CSX Corporation

Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation first quarter 2019 earnings call. As a reminder, today's call is being recorded. During this call, all participants will be on a listen-only mode. Following the presentation, we will be conducting a question and answer session. To ask a question, please press star 1. For opening remarks and introduction, I would like to turn the call over to Mr. Bill Slater, Chief Investor Relations Officer for CSX Corporation. Sir, you may go ahead.

Thank you and good afternoon everyone. Joining me on today's call is Jim Foote, President and Chief Executive Officer, Franklin Agro, Chief Financial Officer, and Mark Wallace, Executive Vice President of Sales and Marketing. On slide two is our forward looking disclosure, followed by our non-GAAP disclosure on slide three. With that, it is my pleasure to introduce President and Chief Executive Officer, Jim Foote.

Thanks Bill, and thank you all for joining us today. As you know, Kevin Boone is taking on new responsibilities and I'd first like to thank him for the great job he did in leading our investor relations effort and for helping me directly over the last 15 months. We are happy that Bill Slater decided to join CSX and with his experience on the buy side and in private equity, he will be a great addition to the team. As for the quarter, Solid performance across many measures produced both record financial results and record service. I want to thank all of the CSX employees, especially those in the field, for their hard work in keeping the railroad running on time during difficult weather conditions. Despite the challenging conditions, CSX set new records in Q1 for just about every service metric. While we are all proud of these accomplishments, nobody is resting on that success. I'd also like to add a little more detail on the recent appointments of Kevin to Vice President of Marketing and Strategy and Arthur Adams to Vice President of Sales and Customer Engagement. Both report to Mars in the expanded sales and marketing organization and are part of the continuing effort to build a highly skilled team focused on finding creative ways to address are customers key transportation needs and drive profitable, sustained growth. Kevin will develop and lead a group focused on utilizing deep research and analytics to identify and advance new business opportunities and high priority growth initiatives across our merchandise markets. Arthur, who is our head of marketing services, is leading the transformation of customer service operations and eSolutions in addition to directing our TransFlow operations and he's adding an expanded team targeting small and medium sized customers to his responsibilities. His initial area of focus will also be the merchandise segment. Both Kevin and Arthur will do a great job for us and ultimately our shareholders. Now let's get to the presentation, slide five, and start with our results. The results are once again straightforward with only a few small unique items that Frank will point out. First quarter EPS increased 31% to $1.02 versus last year's figure of 78 cents. Our Q1 operating ratio improved by 420 basis points to 59.5, a new first quarter record for the company. Turning to slide six, you can see there was broad strength across our merchandise and coal businesses, partially offset by the impact of changes in certain intermodal business segments. Our top line increased 5% to over $3 billion. Merchandise volumes, pricing, other revenues, and fuel recovery all contributed to growth. I'm encouraged by the strong performance of our merchandise business with 6% overall revenue growth. Merchandise volume growth of 3% is the result of positive growth across every market with the exception of fertilizers which were slower primarily due to the impact of difficult weather conditions which delayed spring applications. The continuing turnaround in our merchandise business is without a doubt the result of our improved service levels. Despite continued growth in the international segment, intermodal revenue declined by 5% on 5% lower volumes due to the additional land rationalizations implemented following peak season. Coal revenue increased 7% as strength in domestic steel and industrial markets combined with growth in export coal more than offset domestic utility declines. Finally, growth in other revenue is primarily the result of a settlement of a customer contract dispute. Excluding this impact, other revenue would have been flat versus last year. On slide seven, let's review our safety performance. The safety of our employees remains my top priority and we are getting better. As you can see in the charts, we achieved significant reductions in FRA personal injuries and train accidents, both sequentially and year over year. While this progress is encouraging, and we may be the best in the industry this year, I can tell you that we will never be satisfied with our performance if one of our employees gets injured or killed while at work. It is just unacceptable. During the slide eight, let's take a quick look at just a few examples of the areas of improved operating performance. On the service side, Velocity and Dwell both improved sequentially and year over year to reach new record levels for the company. And our more fluid network allows us to get more out of our assets and increase efficiency. In total, relative to the first quarter, We reduced the number of cars online 10% and gross ton miles per available horsepower improved 9%. With that, I'll hand it over to Frank who will take you through the financials.