UNP - Earnings call transcript Q4 2020 | Union Pacific Corporation

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Operator

Greetings. Welcome to Union Pacific Fourth Quarter 2020 Conference Call. At this time, all participants are in a 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 begin. may now

Lance Fritz

Thank you conference very And for welcome much, delay. Rob, and Union the fourth good Pacific’s quarter earnings call. apologies to I’ll morning, everybody.

this Our technical morning. service experiencing provider was difficulties

Chief of handle Jennifer and Kenny appropriate Officer. Rocker, in Financial With today after call. public Operations; Hamann, any necessary will President are of Eric disclosures Marketing Executive Omaha me and Gehringer, We and our President Sales; the Vice Executive Vice

provide Before performance employees. ahead. year one past of the acknowledge challenges company business. hard fluid discussing customers women us and and DNA, I results, are The improvements men full uninterrupted pandemic no again. of that and dedication the in our our fourth worked that Their flourish of now to in quarter of truly reinforced hope with in the must positioning efficiency first the people experience Pacific the service. This UP produced to anticipated that XXXX best part year face days the and of all has exceptional service never our presented are my conviction our our to and the Union

related results. quarter previously announced $X.XX $XXX reporting of $X.X fourth our the the of per include yard to our charge impact Brazos morning, quarter billion share. million to net on non-cash Union Pacific is or This investment. fourth Moving XXXX income These impairment results pretax

of XXXX. to Excluding the quarter share billion per that $X.XX or in billion or per share. charge, net $X.X This compares $X.X adjusted income is fourth $X.XX

growth, and These better the and XX.X%, demonstrate pricing. leverage Our potential outstanding in when three simultaneously, fourth an quarter adjusted XXX quarterly quarterly at came volume XXXX. drivers record than profitability ratio results all we productivity our of all points basis operating time

with long-term Eric we’re for fourth our we start full operations update. more going potential and a bit detail, bolsters and the year the provide Our have to quarter To of performance optimism an company.

Eric Gehringer

statement Lance, did quarter results managing team The good an holidays. to delivered as PSR our another quarter, operating their transform achievements team their associated the we achieved what our excellent and XXXX also proud is an adding manner, in a year. challenges have without morning. fourth normal volume commitment. how impressive the Thanks, continued I’m with support while has of operations. We not efficient to network The operating job extremely entire in the during proof very our didn’t challenging we of and could and

as like those made focusing records both driven an Locomotive performance to on reducing improved team and indicators nearly car once productivity quarterly resources time terminal journey. car while and evergreen touches. key velocity on through continue year-over-year, and evaluate improved efficiently all to to car our utilization use all fewer locomotives. asset plan, driven adjust improvements the by measures. to using our our slide were by and transportation process PSR more workforce we These you update four, Freight our freight I’d both where again Moving improvements dwell across of

are parking In plan addition, service of and high of train evidenced increased the achieve volume we while volume our as intermodal decreased XXXX, workforce by of a results. level we X%. the In intermodal engine maintain XX%, to in levels, versus higher in To a trip containers XX% production customers growth face compliance improve facilities order create timely ramps turns, working improve and our intermodal to chassis efficiency supply. with order the that capacity their reliable service drive We increase more to improve box product. as must view pickup of

by significant volume product trip and then staying improvement provides keeping planned and up improvement them, rapid on drastic manifest April, while team agility, of excellent focused operating demand. made our to X in metrics despite the for network recovery throughout we during improvement foundation during did our in reopen This in quarter, The Slide challenge the five this operations quite and year the safe autos. the of down all our July the our employees a fall point service maintaining presented an team. all changes. XXXX. shut of strong strong in as Finally, some our key of healthy. past in in manifest required we recent The service a for fluctuations across followed XXXX job the The compliance portions year, continued remains highlights driving

is tracks trains was redesign by in to completed approximately product engineering first department to our this XXXX, monumental and is productivity, remained feet program. Englewood began and in reducing the these XXXX, have facilitate service loadings to yard this of bowl We the on drive scheduled line. Houston finish extension a to team along while design that also fell main of quarter yard trains. density implementing to XXXX in process our or leverage investments XX% allowing in investments providing track. our increased by the X% longer capability. to Recent push both to you focused and network continue XXXX made leverages a tremendous fourth train accomplishment across especially to to at project the directions fourth -- we’ve on our XX feet our sidings increased run over sidings add Compared The XXXX. the starts. longer We extending railroading, length then This operations our This system precision train our train customers. same better the progress, quarter This by to siding progress length our a we when consider car seven-day One of period. enabler great when the we

to Cities we last announced existing capital service new intermodal investment, into terminal, Minnesota. a yard us attractive are to intermodal a to month, With quick Southern market efficient California an turning ramp Finally, service of in new we a a manner. Twin up and from in the allowing provide small pop minimal an

I’m full projects. the to look of pipeline about I excited the As future,

drive have entire productivity service and We to across network. enhancements our

our deliver spending, through of Turning to the shareholders slide efficient as to continues six, Union capital demonstrated use Pacific on value capital. to

focused significant efficiency PSR has and improve our stakeholders. Directors, planned and of generating includes of improving and boosting a plan XXXX, Our of all safety also existing discipline our The capacity, replace support harden in are for flat an investment remained on to fleet XXXX. in its opportunities. older last by locomotive acquisitions year. out core capital capital a this $X.X life Pending reliability we allowing billion win with Board us freight XX% spending is our basically upgrade implementation maintain final targeting spending our and the infrastructure, through to approval replacement car of network. asset, units, assets About the older of targeted of modernizing the resiliency We is replacement its to fuel longer growth generated

and to capacity of plan XX improve network Pacific our our the Northwest Southern sidings efficiency. focused productivity operational invest in and complete continue on to initiatives our train more network. than These business. our parts growth areas and to for future support projects will We We siding extensions in target length

management enhancements remain leveraging on we with integration platform. our fuel reduce consumption, Finally, to PTC system our energy to our focused

do PSR led remain we doing the eye XXXX, principles must Looking of done to have to this using that towards us the safer. an focused be on drive our organization Everything level operational to new with continuing work we excellence.

of the injuries, full high standard have While on maintaining we a to yet personal prevention potential. reach we our recognize our

XXXX in entire improvement indicates the network Our have incidents the in to make plan safer. we right rail that in place

and turn our with resources will them judicious We be quickly.

opportunities those the operations, must to of aspects environment. We consistent deliver for are determined With as and be our we reliable highly improve an the product service across many goals through the our long-term are push to update initiatives. it railroads. and train continue to to our as of must fulfill all service reliability that, over in I length We for at There of business turn possible to to upon will order provide on our us improve seize efficient and productivity will we a customers. other product terminals Kenny our to

Kenny Rocker

Today December good the seven-day fourth results fourth carloaded to and The XXXX. Eric, report in month pleased you, our as I’m up posting Thank X%. quarter highest morning. with strong volume was quarter our ended

our in business volume increase market. partially offset was during by grew industrial by revenue premium as business offset were mix. quarter, declines Freight in in fuel our our the mix the was gains and -- quarter down negative Solid lower X% for a

X% demand bulk, XX%, up demand X% So as let’s take Volume groups. and continued X% fourth and a Fertilizer quarter sulfur refrigerated and grain which domestic renewable customer shipments increase carloads a offset potash closer was to start in the products by were export Coal export for was and shipments. were and car. shipment, per for to was high the increased XX% fertilizer winner. flat primarily volume of average sulfur food strong for up down performed was lower And for each look revenue less our and inventory partially volume how the up down by quarter. a revenue due on of grain. with due export industrial grain mild beverage strong to levels, and X% driven Starting finally, carloads a in result at business quarter

driven and fuel by revenue Moving mix. to in on surcharge specialized X% X% reduced low from lower also Average car oil to decrease industrial. X% petroleum reduced decreased negative declined shipments per XX%, to prices declined shipments volume. demand. Industrial Energy primarily and revenue a due due and

strong grew Forest in was repair with in an XX%. and by by housing lumber remodel. Strength driven increase along product volume start,

inventory. sand improved and growth industrial plastic was for paper, driven with and brown offset and low flat volume and strength volume prices sands. also Metals market demand plastics X%, operating oil was increased from plastic in We in and decline quarter. by supplies surplus rock saw medical and by associated Domestic reduced in the down shipments chemicals demand by shipments Industrial rates. minerals chemicals primarily production frac in increased local packaging remain box and the were food driven Lower softness for strong.

volume see continued increase increased declined shortages quarter increase X% Intermodal strong driven the the from and increased X% footprint the total continued XX% continue disruptions, parts to throughout in per were percentage restocking. mix shipments. to on premium. Shipments the volume pandemic, and in a by Despite for to Turning demand volume, year-over-year, sales impact the supply grow down X%, Revenue parcel and inventory shipments Automotive a sales. quarter. was we flat, by shipments. recovery auto mostly was reflecting strength now Finished in of ecommerce domestic retail up chain quarter X%, the intermodal truckload highlighting COVID-related revenue average due down were apart. X% causing for as vehicle of car by

as business, plan we we XXXX, on to that our as ahead year, together slide with indicators XX. looking the put Now economic start our illustrated for key drive the

a keeping economic on We’re close forecast. eye the

there January, latest XXXX. timing you assumptions volatility some been recent largely As some with in But push into months the show economic half released know, in the has the recovery, the of bullish markets. more outlook in of second

is to weak year-over-year be While our watching outpace still is the in to some first is quarter. pieces adversely goal closely piece factors. impacted market, business continue economy, our still most The expected there we’re of will which the external the be that industrial are by to

more teams, expect improve. bulk natural three XXXX. outlook forecasted and for are we Looking at negative closely continued in our to a business gas Electricity prices for demand commodities, coal our

challenging entering market. However, and an year for combined high sources levels other energy a a with increased customer demand loss contract inventory presents the

key lower carloading by factor As volumes, a always, see total company reducing All X%. weather will conditions coal roughly demand. in, of year-over-year be we

comparison is ag grain, back calendar year, XXXX half China in as there of product purchases year. a the remains with incremental year-over-year to in for clearly tougher the export continued However, strength the committed

diesel increase We volume also products. a new our finished destination is biofuel to new drive feedstocks expected UP shipments, of with facilities renewable at which optimistic will are and production domestic

there at industrial to will comp first the energy our uncertainty. for beyond commodities, be the Looking first challenged and continue is quarter quarter,

growth. However, our diverse portfolio, improved will drive compete ability service to product and

XX domestic for And strong in along expect improvement plastic encouraged parts from for and industrial XXXX. benefit with with million shipments truck retail to for continuing increase volumes the sales efforts, plus finished lastly, truck in units positive us remain restocking intermodal tighter A will automotive a a sales closer vehicle automotive growth remain business. million for should addition, auto vehicles sequential forecasted shipments and intermodal year. XX convert XXXX. seeing inventory inventory is Retail and relatively the to win high projection we’re second over-the-road premium, businesses. inventories XXXX. in in and to utilization trucks supply low half. UP’s bolster we’re growth expected with uplift production in and Retail drive restocking in both we a This the to in recent be XXXX from should from Automotive improvements our higher In further are to continued strengthened along in

will Our from Cities premium benefit which Twin terminal, the Eric earlier. intermodal business new mentioned

of out capacity starting to build plans over that. small current roughly XX,XXX five and with We’re out loads times to future

business. receive started our in stay first to excited January. XXXX commercial continue We’re to new job I’m new Angeles fabulous summary, the this terminal market. loaded win we penetrate that a to Los from They did week opportunity to expansion team. the of proud has to additional see close Furthermore, pursue customers to already containers of In in and

with about turn review over penetrate customers XXXX, we excited financial our I’m have to to Jennifer With began that, I’ll the performance. the in we grow to markets. new it and opportunities As pipeline

Jennifer Hamann

to good $X.X income adjusted remove Kenny, on remarks X% XXXX I in one demonstrating the impairment both down morning where year-over-year look versus grow without with as statement adjusted to to billion, of X% to speak results. will morning. Thanks, $X.X a operating volume off and impact slide expense for revenue decreased I’m we costs our Throughout today my billion one. adding reported X% Adjusted start the Operating a continue to XX, this growth. the adjusted Brazos charge. the we provide going ability our and at totaled on

mitigated of of was quarter million X% share versus XXXX, a to as basis per expense adjusted combined to is which we versus XX $XX earnings income billion in $X.X $XX together, share increase our income increased we XX% income XX% increased led the up are as Taken of gains. $X.XX. impact compared interest Adjusted result effective reporting versus lowering estate a with Other Interest a year-over-year. real XXXX. million billion, rate net of fourth XXXX, by points of levels increased debt operating to repurchases XXXX, $X.X increase flat when

Our XX.X record all XX points basis time XXX better basis is points totaled points. prices as lower for % improvement fuel XXX an adjusted operating Core was ratio and year-over-year Union Pacific. basis contributed quarterly

down by X.X slide reduced which lower provides impact was year-over-year, a XXXX, which Looking revenue, quarter diesel fuel of closely at X% XX fourth billion, more volume $X.X revenue, offset growth X% versus of breakdown totaled our down freight the prices, XX% by revenue points.

quarter yield pricing of revenue pricing the freight Although, mixed negative carloads inflation and reduced in experienced environment, we in petroleum fourth than and were volumes continue fourth an point. these business headwind improving to a a mix excess a Strong the more dollars were intermodal gains and X.XX in quarter. offset lower by

mitigate both that in strength helped grain impact and However, shipments sequentially. year-over-year

inflation remained X% adjusted lower to Jim, full grow great diesel variable levels offset we XX, elevated, tightly train expense more kept together by X,XXX about managed Starting fuel time or on wage of engine $XX XX%, workforce result primarily per have benefits the of an slide consumption a employee move Fourth offset impact, and done fourth improved Eric and engineering management, the expenses. by workforce train bonus while length, cost compensation excluding to and to and workforces decreased with driven first operating volume fuel growth. equivalents, XX%. our declined continues rate which let’s decreased mechanical X% employee team XX%, down fuel bonus to a increasing Quarterly XX% quarter and prices which than be volume quarter provides and expense, the million decreased headcount. lower Now summary as one-time counts, our we force quarterly with as year-over-year work

of with settlements. line X% the a productivity, versus mix. from of in by XXXX, driven core and Our fleet productive by Purchase declined fuel business adjustments, roughly couple expense more half material fuel to through quarter of driven consumption X% middle improvement quarter, locomotive run some related decreased interline fourth and half rate with offset our use the favorable services

locomotive As in a offset car savings lease freight also more as by however. assets and other of Equipment of as expense portion continue Increased pandemic, to rents was efficiently. intermodal drayage the X% automotive we lower use shipments those and year-over-year. subsidiary those volumes quarter, remain result lower expense, impacted fell the a

expense up when $XXX of non-cash charge, is impact the category other see the X% million year-over-year. The line was adjusted expense you impairment where this

As you’ll we recall, insurance fourth last year, quarter, in $XX recovery the cost reported in million this a line.

So, than also lower better and state solid loss railroad. Freight expense including local expense damage which quarter ended the taxes, a control we versus year XXXX, was and run safer as expected.

XXXX volumes materials expectations, be high-single for expense XXXX, to and with Turning the purchase in relatively our following. versus moment low-single primarily for digits XX%. to in our expense state tax look to up flat Depreciation and be auto for be effective and increase taxes we recovery the driven annual the a to expense income other XX% by services expenses and local digits, should XXXX, and expect taxes, higher rate between

two generating at strong productivity, in $X.X past by progress initiatives operating over our These and years, the a trend Union productivity nearly the productivity. of fourth at resources. of more train our $XXX team. fantastic by were achievement total the gains quarter, efficient of XXXX continued continued Pacific led length a and all departments now million finished billion of We use $XXX productivity on million entire we Looking the

to versus while variable achieve we cost throughout reliability as XX look fuel provided finalize demonstrated the Eric or analysis and of basis, slide viewed facing of only adjusted $X.XX, charge which the on KPI of improving XXXX, reporting of level X% we full To back this volume I our than Importantly, despite the whether volume adjusted productivity, $X.XX, per higher discussed, revenue how a the declines declining the is adjusted were sequentially. X% X% $X.X billion. when more by to productivity slide for year impairment on share product. at XXXX, slide, also income we XX%, we’re service Stepping variability driven declined respectively, XXXX illustrates and earnings only just strong operating gains, year-over-year XX, on

work of operating as XX.X% ratio organization’s basis adjusted overall XXXX Collectively, year challenges. represents full of results agility Our overcome the these improvement an we XXXX. and transformation demonstrate XXX versus points to

operations same returns, of strong time, billion, cash pandemic, purposefully year the Turning now as X% after a to tax flow the adjusted XXXX Pacific cash some totaled a by the payments, while adjusted decreased cash capital only in significant generate full maintained versus from XXXX, we XXX% in investments X% XXXX Union liquidity billion, continuing resulting flow. cash decrease to cash timing income. cash rate. throughout to $X.X despite net at Aided Free conversion position maintain greater and $X.X through

to downturn shares Our dividend impairment adjusted their repurchases includes $X.X to above to through and of XXXX, our common quarter. the our XXXX a payout and to total we economic ratio slightly billion. cost $X.X an as XXX was the This million preserve of range, during or we our of XXXX paused totaled charge we repurchased share distributed XX% although in the or in dividends In for $X.X fourth XX% XX effort returned maintain activity an XX% billion at repurchase for target combination still all shareholders. made And shareholders. liquidity, billion repurchases dividend X% in million during

and rating maintaining from Moody’s from committed balance our with credit a S&P. A- grade a the ending rating, an BAAX of to remains investment Union sheet, Pacific Turning to strong strength XXXX

adjusted the a of charge, X.X times. Excluding comparable ratio finished the year impairment we at debt-to-EBITDA

increased position. quarter as of fourth of at adjusted XX, actions our billion liquidity pay debt your XXXX, billion the $X.X in took balance down billion to in all XXXX, Our we debt, $X.X given strong $XX from December in

as due adjusted the XX.X%, reflects invested benefit XXXX, added pandemic range impact earnings in return is to never our the desirable, came historically a a creation. our Finally, of down capital at of well declining as the capacity while PSR long-term ROIC within high on staying capital our on discipline, from and

in confident ability we opportunities XXXX, the our are to execute to ahead. Turning on

three we’re growth for in Importantly, drivers, quarter. looking our increases the volume, for price X% across productivity. year second by driven performance outlook year-over-year range, for to and all With full the potential volume includes in improvement largely the year the X%

volumes it we mix But to in murky in a Kenny, as from is of Our the consumer relates it demand mixed most fourth the quarters. opportunity win visibility to see the on railroad. half the and of however business recovery. and a and are bullish you in perspective, factors, rollout, industrial particularly depends our to really and drive heard vaccine first the we our second staying trade, as and sustainability year number the challenges negative to XXXX, business about with marketplace a pronounced From grain

where volumes where will quarter pressured from in be crude those car environment growing intermodal lower year-over-year first as move to business. an loadings industrial we admits The are grew and XXXX today

a pricing expected that remain as to and our and could as half in X.XX%. in inflation stay improved XXXX, that we the headwinds will With product, though headwind all fourth comparisons if dollars first for we is That some service be yield year guidance excessive to quarter our those disciplined in in moderate an year-over-year in the of in demand shipments strong. environment, expect quarter. around XXXX, expectation dollars However, reliable embedded see inflation is in tough particularly pricing strength a grain well grain become back approach likely will the

range of in you combination above On operating year ratio described, another million plans our year points roughly if the ratio not operating assuming of be improvement inflation XXXX, XXX XXXX. is in to basis rail heard the year. produce should outline industry volumes, the productivity productivity the a XXX points for pricing so and $XXX plays of And expect full of continued of have of progress, the one I gains. front, best year out, growing productivity added best basis generate as The to we’d the should just ongoing which Eric solid that in this

discipline invest just tougher dividend be that conversion headwinds, our on single-digit increasing Turn plan XX% in generate our less leading guidance first payout result heard through share again an expect operating to well of efficiency cash. that of guidance, revenue, to we of in you in billion cash than rate expecting in into journey. should quarter potentially our mix us to ratio, The through cash is long-term our returns our a we’re low of a great to the the XXX% and the in profitability industry more within combination capital of and operating mentioned. shareholders dependent performance ongoing range and strong of positions a topline ratio capital, we I and Bottomline, $X.X XXXX to terms the with capital grow strong form range, capacity growth growth, and which repurchases. about around step a as cash enabling for toward year, volumes PSR achieving ultimately comparison, In generating is drive XX%

year it us employees Lance, and showed Before very exceptional our against I’d our difficult to workforce. up and I rose add the was turn back like possible. XXXX what really my you to a is adversity to thank

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

Lance Fritz

Thank you, our XXXX, with more journey began operations we while reliable Jennifer. of safer to our service across drive every of a When was product. quarter providing customers fourth and objective in the the PSR facet efficiency

substantial excellence. held As on improvement number incident foundation line and a strides personal toward building on while a very areas made We of that achieved good we in we operational a heard the progress of the across you tremendous in we’ve injuries side, safety last rail made solid today, year. challenging are year. We goal

moving warming. in step Our the right expect safety we forward XXXX improvement. impact continued and performance direction I the a to took of is reverse global In

and pledge to fuel targets an science-based demonstrate operate our to sustainably. rate consumption Our improved commitment set

to reduce our product the combined to UP work of cost do To up, May. a as from footprint with all, be only lower prospect While Kenny, you there’s our new same. is to important are these team on the wrap customers soon our about more win our an service enhanced structure that heard win expands in watch helping opportunity milestones improving for carbon marketplace in and is more Investor help and done, early business. economy an of the energized upcoming grow. And Day information Best

most future up a it While we Pacific in questions. person, would to likely excellent returns. be Union of a the that, let’s event. lead will vision lay to our Regardless, line With long-term we’re excited for love open meet growth out and into to your virtual

Operator

Thank you. Justin And comes Instructions] [Operator our question first with today from Long Stephens. you. Thank

Justin Long

and expecting you talk for first about you understood the deterioration in make quarter. to the clarify, that Thanks. I for on quarter XXX wanted guidance, on to one that. guidance? sequential a talked the there the I to year. can points for or base on wanted XXXX then expectation XXX Good that And just are Maybe OR you’re guidance, some items start a morning using OR improvement sure just basis were But year-over-year? I congrats about points on so this Jennifer unusual with to given just the of you basis basis XXXX,

Jennifer Hamann

with I’ll that last the Okay. terms QX. start in of one, Justin,

the As generally worst you operating our is and ratio QX know, seasonality there’s year. in of our ratio operating

think very up again. the that welfare, Because terms QX on health be inflation when call year-over-year that a roll And so my -- in comes of tough and year year the is got sequentially. one, you inflation, in you’ve QX basis, starting payroll to comments the tax into about a not first would were that that’s of fact

that comment. a was year-over-year So

guidance and we’re on at fuel a basis guidance, of of XXX terms basis into not points forward, a that In basis really points was expecting of headwind from attributable look part any points about year-over-year kind to the is as of full we we looking basis that fuel when we’re XXX XX.X%, to have year. XXX did next tailwind year or

for during that there actions course course of some right some take some three were unusual did shop of year. shut that down the XXXX. We through the employee about We did We happened closures. the months. You’re salary things

to XXX obviously will how into that basis. giving and we that’s to be going points XXX at on comparable. when obviously, costs see to basis points those kind XX.X%, you the look that’s basis up make back adjustments of a points, excuse to and to So as aren’t it the basis year-over-year XXX can that present what be so will a you But -- that to me, come the some year XXX we’re set

Justin Long

you volume But how and of helpful. to that thinking the guidance? if Do improve key about slide maybe and see metrics. improvement I has as But fourth a that know ask progression environment? still XXXX the as are the the they’re you Great. where say, opportunity? a that on across that talking you like then, performance outlines your function about service to metrics is, in in so, presentation Okay. I performance come lower have And with in could performance Very a the big the and question shippers, you feel talk those Board, there. I changed? in quarter service about the can wanted improve, these most you let’s you line volumes key metrics know

Lance Fritz

do Eric, you take that. want to

Eric Gehringer

Yeah. I appreciate the question.

entire is So have when chain. the that look as before, the at supply you did we’ve mentioned challenges we ecosystem

year, opportunities do saw compliance expect off I up for that on morning I in this the improvement quarter increase base. XX% a you There moving XX% weeks tell our I’ve also intermodal, fourth can a volume an three improvement even intermodal seen in in into reported we’ve continue. As we to plan to is XX%. that forward. significant trip

been we to focused in very to XXXX. that opportunities when that and on and us for a think we’ve with it item critical in go improve, can Now the remains where you XXXX continue about

intermodal terminals, our about also think do we customers. how how we but partner operate do we As with our

traffic same drives fluidity that drive work seeing time, us we that for for and System, and will railroad we do intermodal you’re into we see to we’ve and turn improve allows road. reliable when more Every before that’s opportunity customer. inbound us the increased because through it, about that very better Reservation we So how that generating about for the ensure over fluidity At plan themselves in capacity, to spoken as the the opportunity efficiently capacity manner, a obviously, a that Gate continued think efficiency us. can ramps a the performance do performance that

it’ll base we fourth be off to and the relatively of XX% result quarter. a XXXX in on focused very need key drive So even in high this that

Lance Fritz

second a and our improved product into we volumes product third as XXXX, quarter our quarter came back. the drop volumes year-over-year year-over-year Eric proof service backwards in Hey. statement, and you when fourth when improved the look just service Justin, in quarter and we

a proof able to we’ve So make got in statement environment that improvements. we’re continue either to

Kenny Rocker

really I’ll that product product closely have that line, our customers with our they we’ve recognized that comes service has working the add been as through improved. there, and

terms on chain. and supply of Eric thing. the puts once whole supply really our in Yeah, performing. are So seen that about and network, some But chassis wants takes and that us his of talked sort we’ve Eric team

Justin Long

the Okay. Great. I appreciate time.

Operator

proceed Seidl of line question next the Please question. from Cowen. comes with Jason Our your with

Jason Seidl

little Thank to sounds on about to wanted side down X% everybody. I bit talk bit you, pretty morning, the on outlook and narrowed the Operator. a Good outlook. good the volume X% a

we international and the go expectations, was be You XQ intermodal to mentioned there actually little especially domestic quarter ramp fourth ports through clear seems about year, as the talk because intermodal in a here? throughout the growing, a bit up there -- in the you could

Lance Fritz

Kenny, do you that. want take to

Kenny Rocker

Yeah.

acknowledged. out of in the on. that Having that in of back to you just earlier this all comments made to maybe few that, the pulled we’d publicly, coal the if me had intermodal step that I that a stated Let second be significant win and on terms ramp this X% that, the a range, X% we’re that the we’ve the on continue energy to international take highlights we fact at side half side, highlight the we morning hey, expecting pretty challenges and we year, said a said

chain should down transported. see encouraged we’ll believe settles international supply we the those of versus we that as also been have on itself We scenario to dock more moved being type by boxes a

trade really the and would spending product. international on consumer improved area that I if as would So, as gets a side, expect has product even opens we that service as strong today, service volume earlier, And very the in we up, sit increase. the it’s that better, stated

Jason Seidl

conservative color. Kenny, though, share Clearly, up your share and should little follow cash to you your little flat appreciate bit side that. Are XXXX. is more COVID. got you repurchase it to relatively play looks you a for up here in try for ramping is think Jennifer. activity are good Okay. going about outlook of up, the XQ, guys in guys My with guys on CapEx How you we mentioned That’s a the the in Jennifer, to given like be repurchase profits grow looking some catch to program? of going bit XXXX?

Jennifer Hamann

question. for thanks, that So, Jason,

still a we In that today billion. have probably bit cash catch the terms higher at little we’re up, of carrying balance $X.X

year. outlook only going the we’ll specific we’re that cash to then plans us, into rest performance, the then not outline year a some Day the think, Certainly, we of long-term to but in out. talk more And going plays to of deploy Analyst the at May, strong So our probably we’re shareholders. that gives how good as our how that see start I business around

talk So in we’ll more probably May.

Jason Seidl

there. Everyone be Okay. Appreciate safe always. the out time as

Jennifer Hamann

Thanks, Jason. Yeah.

Lance Fritz

Jason. you, Thank Same to you.

Operator

of Thank from line Research. with question The Group Wolfe you. Instructions] is Scott next [Operator the

Scott Group

guys. Thanks. Hey. Good morning,

So, Jennifer, for any that. in quarter OR pretty full thoughts with if cost what you Maybe can out I’m worse I and figure you didn’t around implies some And year I outlook share to labor trying do year. the typically is the the fourth than similar hear something guidance there. color guess,

out as or sort you the the you. on do get maybe I like feel So just And not labor then OR as year, with did a that mid-XXs that Thank further that feel I on Does good ratio, if down you you go on it’s it’s like just as there’s revenue? full the few years? next room operating can the longer it bigger side. can know picture improvement for of

Jennifer Hamann

part the improve ahead mean, me say, XX% that the first. endpoint. that us that said absolute let Well, to an Scott, heard moving of while take have still not still last that’s see there continue We we you’ve us efficiency. We’ve opportunities towards. to we’re that I out target

and of talk very through some we’re Eric, that bullish. heard, You’ve

think we -- We’re there’s lots of opportunities ahead.

that So, we May. talked more again, those will in about be things

confidence, what of today fuel you did confident I very a lot we those quarter a on XXXX of appreciate about and there’s categories be, and as pricing to levels outperform fourth we certainly. from our puts going predication terms is and our feel upside would not terms can bit and terms a know, being takes But statement But really if of of In a We ourselves. optimism full in have we year that that XXXX. there’s absolutely the variations. and in versus our it expecting that our those help any you be three gave in we’re of productivity, is volume, guidance that outlook rooted in in of

Lance Fritz

assumptions can Jennifer, gave that re-emphasize we that, on And we is guidance to those assumptions want if those we faster to -- grow want We will. we outlined. the I built make Yeah. if the better, market.

to get as can. we as much We’re going productivity

to going relentless efficiency. We’re be about

Jennifer Hamann

labor Yeah. giving And cost about side, you asked inflation. also specific we’re the not labor

about If expect you elevated we employee, you’re continue. of that that -- kind if seen to where per we’ve talking cost do

the continue overall make. going decision to right that’s workforce very the we think manage to We’re to tightly and

Scott Group

Thank you, guys.

Jennifer Hamann

Scott. Yeah. Thanks,

Operator

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

Chris Wetherbee

on sounds of maybe so to opportunity in inflationary kind market setup looks saw I we on question side. May a morning. it think terms there’s an There’s similar in intermodal price side, Thanks. Hey. pricing. that to be what on of the and the there the be Good truckload like particularly my XXXX pricing in

within opportunity can you of in sort to using pricing maybe as of business, what you book wanted the do forward is core that you think the we and sense we move acceleration ‘XX do as type just of side where get best a So and get see of think maybe the a the corollary, opportunity?

Kenny Rocker

product, really and where that marketplace, excited and I January. us the to price which say product so Having out allows all we’re want starts it to off, go in and the is. that, to first compete just said service So, service about and with we’re our

much ‘XX. bid in We’ve that, us XX% loop you’ve through out the based environments based I in terms the the that product in is there. gone on market, a what you tell and in We’re tight And of about early season. ‘XX tight this the for part supply, heard bids the opportunity to rather there of of would on in of the is first somewhat talk environment than favorable us We’d be environment. part XX%

our appears a be get see We’ll we’ll clarity a how season. it right through to So it little bid bit But plays. as favorable more we have now, environment.

Chris Wetherbee

you very Thank Okay. much.

Operator

ISI. with Chappell with is proceed Our from question. Evercore your next question Please the of line Jon

Jon Chappell

surcharge entire Obviously, Coast maybe out up those compliance, otherwise you surcharge. the follow up read keep pretty fourth really in We’ve you. West Good to grow fourth for only to want take confidence take you’ve this able the planned to there’s to. been you the Thank opportunity business to than lifted couldn’t the much with up intermodal as maybe that pace and can strong publicized without you. quarter, that not that some read that trip morning. of weren’t piling an congestion as intermodal quarter you franchise also guys in is well business a we issues, you have but greater some issues? mean to take Should at that the had wanted I Kenny, to the the probably, you

Kenny Rocker

is not, here. believe to -- There’s there a or unpack Yeah. lot

first. surcharges the take me Let

first So, are our of place in MCP that customers our program. those were all, for surcharges in

So I that. want to clarify

and We want have those those a make that containers. under customers we to program where program sure containers customers receive receive

to them season, in it’s tight into those high scenario During peak where the peak Demand a we wanted now, as we is was season. not received demand. because but sure it of the tight customers ran as make right

go we want those and to out removed there and we’ve surcharges grow. So

just we’re really the your comments lot containers of to Let of me around and congestion seeing are A break pivot coming what another water. marketplaces. in the off down part the the

of that’s about is rail, what parts into going talked Some business and I dock great. of in Other that them buy you’re to that there product on when out are going service are warehouses of they’re are off. they the some can some where is not chassis supply chain those the there, is out going seeing not containers of that turning then shift and turning

incentivize in that stated, Pacific service a to some done closely. chain with product. and saw that fabulous very made Union to again, we’ve charges very customer Eric customers just But product. as we is service once really our make changes I our accessorial working of sure all supply closely. with working the executing a We’ve job customers get We’re

Jon Chappell

Very right. you, All Thank helpful. Kenny.

Operator

question of with Please your with proceed next Our Tom is the UBS. question. from line Wadewitz

Tom Wadewitz

had in that metrics and it’s improvement most improve in to would on the of you. to to the and the you morning. with operating right. still the nice be I And you Does are that what Chicago? XXXX? what about think the -- in with congestion? your that do should key are improved then kind you it to great consolidation a other planning goes a in think terms little you XXXX XXXX? given there a terminal You ask you of in if terminal intermodal? train don’t the -- about and Are look Good relates LA wanted line slope So that’s -- planning bit I we lengths from in bit know Thank complete metrics consolidation and same network side maybe we may perspective PSR are your a focus that Yeah. continue where are terminal at or should more, in up

Eric Gehringer

Sure, for question. the Tom. Thanks

So with Chicago. update an on let’s start

our consolidation ramps of complete. intermodal is Chicago in So

are right is We and now the working -- construction complete.

the intermodal We’re GX Houston here in At into of same the complete. ramps our working operation January consolidation in XXX% consolidate the and we’ve that’s time, our to finished right of now GX. month two

we that never efficiency, terminals forward Now to efforts they our the to increased your point, put end. looking at drive

investments this have hump at the month, Just Englewood, Settegast. fact, we’re with the in made rationalizing in that we we

and on all that think out point gains, about of our terminals. to talk about terminal think often important it’s we continued humps. Now, I we it’s these efficiency calls when But

in it, less. cars have doesn’t it because strategy to PSR if for touch hump, railroad, driven being the after even a a still PSR look a still you’re and So we safety

to for less represent switching may cars not operations opportunities the So, swapping, switching. non-hump touch terminals use for them rationalizing our out black operations. but We other by even like

We in Iowa. Texas. in fourth switching we Paso, El quarter, stopped rationalized in the here City, Mason switching So

efforts again, and very be XXXX Now, those clear, beyond. will to in continue

only ones watch more to internally, going you’re we metrics, of the are on we the leading lagging indicators. regarding course, would but many help have metrics that I that with Now, us you leave we not indicators, report, dwell by that car our get terminals, to be improvements regardless a benefits making and or two we here. of biggest in the velocity. hump just whether classification a going are of your car conventional Those the indicators but it’s

Tom Wadewitz

question, whether comment terminals the you’re consolidation in going not? to Can LA on you or do briefly there

Eric Gehringer

Across the opportunities. entire always looking system, we’re for

that Omaha guide based in far additional then as a out team And changes, as very on in opportunities as we you is the have there through are We ourselves I’ll today. here focused constantly field. those make on changes? asking So that’s

Tom Wadewitz

Okay. Thank you.

Operator

The next Allison question Landry from line of is Suisse. with the Credit

Allison Landry

next following just parks the But Maybe on logistics development big morning. announced major couple have I think, a to rails about talked Good changes. Thanks. the terminals. of up question a intermodal of specifically, about Tom’s intermodal the other some network, you’ve

Is I create something share on the long-term think sort UP for sticky you customers like a and long-term where really these can their has opportunity any relationships the of drive network gain? couple there on that, network. BN with

Lance Fritz

running Dallas some Kenny Yeah. it’s the Terminal, Allison, and do Intermodal for is about they and yes to to detail. dock Lance. I’ll and exist. industrial to turn short got then immediately large historically answer this I’m over where The Dallas and plastics it we’ve going is product. start to adjacent to very park alive We’ve the a talked

that Kenny? yeah, estate search and real to ways benefit to do railroad the opportunities our the that’s the use are happening like and time. for all of So, there we

Kenny Rocker

appreciate I you bit. rail But about we today, it if look you talked you what, our question. network we ports have are I at it, that asked glad haven’t tell because XX I’m quite there. that out a Yeah.

rail Dallas, road that’s You with the in intermodal trucks whether have the like, area. that even it’s those look we for Los or network complement We take ports whether it Chicago it’s off align, terminal carload areas the Angeles, at the at matter. to that trying look major major and network Houston, you whether if already

impression opportunities for be Cities and to seeing and that’s that with doing today. out we’re intermodal There to So terminal. that with today. aggressive you’re the more of not I there are Twin the don’t want go leave occurring anyone that some us

Operator

[Operator question Instructions] comes The of Thank you. next Susquehanna. the line with Majors Bascome from

Bascome Majors

In said about roughly on and by there you’ve years, your Yes. a period XX% you believe and two the I daily were down Good last volumes morning. length the we’re train increased X% where basis.

growing that margins bit that and was traffic the the merchandise recovers lot as revenue Thanks. with think changed typically much as traffic is relationship to runway incremental model typically come industrial considerable recovers? go, about calculus historic curious, I starts a cars and that we adding capacity that’s a existing there Has industrial as high economy So the far to left been of progress. little just how that. train when or new hopefully continue to see when is you that still of

Jennifer Hamann

have we’re train. the enthusiasm only combine train do different types Yeah. further us That Bascome, not changed we this continuing not to if is ways moving to that. gives think Jennifer. traffic say opportunity our but around on of to I that build our I would that. that find And length, is anything, are

definitely very So drives we favorable saw fourth doing to were and things those you the I it have and been as results think will are in that do continue quarter.

Lance Fritz

in continue XXXX. I to siding going to had sidings. new in that of the Part plan for future? point finding at part limit there is your if extensions length of capital we’re another train through for or and find our heard, XX length I train train reflected you plan opportunity to Bascome thought Eric some think, And kind length mentioned, were of Yeah. question, a I

we see And end an either. so don’t that yet to

Bascome Majors

you. Thank

Operator

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

Ken Hoexter

Hey. clarify think there there’s quarter? year building Just I year, on and so first siding versus if on number XX this the last year-over-year? worse there’s that little progress is the Good comments comment thoughts? to tough? comment just of maybe just the deceleration your I some about just morning. last be length, clarification, new on you Great your it half it versus ratio, a you’re on any follow of we one, then only or there? Should because bit XX? going up sidings And expect job Is think a the anything that confusion -- but, the confusion Jen, Thanks. deceleration on operating could Is some

Jennifer Hamann

with turn it start to to OR the talk sidings. I’ll Eric me and over Let question to about then you

is comparison have to year-over-year, mix bit and saying because going here just the of So a facing. commentary can my in that quarter, we’re the little first it. we improve tougher that, again, headwinds I’m talking are we Not that

as headwinds need volumes, and take what down certainly the Just in quarter. oil, mix saying the strong and less that industrial business you’re crude the help fourth that that hopefully, that but will to profile green terms looking we’re that helping you continuing of into calculus grain see did you to particularly with mix at saw in

my So that was commentary, Ken.

Eric Gehringer

Ken, I say… would

Ken Hoexter

Okay.

Eric Gehringer

an we years challenge I ourselves, that intentional its largest deceleration. that truly last about Jennifer continue process some read the versus does very used XX, into I opportunities investment process. the need and What just have briefly you it. doing Ken, working I not want think judicious that I appreciate train We as the XX length still of the being the question, necessarily elaborate, are we’re capital understand investments. then through and will to mentioned where would to though, not with and about when when growing all would making the we over it read into siding two is to

example, our prepare have and help longer. that, even for to put can sometimes also, ensure opportunity that really the Dispatch we for advance, hours for we combination that see team that then local today against take more what us see allows five in have, for a together. We do are is trackers to and resources of hours And can trains example, that hours, up data us to six where that analytics, them We two in Harriman to that. Center advance

us ever clarity to length, you investment be not it’s to railroad driven alone. seeing with have grow and going the we’re capital always see than before are going we but by better train continue to So

Ken Hoexter

Great. Thanks, Eric. Jen. Thanks,

Operator

you. Thank

from Our the next Barclays. is Please Oglenski with question. proceed of question Brandon with your line

Brandon Oglenski

I and required? volume? this around just CapEx keeping taking are year, question. following Good be flat some would follow like, continuing on to CapEx sustainable for a again, network, these grow line which capacity you keeping you guess, you’re quick talking equation, mind? guess, guys how there. the keeping are at thought thanks of morning, do you that guess this capacity But in there’s Isn’t some everyone, there, spare my you Hey. about how see obviously, I if I to levels point D&A And flat physical guys too, don’t on that as

Lance Fritz

let turn we’ll me the it on or the Jennifer second capital and start over to part. So then on either Eric

justify nothing created think and to please or we when about future, So unified than of more and to long-term capital. plan. would through capacity growth PSR capital bit open have capacity enough we’ve volume a more us quite excess investing And into looking the

the You love we hand, need look XX% given in the plus, the the we But of at way today. at we amount railroad we’re generating that. we just dollar -- put our running don’t that every it, ROIC, we capacity that have ground

growth this to that again, in need loads car are good when where that’s much day difficult are, we look boy, the how on but for depend will the it’s we more us. going at turn and to say, face the question, out very capital. future It’s So, into network, a do on Brandon, date, to they certain very

Jennifer Hamann

the I in that in think spend XXXX and -- to And that going to note there spent again important XX in roughly we’re it’s that [ph] XXXX. we Yeah. we

support you all investments that We’re think for and intermodal maintenance making growth. investments CapEx terminals that’s That��s doing the of we’re going facilities Chicago, Houston, some about growth in not and to in there. the in in

you think that mind to need in I So keep too.

little of asking Going you not asking we being how D&A guess a that Could you that we back in if you’re bit? flat? clarify XXXX? that How doing sure do are question XXXX? do that. your Were to maybe I that I’m on in in terms

Brandon Oglenski

Sorry. Oh!

you think this year, I flat said D&A would be right?

Jennifer Hamann

sorry. I’m D&A,

Brandon Oglenski

Yeah.

Jennifer Hamann

help. Can’t

helping we rail in on little think us terms little looking I that’s G&A. so Sorry, do got bit there and expense, Depreciation rail you thought the at life know, a news of we’ve and a on depreciation year some side. bit you of said, studies every I out favorable as

Brandon Oglenski

you. Thank

Operator

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

Amit Mehrotra

maybe is I and growth will all the to company Hi, kind Operator. what realize alone here, and just guess, think Because Thanks, everybody. I about growth of and of ask to And Lance the I share network. last about I a the decade and pricing characterized market was the above talking say by return. cyclical I’m comps, Kenny, growth. with operations think guess and And the full easy I rather just kind not that, -- but changes wins. be guess, of the allow from growth, I tide, fair not recovery, respect growth market to wanted to would but it rising benefits rather

of the going and on the leaner just could business wins, you how towards little the even a just pivot a network, I better maybe you I culture think because if the share And examples, company just growth? those? more to give tangible a to get provide network, some bit have us sense have of are love you but clarity you a So market

Lance Fritz

That’s an question. excellent

You’re organization. of indicative a that But the think inside just in things culturally where improve exactly got Kenny, you’ve we’re It’s right, margins they’re the and turning sites to not our more leg growth. that stool. supporting of you’ve terms of we in are organization to the to about strengthen of growth while process all the And done that couple of the to I our going. continuing commercial yields -- add commercial

Kenny Rocker

go We number and trucks a tell of compete. there and and you, to great Yeah. And have modes that have we to That’s still compete we go other win question. against and a commodities to still business. will I’ll out have that out grow there

where motivate the want their program, like energy of changed We are good to here And on there spending team and those. growth. and team so out about the teams of excited sure that tell we at they feel sight that go very make I we are. were choice of our word have culturally. We We it. compensation you I’ll about our your We’ve line good I that to carload win. we’ve and you can all sales the focus not that those carload leadership tell really it, what clear all they’re didn’t ensuring table the supportive with of margins, we’re kind have good, with but that But we’re right achieved and be winning kind support things we remiss I’d there’s price. right if that that behind of like good transparency, like to growth. the had we metrics necessarily on margins I really win and growth. say to on what me, it’s committed clarity goals can are

a just cultural we expect baked team the it’s to and in all there be that great motivate change… So to

Amit Mehrotra

Yeah.

Kenny Rocker

…for us.

Lance Fritz

structure work your changed it. you’ve Kenny, streamline to And

in business broad more and think development to growth beyond. distributed going have just there’s put salesperson. just are we business Amit, each that that after changes development in than Everybody place in XXXX XXXX team fundamental goals You’ve drive on to been example responsibility. your has of example

Operator

Thank you.

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

Ravi Shanker

that volatile was -- end morning, of Apologies do Good Thank the kind trends was of markets think terms was in you market given in I markets missed of there can XXXX. if international really Thanks. there intermodal. what address of this. XXXX? I But that the commentary one that really end missing for one everyone. for you you the But see was

Lance Fritz

vaccination, Yeah. Again, at consumer the spending we’re timing and big things looking of the of the is adoption trade the vaccination. there,

have expect volumes. international direct impact on a We those intermodal to

us the be product. good to interaction the grow and our will believe feel we to the feel that we they’ve our there. As with efficiently about We service about demand processes customers good allow sustained. adopted We

going into be that believe we for all a So will XXXX of positive us.

Ravi Shanker

Good. Thank you.

Operator

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

Allison Poliniak

to Hi. that Good circle love to morning. back growth question. I would

sort that more that in perspective hear any there terms of to it an Just terms of in as back, more your at gaining of a enabler Are or and of, love thoughts? productivity growth? share you technology on is would on reliability sort service opportunity looking I of enhancer as

Lance Fritz

Yeah.

on I perspective. that Let and a might then think me the everybody with have start team

I first us want recent joined addition team is our The our note leadership with Jalali, most thing to Rahul the as who CIO. to senior

customers in to months. it customer and is platforms applied to the terms efficiency our of been needs technology in a energy He’s I experiencing think from recent a it. of of use a perspective. in team. in into very to asked very, Eric, guys of Allison, growth, hands early above, are our product great resolving fly ecosystems on in you in in to was that fresh vision experience, -- us going of the the of juice productivity. developing operations a enhance today. the team it ones year. and all minimally role real it it, getting about definitely tool think Kenny plays then There’s we example their bringing to the strong about minimum and technology, viable and And a UP And of and productivity the of we’re what you November role that continue and their to developing But terms something for in last terms perspective participate

Kenny Rocker

from customers to want certainly with to tell and standpoint do take Yeah. commercial us there for I again easier towards we to a of you, go it growth. business make with would out advantage pointing it

visibility So, number engagement tools set of kit. can to expanding customer Rahul before that the certainly our about here, it’s and then to up, a there the have helping either the to with job of are us their opened And yes, great we’ve for in pain have just us. so and Board. comments a customers to done Lance’s customer go vision UP coming markets he what’s common a have literally, lastly, up we win we’ve really API and standpoint, technology And Again, visibility utilize mean, usage coming I’ve see that with using, certainly IT. what’s might tool We’ve remove through out at we capabilities. on able business they us talked points encouraged offline. Eric see having to with for our the to that from been been API’s of or a API’s them plant on I

containers the West good Coast into are example a of So that the port. is, that heading

what handle coming service come solid to better utilize and and have that to good up product. We leverage a the of a point more now we strong clarity port at with what’s the to port,

Eric Gehringer

and Lance excited we we and strides I’m how our very tremendous have have of about made to in technology Allison, tools Kenny both see is top railroads So, allows railroad. on us that highlighted on on execute that. all What that technology our

of implementation but CATX more When This service. fluidity, it mechanical reinvent only system what if think the [ph] not Dispatch with upgrade the at about, at Harriman I for customer department So example, engineering Center. driving departments time look to initiatives to doing to see the our our almost in you drives beyond. are our and improved a of or technology do manner, number that way relate occupy XXXX they in continue work their are it’s work, that to the whether more and that whether and less you’ll a do are it’s that there drives countless efficient

Allison Poliniak

Great. you. Thank

Operator

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

Cherilyn Radbourne

where but and export now where franchise, normal a you I much for do outlook bit on hoping very the little inventory expand on my of morning. been questions good that your farm Thanks have including stand? asked, stand think could grain was Most relative you and to flows

Kenny Rocker

those good Cherilyn. Now, questions, are I couple that. a appreciate

and of the innings near-term this that, in you up. looks Jennifer right that like and so quarter, the now early and but will kind early innings grain You still it’s in is tell it what hold know I for we’re mentioned pretty

And to so see. we’ll have

to get I’ll of the customers you, We’re very comps that. a year, tougher. half the the closely tell with working in get lot back on our though, forecasts

be However, that very XXXX. still strong will a

in So that you want perspective. to keep

quite I inventory. bit think of is year-over-year. inventory grain last We around the grain the feel there’s of We’ve decrease saw about the back that still -- a there. about fact question part your good just out XX%

feel good about We’re pretty expecting that, we crop. that strong With demand being sustained. a

our will get. that team will can we then deliver team So, many and Eric, engage to maximize as as commercial and shuttles his

Lance Fritz

partly bean China Phase a X the would is U.S.-China largely China’s China. domestic driven reflecting -- I herd current reflecting from demand recovered Cherilyn, hog by entry trade basically back partly being large U.S. market, export add, perspective being And and deal, the into in

is what going grain. the happens does in kind of China the in of year half through what of predicate So year export to terms second really the

Kenny Rocker

dynamic. That’s right you on that Lance. mean, I got

-- down us we Some whether can. talked executing talk and grain there’s if of you, we Brazil our about demand. focused can there that might out the export a drought But getting can business of country impact I to about as much as the we’re customers have not and tell on or

Cherilyn Radbourne

time. the for you Thank Great.

Operator

Our with comes the Brian of line proceed with question. next Please JPMorgan. from Ossenbeck your question

Brian Ossenbeck

morning. Good you. Thank Hey.

mix. service opportunities related conversion just the how it a as more that about share the point, you kind guess talked quantify commodity about of the and they, can if one Lance, there then is to in context opportunities, do is you mix we’ve press Appreciate where you would to be bit think market. service on around what coming I is you some freight So like, in from better typically the infrastructure, do when margin sounds targeting more taking type? or of about that the density transportation neutral you around team. can accretive, But better coal some And technology do actually reconcile we some and appreciated. growth, and we do to a context want the on two are is need think that more the the seen something Analyst this like get release negative provide you you a a I Day question in putting May? pricing? or play and of the you And sales but what focus of of ask to past system could are get we then see versus So with the comments a of biggest that,

Lance Fritz

that so I’ll to and Brian, me Okay. unpack try that do let holistically. try to

what to freight and around you’ve around some And being question us confidence. market questions win asked of implications the the takes that mean? gives it and mix share our of So what does growing the what and

where So see train of converting trying penetrating and when are on and highway. of on they we also new our and overall we customers, product -- should dynamic share broad, freight to talk that foremost, they both freight. service don’t and that under about have of train up to and that penetrated the growing why cost trucks from our commodities be the first that for because and we looking should because deliberately we’re about focused, Inside market, are we markets of us And unpack greater are can used share to opening us, structure. anymore to our ship do we’re what

the there broad deliberately markets target we’re So, because deliberately are broad.

also product help most their in their In terms customers our for ESG us meet excellent footprint. to shareholders commitments an what to service perspective and their of customers to and and it consistency. stakeholders it of Many component There’s that’s reliability some look of of there. takes, takes them a terms and carbon safety an

having and understanding to to you’ve grow, right looking deeply deeply, a to us commercial the of we’ve right, got understand So the there’s even go Kenny’s like intermodal win. of that it product also that is that think, us down. intermodal enough else It that’s commercial sauce of And designed deep our And what as That’s, is, equal marketplace team. a partly team have many our the service then the that. product, through tends of do maybe secret knowledge everything needs markets means that products takes and we it’s going to lot customers. I the to largely looks mix that got into forward, it takes

time our said very, over that, we’re our we’re also And not becoming that having in on and productivity. intermodal stop confident Now to growth going also profitable more very is product through to initiative. ability leverage

continue what to So better confidence to our all coming is, it says bottomline been being never that. really today. we’re of generation and able together you to put three has future margin going use stool do out legs make that all to higher XXXX than the of And

Brian Ossenbeck

it. Appreciate Got Lance. it. you, Thank

Operator

next Stifel. Ross the from David Please with proceed line question. The with your is of question

David Ross

in Mexico better the should a versus growth Mexico business, wanted Yes. everyone. on the the on Commentary be be in it to or it just Good expecting I worse, morning, little business you’re but touch should the for XXXX same? bit. U.S.

Kenny Rocker

Yeah.

up. thanks for that bringing So

the Mexico tied percentage and got significant network by comeback, seeing First that to been of us. encouraging is we’ve business, which we’ve automotive that fact all, to we’re that, that a the of encouraged

Energy pipeline areas also some Reform, We’re Mexico seeing growth combat the for for like the us. area or

go we’ve we an that wins as the of that some at Mexico look to comments after that business area the and I we pieces of the that were over where Lance’s truck before. have around road haven’t to grow really won As had, business,

untap of So the about same to is penetrated, we some we chain markets. time, look walk automotive partners whole, that once so we’ve encouraged with under to supply you a Mexico thought are you as and and of do what if see Mexico. at it working At customers out can those still been network

encouraged So Mexico both has and we’re pretty for what it and long-term. XXXX about

David Ross

Got you.

Lance Fritz

Thank you, David.

Operator

with question your Please from Walter Our of with question. the Spracklin proceed line next is RBC.

Walter Spracklin

Yeah. Thanks very much, Operator.

another as railroads down your are they’re accommodate the other what want unconventional but of a view issues to rail to related you bit that therefore or So PSR around very thoughts tempted angle what on that does down significant is, the growth are take question. order growth share strongly, they’ve the converted to identified When -- appreciated up grow? there going My rather we service you improvement address have the acquiring need capacity non-PSR -- growth some So kind the a not to well? toward pure Are go around to grow of or more cautious railroads very organization cautious and little are. you you’ve noted, railroads as in to especially led opportunities, ability other other to question PSR, when growth capacity the against any that’s that growth, I obviously, is market? to question, your paths very, of railroad, if be to your those that other routes, that seen

Eric Gehringer

you that Yeah. add Jennifer Walter, comments. me the and to to very much at a maybe take let wants Thank question. for stab my

to look think need good we to to just -- regionalized see I if capacity to So network. forward, even capacity add don’t got that to absent cause our product our whatever growth growth, around growth is. I And as when about and using the and we’ve we grow? occurring, I in to us think surprise some react see some I I the don’t surprising a service candidly, very We’ve I got strong alarm. ability would response, us it’s

really occurring, our on network our it’s where what I seeing growth about happening, think it’s know mechanisms going processes, as the good is we’re I being think for footing. deliberate after. very

in -- the what that’s So a capacity is needed perspective.

elements of grow. ways growth terms are it Unpacking question about when we three In the what think of comes thinking part of your to about you to non-traditional?

it that’s fit incremental to to The margins way most a it’s that first and profitable great favored are network. carloads put and grow Clearly, capacity step one uses got that’s available. the network is because the on the

us customers, more grow more way working opportunity it is to logistics. our that’s because function to always and us. perform in an helps their And with we’re Another make stickier that, for them on supply for also customers do chains for

increasing think destroy from solving geographical value when addressable are We’re about the perspective providing their footprint. problems we way merger that lot We’ve their been that of that one to in pretty greater for the is clear the regulation for a third Then there’s that us. them and process in opportunity problems, process. class a whatever we growth value that to about think

the estate one use earlier look And only parts. to incremental we our loads that’s increase just they our do transit incremental can logistics way far, our not out. of through, so maybe real increase don’t But reach do how economics the like or through geographic it to the footprint. questions, pencil We

yeah, about So, probably I it three we’ll the think when detail and get on action three, them Investor into all all that Walter, against more to have thinking a Day. we’re bit comes

Jennifer Hamann

of of us that’s great a quickly And ahead we leverage mean, is next grow what I and see on Yeah. less I is you’re opportunity put the the on bow in over kind intensive think of just what the time. a to capital deploying about we track deploying to storage see it. that’s great think, manner period as great touching ability you freight a assets cars, When need those to that Walter, extent those and the the us we deploy, new all be the locomotive can if the assets to, capacity, redeploy mean, will those I future that where start we terminals to we are we assets. for

the of and value real that the ahead I think we that’s leverage have us.

Walter Spracklin

of the Appreciate a time. Makes lot sense.

Operator

you. Thank

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

Jordan Alliger

question you’re saying on revenue morning. heard fourth the just carload quarter. yield, Good Yeah. quarter about Hi. the A and per I first what

Just in second industrials where wondering of of quarter? could versus Can part becomes is, of quarter magnitude? fourth terms I period it be mix second context and you of a sort standpoint, sort XXXX? talking did minus Are a the order to that in the sort same in And of set when it positive, better of from that? of likely the third inflect the in the Could quarter the you X% context most look headwind. that put a get there tailwind we

Jennifer Hamann

Yeah. Jordan, right. I think, you’re thinking of it

you much pretty a single-digit quarter, think as continue us looking the first fuel call in strong volume it for a low or say fuel. a to about that revenue heard have to now of if unit But first just XXXX. going revenue on $XX we’re growth headwind paying per flat so are we’re standpoint. or Right So at we the we in did we a quarter through gallon arc,

to $XX the year. close paid in quarter of think a we first last I

unit, fuel going there be the that revenue of just driver all is surcharge mix. that see you revenue So a in terms then per to obviously the and

With to average the headwind. type down, industrial creates business of be highest car so unit that loadings car a continuing and that’s our per revenue

feel the We’re that. good and grain on bullish about

there as Difficulty]. can. of possibly So, to is we’ll to we as going that much move look But be [Technical

second talk Kenny talks the we think opportunities. quarters, half the an have third to and as improving about I price also second you environment.

that that have be industrial news well. on get year-over-year and to side, if You’re some then change an relative going to growth could great as fuel abate can the headwind we

Jordan Alliger

stuff quickly chance the better guess negative. a too on been Just mixed in on up direction intermodal, follow for positive upcoming Is a a running has bit the to move to there does on going arc Thanks. have there quarters? pricing I which that in that is,

Jennifer Hamann

Yeah. know, there’s I mean, mix again, as mix. within you

obviously within is group, premium is differences see those year-over-year there. growing. And and there there down intermodal domestic, intermodal, and and automotive international So when big then both volumes a of part that have and in as that, you you part overall, are of automotive

Eric Gehringer

Yeah.

Jordan Alliger

Thank you.

Operator

Thank you.

David final this Our question. Bernstein. morning question proceed with is coming Please the of your Vernon from with line

David Vernon

trip intermodal, Lance, of morning. of when the growth, Good metrics this the XX% at and manifest. XX% topic for on And is catalyzing plan look Hey. performance kind like compliance I page for specifically

primary take trip one share more of And drive plan one your you How in on you be towards the think up, levers are competitor customers? paths easiest looking metrics satisfied those can how you to West? the the compliance those the does have then do to to with would share what with I’m existing I some of I because today. improve guess that for would that your to I compare metrics. -- be maximizing think would with easier could perspective

Lance Fritz

question, a David. That’s great

with we KPIs. satisfied So not are our

made there, customers. terms us and way resources and in good and we’ve marketplace progress that some the ballpark and and are and able in manifest to upside balancing into with win also it position said can compliance that’s be we spot, to we and think But the we consistent compete pleased We’re it’s product plan plan get they sweet the think and that XX% the for actually have XXX% reasonable get intermodal even or the service the for there’s we XX%s sit business. not In outcome. intermodal of into have environment, whether low think, manifest the or Having railroad product high measure out that supports the that, and and That’s and can of that is XX%s XX%s is it an fulfilling the trip reliable improvement. said autos. autos there, a we do we needs if our low sit likely that’s What optimal. and trip have a compliance,

an What against And to set a to upside wouldn’t and bit Xx So of Xx of we’re does delivery and there primary a set lot got underway with competition that with compete our it on effectively. on effectively hang truck. able some and already work to there, being really my to effectively generate to compete we’ve rail compete that’s going hat us up continues growth. I is David. is Xx

David Vernon

client’s is there this that and would tension a little But trip And like of number between I any sort bit of there. is I might tension guess, operationally, think a plan I train be mean, there lines, where on to where some growth not situation Is and that maximizing table. or now we think the that we maybe to the way are right the is efficiency it? or it way we’re about leaving think about

Lance Fritz

David. -- that’s about way right I wouldn’t to think don’t I No. the think it,

our favorably in and all, you’re right the moved both virtually XXXX, service Although efficiency of the all I we comparison to in productivity and that, KPIs operating critical XXXX think have measures measures.

label false making right? demonstrated place direction. they can I Because move we same on in we are, get It’s those product. about can we’re think false right, we’ve both network think our don’t right, because I the the trade-offs efficiency So network, the not trade-off both. if about can layup. we into do between think productivity a them work service them where our and hard That’s easy, if a and we not we

David Vernon

right. All

Operator

Thank this the of question-and-answer time, we’ve reached our you. At end session.

comments. for to back floor any Mr. closing the Lance hand I’ll Fritz, Now

Lance Fritz

talking then, Thank to and Thank look all all and your XXXX wish questions. April, good in quarter We thank safety, results. Rob, of you. our and Until with forward please first you, for you health we when you again I discuss you care. take

Operator

conference. This today’s concludes

disconnect for your your time. participation. you may You lines this Thank

Union Pacific (UNP) 21 Jan 212020 Q4 Earnings call transcript