a we where is So headcount from standpoint? to are the right think about way – that

Jennifer Hamann

Hi, X% does year is some imply full that reductions here. further average Yes, Scott. from This Jennifer. is a and it

if you X% are roll I we around or be it just forward would into XXXX, at so. where think

and looking obviously, try efficiency and going on volumes our that’s view further are we we So, are gains will but depend our today. for overall, continue to improve to to that

Scott Group

Okay.

Okay. of gas are right. are what [depot] volume just sort so, then, we below share positive. year? starting And you coal a assuming volumes on Maybe Obviously, the could [ph] slightly this X, for net you is outlook, in

outlook, you the sensitivity And think then, And what if see there, are to volume and just together, ratio guidance operating the maybe that guidance out the stay the negative? OR in volume think the we terms volumes ultimately as things about what’s biggest tailwinds of Kenny? the you

Lance Fritz

the back OR question take question? I’ll the on you circle don’t why and Kenny, volume

Kenny Rocker

they trying are figure going that coal tree going using a gas. whether go or customers to natural dispatch are all, are first are of they to out to decision they they So, or to each our of not have unique when

tell you team I whether with train make and been our by ways that that’s dogged doing length, improve sure at that competitive. in in supply efficiencies the really sitting everything and to are we times, cycle whether customers days, down can forecasting is things looking chain operating like have supply can it’s that’s our we commercial to whether that chain

volume back grow feedstocks broadly that the other that out. look you with and at the that will continue at petrochem outlook, When like us to we industry things along not volume to step that as large some and the in look the there you expect help will are plastics

of continued side We the in of expect also growth things. petro terms

oil then there and the upside south. the of shipments south, a the weather business there favorable, crude if also So, and still is rock in the lot the in growth of a is lot

the think expecting those also just on still during will impact intermodal the just trade am the positives the that Now, the side. time will and are year. not second you that call the range, and side half it I There also international our of is September Ag positively about markets but some the, side on happen

expect things market service So whatever we need better those a there a has the happen. those to of team are things, happens Having a mindset from because commercial very that market and win our have say regardless said to perspective all aggressive to we we go out product.

are out there. we going So

products. are creating We intermodal

this all got a public We’ve – is information.

Valor with our Northern business for product international a have that’s We Victoria. Railroad Iowa intermodal and

moving for we are more new side, our Bulk on that the and service we business have out west. products product based going On grain securing the

it’s teams. about mindset good the and heard about also commercial hear of you our to So, markets the

Lance Fritz

the up and to volume we’ve we morning, question we’ve your the with to and expect wired now everybody some do what regarding this impact on growth. see the OR, shared plan volume right on side top Scott, the And, way

expect against as natural it and part a a Now, not but against be intermodal first small, a coal. is, to plus point take the we tough minus It’s headwinds international can truck which gas got loose do that course year be And comps pricing challenged. it of you market the very sign. and exactly is still out, sign, as of intended on

impacts looks truck that take something tightening deals that’s of the better. you and it the expect recent into we anticipate when for that are the to market But we pursuing together, now. from us the account, XX a we see All what right of take you wires and all to like put half second operating some up trade ratio

Of and course, there of is the moving a early in year. it’s parts lot

as manage the to continue evolve. we just we’ll So, see markets

Scott Group

time for right. the All Thanks guys.

Operator

Ravi The with question. Shanker the with question your Morgan proceed next is Please Stanley. from line of

Ravi Shanker

gentlemen. follow-up to just return in just morning can question, just like, kind the almost tightening catalysts more normal Good scenario XXXX I on Thanks. a it truck something supply market? the of like like what market last really it you side of we given place? is ELD level [ph] Or have a are [five] Is a If of envisioning? a

Kenny Rocker

now of hand we call at do hard Again, we feel the and to or seeing with tightening is, – expecting floor. we to back play more occur by some are it the not whether it’s Yes, on are what are mid-XXXX it’s level, to things me I say. to for trade normal tighten get like we out some a to put that’s going

we some to environment seeing the that in customers market, for in certainly in. place better us But a our all be truck the have do bankruptcies compete to expect we to and of for it taken of talking

just premium our Chicago. for service are - product talked commodities. in the on as has reduced market, less about complexities to intermodal just truck We’ve seeing our about Finally, network, think our the want their better. Customers I emphasize we dwell improved

of so, we that of marketplace. compete gives those that lot structure the a lower things And confidence really in all us create a can cost

Ravi Shanker

you at Got you kind it. do and or get are kind point are need the and line incremental there? sub-XX XXXX. guys process to your What’s PSR [indiscernible] kind get level of to of what lifting of you of heavy now follow-up, into this sight GXX when there And just a comfortably that and you like of

get there point top-line mean, do you this XXX driven you components is points still big a more? that mostly or will think walk basis another from I that on is cost XXX,

Jennifer Hamann

is this Ravi, Jennifer. So,

and that the the think and you’ve heard in first we that out were I say, You’ve not target we Unified us put phases long-term when adopting heard XXXX. remember there, Plan of us about talk also

are And helps are get our we us price ability so, also to productivity three in point has it now price and in have to confident that productivity. that levers in But kind of terms been in terms of and there. talked this we what about we the of volume, even and the certainly more

We’ve had on much not as side. the volume

so, on great we the that put start as very well. obviously service our we ability and with volume confident have will leverage bringing And the operating we ahead that product together, teams to feel about that opportunities But productivity still very great efficiently.

said $XXX to about here we of We get million XXXX. in that XXXX. are looking another off million in $XXX That’s

those and good we feel that. about numbers very So, are big

fronts continue we’ll press on forward. we all So, to as move

Ravi Shanker

Thank you. Great.

Operator

next Please your Bank. is the question. Deutsche with question coming proceed of line The Mehrotra Amit from with

Amit Mehrotra

Thanks, operator. Jennifer. Hi,

wanted I could because the I I if the Just that. math very headcount to actually on follow-up question, quickly follow on didn’t

headcount. it would would just itself X% to extrapolate that, average and fourth in that in you average – the translate the take quarter translate levels decline If

calculating So, I is to little if overall could bit wrong. But be a productivity that the more important just there given clarification of the offer something how just company? you can

Jennifer Hamann

continue want effectively. leverage you. thank push overall. headcount are for So, math reductions to is, mean, some that very assuming that and volume to us we I The Yes, important very the that. We’ll improvement

for So, we forward basis. in a continue full minus saying we going are that push are looking are is and we again, year X% to to what plus

Amit Mehrotra

question thought at – And And guess, $XXX ask, fair revenue interpret, way million how and follow-up, expect neutral really a for profits just you least again, a about that’s productivity? I’ve it kind I just do this Jennifer. like in that, want that a I the to just think is net to it? that uplift is environment it��s of just always in And way the about Okay. conceptually is as we of

have if OR are the I on it, plus, XX you a than from growth the the because drag for get overlay revenue assumed guidance million would improvement XX $XXX OR some assume better would just OR. you and have that also, And you some just mix, been giving

of think can growth $XXX million top and on So on if you us the help layering just of conceptually kind relative the revenue about that?

Jennifer Hamann

Sure.

So, about, and to does you exclude that when productivity talk think we about volume.

when us. to volume think from positive the about for So, that’s being incremental we look the you standpoint, around talk turn move very we talking a about to of start and side able could margins ledger, where favorable which

we’ve got XXXX that that are giving, we great are a solid X% OR. XXXX good feel put in do a another of and year year. the very think down much step to we about with volume plan and for this together XX off and forward not We Making looking guidance very

either. the not to meter a it’s solid press us think do I moving But safely, providing So, are for to envelope. we service to trying good product and our reliably, progress we’ll the continue move continue we and next step really it good down want keep and But forward.

can. to going we as to try fast go as are We

Amit Mehrotra

Jim, I PSR process? love you you in inning are What the question. know this

Jim Vena

finished. baseball Well,

football, let’s it’s right real So, of exciting talk middle the in part. the

Amit Mehrotra

What yard on? line are you

Jim Vena

think line, yard middle on or XX line started XX don’t I yet. the the field of I’ve yard Well, hit I the and

Amit Mehrotra

Thank Okay. very much. That’s you enough for me.

Jim Vena

you. Thank

welcome. You are

Operator

the from is with Brian question line Please proceed with JPMorgan. next your questions. Ossenbeck The of

Brian Ossenbeck

Thanks morning. taking question. good my for Hey,

even How seen or So, some really better you you. efficiency you think Jim, but maybe one about do more improvements horsepower haven’t of Canada have peers I You other younger management, here? you longer done, look locomotive a the fuel specific field as the from for think trains, as get CSX. at the network on the fleet,

years? big you improving that couple confidence have you you how think So, next event the and mover of level in of do count a what on of in that

Jim Vena

area an fuel get I can we where think, is better.

easier even locomotives will it make investing with to some able that fuel be conservation. are We this year more us. for That’s get

there in but table a did work line money going. can more topography, of their fuel sort be and the we we the and is So XXXX trend still that of on efficient. see railroad Every different feel we we is same left lot in that save

on cars trains to Bigger final the conservation. way biggest is be more for And guessing us the less probably the trains, fuel on get I’d number. more

we’ll We from are last that. to have and an for year improvement shooting continue

Brian Ossenbeck

of start couple – But you doing X% or year-over-year. improvement are so I me here, think last XX% up train the excuse lengths X% quarters, as mentioned - but of are you accelerate pace about about

is a or you to fall into things few So indicator more get lagging that the that? needs can something this a before material benefit place on have

Jim Vena

trend XXXX be change X.X% what wouldn’t in that improvement to I of in an gain the more should we trend that line done the be efficient sort in that low able line we’ve fuel. X%, on as

see that’s numbers. what at I for point, So, this

Brian Ossenbeck

Thanks, Jim. you. Thank All right.

Operator

Thank you.

Brian Ossenbeck

again benefit Kenny, down just side? what Thanks. clarify on marketing which can when U.S.? is export at And mean you half on you here corn, think one expect you of exports. trade look the what the Ag how the you year current in about then terms the deal in on of type And about you the

Kenny Rocker

of Yes, us. so, year. pie quarter comes I there first the look on Brazil the that’s is is piece type part probably of fourth in of larger soybean a – for – about the during more really a side really the the and it more, more call

of them, as grain you see then milo of slow other that could and wheat one are a could be we one mentioned, them, parts uptick would corn would some be be one them. there of But of the

over deal soon throughout more I’d to we to lot is get you of too what of hear talking I that, positive. next as expect as year trade are one it’s move talking need a the the it our we think to space timing it. But into been see clarity and few the a customers months. traders and tell We’ve

Lance Fritz

Brian, is Yes, Lance. this

headwind are other level, essentially a purchases So, committing high and Ag be sets potential with concentration tailwind. takes their Very up the Phase in deal in they X trade doubling a goods to U.S. to over of a as China it areas. some

if even large comes going nice or three of tailwind That portion true, a years. couple it if the a comes it’s a it or really of for us true, even next half into

into there headwind – turns a basically that tailwind. So it is a just

Brian Ossenbeck

appreciate. All right. Thanks, Lance and Kenny. I

Kenny Rocker

Yes.

Operator

of the Please Credit comes question next Suisse. The from question. with Landry proceed your with line Allison

Allison Landry

meaningfully of accelerate all expect And than do currently speak we words, just you Could morning. should a be better benefits the volumes to positive getting to in OR the once second good since margins first year? I the rate improvement Thanks, PSR? of half? guess, full not are maybe throughout other you should inflect lot half the it

Jennifer Hamann

some ORs So, Allison, our to follow the improve seasonality. – I We margins know, tend to some or be tend guess, quarter, highest of year. you the our as weakest through have first of in

Third quarter down go they then a our be margins best tends bit. to

Some to that weather. with of do has

has do that the that of we are Some volumes to moving. with

at change anything point see that don’t pattern. would we So, this that fundamentally

could quarterly We it. think not guide of that’s numbers. are you to how going But to

Allison Landry

does does part then, right. All it that in And another the I the productivity. said question you first that And include the just and of That’s of I helpful. guess, that costs XXXX? you saw on incremental on not first, Okay. think include inefficiency weather then, lapping Jennifer, volume.

do much growth right, normally and if I’d that out to Thank teens I could I do on through walk of than low that. math and what you organic help if seems it Is So, because you higher you call productivity, us back think imply the that? and incremental sort

Jennifer Hamann

that question incremental that on of that, helps I us think So, through better the said move about you year. so and we much last put productivity, to volumes drive excludes that volume as the of we if part top the

question that, of the there? think what I first was So, part your again

Allison Landry

and from half of XXXX? Does the of weather costs the the $XXX first lapping inefficiency million include

Jennifer Hamann

Yes, yes.

Allison Landry

Okay.

Lance Fritz

scratch. from starts It

Jennifer Hamann

scratch. Yes, it starts Right, from right.

Allison Landry

Thank Okay. you.

Operator

America. next Ken of Our Please the Bank is question your from Hoexter question. with proceed line with of

Ken Hoexter

improvements the you morning. – employee maybe decline, the number, Jim, are little upfront, given core you am to – X% But, and make if still up which good on seems some looking guess. that’s maybe the through. answers targeting team, flat volumes of I by or guess, I volumes gains, like a are absolute getting are up would continued just you And pricing Hey, nice confused pricing if are flow I thinking, increase, the it for job

I and contract side? of don’t on the into export it’s be mix a – coal And the operating maybe we – that larger export the ratio can kind negative than impact of then, know, given at savings, larger suggest you domestic would improvement. looking the or more maybe there may tonnage math impact. productivity losses the are seem Is dig loss anything or to

Lance Fritz

as clear some you of Lance. in $XXX start Ken, I’ll expectation XXXX. headcount of And is that lay as well which crystal productivity the Hey is expect the both to And ourselves by million just a we part making this carryover sure question we is, have about, in productivity, asking that incremental of are productivity. as

flat the we will pace back not to volume have will grows, we resources that incremental is year, at going this grow. add volume are same If our employee we If our productivity.

be I Now probably and is to largely the half. minor, second expecting we right word pretty it’s are growth think

cautious actually year building as gives are we us what on So, plan depending of progresses. flexibility that kind a occurs the

are that. carryover, up that. got So clear sharing I expectation But we are be and sharing this is the through plenty you we’ve just is, action continued about we more of with – comfortable some point. to at crystal what actions There productivity, against realize want

Jennifer Hamann

really X% Right, and you’ve somewhat productivity do off. building is to that, plus, this with fallen I off what have in again, the ability confident that volumes, our just happens feel the drive year think us seen I we of mean, minus volumes on but and our as headcount dependent

been aggressive that actions the have of very taken. we’ve We terms in

to opportunities, good as is, to about we of But January And we’ll in a sitting There the about there volume are plan. lot point, need half XXrd. Lance’s the we that year some take. again, the on us feel are the see we we so, take particularly bullish us of XXXX. in of here actions look back and return the we left to to front is But

Kenny Rocker

I’ll Hey, I think add.

about were less this we has of impacted. you our think export. before, coal. said been smaller has book is but And than publicly our asking XX%, it’s export been Coal a percentage yes, it impacting coal I

what what happens larger much want in to see gas to to our role going coal. wait will natural a We with gas. are customers how Natural they with weather start the both plays do on and

Ken Hoexter

to the could I you XX% loss intermodal there markets highlight, I down is then, if if shift international just West as follow-up Coast contracts? guess, look that that balance with a to share was you my noted, Is out? Kenny, anything get we want significantly the of more than

Kenny Rocker

go had the really if We think, XXXX you you a strong back tougher to had if fourth quarter. quarter, comps. actually I we mean,

seeing that year. is just And here so, and of this comp first should now are the first year. we lap in of what I the this quarter you mean, yes, the quarter

Ken Hoexter

Great. Thanks guys.

Operator

The with Tom next from comes line Wadewitz question UBS. Please your questions. with of the proceed

Tom Wadewitz

about program pace morning. big you – in a XXXX? guess a left in three duration cost Is Jim. takeout – do lot for still you’ll question I Wanted year have to the that of tremendous or this how had think I of a improvement, think When good network cost you a saves Yes, improvement? the the about would network to

something into capture in the yard it’s – XX Or end the XXXX. line is where zone really from the get you you to –

just on what buckets some So for if and left the wanted you then productivity? offer also thoughts are are could perhaps really that big that network

Jim Vena

Hey, for Tom. Thanks the question.

we So, for I’ve too doing think if long. been way this about –

you’d So, looking never productivity gains. ever to stop

the you what to make for look do place can better. always You

give of with what a everybody delivered team would Pacific lot credit XXXX. deliver. a the at great able like So, to we’re I to Union

us. behind that’s But

we that are forward, moving short-term. have projects So,

to the entire to we productivity. projects So will company that help us able across be more deliver have

the will We a of part million also $XXX the being We some don’t on sidings. spent projects that expect have year. we over Specifically, get a to announced early while. them in

year. later and be will That next into

see guided we gains of that years. see $XXX have million board deliver across and coming to the in productivity are the some that to we we’ve more the on year. and So means this that We following

have not way it ever in make my a bit somewhere to improve. career little and better Never a gone found I've out and

and So the this tougher a big I get but little then a as time don’t there it on. is year, will see goes that year ending bucket this

Tom Wadewitz

areas it’s lengths out hump train greatest Or the productivity that changes would is the stand if terminal out particular remaining what lot some the investments the – lever as big and some with less further the a being of there than opportunity? or with siding guess, Are yards? stand I of

Jim Vena

real deliver We length we one can make terminals train that think even important. have to on. is Absolutely, more efficient. length Train is that the we

whole to fleet. six quicker helps the efficiency. the the put down cars That So We’ve us the plans in got to that Chicago turn in from helps terminals intermodal we together three.

gains but repair how run way So, on We’d get handle going another locomotives we think I not now, just output only gains locomotives, we there. an the are to is think rid there cars. is X,XXX of we locomotives. our X,XXX we over There

There our on through move it. There long there is the go we year. how hour excited could is spend repair on and what we on on have the I list through But people – with around balancing network. of am you gains an network. very The table for a the money is I this taking

Tom Wadewitz

Okay, great.

follow-up. short last one just So,

to elements do and pieces, for in the there think fair of side take it’s think guide? somewhat of cost questions you can of together your does conservative the the is it element an on of in some call framework conservatism you end of us putting the the At the I on a away what that do from the are the guidance. is feel guidance number like focused the on terms of the day,

Lance Fritz

the year us we it’s Well, excellent our and specifically progressing, early, years the that years I’ll and get gave And from and at the of seen very things we know part start productivity what confidence over universally, is and build say, know to then plan appropriately. as we demonstrating guidance product. how is you’ve our we Tom, first change are the service we react we an as to generate in how

learn are product. products to is service to have to of demonstrate going team, how year capable Part got of the what and sell we’ve of that to Kenny is and signed get One things network growing with this they and the those commercial upfront. the customers

Jennifer Hamann

to and But gotten would said, and to is a a good that just be that for continue far as Lance an felt this And add us go are we us. level not what we’ve had record there we we can. I to new say, to on area to year. we going envelope OR push about as performance so, for the XX would the It’s

to we way we than X%. of think we ended when differently that we there fact a growth have know, the about you year we down volume the were a could points thought thinking into you couple the came lot up going got But that

we weather We encountered. certainly didn’t that the anticipate events

aggressive point, going about we Lance’s to be can very the we are and diligent to levers that be pull make So, improvements. to to hard all working

Tom Wadewitz

for Thanks time. Okay. the

Lance Fritz

Yes.

Operator

The next Alliger Jordan line proceed from Sachs. is of with coming question. the Please question your with Goldman

Jordan Alliger

morning. hi. Yes, Good

Just two questions.

little XXXX? franchise? on back business much was adverse give from Ag about export the your then, sense, impact Just can bit And Ag what a in is the the exports total maybe you to talk quickly, real to how Ag just some

Lance Fritz

to been our Yes, business, I’d was I look piece. it’s you a a you it’s grain the you significant call from third if at where question? it tell that, part What tell second of your XX%.

Jordan Alliger

that let’s down Really in say, much tariff business how XXXX? given was the just, issues

Lance Fritz

I call easily I’d half. over it half. call it easily over

Jim Vena

for been of on bit Yes, impacts, wheat. again, down period a that’s Jordan, basically, a to out DDGs little China and and corn, impacted on off going were purchasing those bit which have it of time off of and soybeans even fair getting of U.S. Brazil. little a again

pretty was impact and the grain grain broad. export on So, products

Jordan Alliger

half. By

Kenny Rocker

too. add, is on there improvement I that, the really only also open up we mean, would a has thing I would growth pretty international the imports that of side. it the intermodal see Jordan, volume And sizable

that keep just too. So mind in

Jordan Alliger

agriculture So, of what – mean or I the total am sort you know by half meant? in didn’t decline just of half half,

Kenny Rocker

a forward everything advantage to and lot here us take do upside going do of There we on it. going is side for we the Ag to of are

Jordan Alliger

then question. other one Okay. And just

a get much big take story or the it is international? trying give views on recovery, it whether X% how to Just outlook of – the for tied volume sense volume be or to on how – of intermodal? volumes Just a the thinking to domestic intermodal in part XXXX, the about is your related call

Lance Fritz

a But I going don’t is put to Lance. walk fine on exactly what point think this like year. happen we Yes, volume what through is next needs let’s to look Jordan, you West consuming In normal ports. have consumers in coming to off and where they growth healthy intermodal need to occur. back international intermodal, are get we feel Coast and U.S. to volume it’s

feel bit. up we That’s important market intermodal, to need to Domestic tighten both a consumers to need good. truck We us.

aggressive and as need So a have right to quite real price imports. We impact isn’t deals now. are agricultural exports mode trade the the and competitive on as they loose

low-cost and in the gain economy to their U.S. on under – industry and little terms to taking continuation industrial markets plastic. make what’s competitor going of – continue for in a for of in manufacturers a U.S. petrochem feedstocks need confidence the that back bit good more the get then them and standpoint in the the of feet risk cost plastics and we We investment from capital finding manufacturing

parts change over of course, It’s there. there a moving moving lot is those and of not parts the one So will thing year. of course the

Jordan Alliger

Great. Thank you very much.

Lance Fritz

Yes.

Operator

Our Wetherbee Please your next with Citi. of proceed the line question. from with question Chris comes

Chris Wetherbee

just the questions of if I that, guess, and will expectations, you your sort wanted that of think maybe upside There of where from? to morning. were come about places I think do sort most way maybe guidance about when think has of the to if you lot you see Good Thanks. sort and to a likely XXXX, this been Okay. about

a a little control. maybe more a that little is bit more is is in was less doing that Jim the control or just it things stuff network little Or bit your more your volume maybe bit it or with productivity in

coming sort of you that upside be the get from? a it’s likely do think where want Just see to sense, we guidance to more is

Lance Fritz

Yes, and you. Chris, question thank great

it it upside. is, If way a would make would a I about magically it stronger in could invent mix. like like And I’d natural to to XXXX, love to some I to frac the be I this see It if hears just I’d would see Kenny have could $X great and to to the take that year really the think coal. happen, have like I pressure or come day. stronger. gas sand every of $X.XX off go – back I’d So,

being That product relentlessly and our tee selling it customers really their supply and and got built lot sweet it’s on a to chains like service the convincing means team their up traction year. that to what and getting experience a quickly supply But just would new chains. into of I’d commercial power pretty the see deeply staying

I side as that the they they productivity with. have and to be all it in the top-line of the a after it Tom, have as From the more going world, confidence team, work can world and are operating blessing our would strong hard Jim, to

Chris Wetherbee

Okay.

appreciate be mix from going think appreciate today? help core Okay. environment then of XQ guess could bit color. and you look about some price of to numbers the little moving if a in that are the That’s pricing sequentially anymore. I question, the on But ask just what not helpful. I terms the just And a parts, reported I would like us I pricing XQ when actually to to guess, and

about kind us things comments market, you as But, bit comments that about of mix XQ on. change about year the directionally from the give what your a I moving Kenny’s might price truckload a think goes how little to you XQ, from perspective? appreciate can of color how were

Kenny Rocker

see would And Yes, got side. – we that it’s the competitors truck out. it you’ve I formidable bottoming like tell do on – feels as it’s mentioned – before, looks it you, I

improve. We are to expecting that

that where our service improved really You products, trip part got third are value remember, from inserted coming into stronger to of proposition. had we we we and dwell, better compliance to quarter plan fourth quarter a so

are that that pricing are there, product make value of we we the regardless to the forces So, the providing. sure we out competitive to want

Chris Wetherbee

next? Okay. quarter from And as one mix to anything on mix – the

Lance Fritz

Jennifer?

Jennifer Hamann

positive you - we down, about, when was piece but was down significantly intermodal it slightly think think the was particular had certainly well. I coal in although year-over-year as

little bit a positive. So,

Chris Wetherbee

very Thank Appreciated. Okay. much. you

Lance Fritz

Chris. welcome, are You

Operator

Markets. The the is next your from with question. Capital question with Spracklin Walter line RBC proceed of Please

Walter Spracklin

thanks very much. Yes,

I volume, see there swing areas XX% of minus a when but Kenny, your significant to factors items. in a guidance, you bunch factors been marks where individual of coal swing a give bit few has down, back volatility. question was going I been we there – quite mean, intermodal know, So, your has in quite a and

X% Obviously, volume. came you put model question out when you your your haven’t marks plus in

directionally just intermodal, in an guiding assuming those are you for are get – given mean, how bit the on I minus sense coal. and XX% So what they say, just little coal overall to impact I here big example, your in On revenue of volume? Eastern trying Ag a are the am in Rails

high than again, quarter, a it’s high-single-digit business it the less single-digit decline was be XX% a XXXX? have coal is that. But comp are will Intermodal, you for I to a said, Obviously, you first down but mean, mid bogie little in recovery. projecting going a and reasonable your in like tough you to

what or say, Just confidence next Union to look, that items to some back investors Pacific few question gauge a and to on way predicated point. right this plus of go we a X% gives those implying? little us it’s like things we mark volume the of this bit which us to to confidence as at quantify uncertainty gives plus But is so growth can when lack has your X% line and

Jennifer Hamann

and reiterate to going to volume bit. little our just Walter, guidance the Jennifer. this talk is Kenny am a let I then about markets going

So to we declines get we comparisons full positive are We with that a we going of expect does going year positive tough to intermodal. start and said have to get didn’t in the it but the to the then are just offset relative to mean side – basis have a X%. We side, said year that we to plus ledger. to year-over-year the say frac coal, the to the on sand

in positive mosaic level to that’s that of put declines the to. looking of in basis. things we’ve that But to are terms haven’t all going we are not sized is that any year those So, and you we give what that full of are of we a on inflect kind guidance together

Kenny? So,

Kenny Rocker

low we into they feel the again weeks But month, gas. natural three challenges certainly the we’re with Yes, the the year. into – weeks three

to perspective, there. things on capacity premature half the that to of timing of expectation happen mid-XXXX that, I year. business, in is a up trade the and a the again, the think Setting ahead us really and truck for the Ag expectation should it’s better intermodal second out look terms get is going aside the from by what’s should in tighten the perspective,

Walter Spracklin

targets OR of back I the a Jim, put amount you’ve target, pushing back lot stock work but Okay. Understood. a something long-term here. to coming done a now the in, but and long-term as on tremendous understand lot And on investors XX of are not clearly,

that positive an and The environment look very, amid a challenging, to say data very is volume understatement.

hitting a within normalization, And two to a over were to it could those say again we so, year could targets” in you see, see if the within a two normalization fair we we next are years, “long-term see XXXX, timeframe is that

Jim Vena

Yes, question moving happens it’s of say a has at point which when the at stake Walter. a haven’t put The we fair is this ground XX parts, we amount think of why this and certain. date in

to path We a in continue model understand work scenarios the believe that we that that try and build ourselves to to there. and get

right. growth. have productivity broadly our looks But to the generate about service back pricing just more and in volume confidence making ability sure the we a it, of regardless And environment world I and stepping mix, confidence, product help in be great would things a a that what have then, lot all thinking like. the environment favorable of

price, XX. a about to and and to tougher tougher that three we three to those levers parts being is constantly volume, Certainly, closer lot levers as is there get talk We closer and on pull productivity. and those going moving get productivity of

step and XXXX up hell step a to step. good a a making of are of I strong us. and will hell a become think another in little it are more a time, signing clear We for over in XXXX We we made

Walter Spracklin

visibility you with? the think, if half you Lance, through to work timeframe stake more that get you a a way do put to more get little you to when datapoints half are And in bit year, the through way year

Lance Fritz

closer when we are of stake and analysts the were that the you will are last a we this put our be time ground. to than we the to Walter, time and to first in investors rest ready know and year

Walter Spracklin

it. appreciate I

Thank Okay. you much. very

Operator

proceed & is Our question. Company. line next Jason with Please of your Cowen Seidl the from with question

Jason Seidl

that Thank on you, performance operator. network as in on we to operational into through especially Morning volumes the how everybody. back Jim, of are check wanted coming half you viewing in sort just versus look the are the challenged in the your specifically domestic the Should businesses when market, your year-over-year slightly XXXX? of we sort some the inflect, XH network views of year might at being look given your of comps. more intermodal truck

Jim Vena

product marketing allows whatever I go the a challenge, want the that and Though Kenny don’t service able happen them to win to with should out customers. sell, be to market to we we’ve team there any that could the is, whole best win given can thing give, see and be able that’s so and we our to

we thing come a as volume that’s So, and see that happen. best could they increase, on, the

them always increase an in manifest business move allows It us railcars to do fact, to it’s if intermodal There everything in you on, In trains. with of on more on, put we us to things. business it. run a is that unitrain to use same the allows but comes course we have on can trains some new trains

put us you’d we it on see our the excited strong structure same bring very in. in trains amount be incremental for we’d and revenue of market if cost gave I’d growth, So, the a the savings

be that’d for scenario perfect the us. So,

Jason Seidl

I’ll seen here wood to then. we for Kenny. that volumes on be trade seen knock chains should impacting question Southeast going about America back some always seen you the We’ve some is My general, in How come war? with Kenny, on out? Asia. a to in the we’ve that and go lot Mexico follow-up to do North view for shift think global how supply from

Kenny Rocker

short of lived be the originate in Asia. some that would that ideally, the Southeast Well, products

East of the lot Coast. to a is know, that going you As

West the So Coast. come with expect agreement, more to back to a we’d trade stronger

to good I West the the and the that starting folks chain ports can U.S. tell you supply had more we’ve international with do across we in intermodal the Coast will that. to engagement make really continue competitive

Jason Seidl

as Okay. and the everyone. color the time always I appreciate

Lance Fritz

Thank you.

Operator

The next Vernon your line question Bernstein. comes David question. of Please with from proceed the with

David Vernon

and have Hey then well. guys. cost question a Thanks a long-term on have do I I follow-up for as taking time. wanted to the

being in so. last miles XX% five If revenue you down business or think some years about ton about the

little the in think not on inflation cost range, the is the the bit the business When to base cost X% to is cost the shrinks nominal for guys way to a think this Or level that business? of higher right you as about right it about leverage X.X% effective is unit that think decline the with coal? of business fixed in the

Jennifer Hamann

challenges you team mile I David, basis, we about talking So, of the mean, a on one think our are we ton our put year to structure. how cost every revenue about should your have some I you inflation. you. think heavier where your is to falling is away that, tonnage want from to we when offset getting higher are But RTM, this volumes you of that

can That able of with team get frankly does that try as that, we’ve that’s been quite franchise build that. the think a actually efficiency. up power underway, to fuel to the improve harder help better trains, we But at much that’s UP and great it longer I for to diligent is that’s going our be more to be work drive keep that able us even productivity those with and to the to the to to and weight be the make

David Vernon

to right to an from that it of is have about every not burden effective pay way bit inflation the right the on little year Well, I the for remaining more network was it? a think cost guess, or traffic perspective, did more kind

Lance Fritz

are clearly, pieces long-term business there of down. lives demonstrated what in that in Well, different up adjust have variable cost being and a we’ve different are or fixed terms we to cost, significant able

So, mapped in which an years, it last is up. to environment hard we’ve fashion, out, keep dramatic going lived you is is in and five the going the down it’s one that down volume just if

hell much volume and our teams placing one we the fourth is in even that a call a on so I pretty example. reasons in great that, a think, of of this base out productivity employee are being the environment they’ve the a done seeking job quarter difficult

productivity generated hundred You down got percent yet, we and in what, a double-digit million volumes dollars the couple quarter. in

David Vernon

because up your mix Okay. a at like pretty that and And then, the conservation is in tailwind, as lower or are if that to in RPU your Is you being your implying the the is your mix just look smaller right looks quarter? they side big traffic. were It Jennifer, not a slide? declines follow-up, way that maybe core on like Or fourth X.X. price from price read core revenue there a

Jennifer Hamann

we significant got a slightly the and think But question driver was of you positive I in quarter. similar not No, number. that know, earlier a mix

David Vernon

right. guys. All Thanks,

Operator

Long coming is question next from question. Stephens. your proceed of The with with line Justin the Please

Justin Long

morning. good and Thanks

on are environment is So, If I for period to volume but transitioning over term. we start to wanted on in this your updated longer year, gave CapEx you get the where this we growth CapEx, thoughts the the kind next absolute at several where a guidance the to on capacity next years, maybe over of hold as several And we there years? you CapEx enough just in basis, XXXX? system relatively look steady now can an

Jennifer Hamann

Unified but Yes, idling well, start power seeing might and and as Plan we so, through XXXX Jim yards, the great that off other to closing then facilities. terminals of in the want hump our is are through I’ll chime implementation

are latent back. in deploy again be our come capacity to We the we creating as able hope network volumes would that to

downshift kind that enjoy idled, to we think your a anxious we the number structural of for to the freight our that’s do to again capital point, and and the expenditures period capacity able cars that to some we parked, locomotives you in are about we use able see, to of So, we relative have have when to that be are marketplace. deploy

are about it right. So thinking I think you

might Jim, have want to So, additional some you comments?

Jim Vena

I capacity. high is Jennifer, Well, doing spots. the we are the you to this, able What is we think run are hit

trains of locomotives, investments capacity the are some can the we to efficiently I But more train. so going do of the at spend handle course. see operate not is make this in can the that think where big on networks, railroad, we size the If more targeted network most that sure money the we the you in look can built, of we in we lengthen to traffic. places

of got see railcars. parked. I them big lots in investment don’t We’ve

some and for We investments there need getting that targeted old? for cars are are be growth turning to them is and faster, that we customer going but just

the place Absolutely, sustainable current, long-term. keep the over

capital railroad efficient don’t we worried on worry coming see where need it more to on. about business I So, about make spending anything some or the to

thing we’ve continue best that will the we announced. That’s the with could happen and projects to spend capital that

change going the franchise So, we’ll and stay and Chicago, Houston, building more. tuned, intermodal some in announce in in down

on going We spend those service and to to are efficient more make product. a better capital ourselves have

a of great to lots We capacity. place got it’s So, be.

Let’s business bring the on.

Justin Long

kind I to your the around a a Is there I lap coal on frame you can And of on know there follow-up, magnitude? any think may sense rough was That’s a it coal but lost headwind start have just when up down, that give expect Thanks. the of missed exactly helpful. to contract. this you last is be of year, And how as year, outlook answer XXXX. in order XXXX? I us of you beginning that? to for way a the the much And you to

Lance Fritz

Kenny?

Kenny Rocker

Yes, again.

is to year early here to little this this I As that lap on bit what’s a or in, will contract believe – mentioned there, I contract and we weeks coal happen the in we go yes, the side. say going lap three did too out

Lance Fritz

that clear, was and of being the Yes, last at year. contract end loss lapped so

Kenny Rocker

Correct.

Lance Fritz

are now ground. So this, fresh we

Kenny Rocker

Right.

Justin Long

loads And headwind car in there of way that look terms any up XXXX? that like size in is to and what

Lance Fritz

size to gas a we’ve No, of we expect out $X, up year is pretty level, that if the are stays to it’s $X.XX tough this going but coal starting it’s be at going challenging, not what natural year. up,

Justin Long

sense. I’ll leave it that. makes the Okay, at time. Thanks for

Operator

with Brandon your next question. proceed Please question with The Barclays. from comes the Oglenski of line

Brandon Oglenski

I lot first call. specifically of morning last follow-up wanted what the employer, Union on of everyone. I I I headwinds and line your apologize, of we Hey, was have know good you? some part network missed you specific that book with prior this Jim, questioning, saw growth there the in to a Pacific in But decade coal past the whereas I the on know guess, and

sales is you base guess, specifically Lance drive really front tonnage think through could actually some or changing the the marketing on I and it’s you customer or questions reengage for your revenue that growth Jim. What network? the But to

Jim Vena

broadly try the think, the in getting pieces. growth ground this two break as let’s One speaking, and start for are the and year, you which into are what and is, environment competing I’ll us Yes, look we into in the start right. tailwinds markets What’s the start lapping to we to like? markets create intermodal, a soft trade, for truck international to should and in. in us a Significant like a little environment and abating like tariffs better, things those like better ahead pull avoid market, compete that so

our Second of team destiny. historically we It’s customer indicative question an our how is, Plan has part And with had our Unified of relationship own have implemented that commercial that from their perspective, excellent base. charm controlling said goal and XXXX, around offensive. very so and our lot we base, break have alienate customer on right? glass a the come to At we that isn’t to a beginning, of back go

Our service asking to as take ourselves occurred. much to through, better how we intent them we changes along the and see our them create help taking product. the ride that more keep for are was, go and reliable well we them as informed are a well and has That much customers are through going to

now we’ve occurring at intermodal service new Iowa, and That’s turning in the our ago team market, in process The that years a to taking and two where Northeast happened it attractive be mentioned and the same true in commercial that it’s got is volumes. the very would Coast bulk. West the is never like have into agricultural our of across same now generating Kenny is the true going business business up product

Kenny Rocker

the I and the walk has service going got The visibility it. tighter they network the efficiently, things improved. standards, so containers product because are for get grade of get to customers container our so also they container. with inserted only the on reservation That’s offer could want add, into we’ve are down. few has more a terminal gone I We’ve clearer intermodal to Again, tougher used I’ll through rather being thing system, dwell just that now when our technology you

reduced expect talked the and swaps Santa block lot Teresa there. about Jim to networks. it? We’ve talked alluded of and out can the do in we in about fact there. Chicago they the intermodal an there to Houston expect past When on a We’ve out that, complexity network,

the So, being transformative product. really on critically here

Brandon Oglenski

you. Thank

Jim Vena

Brandon. Okay,

Operator

with question next proceed question. Poliniak Wells Fargo. the your Please The Allison is of with from line

Allison Poliniak

– is capital that Hi morning. you go Good just you a projects think there terms of of, were the implementing. to Just more guys targeted are Could guys. CapEx before? conversation about the approach in some sounds like it, you CapEx we having it with

a this that Your base next line downward years there? to capital? with Just is we the number thoughts of time? should few projects, a sustainable the of sight level trend over mean, expect any for I

Lance Fritz

Just let me that step into Allison.

So, more I little a what’s billion it into the that, we’ve always capital been the in look and that’s year, over very is, thing you there by and capital track equipment is targeted keep on this to on our side doors the for take replacement first when we mean, layer the us $X.XX-ish and it’s open side. bit

point, which then is or either for take your like productivity. that opportunity a or enhancement we for ultimately where targeted service growth capital invest capital is growth we’ve there targeted look to product for and mandates And then, from got to PTC

that’s like capital the And is that. built plan in so, everything

on comfortable revenue changing I spending Sub-XX% our right as that an look don’t really It is forward. we level. we of gets call first cash very see our that level and and our we are now are the appropriate

Allison Poliniak

pull do you them but here. then, just in see the And operating still challenging the going highlighted you Not which thus on any based that that levers to far? you just can of of becoming XXXX more number are Great. back start you’ve to ones made improvements operating, easy,

Lance Fritz

don’t always Well, need I what, any what it’s sight of you line make a see big got do. difficult we’ve them, we know change, to but to of

in think see call I to going on going items are – that I and impacting us we of I to where to earlier be the deliver don’t anything on are those able those not all listed deliver. we

what to measured see have right got make impact doing people we we forward know can am line looking smart deliver we nice it. so the – do. a of we that our are sure just in It’s We it And I sight, don’t that service. we we and way to

up. us don’t So, really see I anything holding

Allison Poliniak

Great. you. Thank

Lance Fritz

welcome. are You

Operator

Our your the of Please is question line Nathan question. from Daiwa. next Jairam with proceed with

Jairam Nathan

for It’s Hi, questions. thanks Jairam. my taking

the casualty other were So, and about look increased year. safety casualty kind if a focus in X% increase they there this talked another or about up was are see I at about you noticed talk number your a X% just of expenses, comments of expecting expecting and from you safety? benefits you I some cost lot and similar we that on Are should

Jennifer Hamann

Jennifer. of state up much said we is focused level We as we are up. those expecting safety go absolutely become costs. primarily, a local is includes we and taxes absolutely on are similar be you taxes What X% believe This which higher we better not – casualty will and as we profitable, XXXX. that in No, guidance more is

Lance Fritz

we that want really question. it safety, to add think and a it’s because Just on the minute for I about talked appreciate I I important

So, and is do day every key a the we and foundation for railroad what industry safety.

– the where not are We we with are happy overall.

efficient to this most is North the best the in be safety. and most America in goal Our railroad includes that –

line us handle at one trend So, need the the measure and of will we’ve of we we on but other side to year. safety, working get are to the got the year better positives we lots expect of we We’ve and continue about I see better hard. that side, that on it, this seen and gets how end

North is in goal that us best includes the to in best be safety. Our and railroad the America

that’s So, are what towards. working we

Jairam Nathan

does changes has do passing, that see near-term – with the and Again, you XXXX impact – that as do just any you USMCA volume? any how a follow-up, see

Lance Fritz

It with it little of a mostly tailwind. and take so turn it headwind does and of a a the investment about where and bit pass taking was was occurring. SMCA Yes, into uncertainty risk

have a long-term volumes. that positive overall impact anticipate of would our slow I kind will a So, on

Jairam Nathan

you. That’s I Thank Okay. have. all

Operator

The with your Please TD of question Radbourne line is the Securities. question. proceed Cherilyn next with from

Cherilyn Radbourne

Good very morning. Thanks much.

ones quick for of couple me. a Just

surge On fleet. the locomotives a that Pacific historically, got Union has you've in maintained storage,

for whether balance the you of just of would fleet those start or thoughts need surge and size might what to your selling in plan a So, you terms curious locomotives? on returning

Lance Fritz

and Well, any could two Jennifer jump in things time.

start we could we’ve could buyer some as surge some, for we it to And Cherilyn, we’ve the we excess, of them fuel if normal as think, a dispose far find able all we I fleet, just of locomotives were would do a that got – in running them. of down the comes number go got up switch, that to a locomotives turn status and that.

needed number. them are talking of in be it pretty the if hundreds So, back that would easy to put service, we and in we task

the go. that’s ready sitting surge. So, It’s to there

Jennifer Hamann

about Cherilyn, and XXX. our so. did or a highlight to just so couple and fleet did hundred. a total in locomotive sold reduced quarter, find Yes, we scrapped by we We the We XXX buyer another

continuing are as and company. looking to best the those for financial a decision we So, at all us points at to things make evaluate what’s

that as future forward them do look service most handle way because growth the fleet. to those storage back that’s would putting that volume think locomotives we But in cost-efficient bringing to leverage we to existing into and are

Cherilyn Radbourne

referenced, on the that of should extensions that into we that along assume Sunset penciled improvement train corridor the that that that and CapEx still the to siding most budget directed are then, And region? that Okay. size the are in resides you

Lance Fritz

see extension bigger to think, that deliver the in seize volume I CapEx sidings with the that the we the we are be on putting are of able but we going a to also the great Sunset will with – to team job. the decrease, did help, trains

we but if on will volumes, the network. see volume across in of whole a So, a we help slight have that, if us, top uptick benefit see I

We are the of just train the on starting one corridors. length down every in

is there Cherilyn. a the major them. the So through A bit be all little will piece in of investment, capital –

Cherilyn Radbourne

for me. all That’s Great.

Lance Fritz

much. very you Thank

Operator

of the comes question. your with Susquehanna. proceed Our next Bascome with line Majors question Please from

Bascome Majors

Thanks for my question taking here.

growth of the trip the a question, up call with and here. improved an today. guys That of to quarters your a about be of in low have span service from, answers the playing going it it, compliance showing Q&A talked probably your On dozen is to XXs in message the couple seems you resonating product to mid-XXs, certainly

confident of basis? on a and really steady get that, sort a team feel network state you Are can fluid go-forward are your the to when to unleash that does sales the deliver stable growth customers Thanks. where starting plus industry you and

Kenny Rocker

I quarter, and operating our and with it, about there. really thank team lesson what – customers got a the you second the it year, we service Bascome, at to Yes, the call here, mean, talking had, a just changes confidence both of by history what the network half mid products would happen and were third our picked up the customers of really just during lot gave us, half, give we year, – first call weather last to proactively I’d

have We it. them we of really do, that and a internal and talking that are seeing that every surveys we see day number are with communicating through look customers and they at measurements then we that our

Our them, they the are teams, selling benefits, is service, the the down with sitting value laying sales quantifying there. out proposition

up a really for it’s setting us. XXXX So good

Bascome Majors

update? detailed year. Thank you Day be bigger sometime give launched Should year. XXXX do Just in the lastly, And late help you are role us Investor seat think Plan, anything you the a Jim expect you. deep us the I you. and exhaust dive buyback on we this just you in going Unified and timeline that to CFO ready a will XXXX. half? Thank been your in a took can to over second in has Jim to the

Jim Vena

Yes, that’s Bascome. question, a great

when concentrated way, talking are to the opportunity expect. for to is story about We tell us the what of in good – a next

And so, stay tuned.

when will is and and surprise this – be it’s year. story needs will if baked shared, it we wouldn’t fully later share me We it that to

Bascome Majors

you. Thank

Operator

will turn over to I Mr. call Thank for now the you. This closing back concludes Fritz comments. the session. question-and-answer

Lance Fritz

April All our our results. thank us call Thanks. this right. on Rob, and you discuss quarter Thank to being again with with you XXXX all for questions We first you, as your look for and we forward morning. talking in

Operator

Ladies This your for participation. conference. you thank you. and today’s Thank gentlemen, concludes

time day. this lines have at a may your disconnect You wonderful and now

Union Pacific (UNP) 23 Jan 202019 Q4 Earnings call transcript