Norfolk Southern (NSC) 24 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Pete Sharbel	Director, Investor Relations
Jim Squires	Chairman, President and Chief Executive Officer
Alan Shaw	Chief Marketing Officer
Mike Wheeler	Chief Operating Officer
Cindy Earhart	Chief Financial Officer
Allison Landry	Credit Suisse
Jordan Alliger	Goldman Sachs
Brian Ossenbeck	JPMorgan
Scott Group	Wolfe Research
Tom Wadewitz	UBS
Justin Long	Stephens
Amit Mehrotra	Deutsche Bank
Chris Wetherbee	Citigroup
David Vernon	AllianceBernstein
Jason Seidl	Cowen and Company
Walter Spracklin	RBC Capital Markets
Bascome Majors	Susquehanna

Call transcript

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Operator

Greetings and welcome to the Norfolk Southern Corporation Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode and a brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Pete Sharbel, Director of Investor Relations. Thank you, Mr. begin. now may you Sharbel,

Pete Sharbel

Thank you, morning. and good Rob

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

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

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

Jim Squires

call. everyone, Southern's morning Good welcome earnings to and Norfolk XXXX second quarter

are Wheeler, Alan Officer; Earhart, Marketing Cindy and today Chief Officer; Financial Chief Officer. Mike Chief Shaw, me Operating Joining

an and With half in meet commitments second XX we first made track XXXX. XXXX OR at and points of a below XXXX, namely ratio the the shareholders to results are on least XXX the operating by in to basis this year quarter we February,

give coupled very come. performing Sheeting half of numerous uncertainty. this back economic modest is the seeing with flawlessly top stated savings the opportunities financial our confidence cost now are in already transition goals line achieve These the our half second we more we The plan amidst Clean pursuing. TOPXX year and we we railroad Our beyond, aggressively even growth expect will which went us new PSR-based and with benefits in savings the Top'XX are to and to operating well. for exposed

X% billion, was prior last income X%. million, Net X% versus by was increase EPS an second quarter. increase. the Turning to the of The results operating financial improved Income an points XXX and ratio $X.XX, to over basis from year up was $XXX XX.X%. operations year, the $X.X for

by ratio while percentage net operating reduced XX.X%. to First we experienced our XXX EPS income basis double-digit and growth, points half

ahead, to ratio in year-over-year expect points at the half, second leading OR we an the XXXX. basis continued full-year operating Looking than XXX improvement for lower in the least

Mike Before me our few and Cindy, turning and more to outlook. over about words a TOPXX it say Alan, let

of which implemented As X network. operating you the on we new fully phase our on focused plan, first the July know, merchandise

will performance Mike with and train addition for As in metrics XX% traffic to that's best are steady trip Cars-On-Line, earlier metrics, network the and TOPXX plans. and the Despite in changes, reduced circuity in new corresponding dwell of now speeds, customer terminal accomplished reductions crucial highlight through plans new merchandise year merchandise circuity and operating these the service levels. fluidity. auto record network XX% sweeping cars held increased by have

from our we conditions, adverse floodwater Kansas a severed to month. we TOPXX, to As successfully addressed including highlight Missouri implemented which for weather City line River, also that it's important the than more

highlighted Investor Southern Day, transforming I is how and focused our on is our to with will aligned goals during ensure our that As employee culture Norfolk them. every pursue achieving we are

is example culture. of department this perfect engineering Our winning a

didn't they highlighted; a quickly together track, execute plan, us I conditions to miss get our of have the flooding of network This the example our seen again. the They from presented is Since one and just team challenges TOPXX moving customer launching adverse our best service. beat. quality or the in Despite work this performance business. is why on we effects no restore

predictable improved fewer TOPXX times customers trends apparent, with can and velocity of to move more of and reduced as serve circuity benefits The their we majority at the now already assets freight. our are

discuss ahead Sheeting velocity and of reduce us well. has a levels will earlier improvements In employment enabled Clean later. As conjunction to I impact noted, from we from TOPXX Cindy this as are already financial work well favorable pre-implementation with year, plan, seeing which TOPXX

in accelerate, We the and We're rents. will the new started half in related expense on we've confident takes quarter, already second as in that plan. decreases categories hold work of Phase year-over-year TOPXX saw count the second in expense, II plan expense related this equipment and the head with favorable materials comparisons

balance Turning to our outlook for of the XXXX.

modest volume expect We and growth. revenue

will Alan growth our commentary from expected growth is to of lines As come the partners. business Intermodal consistent a resumption with select and from explain, by merchandise of channel

we from Even we plan. the growth, exploit as pursue determined efficiency uncover new to we operating every are

serving for additional As areas. local of among we TOPXX, locomotive a result and and operations yards, cost opportunities other see savings maintenance

rapidly jobs, I is constantly doing and Day, critical, remains mantra. in Investor a Openness committed must as right the leaders, changing shareholder the culture. the belief to its At our company described new things, having keep That right so our value. a reexamine to world in people ideas up to that right new

across into As business. ways broad new spectrum leaders a functions dig of doing deep of established

are costs, operate working us our our people. develop together and improve control assets, our of and All safely to service manage customers, seeking our ways for

transform progress and to excited about we Norfolk continue are Southern the We making. are

With now call turn to over that, I'll the Alan.

Alan Shaw

a has clearly coupled team and worked Throughout the customers second resulted impending we you, freight initiatives, service execute up continued We on by an our X. with collaboration. leveraging constant to partner a these operating second and the the income July as flawless customers Thank approach, of product demonstrated implementation we in good plan In successfully our completed we yield everyone. grow environment. to plan face-to-face revenue implementation. through on execution This and concert and in numerous communication in greater efforts operating drive quarter a strategic daily effective NS with of morning The seamless improvements through of quarter, proven on our Jim, outcome collaboration, This allowed the our TOPXX with margins. the to challenging these improving meetings. our

revenue in growth offset declines our a This Intermodal, delivered of X% of a As quarter were despite volume service volume tenth of decline. Norfolk decreases implementation continued second increase value export of quarterly unit. on Merchandise revenue Volume revenue increase quarter X% slower volume second generating revenue improving per building X% last coal shown steel. year's to on decline. economic revenue the delivered gain, Southern's of consecutive gain in Slide we X% a X, by marks XX%, X%, quarter growth, record a revenue despite to strategy a price the with and for product, a our drove

to down year-over-year. impacts impacted negatively and prices. declined and segment. Revenue Pipeline volumes, steel decrease truck growth in Midwest higher merchandise driven revenue, which continues X% and our pricing capacity, volume in increased flooding and to were lower inventories Steel from X%, improved franchises activity adversely our gains Increased volumes was flooding by NGL volumes. network Midwest due agriculture impacted velocity. tariff primarily Intermodal automotive aggregates

Intermodal Revenue offset pricing mix volume utility export associated Coal a was market. year-over-year domestic declined unit unit pricing in increased our growth X%, flat with as was year-over-year, X% The the in by international by pricing, revenue franchise. with revenue offset volume international reduced was solid market. partially X%. primarily by the with reflecting helped was RPU per in increased strong offset due increase X% product also value negative increased volume. south our per X% our of positive associated the service to mix volume by that volume our decline, by enhanced

quarter, contributes due our prices seaborne the stockpile improved from the in mines to of positive service several the with lower results, in business to our successful units, gain delayed first product and improvement improvements, long-term of against to and a RPU replenishment. comps. three and service foundation This tons Utility continues volume export to resulted weather plan difficult Pricing coal low overall. execution all value growth at RPU and challenges year-over-year, Production produce the X% our success. of highlights volumes

we Slide manufacturers X. indexes expansion still activity a near range. growth dropping, rate is in the The uncertainty a remain than confident continued experienced economy, manufacturing Taking and ISM sector. primarily XXXX. to low, Consumer Unemployment and in we although high. still a what Moving consumer strong. although in Tariff remains confidence remains the lower headwind, is at XX-year an together,

in focus of despite economic in TOPXX with in on of second quarter. that and second rates year-over-year second and growth driver we of the last is modest growth half half the success year, strategy, our diesel increase fourth half impact pricing as market. to the Increased in growth projections lower the our expected on revenue, RPU continued well operating to of seaborne of as largest with is plan pricing the improvement the expect result backdrop, volume, customer in and year, lower of Based the bulk the alignment. difficult a comparisons of this the export RPU This the our

on a volume merchandise, crude U.S. to will service to to to of are our to units. the increase drivers of liquids second markets primary is by will light increase while in anticipated year. normalized negatively demand, support a shipments X% low benefit the expected volumes expect be commodity business prices. half. of projected steel from and tariff will and production, Aggregate highlight shipments I for each automotive levels Coast. disadvantaged we activity expectations the the is East impact improved Based in weak now vehicle throughout oil natural continue gas Pipeline Within spend the of price and differentials sand oil impacts, some demand and forecast of

continued product value on our revenue Our increase flat focus service annual to to the expected is pricing on of volumes.

declines. in forecast XXXX, as year-over-year half slightly the is for both growth offset levels, will growth sustained half spending. half from international Intermodal projected We resulting project finish domestic markets second to and volume above in growth XXXX consumer the first second expected

by the domestic will tempered Although, be market. truck increased in growth capacity

will volume prices are second Utility forecasted seaborne by markets gas prices coking both natural prices at API while coal projected and will and decline to are weather. to in in decline XXXX. levels Our continue coal to RPU. likely impacting half, volumes to comparison remain X impacted the be low

is summary, below RPU to pressured. while coal In expect total XXXX also we volume levels, finish

on set of to success. product service that and leverage the long-term margin opportunities We supported by and stage continue consistent We secure market initiatives values. the focused for product and that the efficient a our remain growth value improvement service

operations. over now turn will update for an I it to Mike on

Mike Wheeler

the will the you, TOPXX and six achieved for improvements the implementation new successful quarter railroad operating our second our plan, first of plan. customers, months the for operating Thank the and continue Alan. drive service second to and you In of a year. on ratios update record state the quarter, our of finalized operating I TOPXX Today, we

We strong for are ability shareholders customers. continue for strong build and support momentum our confident in and to our to on our value deliver

Slide to Moving X.

execution precision is metrics. focus performance of of plan continued principles our on and evidenced Our in the our scheduled railroading

for performance, to quarter. terminal execution by relentless These consistency and achievements best the employees their the the firm operations shipment velocity for plan. on due and were operating dwell, laid foundation record and We relentless TOPXX our want focus Specifically, on car unwavering efficiency. team field quarter our and new for our thank to train service second a any for level are safety, our

to is our metrics with our XX. with that aligned our plan, are upon will to providing us. productivity These a Turning built Slide service on strategic allow service metrics which product grow and customers

Starting bars as XXXX. that is combines which and performance This Delivery a scheduled the blue customer merchandise for our represent consistency, shipments automotive to for general our indexed with goals the which adherence plan the as of before, measures metric XXXX. Service delivery As well respective availability. on-time Index, Intermodal shipments traffic trip is facing

that for flawless to half our we exceed goal implementation first report track are of to pleased and plan. am our to on the performance due TOPXX service XXXX, I

of we are shipments slide, As a delivering previous number to our noted time. customers record the on on

trending goal are to for would the this where we productivity with T&E We year. thought be we ahead

trend TOPXX implement our we the this as plan. continue for year of rest anticipate will We fully the

is for loaded during mentioned new call, backend implemented. goal be this monitoring plan our is on operating goal the will year we and As train as last and working weight TOPXX our this

which already We and associated are merchandise in general seeing headwinds by improvements with volumes. Coal our Intermodal weights, train are offset

are negatively track Locomotive be as exceed meet goals. metric meet are on strong in productivity and Locomotive to the to adjusting well continues actively are T&E for we being gross to by impacted ton we remain our we year. to or ensure But resources productivity as another miles. decline goal tracking NS this for our

Our Cars to to ensure team dynamic will our is consistent positively, is targets we thanks the service hit trending fast as flexible, very and business change. our And and On-Line product. adjust levels

Slide distribution previously, number in the in have part XX. timely This update like noted the equipment which from X,XXX our on by you the our new TOPXX be conditions. match progress dividend market that to storage to approximately includes also this XX,XXX, is of created cars capacity would adjustment to up prior plan the we quarter. on should I of we referred of operating also It

operating Operator, primarily bulk Investor reduce terminals. you plan new has of merchandise As one train general on This may from terminals. major customers focused between A recall our iteration four balanced dependence major business. frequently; our network. Serve and is objectives. and plan automotive on our our Day, TOPXX

plan. and our As we of which before partnership plan model were operating harvest and implementation the from The to the is quarter. our developing These We involved view on communicating already transportation implementation network and the successful was of plan implemented next plan, of throughout network. between marketing iteration we some the edges implemented X, our operating who full a noted, second over involved iterations of optimization the targeted XXX operating the both the planning Jim July in continue around executed who are working plan, on plan. changes implementations newly the plan while the concentrated primarily opportunities

been our better Prior all held to customers As collaborate the the closely promised, Halls plan. the work TOPXX to plan. we Town customers that we to and provided This on the with employee opportunity benefits customer continue of and customers. operating TOPXX across XX have implementation, joint and our one-on-one large with the to network new understand will

yards, a in to baseline July A less on of pillar comparison on would distributed will expanding miles capacity at also utilizing Slide XX. density versus automotive you focusing implemented like X Turning our the the I is the least XX% a that trains. at plan by the regional for yards. at TOPXX plan. give new final to was reduction use plan operating creating hump of TOPXX of drive and merchandise power circuitous key

locals, network a as traffic, with of plan. with the automotive on at least the XX% trip well under new This XX% There in reduction receiving graph and a will and train result undertaking as also in fewer was be significant for This automotive trains XX% a efficient as in on train miles reduction manifest, will merchandise just a starts. more right. shown

further We new near drive improvement in of our are that confident execution will plan the long-term. operating and

I over Cindy, the will turn who financials. it will now to cover

Cindy Earhart

and was in over and results operations second Thank Income by record, year begin from driven X% X% morning. Slide railway our you, $X.X I'll XX. and improvement in on a expense. prior up quarter Mike, with operating the a billion, decrease operating good X% revenues increase

point record was improvement quarter Our year's results. XX.X%, operating second ratio also a on last and a XXX-basis

will over on the financial We of basis and goals at continue our progress prior least strategic full to points plan make that our significant year. expect improve year the operating XXX ratio

Slide changes XX last expenses. total year's operating than In illustrates $XX expenses. million lower the were expenses to operating

in during associated rents price quarter, line rents, the a volumes. network and to in fluidity And full equipment decline and improved due ahead looking the implementation we each the drove function expense. decline As Purchase the fuel our at a of of improved services fuel down, benefits lower July. were lower TOPXX statement recognize the income velocity network in items, early of with

Materials technology other than increases were higher These were offset in planned partially and spending. prior by slightly year. decreases

reduction savings of increased locomotives expenses. Our $XX million drove in a by loss claim associated damage were by expense reductions environmental and of number materials. operational and and million, These in service freight cars-on-line, initiatives offset with the higher resulting costs $XX and driven of

head over the benefits have head to in improvements slightly, for Sheeting every compensation forward decline X,XXX plan count. from up and was a a The see running the count. Clean we benefits first to was from While resulted and pull the continue expense second consistent of in quarter. quarter down compared day reduced headcount Average operational sequentially,

reduce headcount continue to TOPXX of implementation. resources will the a our as as decline we of the year expect result remainder We for

quarter, During the over and of we due million, to lower savings employment $XX levels second had time recruit.

In compensation. had lower we also incentive addition,

absence these tax of savings rates. offset well refund, higher year's were However, largely the wage as to due employment last as

taxes You stock-based on benefited from will from employment a second that recall quarter refund compensation. $XX million XXXX

increased our reflecting up, base. was depreciation Finally, capital

summarized Let's to our Slide on financial XX. move results

recognized million we quarter, $XX monetize. natural certain we impairment seek related second a resource assets loss to During that to

includes non-core execute investors. income returns to higher initiatives, corporate-owned in other insurance. life to all on part was strategic by return included the we on gains ensure that from property non-operating This are assets driving for continue in loss investment and sales and evaluating greatest our offset our We

an due was higher diluted Interest share improvement. up $XX of $X.XX, X%, record. earnings June second was expense was on results. measures Wrapping to these million, Net year. overall million debt up to up balance, debt Both and compared of per our last bottom-line X% quarter income are $XXX

for in first totaled Slide the generating operations billion XX nearly almost flow year. billion, depicts cash from half $X Cash of flow. the our cash free $X

to $X.X over form returned in to shareholders last committed billion capital XX% a year. increase dividends the of of and the are returning repurchases, by as We evidenced share capital

are produce plan drives that shareholder and confident on We improved we strategic executing performance to value. our are will continue financial

Thanks call for I'll attention. back the your to turn Jim.

Jim Squires

Cindy. you, Thank

As half focused And are and and for our before, won't tomorrow. member objectives. Each achieve of reach while on we NS executing is demonstrates, we planning we our the have to working growth unison laser year in as every when of today, the first the we efficiency goals. done team rest

now open Thank Operator? you for for attention. the And Q&A. line your we'll

Operator

with first line you. the of Landry question is [Operator And Instructions] Allison Credit Thank from our Suisse.

Allison Landry

Thanks. morning. Good

negative environment Analyst in given you in change that the pricing Day. also CAGR the confidence the current if could freight indicators, the do indicators maybe any to you have Just weak And and out seen speak targets revenue whether the backdrop sequentially? long-term volume set and you less economic you've at

Jim Squires

morning, Allison. Good

described are things to half delivery through in the begin service, can over saying select minute modest volume on of and describe things a in growth to focused revenue the merchandise we our of I'll that pricing turn it me verticals, are and him objective second which by Alan value growth. growth those to control, our Let the we that further. in

the we that At have and are the through on Sheeting efficiency focused and opportunities we Clean time, through same TOPXX implementation. productivity very uncovered

So, very in goals to year this year, you XXXX. we're things why outlook we confident and focused at last Alan, dig XXX our control are operating can XX the bit we by and over further. basis on that we will hit don't ratio the in little that improvement a least the points

Alan Shaw

remain we Allison, of in our and Sure. confident fully execution committed the strategy.

and move and married to continues in a growth consumer indicators the is which strategy the know, which economic it's are part direction productivity. economy diverse franchise merchandise got We've offers Intermodal of the and delivering year. strong. service to economy the half the As and growth in the powerful balanced the east, the franchise, consumer, the many opportunities in a you for of that's most second consumption We've of got the still related relatively U.S.

looking looking more oil for automotive U.S. production. vehicle We're in consistent markets. aggregates shipping normalized for growth due improved and to projections growth improved We're for We're patterns. with growth in sand the well for looking in light and service, crude as

of such Our we're consistent channel is take that partners. going this NGLs as very to we're our and Intermodal with seeing is markets, offset steel what in headwinds hearing franchise other our from outlook read the is some market, that and the

the quarter pricing pricing. year-over-year we seven and This strength respect years. year-over-year quarters continue franchise. our to we've And gains consecutive With of and the had pricing, in sequential seven in pricing last to in second-best quarter improvement in merchandise past see was

building product. product. customers improving rapidly service we've our that credibility value So, and of with the pricing a to we're We're got

Jim Squires

we efficiency now. a the if the the and So, to the growth like about duration little realize up, are turn over which are I also may to Allison, for of to revenue in second just and to talk aggressively to more and productivity we determined opportunities, right half opportunities bit we it Mike, plan, I'd can wherever sum pursuing

Mike Wheeler

Yes, sure.

as efficient DP of put uncovered So, an more the doing become and on plan in the that well. tranche that plan, working of the It's opportunities is, help us we're new in first trains even additional thing operating will was place. opportunities out, out new harvest us take in as operating for to cost the includes

that making synced the to while implementation other local also us some and service train thing plan we're that still at efficiencies really plan, will we're customers. well sure give The ensuring the with the good with opportunity we give product operating looking that is up of a to new create the

but which not network, the we We continue on fleet. at thing already well then other – The early there. operating locomotive phase we forward our the next out which some the the there fleet, opportunities to traffic plan on locomotive starting And the look as as maintain are encompasses model going all the next fleet, opportunities locomotive the is of last, in we how see to are the plan, least, new year. we'll rolling what

continue going lot to to work on on So, productivity efficiency. a and

Jim Squires

sum a to is value it us positions in enhanced that all So, shareholder for ours plan any balanced up, environment.

Allison Landry

and the in to of basis encouraging going pricing helpful forward? comp a factors the Cindy, thinking hear and the on per That's to all when just basis. right of benefits ask of or really outlined helpful was some you definitely about employee sort Is comments. on question terms could there, really the more range it kind this one I per year-over-year of this If model employee. dollar but this

Cindy Earhart

the thanks for yes, Well Allison, question.

of sequentially X,XXX. ones X,XXX, made good on you've head you When down reductions about the start our look and as we I we've we've As X,XXX so X,XXX, had reducing made trainees. said, really conductor about that Year-over-year at noted, half in the headcount. we're that about far

obviously pay than So, rate our employee. average much a say they at are would lower you

seen of impact. you've a So, bit little that

to going to take-out it's as count. as not words, would on high an continue average other you think head forward, normally we quite But In for employee. going work the are

terms at. what looking TOPXX. reductions of The in saw presented number start Mike train of You they’re

push reduce we're in to of but company, the only to headcount, all in going areas we're to T&E, not So, looking productivity. for continue additional

Allison Landry

guys. Thank Great. you,

Operator

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

Jordan Alliger

Hi. Yes. morning. Good

starts which think are I velocity of dig them year the guess and points to right XXX-basis do many into sort good in. is PSR more I'm from direction, looking just of pointing in and you metrics, the anything? that lower suggests wondering, in know like of service and kicking a but the sort I the we as the second reaffirmed dwell So, really move how of ratio that how that beyond, move XXXX than and standpoint through you half operating timing about improvement,

Alan Shaw

Jordan. as very The the we're velocity and with metrics you, I that's an far-reaching of, trending is extremely effects obvious. Thank service and traffic. operating to guess operating proud network plan are – something metrics favorably Having on new just our cut over a

So, service trying the metrics through well Mike well. well. of in to terms trending we've and, we've as of as platform in goal which that do, and side we're index we're That seen that the of are all the set productivity service ourselves, toward, that the you basis for mentioned expense metrics, the delivery and revenue in and everything on went the

TOPXX and significant to seeing expect already We Clean savings as result preceded Sheeting implementation opportunities it. are do of for we yes, the a see. So, that

Jordan Alliger

Great.

I – translates whether mean, sense X, the I'm So, et – mean whether flipping yes, how the cetera. metrics I terms presumably obviously that improve, early you're days here a I from headcount but mean ratio know operating it get switch be it July rents to improves, as you just trying of basically, in that's it's literally

Jim Squires

of Yes, course.

XXXX going are basis least there. year we're XXX at And to the so, an still to get full-year for confident better ratio points last we operating and than are expecting produce

we’re the we resulted that fourth of last that have did fully to and loaded and significant remember sale Now a property comparing gain in in result. a XXXX year quarter that

Jordan Alliger

Intermodal quick The sometime next assume year. network more one II, I the include will TOPXX Phase question. of Just early

do that volumes undergoing doing that you're While continue of push – portion able TOPXX? to to network you for expect to Intermodal be you you're as will the change, network on

Jim Squires

contributor do. and has we been contributor significant has growing our to revenue well. do, and line it engine volume and as growth been bottom We a Intermodal

how how two-fold we TOPXX grow as begin we and the that expect So to network yes, considering even it much continue of in operating to into plan.

Jordan Alliger

you. Thank

Operator

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

Brian Ossenbeck

ask morning. was fuel something question. for just – of this look that efficiency, good got I expected the taking little metrics, Thanks that you Hi, a you when GTMs look operating Mike, you for wanted When bit mix my quarter other worse. at coming cut ones something plan to out from that the was else If results you a efficiencies. increases on that of good in the perspective? over this of class some at start see some they the operating from quarter, pretty look going the was or to at

So, you've talked to wanted thoughts trends much about just past. year? it's how into the one I not the of the your and on in metrics next half too that get for back

Mike Wheeler

efficiency, drop-off TOPXX The really not the Yes. was It ton fuel really by was by the in miles. driven gross impacted plan.

an eye that. of a too. But, yes, So, we've keeping well. little And on got a lot that hurt lot work that that's And A of in initiatives to help drive we're on initiatives plan. that. the as down to coal volumes our bit

Jim Squires

quarter believe the overall quarter, we in going addition, energy And have in area very trains to our an have help efficiency. management in in Mike when fuel it the comes as up as that recognize we some fuel fuel ground will early with second of third should numerous implementation, the make efficiency. improvement efficiency a mentioned, in result forward. heavier TOPXX initiatives Brain, late to result that we we bigger, in Running

Brian Ossenbeck

locomotive with in well? that fleet the a function conversion be of step change you that as see And that would the

Jim Squires

help. will That

Mike Wheeler

fewer something tonnage this step with that handle going necessarily it do to it's over is to we're several able years, locomotives. is change Yes, because it the does but next a more help you're because

Brian Ossenbeck

land update I And thanks. moving for think like give then the different this sales little it's What's It at at us you with in, you. just gains XXX a was on with pretty bit it out get for year? fully least land well, for but year. look guidance I Cindy. first the the at heard the sale count an trainees coming year? last quick time kind maybe Can when at to seems Okay, of looking the a half loaded for back the quarter. and we're outlook a mix the down follow-up Thank head considering along it comp the last all you of then

Cindy Earhart

we're Well exactly first end at compared in down by we terms of XXXX. least head I as XXX count, the to of the And in end down from to right. the X,XXX mean you're year, guided sequentially of said, the the quarter. year I already

headcount – We but we specific as come a down that previously, number, headcount mentioned we aren't we've I TOPXX. expect reduce is with guiding work associated to do going as continue to to

going we areas G&A be the productivity. to mechanical, push continue We're the on all those at as all to areas looking of company, of

land between with of to year. gains on still I $XX And I think good the we for a terms property, million that's in for sorry. million In had still and $XX a second. one million million – think that's $XX to $XX and sorry, I'm hold $XXX year. the I'm operating sales a year million for guidance guided –

Jim Squires

and item a non-operating in income Now, we item actually you did incur Brian, a was there was mentioned the other loss...

Cindy Earhart

We did.

Jim Squires

marking on was what that? of certain why Cindy, with a As assets. going down result explain don't you

Cindy Earhart

relates which company natural million really $XX the wholly-owned early of the Corporation, of some our since Land part call subsidiaries resource that our was Yes, that to we been XXXX. our one related did to Pocahontas loss – out of has for assets,

it continue to assets, we a years, our like over other really the that's look part this And looked business. at didn't had we've and just asset that at that assets as we determine core we asset need felt to that As to an was land wasn't have, our of we've to strategic. just not continuing

down we that and market wrote it we that fair subsidiary we to value. sale So, for hold decided would

So, is. that's $XX the million what

Brian Ossenbeck

there. Thanks Alright. for Okay. it. Appreciate the clarity

Operator

is from Our with line Wolfe of proceed Please Group Scott question. next with the your question Research.

Scott Group

Hi, morning. thanks, good

So, when at – to the I look on going labor. stick I'm

I'm So, when as down sequentially this say. quarter get only X% headcount the sequentially, trainees, issue could down you in well labor if I and is X% wondering costs any severance there's if of the

now sequentially? So, do employees? a And or then, reduction a and but guidance more bunch trainees in headcount we forward, we half going with in more are I second moving the through first and see headcount there. regular about could each the giving not as Now, on the half of headcount, cost other? we should the so you're Are what TOPXX additional in know that specific that saw headcount labor line reductions the volumes think we're think a in weak, you on sort similar more

Jim Squires

Cindy?

Cindy Earhart

Yes, Scott.

In the terms And severance. there headcount. question of in that related of your been – reduction really first any hasn't severance of to terms was,

you consider trainees, of of terms of average mix of you've compensation of employees the it's we got will coming out the in early. forward got is that We've yes, sort what be seen. conductor Going that the more – out

out So, forward. you'll more coming see of out the comp associated comes normalized headcount going that with a

Jim Squires

other bit the a came And of near quarter. little end of that out the

Cindy Earhart

trainees, that of about I really Yes, exactly. said related question about was Scott was... half to last your

Scott Group

we second now saw given Just the of the half, volume given similar? reductions in we headcount in similar half what that weak Can trends. through to we're sort the first in the see sequential TOPXX and

Cindy Earhart

around I I going – mean before, continue will can that's not I specific areas, there be giving would I've down as side the we're associated that. work reducing numbers. as but starts. to to that well And going other in going we hard push as as in bring guidance as on the say to headcount headcount on with the away T&E headcount the said train that we're we

Jim Squires

and as opportunities working that the can of well. on possibly efficiency we and the operations, Scott, things my hard half whether went a local as we headcount will lots it's push as statement, Mike the savings yards it's on other locomotive in we're serving and through reductions, additional have earlier that I cost second whether in opening we maintenance, mentioned the as productivity

Scott Group

we then Jim quarter planning through about not. can said you as And there? we to XQ sequential talk sometimes the rationalizations. I Can TOPXX let's last sometimes can us and get give second, quarter get Do improvement just margin what you're yard third then in than an versus on XQ? margins you think model update like think you about do better

Jim Squires

it we'll you're what to sense work we're to see open. looking opportunities long well going to keep hump that. new around given convert switch moving of and level, of entire as local certain the doesn't. fits And coming in continue a with TOPXX it the start network, other yard. be plan below operations But continue on to of over. drops through flat operation, volume yards on that yards really a a look under We've addition There depends portfolio level switch converted to already as yard out that's the may Let's with the over what things two to makes network. Once It our serving TOPXX. volume to flat we'll

And improvement the can basis XXXX, the our of operating at meet points ratio, the terms it. least In fully confident goal. again, for that's loaded, in trend full-year versus XXX we're we

Scott Group

to last that being just talked Was I what RPU year-over-year full sequential, real lower, is I that Can comment you RPU was want second that a year about put some You you around one is context just one think or half pressured. ask that quick? you Okay. coal said? lower

Alan Shaw

pricing the prices second the year. able at half to increase up, look metallurgical Last we our export of ran Scott, commodity Yes, on year market. our were as

commodity declining. are prices Now,

impact the I second we then difficult and that a about volumes to the in know have the saw API suppliers were a participate going for hedged, where it's in that's market. remains think in pressure US metallurgical of going on Scott, time $XXX $XXX think export pricing put I X they're unless I year. last that's the really the market, on you the thermal And this as ton metric was negative year, overall, to weak, half and to over latest so

Scott Group

Alright, time the thanks for guys.

Operator

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

Tom Wadewitz

a what I – a Did you now questions you to bit but on do on There I were follow-on I expect calls, wanted overlapping where give coal, TOPXX. for Yes. to be? export coal. morning. that tons a comment export maybe think Good if missed some apologize full-year on and the this. on quick you

Alan Shaw

I half the in second year-over-year volumes And the I'm coal to calling decline Tom, then just markets. on pricing heard on you thermal in – heard well. you for as the commentary did No, export guidance give that. not of the pressured year

Tom Wadewitz

your the what in export in And quarter? second mix the that in was of What did XXXX? met year thermal and like Sure. look full

Alan Shaw

year. about ballpark Similar last that were to Generally, to where is XX% in runs quarter. mat XX% we we second were it in and the

Tom Wadewitz

Okay. But...

Alan Shaw

little year. team mats mix We was a second towards The mix bit of this more consistent. pretty had the Baltimore quarter in

Tom Wadewitz

I to comment worse or in Is on it half and think guess up that given a mix trying in weakness mean that way does to maybe yes, kind the the but comment of would than you show on And given different seems second sequential like – or there not it? mix I thermal about – thermal, I'm do on – [met pressure you resolve more export]? right on, expect export the decline how in changing. the –

Alan Shaw

right metallurgical thermal you're in think terms pressure on on I of pressure volumes and Overall, pricing. then

Tom Wadewitz

Okay.

Alan Shaw

And the band that going gave mix you. to in that is just I shift

Tom Wadewitz

Right.

resource think on a you resource quickly to plan, Okay. before out you've more about And it your out sure sense start TOPXX. the amount would count seen that execute locomotives got it's The make give some you right – think or can a And bit be? of, that question that the just in talked more whatever get we I you've still that works, pretty well, out. taking on whether then has it way system time enough been will lines you along running to the you we resources it that you've is the take take head wanted of the to that's of, I framework Jim before want about and

Jim Squires

in flip switch saying, progress on look, TOPXX. Well quarter. we me made the on second Even by before great let resources start we the

we the network resources answer after a yes, reduce we've going TOPXX got opportunities its And well now which start the ways and been go resources. already has aftermath. in question, So, your running running this to absolutely, the all and of discussed implemented in to further the we We're see on this. to But morning. is

Tom Wadewitz

Okay.

time we go okay further say, you need success don't you it's right after it now? So, can to working assess and

Jim Squires

is correct. take we is the That's gone, once Once the resources work the work out. –

Tom Wadewitz

the Good. congratulations Well, Right, on thanks the time. launch for okay. TOPXX, on and

Operator

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

Justin Long

Thanks, and good morning.

TOPXX wanted and get So, to wanted different to understanding that of I iterations help the start plan. with some

of should in is the early in later X be of of stages expecting impacts benefit process X the we the It but this complete Phase under TOPXX at of TOPXX? the more So, OR, sounds how network. when starts will Phase be terms across beginning entire an of And implementation next or year, like stages way. plan the OR the

Jim Squires

Justin. morning, Good

at with the initial TOPXX further As we we of out follow will laid Investor Day, implementation refinements.

benefits will into merchandise Now, can operational the within commodities bulk opportunity additional be be the benefits, remaining first operating TOPXX target of that Version further consolidated the X plan.

on elaborate you don't why Mike, So, that?

Mike Wheeler

Yes.

It's almost to it implemented. X.X wants he call very of So, what well. we gone

are And about look behind So, we trains. at power that's what a that, talked was how more to We the add effort did we we're taking now. big a distributed there what also that. next looking opportunity but more knew made We at opportunities. we're

that more us more of and place, as minor will well. put give this power benefits be iterations in some we'll distributed add So, plan current there'll model that

start with concurrently So, better everything can and get and find, better we're working kind as next harvest of taking plan. this the we the we plan opportunity to on

Jim Squires

the XXX and terms as have pace And we XXXX XXXX. of XXXX our points in basis by at to over in of XX improvement said least

Justin Long

on seeing, and fleet demand, adjustments Okay. Mike. based you are can optimal where you're heard is what environment on level? locomotive your that would size put And fleet. the but is in volume numbers we where an into be of secondly, versus locomotive active make about freight today but you know consider we're on market based always talk current to railcars have update you the I number maybe the terms give for one this of that I some any storage, rationalizing the of been in

Mike Wheeler

okay. Yes,

over got also that available I'll remind XXX we've So, and last units we about are well. years as as we've you that needed, locomotives pulled sold the XXX we about that that out stored have

So, where we're that's at.

at looking talked as network it's to at yard plan is pretty fleet. from that our working in about reduction part TOPXX what there now. look is well working, a as And how And as So, big more on the taking the of come. local we're right we've

Justin Long

leave at that. I'll for it Okay. time. the Thanks

Operator

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

Amit Mehrotra

yield-up kind of speak. February come achievable and back to and so – Jim, in when to Thanks. volume the could. but was you mid-single digit horizon not in other aggressive, the plan, unveiled you I back declines called it management really it if team to discussion, I an just wanted were that executives on the and when the

you with if with pace also to the are in had the the ancillary strategy, wondered few just could to rumblings the behavior of guess that changed last talk I impacting months So, yield-up you've respect respective bit little a STB more if – over that's all magnitude some of changes I about trying aimed PSR? to how at revenue

Jim Squires

with turn we I'll price which in let we are that the the value Alan take taken our to increases weigh say me and but on providing expect future let service have their value based can in create of in the customer here, are they businesses. service the in

to So, the at and of service a has level very the enabled that's Alan high thoughts. up. your take is pricing that basis price us increases the and the

Alan Shaw

It's foundational doing. to we're what

know improving on with for just is we've pricing the and they the of product last improvement quarters we're And also year-over-year changes plan, process productivity our our in the approach increases. revenue a we collaborating consecutive balanced merchandise you're product. in of discussion see operating both and network a them noted, part growth. and of with service our seven increases had seven we're converting years, within strategy had the and providing in that quarter they’re They had part platform service of and our them they’re pricing Customers great of as seeing that growth that year-over-year in second-best to our Our know results. I our

the going in partner give that's so, a to opportunity to grow supply And them future. they want the sustainable chain

Amit Mehrotra

price. follow-up that solely actually can rail there’s Right. precise could that kind pricing or core being from makes of one we only truly perspective, that There Yes, what's calculate no, if realized on just sense. And price total is – the I on point.

on proxy think look metrics One as of could at is revenue not be ton-mile, or per revenue about quarter. use It proxy price, the the X% revenue we and which quarter. wrong growth I miles second the for that actually it in for company per ton we metric I first at was X% decelerated if up the in so this in at least a revenue the look from

expect the process? along be So, then, plan. the way, if first, should is guys yield-up get as to And that progress maybe in we that right measuring we the your so, can metric further gains with respect greater in you

Alan Shaw

a is and It that's for the as benefit proxy Amit, that. with from also, by circuity to influenced plan, that. going denominator the TOPXX you we're know

Amit Mehrotra

for Okay. Alright, questions. my taking guys thanks

Operator

The next question line questions. is proceed from the Chris Citigroup. with Please your of Wetherbee with

Chris Wetherbee

quarter of that fourth wanted rough yield outlook maybe third strong. and first able expect move you've XXXX come second can assume year. in what leverage second the strides points for some of know in first on as the towards can we half? relative still around targets. just about maybe but back to the wanted operating plan and that versus maybe it XXX the forward fair through we kind the reasonably assume to half as incremental the I year, to get TOPXX up we think commentary the the is sort morning. maybe be the sort of might headcount PSR half your target rollout the you a that reductions, bit pick made the to I if performance to of little Good the about bit remains you a and basis volume, of seems sense that the better to half, operating Thanks. Conceptually, a post But half quarter the of when you to I second little big side for operating leverage quarter clearly think there this you year capture should the relative back is

Jim Squires

with as modest some of to growth first significant tailwind in leverage service, We that value did there growth expect emphasis trend our we see the but operating continue to half opportunities, well. our with and the on opportunities, targeted pricing

up points it believe on at we can roll you for we improvement the achieve So, least last ratio and that all XXX basis operating versus that year. full-year the

Chris Wetherbee

Okay. side. Intermodal question the Maybe, a on Alan,

some you off at about or obviously that of you least you Just the thinking going maybe that around less call half you wanted the back probably are sense, do. of to made you from to and along into need commentary channel consistently half Do a strong of year? more as far need the in of I coming on maybe some outlook the I that's positive more business your of to When network How mean, selection that book for stuff, you lane the some get Intermodal partners. move back just you the better maybe for the about year, year? or process? of somewhat Intermodal of the to the back context half see incrementally think

Alan Shaw

for an rationalization ongoing lane process. Chris is Well, Norfolk Southern

done have top We XXXX. last and on XXXX, were [rail] able year XX% growth in revenue with every rationalization year since it of deliver growth revenue we to XX%

doing notice, they this with to with channel collaboration providing can sufficient our committed them accordingly their plan customers. so are and We that with partners in

Chris Wetherbee

Okay.

seen we what so XXXX? So, on but sort be it ongoing is as about shouldn't far process, or half more just we've incrementally of relative first in thinking less

Alan Shaw

season at these these bid beginning had year. advance we of execute with in – the operate we the – we Typically, or of changes

Chris Wetherbee

Thanks appreciate I much. it. helpful. That's Okay. very

Alan Shaw

Again, our collaborating Chris, sure with make customers. it's to we're that

Chris Wetherbee

much. very Got it. Thank you

Operator

is your Our proceed from David Vernon of the line AllianceBernstein. with with question. next Please question

David Vernon

to back market confidence or morning Is terms to in back get the shifts volume Intermodal follow-up the expectation up Hi, that there domestic within – starts wanted the your some smaller is that growth firm of Alan, to share the going based half in back market, visibility around truck which you year. the so have on you to in I good just the guys. coming is growth? of on

Alan Shaw

environment. not – the on overall macro conversations based partners. We're with it's channel It's based on

You're starting rates, to maybe an see inflection point. at in some improvement spot we're

to grow. international modest, that it's however, So, that's and our our continue recognize read, volumes again once and

domestic growth could best improve overall in Intermodal the Once franchise. got again, the east. easily within we've it then we when Intermodal volumes, turn So, our the franchise into

so, to And the forefront growth. we're going be at that of

David Vernon

I I you you environment door] there truck within pricing is are and anything some do about growth this of think to guess under kind need order little of talking like priced you volume Is side, are that a the market now the a guys [the the feel think Intermodal. you there can being yield-up on Or as Intermodal the do providers rates softer about lanes how bit right side, growth? get to where truck still And actually on truck back? into softer get

Alan Shaw

the you Yes, strength truck market cyclicality find outcome reflects rate have the of great increases of the very adjustments some our in the achieve. a and and pleased a the we franchise, with is it's There got of bid able we it a the product spot to of the to value in point-to-point Once lot franchise. where means, there our it. reflects under rate were it to which we're of We've franchise, terms frankly Intermodal season make can Intermodal. lanes is some don't out again

got the chase to term understand channel to that. not our we're that. We're value continue and long However, price with partners. going They going relationships to to of we've product our long-term

David Vernon

Alright. Thank you.

Operator

proceed and the from line with question. your Jason comes of Please question Cowen Seidl Company. Next with

Jason Seidl

much Can sort operator. peak? How normalized coming just Intermodal stick growth competitor you Do that about side, sort gentlemen. East growth season? versus do you versus business maybe of that expect East? peak or talk share Coast there. you, here a then you the a of lot in I'll is Coast international just the Good won you of your West upcoming some as with on bit the a of the wins morning, little think Thank And well. obviously

Alan Shaw

anticipating will channel for August. looking volumes we're in pick think start our a up I peak, normalized are to partners

On driving the the Coast. alignment to the a that of that's side, lines steamship we've lot got capacity East international great our are growth. And with adding

Jason Seidl

month. us quick associated guys was a out have you meat on there? mentioning you the I with any KC, mentioned more out, a for sense. your don't you if think more seem And wondering to in said, being flooding line bone cost give a recall that said you was Makes I I than little question, can line Okay. I

Jim Squires

costs some The Cindy impact was flooding. have associated on capital the expenses order of immaterial. with additional did magnitude. We

Cindy Earhart

that the it costs it capital was I just we material obviously with on expenses. and side, associated that it, were Yes, repeat there but expense would primarily was not

Jason Seidl

the color. as the always. for Appreciate time Okay. Thanks

Operator

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

Walter Spracklin

Yes, thanks very Good morning much. everyone.

you territory dropping, see in customers bit question a the the but of of third fact that far one know Alan go stop just and to back you your rest seems and swing back you big going early going in board to to obviously a share in minus win got or in half? to of got that each in are back the the to So, in it would to positive you're segments it each – only overall Just of quarter down be each great. hearing, I perhaps minus any of for the minus line, minus come that the X% little that in color hearing secured inflection, across trending to-date I top growth see, metrics X%, X%, carload second suggest volume what but the I'm wanted about volume you've seeing quarter data on into positive I here is can What not and that be mentioning. commodity? you're back it so on are your there. to the growth quarter, down you Is to the X% the are is you're from the to year And is enough the

Alan Shaw

of the growth quarter improved see growth got creating differentials dividend merchandise apply my the in our hearing from about to year. customers TOPXX. allow targeting second crude network what noted to of within partners capacity which because of channel the fourth talked growth are will then price growth prepared And of in in The the half in in the Walter, for Jason as Conversations We continued we we're in our service, remarks. flawless the the half the implementation that. with aggregates. will I Intermodal. just I see of We've the second opportunity occur year, we with our that majority

normalized X% the we serve any And of production half production, for me, pardon increase by frac more looking projected the patterns our second shipping in than We're U.S. within U.S. markets light sand is more in to other and Auto railroad – is build vehicle North year. vehicle America. production

see Our you has see coal where been going price pressure see of metals fully stick. market low that's although increases NGLs, steel to that for some declines, tape declines I read by market to prices, noted is weakened we commodity to we're and earlier take expect offset the export within effect the as starting expect in rolled hot coil and our to

Jim Squires

result efficiencies push as a have in and after in about of as uncovered revenue the as all growth, So, we pursuing well. go growth we for hard all second we and do the We'll volume of We're and reasons the expect to Alan Sheeting half. has modest mentioned volume – opportunities Walter, even the growth that can quarter, we growth those TOPXX that all Clean on the continue find. second revenue

Walter Spracklin

right? of color. When at And reductions OR at compare are and that appreciate it's to I me color. look then reductions [XX year, those What I in that's a get will weighted, you're taper little XX% mean from that question. the looking the little PSR I PSR helpful. XXX XXXX basis its this of but to points big second that great in it TOPXX in tie for per bit, front-end to I'm PSR. for and and target, to past XXXX], iterations get to basis then year why to my pace different a in that is if to in and struggling fact TOPXX yours guiding operating show that's kind this thanks to I And for suggest XXXX double years you improvement Alan that for ratio leads that When look your Jim, and be can XXX certainly you're is plan. as going to couple why accelerating through next we points is year, off in XXX of the

Alan Shaw

at we Well, operating and the process iterative there be optimization coming. an planning is ratio this the be basis well more growth to phases for period Investor come. there manage And network plan we the can out as as of and of will that planned improvements, operating into XXXX. be the Day, additional as laid will change will duration Those further for

Walter Spracklin

you like Will the you ratio operating you did year be get providing into for guidance period? this again XXXX XXXX as

Jim Squires

the and index you on update to for us we expect goals SDI certainly would delivery laid I see. we'll Well, out service productivity you. that

improvements give expect to the you are will new and linked drive. in turn financial operational we which to We goals,

Walter Spracklin

great. That's

thank Okay, very much. you

Operator

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

Bascome Majors

Yes. investor Volume revenue dwell metrics But up more, quarter, the lot you up beyond in this are me, Excuse the the going if NS, like is XX%, it Why margin stair-step a the income. improvement hurt fall to fluid is more around just up the down just XX%. to in operating early we was you aren't year-over-year year but that close were to this a situation look financials, costs quickly we're seeing income comp stock last down labor? velocity I year-over-year out operating high see was still network. on challenge X%. comparison temporal that benefit from a those how expanded here? expectations more point slightly, drive about had system up too Or the margins mean, the is and of in Thanks.

Jim Squires

expect to did in second continue TOPXX as we savings the in quarter driven improvements to and went would equipment Cindy and balance accelerate year. in labor, materials in and We those of see expense rents through the

trends offset quarter, by the second were favorable last in the those Now, year. expense cases in to comparison certain

year, as employment we things and of last other were the well. tax in booked For example, some there refund, quarter second the

improvements in and in example, the For that materials other masked expense. materials

Going forward, additional we TOPXX expect savings of do driven to those all categories. in see

Bascome Majors

talked And Day the it of your Slide goals. what and Jim. you XXXX Investor out XX you one, last goals I where KPIs, a for XXXX lay about that. reiteration you believe was Thank with

progress some color like lay-up You you have metrics about we XXXX the degree where a tracking a Can to from bridge we've made What about you you're looks you. today? goals? gave see on a hard slide. from and commentary more toward Thank bit XXXX more directional mid-XXXX, give the little of stretch what's where but don't the

Jim Squires

each go why Yes. on of your those don't you, through Thank you Mike goals. again commentary

Mike Wheeler

Yes.

trending thing well. noted of So, that and productivity, exceed trending the that were on are with the track T&E and service as we as we Same we're goal. delivery of index were to ahead ahead

And year. we being and to there. implement some about and some are talked so, for exceeding general track We're new in the merchandise. on we and we we back-end as comfortable weight, feel Train about are loaded will that. TOPXX see we meet already we the plan it Locomotive exceeding productivity, or improvements seeing exceed be Cars-on-Line

Bascome Majors

Thank you.

Operator

your Bank question of of The is from proceed next Russo] with Please line question. the America with [KARRIN Merrill Lynch.

Unidentified Analyst

Hi, good morning guys.

some on quickly just So, housekeeping items.

expectation little tax in what a been second if the looking quarter this the might the number talk on lower what something came could we and the half if had about than and for you the also unique be for Maybe could this then So, was estate quarter? gains rate you quarter. real give there about for

Jim Squires

Cindy?

Cindy Earhart

One, that XX.X%, two tax Effective hit on had some stock-based was And then the benefits which really. returns of compensation the insurance. being life rate secondly, pieces corporate-owned in benefits quarter. the

rate we're out non-operating full-year, were we I be estate property, the called XX%. was [significant]. of sales terms effective they expecting XX% property not million. For $XX We between – And will – guess that there was operating on real and already tax around of sales the in

Unidentified Analyst

it. Got

the targets, and because of wanted in it would like Analyst TOPXX volumes with it up bit opposite just kind starting at July. And I with in little helpful. beat implementation a certainly we've moving expect trending in set at come if feels maybe to half. you moderation tandem structure the of are out to headcount, the just the weaker targets could your about had on cost but those about ahead gains, what death to maybe feels Okay, see feel it people cost have as we than of then like Should guys it Day have least little could question volumes obviously, the in like which volumes? first what bit, a that extent feels you you're OR also expected, on it just like now your well efficiency because Maybe and which that's talk you see through OR you the variable to given full-year talk some of be I the you is extent most structure to pace return would this and

Jim Squires

ratio generating forth that focused on order been Mike that types that focused KPIs to keep generated on that on or the close was We're And relative are way. progress. that's as our meet least at the through, based we're in us results have the for exceed there remain through. productivity went created for Mike will to or winning we rationale target XXXX. we In and because network ratios making of the We has to KPIs setting GTMs basic why

thus productivity and focus adjusting the we've areas of volume efficiency different all the So, light resources of we are trend, been the in on and through. the intense

Unidentified Analyst

for Thanks the Thanks. time. Okay.

Operator

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

Jim Squires

you Thank your much time talking to look everyone appreciate and you Thank attention for with you. next quarter. your questions, forward this We we very and morning.

Operator

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

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

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