Canadian Pacific Kansas City

Good morning and welcome to the Kansas City Southern second quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. It is now my pleasure to introduce you to Ashley Thorne, Vice President and Best Relations for Kansas City Southern.

Thank you, Andrew. Good morning, and thank you for joining Kansas City Southern's second quarter 2020 earnings call. Before we begin, I want to remind you that this presentation contains forward-looking statements within the meaning of the Securities Exchange Act as amended. Readers can usually identify these forward-looking statements by the use of such words as may, will, should, likely, plans, projects, expects, anticipates, believes, or similar words. Actual results could materially differ from those anticipated by such forward-looking statements as a number of factors or combination of factors, including but not limited to the risk identified in our annual report on Form 10-K for the year ended December 31, 2019, and in other reports filed by us with the SEC, including our quarterly report for the quarter ended June 30, 2020. Forward-looking statements reflect the information only as of the date on which they are made. KCS does not undertake any obligation to update any forward-looking statements to reflect future events, developments, or other information. In addition to disclosing financial results in accordance with U.S. GAAP, the accompanying earnings release and presentation contains non-GAAP financial measures. These non-GAAP measures should be viewed as a supplement to and not a substitute for our U.S. GAAP measures of performance and liquidity and and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated. All reconciliations to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP can be found on our website. And with that, it is now my pleasure to introduce Kansas City Southern's President and CEO, Pat Oppensmeyer.

Okay, thank you, Ashley, and good morning, everyone. I will make some brief comments here before I turn it over to my colleagues. On slide four, the Folks that we have on the call today are, for the most part, the usual crowd that you have come to see over the last several quarters, with the exception of Oscar Del Cueto. And Oscar, we're introducing Oscar this quarter ahead of the transition of Jose Zazaya. I'll talk more about that at the end of the prepared comments, but Oscar has been working side-by-side with Jose for the last year and a half, and we feel that we are in a position for a very smooth transition in the leadership of our Mexico business. So happy to introduce Oscar, and again, I'll say a little bit more about that at the end. Moving on to slide five, second quarter overview. What a tough quarter. Revenue decreased 23%, 21% drop in volumes. Operating ratio, really look at the adjusted operating ratio, 65.2, 150 basis point worse than last year. Second quarter diluted earnings per share, again, adjusted of $1.15, which is a 30% decrease from last year. So all of that sounds pretty horrible, but as you'll see over the course of the next few minutes, there was quite a bit of good news and some very positive developments during the quarter, particularly on the cost side. So certainly reasons to be optimistic for the period ahead. We also made organizational changes. July 1st, you saw a press release that we announced with some organizational changes that were really intended to streamline some of the PSR activities and focus on internally and really maintain our focus and sustain the significant savings and improvement that we have demonstrated over the last year and a half. And without stealing Mike Upchurch's thunder or some of the comments that you hear from Sammy later on, you'll see later that we are significantly increasing our estimates for PSR-related savings for 2020 and beyond. So a lot of good news, a lot of hard work. We responded extremely well on the cost side to just the – I don't know what the right verb is to describe, but precipitous drop in volumes that we saw in April and early May. And then we also responded extremely well to an unprecedented 39% volume recovery that began in late May and throughout the month of June. I don't think anyone on this call has ever seen a 90-day period where business levels dropped so quickly, stayed at a stable level for a relatively short period of time, and then recovered and responded so quickly thereafter. I really feel like our team was on their toes, and we responded extremely well on the downside and on the recovery side as well. Looking ahead, we're not going to change our attitude and practice here regarding guidance, so it's fairly thin in terms of the guidance that we're going to provide. We will stick to our 2020 capital expenditure guidance of $425 million. and then still feel very confident in our ability to hit our cash flow target, free cash flow target for the year of $500 million. So with that, I will open the call for Jeff Songer to make some comments about our operating performance.