Canadian Pacific Kansas City

Good morning and welcome to the Kansas City Southern Fourth 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 of Investor Relations for Kansas City Southern. Please go ahead.

Thanks, Jason. Good morning, and thank you for joining Kansas City Southern's fourth quarter and full year 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 SEC. 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.

Okay, thank you, Ashley, and good morning, everyone. Welcome to our fourth quarter earnings call. I'm going to go ahead and just move directly to slide five with a summary of the quarter and a couple of comments here. As the headline indicates, we really had a strong quarter in the fourth quarter of 2020. with some significant challenges. And we'll talk about the challenges and the impact they had on our results a couple of times here. And you can see here, revenue declined 5% versus previous year. And that was impacted by the teachers' outage in southern Mexico, blocking our line from Lazaro-Cardenas to Morelia and Mexico City. And we'll share some detail and the impact of that in the comments that follow. And obviously, fourth quarter results, particularly operating ratio and earnings per share and revenue, obviously, impacted by that event, as well as some elevated casualty expense, which was really an unusual quarter. I think Mike Upshurts has told me that was – the highest casualty-related expenses we've had in well over 10 years. If you look at the chart at the bottom of this slide, we've shown operating ratio and earnings per share in a way that tries to highlight comparable results to prior period, as well as focusing on some of the core results. I will mention in the adjusted operating ratio column, the 62.4 last year to 60.2. That 60.2 does include the impact of some of these significant challenges and unusual level of impact. Mike of Churchill, again, will cover this in more detail later, but about one point on the operating ratio due to the Lazaro outages. and about 1.6 points, 160 basis points related to unusual level of casualties. So with that, we'll put 2020 in the books and move on to slide six, which I think is probably more interesting to all of you on the call, which is our outlook. We're reinstating multi-year outlook here. Obviously withdrew some of our guidance over the course of 2020 due to the circumstances that everyone's aware of. So we are expecting revenue growth for 2020 in the double-digit range, and Mike Nance will talk more about that in a few minutes. Operating ratio, we are targeting 57.5 in 2021 and 55 to 56 in 2022. EPS, $9 this year, increasing to 1050 to 11 range in 2022. CapEx for the next couple of years, around 17% of revenues and free cash flow in excess of $700 million in both 21 and 22. So I think the punchline here is we feel very good about 2021 and beyond. We think we've got good visibility to our business pipeline and cost improvements, and we'll cover both of those over the course of the next several minutes. And we feel that we are set up very nicely for 2021 to have a terrific year, assuming, of course, that we have a little help from the economy, the pandemic recovery, and stability in some areas that were not so stable in 2020. So, again, we'll get into a lot of details here, and I'll come back at the end for some summary comments. With that, I'll turn the presentation over to Sammy Fahmy.