Norfolk Southern (NSC) 24 Jan 192018 Q4 Earnings call transcript

Company Profile

Participants

Clay Moore	Director of IR
Jim Squires	Chairman, President and CEO
Alan Shaw	Chief Marketing Officer
Mike Wheeler	Chief Operating Officer
Cindy Earhart	Chief Financial Officer
Allison Landry	Credit Suisse
Chris Wetherbee	Citi
Justin Long	Stephens
Amit Mehrotra	Deutsche Bank
Tom Wadewitz	UBS
Ravi Shanker	Morgan Stanley
Matt Reustle	Goldman Sachs
Brandon Oglenski	Barclays
Walter Spracklin	RBC Capital Markets
Adam Kramer	Cowen and Company
Brian Ossenbeck	JP Morgan
Bascome Majors	Susquehanna
Ken Hoexter	Merrill Lynch
Scott Group	Wolfe Research
David Vernon	Bernstein

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, greetings and welcome to the Norfolk Southern Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. It is now my pleasure to introduce your host Clay Moore, Director of Investor Relations. Thank you.

You may begin.

Clay Moore

good and Adam, you, afternoon. Thank

and differ please Before annual we risks and during results. may call quarterly slides website that with for make of Investors are on our we and refer risks the norfolksouthern.com filed view in as Section. certain discussion of our a and to presenters reports begin, we may full most subject at the the those forward-looking today's SEC are uncertainties important. The actual note statements to from materially uncertainties Please available which

Additionally, after a transcript and call. downloads will be the posted

For and exclude comparative is fourth the XXXX website. be adjusted comparisons full tax Please to and to deferred results our of of year due are to which taxes to XXXX purposes reconciliation, the results. our non-GAAP re-measurement the also XXXX adjusted XXXX have refer on in been available enactment quarter reform

introduce and my President Norfolk pleasure Chairman, it Now, to is Southern's Squires. Jim CEO,

Jim Squires

and Southern's everyone to afternoon Norfolk XXXX fourth earnings welcome Good call. quarter

Joining XX% the The up XX.X. was increase. an over from increase for In XX% results are the all-time EPS prior and full Financial X financial the Chief Slide Chief an year Wheeler, quarter Cindy XXX, the was operations ratio and to we Earhart, a Marketing million, Operating year. Officer. Chief me results. Officer, prior year Alan Income of the quarterly fourth again delivered income XXXX, XX% Officer, quarter, highlights was once strong billion, today and compared for the X.X Mike XXX Shaw, record. was operating Net quarter and

operating X XX% record from was of of increased XX.X a and improvement. billion achieved earnings to for XXXX. OR to per full year, nearly record was Net full the income year increase from year of company increased The we XX% XXX. third operations XX% our and our ratio share X.X consecutive income an For billion, totaling

we increased Directors XXXX, dividends X.X to earnings by the of and X%. dividend billion buybacks lowering quarterly OR to returned addition shareholder yesterday more through the boosting in Board In and our another share than and

are new we At greater discuss detail ahead, financial with our on our will over operational Norfolk initiatives to all even Looking of Southern and value. February and shareholder we to XXth, Investor go in which targets will the heights. determined we Day, take drive

Now to call financial cover Mike the fourth will will results, Cindy trends operational and provide details turn Alan. further now performance, on our over I'll in revenue, Alan go cover the will to quarter over results.

Alan Shaw

everyone. Thank you, Jim, good afternoon to and

revenue all X%, the of see improved business Slide can three Each per revenue drove you both X, reflecting delivered fourth-quarter fourth and six on a revenue posted units in Southern X%. fuel Merchandise in surcharge business quarter gain strength As unit quarter increase the unit year-over-year a pricing on revenue, volume. years. higher fourth were over that record revenue highest Norfolk increases generating X%, grew flat pricing as of

and chemicals gains carload As agriculture automotive in offset by and in metals construction. weakness were and

franchise once resulted revenue a intermodal delivered revenue results unit. Our with again success of for pricing the fuel combined in in Norfolk improvement, volume record quarter. higher record-breaking and merchandised per prices, Southern pursuit

pricing a revenue Our consumer record spending, revenue. fuel strength of with all-time surcharge reached sector outstanding reflecting in the intermodal combined three of increased generated intermodal in combination consecutive improved quarters trucking and and high high volume. has franchise, quarter, the tightness levels of Intermodal an volume,

prices limited X% Volume volume while in quarter, unit franchise in corresponding revenue of a result fourth to X% surcharge high by benefited increased from a as the winter gains in availability. natural revenue. per in increased fuel with X% was export increased utility our Moving revenue demand coal, pricing increase coal as gas

and growth, merchandise while volume pricing handling units, business the improvements. XXXX, in Slide NS top In delivered initiatives growth in revenue growth X. X% including Norfolk through XXXX, in three achieved both on revenue combination in all record growth of improving X% and revenue while of on efficiency XXXX, to intermodal, margins record volumes. Southern a business Moving revenue our

was with strength year, Throughout industry high year-over-year years, in and highest in capacity growth truck which the in Our all the seven units. rates, strong pricing supported constraints, experienced trucking business the intermodal.

U.S. and results providing spending Norfolk and top with that revenue merchandise strong gains momentum the sector, that increased favorable over in turn excited growth. X% production for demand In coals drive crude led consumer coal operations. both sharing Investor respectively. XXXX, and I'm addition, to you In price our growth. Overall, Day, XXXX. update industrial forward on Southern Norfolk fuel to plans and differentials leveraged improved in upcoming look oil, now increased about I'll it margins line we for conditions to outlook and close delivered an Southern in for energy Mike to export and to and XXXX, in building on our

Mike Wheeler

and I railroad. you will the Alan. XXXX state operating Today, record miles, record Thank was we of record a gross update ratio. which in achieved year ton a you, volume, on handled

execution X, the Moving pleased quarter our accelerated we improvements further the of we quarter railroad of to drove the at network the first and velocity our fourth in metrics are that end on Slide operations traction, base, the energy full center, Sheeting of our crude of the the intense XXXX. by Clean This network has healthier further gaining and by and field. been T&E achieved implementation

from year foundation will position hear laying into day for operating the plan of as about that you and more changes go a month. in investor are strength we good are a operating our our next We

prior continuing stored for areas. by Slide GTMs This locomotive is looking our strategy our XXXX XX, productivity improvements XXX metrics. in with in leased or of ongoing Fuel our full the of the driven results annual productivity the our and In combined been performance Record We of closing, resulted our locomotive efficiency consecutive from improvement for to year XXX quarter record a for tied locomotives. record and XXX was XXXX. in year. key drive record Beating the third which matched Turning all either in have year. these to train locomotives full forward. Both on is in XXXX. are for our we record turned the throughout we some attention set these initiatives have length, quarterly record exceeded previous measures over

are financial and about Cindy it the cover delivering to We now and continue we turn expect excited momentum I we improve to are XXXX performance will will over in who our achievements. our in operations to beyond.

Cindy Earhart

as We Mike. compared earlier the quarter Slide are mentioned on finished results. Thank afternoon quarter summarize to you, XXXX Good record start fourth Clay adjusted which year with results with another and delivered I'll the financial operating results. strong everybody. XX,

XXXX reporting been reminder, reclassification a have certain postretirement reflect As pension to results recast also the costs. of required and

continued in has quarterly from Alan for fourth when in X% expenses all of our combined higher into record As the strong operating year. revenues discussed, with income the railway slight time increase XX% railway revenue resulted quarter. The billion, last $X.X decrease growth operations in than

an achieved last ratio basis also XXX improving XX.X by points. operating year's our of We

in year’s Let’s inflationary in operating decreased $X on a than changes category total expenses million in properties at the XXX Gains sale and component million XX%. take were detail a look offset more last of lower or material operating another Slide entire expenses In in than increases. expenses. operating The the volume-related XX. more

Property This of to in you expenses, higher longer line X XXXX. that million of than in also no compared berries do to sale in gains included partially approximately the item operating strategy ongoing properties, casualty by quarter quarter XX as associated monetize our XXXX. included recall fluctuate highlight offset a large category. to this will income favorability were The the in quarter rental are $XXX of this expense million from on sales quarter fourth property, operations. which The million operating quarter. this of sales higher fourth needed in quarter This assets XX now million which is included was with our

with second related of that accruals. for year. of was by our to of We occurred increase million to relocation which in of expenses change this timing largest related union the solely Compensation expense due and is primarily this driver increases rates these dispatched also compensation was in in December. negotiated by unfavorable XX $XX benefits million million completed $XX pay the rate X%. quarter employees the The associated rose to half or incurred our Incentive

expense incentive year in services to is the of compared $XX added Consistent also increased this the recruits $X even locomotive rents primarily prior the approximately or cost compared and and our million and results. is health million. engineering higher Overtime about cost X% activities. This resulted higher to equipment with Purchase quarters, to as reflecting related additional rent $X The As million in slower quarter. for $XX welfare transportation and XXXX. prior amount compensation savings short-term additional of expenses attributable velocity resources. rates year related increase remaining of experience technology earned costs million increase, with network in to our and was volume increase and associated higher

the metric a we added in As XX million. expected million. X% which Mike by prices rose Fuel results. by over equipment Slide fuel due $XX constant. and rents fourth up mentioned to Consumption to quarter, year was prior held million sequentially last XX summary $XX the our drop shows efficiency of our we higher we quarter mentioned fourth it and did quarter primarily as

XX to our XX% negative fully other in decline the up you last dividends both of in generating billion, the year year. on XXX market shareholders of returned free shares experienced quarter was full year results income operating was quarter. over was from see, to operations operations Full adjusted cash year's improvement of XX.X operations of As share spending compared tax due Slide benefiting earnings a was are railway our XXXX. We a can to railway flow Diluted corporate and year life results, full reflects We this as of than X.X through income ratio year-over-year XXXX. improvement for Net enactment $X full record in due compared company of $X.X Cash and was investments owned year totaled XX% repurchases. our million capital XX% Slide rate and the earned than $XXX record alone. offset from full reform. set over last income year's insurance to Income by $X.XX, tax The shown billion performance a XX% X.X a records ratios. cash XX. basis flow. on from billion effective higher covering per fourth from quarter points a lower and last results to returns the with year improvement operations more billion

accelerated share repurchase X.X open ongoing and completed Our our the purchases. program was market announced continued previously quarter, we billion during

the shareholder value. confidence create and drive in share as underscore Our repurchases continue growth business to our we

quarterly dividend our to directors $X.XX reflecting shareholders past As in marks Jim approved previous returning the dividend. increase our per of dividend our share, noted, to over capital increase over board quarter's increase committed to in X% the and third an an This year. the remain

deliver financial we Jim. to and future. to momentum continue excited Thanks to about the the call I'll turn drive results value and are the into We ongoing back improving your attention shareholder for have

Jim Squires

Cindy. quest at of we ago. just Thanks we and our Three ratio basis be shareholders these and been and into to strategic top Day increased will next three progress. over quarter through to for from operations will the Q&A. productivity improvement. metrics line successes, you, value did operating Today, years ago, initiatives and future, will dedication Thank Southern. results. compared short, we overhauling XX% been to years us our have EPS that. Building our shareholder We you our lowered you financial XX% the bottom we income the focus our our will in open discuss our Investor and improved At bottom aimed new delivering that we a operating our announced points, assess propel value. to XXX employees, to the our by your and the attention, plan growth, work Thank the hard on Norfolk month, have for we now reimagining XXXX targets, will for use In line fourth

Operator

Our of our from conducting question-and-answer line Allison and the first you. [Operator will from Landry Instructions] Suisse. gentlemen, Ladies session. we be question Thank Credit comes now

Your line now is live.

Allison Landry

other if to material in I think begin in such you for broadly and wondering additional realized to start when but and the more can you that to to lot of share need fluidity you could will a re-crews a costs? network plan way that the speak detail improve you eliminate couple locomotives weeks, added

Jim Squires

Allison. afternoon. Good

with and miles. measures was We in record and volume quarter, locomotives of and XXXX, In to first handled December example. quarter. which a do couple for introducing achieved I locomotives continuing to service some We XXXX, out investor We for pointed of returned in will to I trend emphasize quarter, of mentioned, a about size than our that the will targets, be and while we XXX productivity into are we and on Mike over to gross of things velocity records record and at details as go his key monthly the annual initiatives was XXX in in XXXX gauge in network latter drive the financial we portion new with ton focus locomotives also keep your about want progress. not stored that only going to efficiency the that highest fourth day, part and a leased try new lot course we the Today, but And operating our the that will remarks. XXXX. we more posted metrics prepared results. the more financial velocity improve fourth

is, head our a the as position we new plan traction We've our lot platform. operations momentum new operating strength center, point through network we're full a XXXX of gained and of operating and period. So have in the implement we early implementation as Clean of from into Sheeting we

Allison Landry

sequential maybe in went side, lower if domestic question rates? talked because the capacity the QX to for tight parse know could the growth even further, there you I about change of a spot quarter, has relative or you maybe truck little versus a in any And you intermodal? been international And but back out capacity, on loosing or domestic

Alan Shaw

Good Allison. afternoon,

international volumes we their encouraged quarter some we’re far X%. so and up our was And also and Our yes, and volume up we've and know the market. seeing from we’re to channel truck through season, both loosing price are and volumes outlook X%, with fourth still bid the domestic and XXXX. respect partners we're from tight by seen were the I what move as in encouraged hearing what we by market

Operator

from Our Citi. line comes question next Wetherbee from Chris of the

You are now live.

Chris Wetherbee

viewing degree Wanted going understood in are to make lost when gains to includes of and sure the I some just ratio there and to XXXX guys gains operating transactions portfolio. you is the XX.X% performance to a hopefully sort you be obviously how the make

of rate future So I we think I extra of adjusted think gains? get I think of of about which to just off want Do a sort how Or that’s something that, get a builds? a you want get sense. do the just to is sort those sense good XX.X the maybe process? maybe guys about you

Jim Squires

us the XXXX, XX.X with started XXXX operating on might by me the we address Cindy we how the ago Let for operating about to for of three that our XXXX. forward. generally in how think XX operating out we ratio ratio years are ratio let annual want We going and sub then here comment with goal view and XX.X

way. along other represents progress that we So plan prior excellent many the our improvements made and under financial strategic

with that pleased are recognize a results have value to say much performance we financial Investor more point. and Day. we have on and that to at shareholder to about are the future we We that our drive lot this lot, continuing do we So, intent in and more up to

Cindy Earhart

the fourth is Yes, gains mentioned XXXX. in which quarter XX of this did comments operating million quarter Chris, million compared this $XXX I mean, property to I my in of high, worth have of we

I assets It's going in come and difficult very, try We property we may predict look we you know to we to we're quarter as pretty continue continue operating are that help sales the the be unusual, got going as at but can. very what to to able them. certainly from to ratio. to it's fourth to a are to think these in. continue around sale the very that’s in quarter to And Atlanta going property large gain monetize

Although, continue improved ratio going benefits revenue come we ratio that that. from that are The to and on forward I'll and what's the will to our do say to productivity going long-term. in push drive that’s continue going really operating to operating

Chris Wetherbee

get Alan, trying today. And early seeing know from current gears I switch you sense, of side focused market if on just thoughts on just sort in the period, I in onto inventory in are just the coal to a but it the a then comment you maybe, keep the then context relatively what to again what see an some will utility on side 'XX Maybe maybe export side of perspective the helpful? and be could

Alan Shaw

absolutely. Yes,

south point this customers is seeing coproducing side is coal that are have in and limiting utilities piles both the days stock some utility franchise factor the front, particularly and the utility over the are clear availability, our export kind for of the XX north past of that the it's now coal volumes availability. the thermal And On in year. screaming bulk pretty by that’s right the on and at of we coal and declined

Operator

the comes question Long from from next of Our Stephens. line Justin

now are live. You

Justin Long

wanted incremental ask I was what sale out. it quarter impact last margin, to and if that quarter back we on at this gains the look about and

I more think we And the expect initiatives of I going which below what place. you to from expect you incremental normalized us especially the of of get give to you come you what think margin number? in margins, forward? some low some is incremental the productivity a sense view rails have with as Could a lot XXs

Jim Squires

my Sure, Cindy invite and me to address again, that let to add generally I'll comments. then

the three lower bottom think impact initiatives Price think, new of we in key be plans. part. three on those our a a margin all productivity, margin volume the about output significant -- the line cost and incremental objective components, areas will in I being marginal of as incremental of the strategic you and reflection additional undertaken pricing of

be plan. a critical the incremental of certainly the margin that part important big of the recognizing will important So

Cindy Earhart

I say we would business we said did in in past about think past have. talked have the this going the vary that, incentive quarter-to-quarter. to from just the of on based particularly cost incremental the in comp margin that XX% around and in We is benefits kind Justin, results comp increased I we it's quarter

So I I sort mean think way about a of it. that’s think we

Justin Long

variety know the get of like going high for just I a class the I I middle specific as level. said, targets want to second to is of curious maybe why know that OR at to the Day. I get we’re details industry Is are in worst my of Just there from they Investor performance at any here about from industry? industry the be near to it thinking relates to pack? can’t we of you But And top the Norfolk OR the the about what heard from today picture, the more rest how or a the question, other bigger lead OR the in going the to that the details just least rails that's performance, the financial now something you're progress but relative reason the fact.

Jim Squires

to certainly so, is ratio, do what value of and front understand and need that shareholder create and we operating we importance will we the the think about We adjustment center future. as

continue So, ratio. on operating push we’re going to to

get well operating will key and metrics. We other as income financial there, as

of growth get will and a through We combination efficiency.

Operator

line comes question of next Bank. from Deutsche the Amit from Mehrotra Our

now live. You are

Amit Mehrotra

the that’s was XX.X%, was take we year-over-year gain but which environment comment core incorrectly, context best XXX something that in pricing unless quarter, made. seven calculated is nearly in out million operating that more an improvement think impressive in like earlier of ratio If not the a the I years, non-cash I the

your a I a bit there may to out you out this guess, issues, from address from and cost of side maybe has profitability the that little of in to is side much you the that so of fact still make context that I cost guess and So, pricing? allowing answer is and that significant position away a not proper obviously drive type you maybe be can position in share have CSX what a shift. in better in volume market also the progress either the are And of or peers, far taken

Jim Squires

the XXX I our improvement ratio and strategic under basis points operating earnings plan. you generated. operating by significant think strong and We've very operating well. back, produced on accompanied been step we shareholder We've progress improvement, have that’s returns if cash that over taken as that growth made we have all ratio

have We and repurchase. company dividends returned it form shareholders of have the reinvested in in our to we share and

three a So, performance for it’s been last years. the strong

in Now, recognized room we we've that's the that objective to increase value shareholder plan. and have more obviously new our

push shareholder I years. will ratio value to staffs generate So, going in we’re the all we out coming continue operating and to pull the is mentioned, as center and front to

Amit Mehrotra

cash one the if Just balance sheet, side. on on follow-up I flow the could really

has ability there, down rail every any down I and brought that. of in towards CapEx now look to been CapEx Just that of sales at of bring number are is still think CapEx. you guys there know to mean, just part CapEx. really up leverage the level their much of this in of their UMP evaluation? guys as You levels Is kind I the is terms XX.X% update industry higher their or you CSX rest thought where

Jim Squires

range, of spend XX% The been forward depended has will return solid it view, CapEx obviously be XX% capital that’s In on the our generate. what that revenue level of a can to the the we years, have the Again to. doing we can likely several that capital that believe depending excellent level of returns. last and shareholder for on returns, generate spending will we been we going continue

Amit Mehrotra

to the several So, be going years XX% in updated to for XX% is that next February?

Jim Squires

capital talk that believe are said will sure, zone for Investor because about XX% XX% can previously drive shareholder returns but Day it we Look, to trying to an we spending at is that we more we drive. for the that appropriate

Operator

Tom of from line the UBS. from Wadewitz comes question next Our

now You live. are

Tom Wadewitz

get about on I wanted -- Clean you talked Sheeting. the thoughts to

of metrics. and some some some that identified productivity metrics of the in of that saw the You've from benefits terms

guess in us wondering, that if on I you're of a focused where give local you at the could process, I sense that Just yards. know

you talk more you local about at some February, on the will in maybe where to the thoughts in just sure yards I'm are work there lot on is but that Sheeting to go process? in Clean that the So a

Jim Squires

more will a in me Okay turn over talk we're thoughts lot Mike some right about it but for to and doing that let on now. we what a few weeks,

Mike Wheeler

the so be is going crossed is of process the summer, initial early completed well. going very Clean Sheeting Yes, essentially it phase to railroad, the and

and why pleased midsummer focusing We new we going done, plan of yards operating idea really But But operating to then. serving well. are get turn out on in the the implementing are our plan way are way to by of we business the then will are new with practices in we top we way any plan on a the we initially see lot Clean operating of now implementing midsummer taking we industrial that's NS we yards really it. engineering to be going works the the are change good see look an I'll the our do that we will and using is hit we tell when in really the going now But to be once business that that you, do it. we future. and rolling Sheeting will But the opportunities be Clean Sheeting done local as

Tom Wadewitz

that order on are supply the tapped in kind new online produce for of Is you or coal? are you coal to then, you bring issues that that to running temporary near-term the have mines just And more issues something Is constraint. broader at of kind export you maybe a is constraint? side, that’s just side coal where existing they out mines? question would Alan, on said a Or and that where mentioned

Alan Shaw

our on something temporary that cycle demand from Tom, question side, that, good clarify thank you that quarter. with for the -- a is our end production very speaking of partners out to feel strong going There we is both there the is me domestically. and overseas constraint first by is and allowing perception like the to off

Tom Wadewitz

see you just could the in growth given constraints. tonnage market not the So, first quarter mine but probably given

Alan Shaw

in limiting the term. be production going to near here a the is Yes, factor

Operator

question next Morgan from Shanker of Our line from the Stanley. comes Ravi

You are now live.

Ravi Shanker

the Just in you on fourth you're did summer? if clarify implemented I quarter you the and that actions result check want have there plan just the started to any on cost now say already Clean Sheeting, be as will just and are if the drags over to of implementing that? certain working

Jim Squires

for some implementing operating have the as for we been making now, that of even XXXX. more Clean changes some in and with we Sheeting fact, we to Clean Sheeting speak in are the railroad, plan XXXX, come much time We in were of

Ravi Shanker

there items Are cost growth to point the as to out pretty any railroad? being would like drag you

Jim Squires

No not velocity high of the of as implementation Clean Sheeting or result a plan.

Ravi Shanker

I And the mean, just given as that follow-up, just environment pricing you mentioned.

of and from ahead that volumes truck? means even going you a Just maybe going strategies your switching broader in of and pricing clarify and pricing push if truck can the just a loss shippers markets forward? gain XXXX broader loosening potential rail slowdown, and macro to you to Are more happy for

Jim Squires

when return price. is shareholder strategy to and Ravi, to a our push drives our this it environment great

there. we’re network, We’re in air the and going season through bid seeing strength model now right continued

a about see the past very to was into confident that to year basically and I’m XXXX for continue So, to we're expecting carry We've the XXXX. and pricing still to XXXX. momentum XXXX over be we up through that price created lining strong talked our that that in and ability we year,

Operator

Sachs. comes from Matt the question Goldman Reustle next line from of Our

live. now are You

Matt Reustle

see tough intermodal and deceleration? anything Is case else the lapping fourth to comps? in quarter. driving did is environment that that’s pricing the there there purely picking a of terms still business, deceleration strong. you up, Back market Is that of like competition in It sounds the volume in truck loosing

Jim Squires

got inner for best we record forward. in point a in the east and go acceleration great at pricing you I back us the intermodal point an record quarter of Matt. to the time We actually will then that the franchise, in real We great fourth was there XXXX to opportunity fourth and the is revenue going quarter, intermodal saw franchise volume quarter for a to And model. a highway your fact convergence

Matt Reustle

like XQ looks on down to a I’m but at fuel bit, understood. Yes, it RPU XQ and looking that came ex basis

Jim Squires

We've talked intermodal Domestic quarter. about X%. grew the in shift, X% grew international intermodal a

had and a confident expect on in that negative mix to that's So, We based season, intermodal quarter quarter very and intermodal. it continue we’re what bid pricing fourth was a so and will. with far seeing great and we’re

Matt Reustle

philosophical more mentioned times. you've a of just looking couple question at XXXX, And back

high You're income up is year It's the the off high-teens. in operating group. of the coming a where peer at end

You've all improvement. shown our

you requires that shift drives plan? progress years? operating the results, whole of it operating you've at new that strategy to a stands need new look a over couple when is So, making XXXX been out disappointing, What past the which was what to versus that

Jim Squires

performance Financial and Network not results were service were have customer in they been XXXX. should what good.

And and of network service efficiency so, to achieve customer levels a as well. push greater it’s performance higher

Of has operating taking at course another that plan. the look us

Operator

Our comes from question the Oglenski from of Barclays. Brandon line next

You are now live.

Brandon Oglenski

the guys for just it now. guess include those back we that get I Jim, I you are the that other organization goals? but and there carriers and of service. the there your achieve want had these a sense chunky. inside pretty urgency trailing peers mean, is too, How an circle is go I OR it rental was says, gains because to can well incentivizing drive I clearly, cosmic guys guess to model organization better that the is operating system

Jim Squires

a based are lot schedule this new is here of there precision adopting of absolutely, railroad. operations about energy Sure, enthusiasm, around and lot on excitement urgency and mode we of a

call to the help about we on that brought people working. that and third into preferences about PSR drive talked us the it's organization have the we quarter So,

thus well. You the in far see of the it the quarter part metrics the as in fourth latter first in surface quarter

deal like feel here it's So, there clearly a hold. plan. of and urgency a momentum, the great We about is there's lot new yes, of taking

talk Investor about will more Day. a that lot We at

Brandon Oglenski

but these of because you get gets I we the up the want save that, very much implementations discussion move a lot key in when and we reduction headcount saw tenant little productivity PSR I to think line, in seen counts is And rapid quarter better. work have for Atlanta, that headcount the bit fourth a employee

drive to and network productivity? context headcount movement heading So, into how labor about ability volume the think incremental in just do 'XX, and the we between of and the the

Jim Squires

Significant of resources in function labor, a be fuel ratio, Productivity is improvement and other better the growth in premised is respect locomotives, which and on combination with business. turn of goal operating efficiency productivity. in a our our will to

our So, get more and foundation that's will a on in is February. the into strategic of those new foundational, plan, lot things we the detail all of that

Operator

question next Our Walter Spracklin RBC comes line of Capital from the from Markets.

are live. You now

Walter Spracklin

little going expect? to came just actually significant I'm bank what gain continued your there Or you what to I'm sub whether predicated Jim by compared over surprised was were. of much few curious Just And operating should anticipated XX next on around had on ratio this of to the -- play? gains years? you how gains, what you some we level your back gains the given gains in that OR the how characterization, level guidance maybe characterization

Jim Squires

be be our there quarter. I'm were for will and Monetizing you gains give operations, value in good difference say will will in and quarter. sure as make the of time a can't all time underutilized company is in drive significant I Walter, from fourth success shareholders in estate And our they not some they part shareholders. to significant estate going results guidance gains, better a time That pricing, and What railroad the occur and to to be be strategy. property growth real so and they real of will the driver that were except will they enough fourth results shareholder as quarters and on will focus be will that the from that will forward. for time,

Walter Spracklin

XX, you So, for to the what compared X share? you're that sub your they sub quarter How did an you for level. assumption have XX to realizing did gains obviously so do compare

Jim Squires

very would that’s want real from no gains part estate longer occur of the time lot saw the strategy we It's time. you of to to book the part when the but plan certainly and difficult more significant gains, We predict of them. will

Walter Spracklin

domestic come volumes quarter done with giving job obviously, the toward course a I move -- would in. going quarter-to-quarter Any Just on sequential uncertain, contextualizing any call, domestic you've of but expectation good call. it's how of a forward your characterizing to utility know, just for kind

Jim Squires

customers more XX have coals. demand strong, We is stockpiles declined, searching are will talk for the about and

quarter. thermal could of pretty coal strong availability a upon be depended So

Operator

Thank you.

line comes from the Seidl and from Jason Our Company. next question Cowen of

live. are You now

Adam Kramer

just guess I questions Jason. couple precision and for Adam Sheeting. is a on Clean This quick railroading schedule

many attack in after guys go fourth terms were relocations Sheeting, you with of process? able Sheeting quarter to how the Clean in Clean First and the

Mike Wheeler

into it fourth Well, the more of up out get the and we summer. in a we results it ramped this plan about do because it it year bit little were we even work to going quarter as up early into done to we ramped are what getting excited

to out Sheeting, So doing and you on make way of from putting the get to embedded we’re moving people Clean just the part Clean pace I to Sheeting what the ahead in that location teams wanted but to field of addition at we location, NS. this we've life into of will tell done there were

practices So railroad. just it while daily at railroad, we’re also Sheeting we’re the while across Clean the the building operating

our early to done, all ready when go operating will So this new with things summer we be plan.

Jason Seidl

And well. follow-up I quick as guess

them drivers the You bit of you're one customer with I PSR. PSR? the your here concerning are with you little and What for the have guys maybe negative? improvements guys kind conversations What What had the to back And you your spin? effects like? been telling those do. was customers on positive forth that cited of about shippers been data on guess either shippers looking or have and service what

Jim Squires

approach. we and consultative a will be to Ours has continue been

as network. we our with our customers working We’re overhaul

we bit Clean Let as about over little through go Sheeting. talk to me to dialog the with Alan turn customers a

Alan Shaw

putting we’re in X% out growth about compete growth and got that that that, their lets opportunities we’re want also to improving Absolutely, can product ours, approach want are XXXX support we succeed a with them aligned X% and they on and very goals been seeing and partners on growth the supply we service chain we’re focused so with their a and They there collaborative. our that of top our see excited in has XXXX XXXX growth highly us customers in

Operator

comes from Morgan. question next Our the line of Brian JP from Ossenbeck

now are You live.

Brian Ossenbeck

that So, get mentioned more Mike, the highest for was in at measured near productivity last quarter, to couple performance level. the you year the car going the in some That and network weeks. crew of back the the strong. I'll metrics few velocity just next call, was But of also and

hoping you where middle of as January? was update in And us through to those fourth give I metrics quarter? did could were the an So they improve the also

Jim Squires

The where quarter saw was I answer continued the of And to our through that is was improve. quarter at main into fourth terminals. cars lines They our terminal really the into getting became get going yes. and quarter fluid third fluid. that's referring We fourth the the then end the to really the

continued first it's even So going excited. those forward of quarter so both and the doing yes, into are well pretty so on

Brian Ossenbeck

demurrage and interaction of plan terms you these the the there more time in some change with these accessorial network in with these around? this at month and trying effect future? think context items some you used obviously, to with the to tariffs next has of utilizing Jim, at networks. to compliance and look the might into response incentivize in regulators service different some at design shipper approach fees, that is going is how PSR been do of the and Appreciate have STB credits But aspects changes the to obviously

Jim Squires

about dialogue me talk that say we our the to in with our regular are Alan including of changes, let specifics regulators, ask I'll but STB. demurrage the

demurrage X letter to Chairman, the keep Alan, continue our in dialogue relationship more responded we our on that some open with assessorial. up about all a to to know, specifics you in programs changes which Class we [indiscernible] that will As regulators. send changes

Alan Shaw

align interest service program we mutual our Brian, and are operating really assessorial the improve our to and our And that. of benefit, is customers' delivering designed complements efforts our to interests with our department our and efficiency.

speed you improvements As dwell metrics, ultimately service. and in said public declining looking is the That’s train our is in customers our are our see has for. improving they're what and Mike seeing can

Operator

next Our line from Bascome question of the comes Majors from Susquehanna.

are You now live.

Bascome Majors

of As the weeks going and other rate gain here, to of but we expense. comp first I results come in the couple about anything quarter in basis part mean and going into think than is there next or when the of realized meet the year the a abnormal guidance we elevated run some seasonal maybe Is forward? incentive about what they fourth look

Jim Squires

Cindy expense Cindy, the flagged in through the out other that the things and fourth that… went in stood particulars lines quarter. things the

Cindy Earhart

rails notice No, some of re-crews still just overtime we the in my with associated and did some I have equipment I that velocity. additional comments. cost say some associated our would you'll about in with talk network and

nothing those, some were So else. of they but

Bascome Majors

next the new in couple for lumpy headquarters cost? needle should with on rent can from it enterprise who economic And packages we that facilities the be with the move decide for capital or or expect over don't move, perspective, course may years, labor anything Just anything additions basis? from people that relocate financially to

Jim Squires

of up the XXXX We and we time. that will will of those in middle expect with XXXX. majority begin in be relocating associated the of year them would over not material costs period the Tallying we the employees to employees moves all in relocate the

folks and very So of will the one be all about quarters purpose good building we think our having excited of the might alignment we’re headquarters closer relocation is that in I that a add head thing.

Operator

you. Thank

Lynch. from comes of line the question next Ken Our from Merrill Hoexter

live. You are now

Ken Hoexter

include the gains get get this included you noted to comp? and real you that there Do comp the that quarter? or incentive to only -- to benefits. you've or salaries other Cindy, gain to target, in estate And your OR are to incentive were boosted year then, any in gains fourth the throughout the

Cindy Earhart

components our incentive In of those and terms income you gain the ratio, on operating know, Ken key two are property, operating of of operating to the comp. sales as as

year not throughout well. property obviously to fourth quarter we have So, We it did this had sales had to the the add obviously and of issues as incentive the improved extent year comp. the and

incentive add So the add, to comp. it does it does

Jim Squires

comparable was roughly mentioned, Cindy to incentive the full XXXX XXXX. as Ken, year compensation for

Ken Hoexter

asked it XX was look I XXX for gains for million. with because I No, CP year if million largest CFX at the

companies included. So your that was both year than one here full bigger quarter those

the you for were is So, -- mentioned they the you've they don’t there were for called the earlier but got us year, there give in think quarters? out. others total what I Can

Cindy Earhart

XX probably were three for million XX total, million quarters. in they Ken, so the to Yes,

Ken Hoexter

guess can out your just that we noted accelerating then KPIs Jim that your and take locomotives I And Mike, presume as talked improves. I you if about. performance you on

you chart was for locomotive tons flat that, plan improve there So to you your had that but gross miles year-over-year.

train that Just step we that back that improvements should forward see how the length Sheeting, going Clean that you we that have wondering given improve about see about as focus you metric? sidings our growing is or think you guess that whether should something on something is it's I think with and improvement?

Jim Squires

Yes, you quarter. look was December a it if you'll really is absolutely and the that it going But one changed of our step function big in there up in fourth at the quarter, now see KPIs forward.

So, of took take the locomotives the locomotives out out year. end the near quarter, into we to even we’ve continue this

two. will were So be part the links, in waiting the absolutely operating see But again plan opportunities we operating advantage take and weight were the all more changes of train not place next are when quarter put train . plan or of holistic it were

Operator

of from next Scott Our question Wolfe line the from Group Research. comes

You now are live.

Scott Group

just on not some maybe increase that you So, in the like in should an accessorial guess in in about since I we you Can much know a be revenue? be So, income let just big couple of us Cindy, us if other will X-K two some guess forward? in we Cindy give things just then how a ever you like put going future I don't other made of expect report on the really revenue guidance would car? thoughts And per revenue, any gains comment give us questions, advance and helpful? can for you

Cindy Earhart

say terms would the for the we annually is perspective, probably that think rate in good rate Scott, XX other that. about million run than run of I that

there right. and that expecting are to revenue it of you car. be are just of in the changes the we that terms don’t I accessorial, part becomes big In know normal

question? answer your that So, does

Scott Group

big they pretty saw we for that than guess did? changes? like I changes they changes be there wouldn’t series, what CFX increase in why your other different made revenue meaningful Yes, Are

Jim Squires

Not our. with

Alan Shaw

and improve network velocity. designed our our to efficiency are changes Scott, our

smooth for us. together can the that’s on them They can overall service of brought this both So, we we're we grow these. customers us, with on because this on in help our to are and counting them the is additional revenue with changers we doing end being help we collaborating and What our front not want smooth are are make can we they for intent.

Scott Group

are seeing And compliance you right away? with it

Alan Shaw

volumes can and talked about see of in December change Mike while storing accelerating you people improvements Yes, locomotives our end were we as are the improving. at is

Mike Wheeler

the it as see noted, Alan this and Scott, want they see want, to engaged customers are process really they and in us this succeed.

Alan Shaw

January gotten both Scott and volume start very we've terms And to service strong off to of in start product. a

Now, volumes our that so the storms we in this our confident the Northeast far for there in out have and velocity very product. our but had the are an product week, impact delivering the we on are and demand

Scott Group

of get we XQ some the going guidance just labor long-term us headcount? give guidance on you for are in can I productivity headcount interim, sort to know

Jim Squires

term weeks, I shorter goals think forward-looking you as thereof. can a the shorter if to Scott, possible. cases be know guidance of we and investor term couple give in as day more give going a components much I term big you of financial to will the and some that’s obviously longer just you for resource hold focus

Scott Group

over to want get month. for targets, to going I'm help next ready know be I year just but of thinking three kind just year five Should us we get prepared? targets, I

Jim Squires

the new plan period, with the plan everything into along period get else. will in February We duration of

Operator

comes question David from Bernstein. of the from Our Vernon next line

now You live. are

David Vernon

about for effect of truck kind kind sort take at inflationary the X can of mid fuel we bit happening of leverage guys truck is business? look increase a that’s numbers intermodal sort into lag coming creep off to that of for expecting the the Should you ratio X per rate, with that in is to up the be up in teens when good without the fuel up your rates. the get XX, kind X bringing revenue unit market? you comes for out a of a Or little Alan, intermodal, thinking pricing

Jim Squires

started year, pricing. there where into getting that was strength is our feedback headed move as as I and and which season pretty throughout intermodal continued David, we the for from partners we're improved said the XXXX. pricing we’re our well has we Bid very good is about channel us

We’re seeing units. business you as of back strength our X% every there go was years to has single one in seven to that. RPU know our It find up

we're So, and strategy approach, our continue confident it very will in our pricing XXXX. into

David Vernon

that -- going happening could to of Is that you is much? those it just levels kind is too approach Or in to think reasonable that saw it truckers? sort that be

Jim Squires

this can exactly going as our margins, hard top and that We’re XX% of to delivered improving XX% and XXXX, on we we in in while it We franchise saw as year. to XXXX revenue intermodal growth do. you that growth what need push is

David Vernon

should just of And line reclassification XX. be Thank you then the rental income Cindy, think some to you that’s helpful. that said inclusive XQ about of year before, net other clarify the because of Is the I’m I the and XX to or just an this to the line? above of trying of a other net on that zero the for year reconcile expecting full like XX

Cindy Earhart

my XX $XX decrease in expect in had year-over-year on the would returns an for company or I million about fourth a insurance. life mentioned we comments quarter, annual have Yes, we is in run the rate.

fourth That fourth quarter. performance you’re in So, It the the very quarter. in just was seeing that’s pretty was unusual. what much tied market

David Vernon

Can royalty to increase how offset number? give coal year sense into just above included other line. other to on then that. you line the us you and got be fourth of assuming that quarter the that the an much Okay I’m in in that moved this for any

Cindy Earhart

significant it's Yes, not

Operator

questions at the Squires would Thank gentlemen, further turn for have like to queue and closing back call in Jim we this you. I no to Ladies time. over comments.

Jim Squires

Thank you.

excited will investor we've look discussing will our and the about deliver our strengthen even initiatives we our value further them prospects our have strategic we day In for you underway February are Thank and forward we of which to are at XXth. what company discuss proud success. shareholders, to We future weeks, a few you. more accomplished with on

Operator

our you, Thank This gentlemen. and today. for ladies teleconference does conclude

wonderful day. and time. your this you You may your now participation a for disconnect have at lines Thank

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.