Norfolk Southern Corporation

Greetings, and welcome to the Norfolk Southern Corporation third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Pete Charbel, Director of Investor Relations. Thank you, Mr. Charbel. You may now begin.

Thank you, and good morning, everyone. Please note that during today's call, we will make certain forward-looking statements which are subject to risks and uncertainties and may differ materially from actual results. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Our presentation slides are available at NorfolkSouthern.com in the Investors section. along with our reconciliation of non-GAAP measures used today to the comparable GAAP measures. Additionally, a transcript and downloads will be posted after the call. It is now my pleasure to introduce Norfolk Southern's Chairman, President, and CEO, Jim Squires.

Good morning, and welcome to Norfolk Southern's third quarter 2020 earnings call. On the call with me today are Cindy Sanborn, Chief Operating Officer, Alan Shaw, Chief Marketing Officer, and Mark George, Chief Financial Officer. Before diving into our third quarter results, I'll highlight a previously disclosed non-cash impairment charge of $99 million related to an equity method investment. Slide four provides an adjusted view of our financials excluding this charge, which is the view I will speak to in my comments this morning. During the third quarter, our volumes decreased 7% year over year, while adjusted operating expenses were down 15%, more than double the volume decline. On an adjusted basis, we reported our best operating ratio to date, but this is just the beginning. As we continue rolling out PSR, our team sees additional opportunities for efficiency and growth that will close the OR gap with the rest of the industry, driving shareholder value creation. As our third quarter results demonstrate, we are implementing sustainable cost structure improvements across our company. Employment levels are down 25% since the start of 2019, while active locomotives have decreased by 26%. We have advanced these resource improvements every quarter since launching Top 21 last year, including most recently by decreasing headcount by 2% sequentially in the third quarter, even as volumes surged 22%. We converted a fifth hump yard in the quarter, and you'll hear from Cindy regarding further network enhancements that are underway. In the coming quarters, we will identify and execute on additional productivity initiatives to yield further efficiency gains. Turning to network performance. Even as we implemented deep and lasting cost structural moves in the third quarter, we ran a fast and fluid network with train speed, terminal dwell, train performance, and shipment consistency all better than before Top 21. We've now pushed train size to record levels. Finally, we're excited to have Cindy Sanborn join us as Chief Operating Officer. Cindy came to NS to drive operational change and improvement, bringing decades of experience and a deep commitment to precision scheduled railroading. Cindy has made it clear she sees many opportunities to increase efficiency and bottom line results at NS, and I know she looks forward to sharing her thoughts. Cindy?