CSX Corporation

Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation fourth quarter 2019 call. As a reminder, today's call is being recorded. During this call, all participants will be in a listen-only mode. Following the presentation, we will be conducting a question and answer session. To ask a question, 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. You may begin.

Thank you, and good afternoon, everyone. Joining me on today's call are Jim Foote, President and Chief Executive Officer, Mark Wallace, Executive Vice President of Sales and Marketing, Kevin Boone, Chief Financial Officer, and Jamie Boychuk, Executive Vice President of Operations. 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.

Thank you, Bill, and good afternoon. I want to begin by thanking all of our CSX employees for another great job this quarter. They continue to show that they are the best operators in the industry. For both the fourth quarter and full year, they once again broke their own records and set new all-time low operating ratios. Our service is the best it has ever been and getting better. The key here is reliability. are operating a simpler, more efficient network. We are able to offer rail users a service that is truck-like in consistency, but with lower cost and more environmentally responsible. More shippers are selecting us for their shipping needs, and we have tremendous opportunity for growth. Let's now turn to slide five of the presentation. Our financial results are straightforward with only a few unique items which Kevin will point out in a few minutes. Fourth quarter EPS declined 2% to 99 cents. The operating ratio improved by 30 basis points to a new record of 60 as continued operating momentum offset top line headwinds. For the full year, EPS increased 9% to $4.17 and the operating ratio improved by 190 basis points to 58.4. These are truly great results considering the industrial economy's second half performance. Turning to slide six, fourth quarter revenue declined 8% year over year due to the continued impact of the softer industrial economy, intermodal lane rationalizations, and coal headwinds. Merchandise revenue and volume declined 3% as growth in ag and food and minerals markets was more than offset by declines in chemicals, auto, and other markets. The Philadelphia refinery explosion and GM strike accounted for more than two-thirds of the volume declines in the quarter. Intermodal revenue declined 9% on 7% lower volume, primarily due to the impact of lane rationalizations implemented around the 2018 peak season. We have now lapped the impact of these changes. Coal revenue decreased 22% on 17% lower volumes, with declines in both export and domestic markets due to the impact of lower export demand and benchmark prices as well as low natural gas prices. Lastly, other revenue declines resulted from lower storage revenue at intermodal facilities and lower demurrage charges. Moving to slide seven, let's review our safety performance. The full year personal injury rate declined 15% and we reduced the full year train accident rate by 41%, including setting another company record in the fourth quarter for the lowest accident rate. This progress is the result of concerted daily effort on the part of the employees performing the work. At the same time, we still see areas where additional improvement is needed. In 2020, we will maintain a rigorous safety program focused on continuing education of our workforce, further strengthening rules compliance, and empowering employees to have the courage to act if they see something unsafe. As I have said before, we will never be satisfied with our performance if just one of our employees gets injured while at work. Moving to slide 8, let's review our operating performance for the quarter. CSX set new all-time company records for both velocity and dwell, achieving significant year-over-year improvements as well as strong sequential momentum. The combination of these improved metrics helped significantly increase car miles per day as we continue to translate incremental operating efficiencies into higher asset utilization across the network. We also continue to set fuel efficiency records operating below one gallon of fuel per thousand GTM despite typical seasonal headwinds in this quarter. CSX is the only U.S. Class 1 railroad to have crossed this threshold. Fuel efficiency remains a key focus for the team, given the combination of financial as well as significant environmental benefits from reducing fuel consumption. And we believe opportunities remain to get even better going forward. Reducing emissions is important to us, our customers, and the communities we serve. and we are proud to have been recognized by various institutions as leaders in sustainability for the transportation space. On slide nine, most importantly, we are translating these operational improvements into more reliable service for our customers. Trip Plan Performance set new records again this quarter with 83% of our merchandise cars and 95% of intermodal containers hitting their hourly trip plan targets. Additionally, we successfully completed the rollout of individualized trip plan performance data to our merchandise and intermodal customers. Feedback on the tool has been very positive, and we believe providing this unique level of transparency to our customers will continue to differentiate CSX's best-in-class service. I'll now turn it over to Kevin, who will review the financial results.