Canadian Pacific Kansas City

Good morning and welcome to the Kansas City Southern third 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, Investor Relations for Kansas City Southern.

Thank you, Drew. Good morning, and thank you for joining Kansas City Southern's third 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. Actual results could materially differ from those anticipated by such forward-looking statements as a result of 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 Securities and Exchange Commission, including our quarterly report for the quarter ended September 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. And with that, it is now my pleasure to introduce Kansas City Southern's President and CEO, Pat Ottensmeyer.

Thank you, Ashley, and good morning, everyone. I will just skip over slide four. The presenters and participants on the call are the same as in prior quarter. So let's go directly to slide five with a quick recap of the third quarter and a bit of a preview of what we see in the period ahead. As you saw in the press release, our third quarter results revenues were 12% lower than the previous year on volume reduction of 4%. Third quarter operating ratio of 58.8 was an all-time best for Kansas City Southern. 190 basis point improvement over the prior year on an adjusted basis. Third quarter earnings per share of $2.01. 11% above prior year on an adjusted basis, primarily for foreign exchange, which Mike will talk about later. $1.96, which was 1% above 2019. The headline story for this quarter is clearly operating ratio. and more specifically, our ability to hold the PSR-driven efficiency improvements and cost savings generated over the prior year and a half as our volumes and revenues experienced a truly unprecedented rollercoaster ride with the steep decline in the second quarter and then the very sharp recovery and growth during the third quarter. The fact that we were able to hold these operating efficiency and cost improvements and produce a meaningful reduction in operating ratio versus last year and a 640 basis point reduction in operating ratio from the second quarter of this year is solid validation of the substantial and sustainable improvements to the way we run our network that have resulted from our PSR transformation. Sammy and Mike Upchurch will get into more detail about those improvements in a few minutes. Looking ahead, we are reinstating and slightly improving our outlook on a number of topics, as you see on the bottom half of this slide. Our 2020 CapEx guidance will remain as it has in the previous quarter of $425 million, with the outlook for 2021 and 2022. at roughly 17% of revenue. We are increasing our guidance for full year 2020 free cash flow from 500 million to 550 million, which, as Mike Upchurch will cover later on, is a 30% increase in free cash flow from 2019. We are now expecting full year adjusted EPS to be slightly higher than last year. And we are very pleased to announce this morning an accelerated share repurchase agreement for the repurchase of approximately $500 million in KSU shares to be executed as part of our previously announced $2 billion share repurchase program. Really looking at our performance for the quarter, our recovery in business, our confidence in the sustainability of our operating efficiencies, and the outlook for our business and coupled with our standing liquidity and cash position, financial position that we're taking this step to announce this $500 million accelerated share repurchase program. So with that, I will turn the presentation over to Jeff Stonger and then be back for some concluding comments in a few minutes.