Norfolk Southern Corporation

Greetings and welcome to Norfolk Southern Corporation fourth 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 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Pete Charbel, Senior 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 investor 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, everyone, and welcome to Norfolk Southern's fourth quarter 2020 earnings call. Joining me today are Cindy Sanborn, Chief Operating Officer, Alan Shaw, Chief Marketing Officer, and Mark George, Chief Financial Officer. I'd like to begin today by recognizing the hard work and dedication of all of our employees who persevered and adapted throughout 2020 to serve our customers and communities and enhance shareholder value. As the past year unfolded, change was one of the few constants driven by the COVID-19 pandemic as well as a global shift in energy markets that significantly impacted our business. Our people, day in and day out, ensured that our railroad was positioned to succeed by delivering for our customers changing needs while seizing efficiency opportunities that produced record productivity levels and advanced our PSR-based operating plan. Moving to our results on slide four, For the quarter, EPS was $2.64, and the operating ratio was an all-time record at 61.8%. Prior to summarizing the full-year results, I'll highlight two previously disclosed non-cash charges. First, recall in the first quarter we launched a rationalization of our locomotive fleet by 703 units, which resulted in a non-cash charge of $385 million. This was possible due to the deep and lasting efficiency that we've driven into our train network through precision scheduled railroading. Next, in the third quarter we disclosed a $99 million non-cash impairment charge related to an equity method investment. I will speak to full year results excluding both of these charges. For the full year, revenues declined 13% as we experienced significant disruption in business levels from the dual impacts of the global pandemic and energy market changes. In response, we pressed forward with PSR initiatives and quickly adapted to control costs. And as a result, we more than offset the revenue decline with a 14% reduction in adjusted operating expenses. The adjusted operating ratio improved to 64.4%, which marks the fifth consecutive year of improvement. As we managed significant volume fluctuations throughout the pandemic, we idled four additional hump operations, streamlined our resources, and completed a redesign of our southern operations around Atlanta ahead of peak season. Since our launch of Top 21, we've completed a total of six hump rationalizations and we've substantially reduced our asset requirements. Our ongoing efforts to improve fuel efficiency and resource productivity produced our best results to date. These actions contributed to another year of operating ratio improvement on an adjusted basis and are especially crucial to drive profitability and efficiency even further in 2021. We see ample opportunity to affect more positive change and remain focused on closing the OR gap with the industry. Moving into 2021, we are committed to providing a superior value to shareholders and best-in-class service to customers through an efficient, profitable operation, building further upon record productivity and efficiency gains to foster a platform of growth. Increasing resilience in our service offering and creating latent capacity to grow with our customers is in lockstep with our goals to grow profitably and efficiently. This alignment is paramount as we continue to leverage our superior positioning to consumer and industrial markets that have been proven growth drivers for Norfolk Southern. We will leave no stone unturned as we drive efficiency and create value for our shareholders. I'll now turn the call over to Cindy.