CSX Corporation

Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation Q2 2020 earnings 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.

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.

Thanks, Bill, and thank you to everyone for joining our call this afternoon. Wow, where do I start in talking about this quarter? This was the most disruptive quarter I have experienced in my career with both the fastest decline in volumes followed by one of the most rapid increase in volumes in the company's history. Reacting to those extreme swings while dealing with the pandemic, has been and continues to be challenging. CSX employees have been absolutely amazing in their response, and I want to thank them for the hard work and dedication to keep the railroad running well. And I would be remiss if I didn't extend special recognition to our employees and their families who have fallen ill from the virus. Our thoughts are with them. In difficult times, strong companies adapt, and that's exactly what we have done. Despite all that has been accomplished to date in CSX's transformation, we are still finding opportunities to be better, faster, and more reliable. The actions taken over the past months will not only make CSX more efficient, But more importantly, they will allow us to be better delivering service to our customers in the future. Turning to the presentation on slide five is an overview of our financial results, which Kevin will discuss later. Due to the economic impact of the pandemic, second quarter EPS declined dramatically. 40% to 65 cents, while the operating ratio increased to 63.3. On slide six, you can see that all business lines were negatively affected by the pandemic. Second quarter revenue declined by 26% year over year on 20% lower volumes. Consequently, the volume decline was the largest in CSX's history and almost twice as severe as any quarter during the 2009 recession. Merchandise revenue and volume declined 22% with the largest headwind coming from the automotive plant shutdowns. Automotive volumes declined 71% in the quarter, including six consecutive weeks where volumes were down more than 90% each week. Intermodal revenue declined 18% on 11% lower volumes. Thank you for joining us. Other revenue declined 19% due to lower affiliate revenue and declines in demerged charges and intermodal storage revenues. Turning to slide 7, safety remains my top priority. Even though we had an all-time low number of train accidents in the quarter, the frequency rates for both train accidents and personal injuries increased due to the lower level of volumes. While CSX continues to lead the industry year-to-date in safety, we must do better. We will never be satisfied with our performance if any of our employees get injured while at work. And we are undertaking a comprehensive safety engagement initiative this quarter focused on strengthening critical rules compliance and systemically identifying and eliminating unsafe acts. Moving to slide eight. Let's review our operating performance for the quarter. Despite the challenging operating environment, the railroad continued to run at a high level. The operating team successfully implemented significant plan changes while maintaining fluidity and driving efficiencies across the railroad. In addition to these service design changes, we also drove increased yard productivity. Thank you for joining us. Thank you for joining us today. in our sustainability report to be released later this month. Slide 9 clearly highlights the unique operating challenges faced during the quarter. As volumes dropped more than 25% and then bounced back nearly 20% since Memorial Day, the team acted decisively to adjust the network for the changing volumes. Reducing total train starts roughly in line with volume declines and realizing line of road efficiency is even greater than the volume declines. These results reflect the strength of our operating model and the ingenuity of our team. In addition to consolidating trains across the network, they found new opportunities to integrate auto and unit train business into the merchandise and intermodal networks. as well as other unique service changes to more efficiently leverage yard and local operations. When volumes began to recover late in the quarter, we started recalling employees and added train starts to meet demand. But we are confident that many of the changes we made during this period are durable and make CSX a stronger company. Slide 10 shows our hourly trip plan performance in the quarter. Carload trip plan performance at 80.5 was consistent with first quarter results, and intermodal performance remained high at 94%. Volume has been volatile, but we are working closely with our customers to ensure they are appropriately resourced and prepared to handle incremental volume when it comes. I'll now turn it over to Kevin for more detail on the quarter.