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Norfolk Southern (NSC) James A. Squires on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 21, 2016 4:30 pm ET


Katie U. Cook - Director-Investor Relations

James A. Squires - Chairman, President, and Chief Executive Officer

Alan H. Shaw - Chief Marketing Officer & Executive Vice President

Michael Joseph Wheeler - Executive Vice President and Chief Operating Officer

Marta R. Stewart - Chief Financial Officer & Executive Vice President Finance


Justin Long - Stephens, Inc.

Matt Troy - Nomura Securities International, Inc.

Allison M. Landry - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Kenneth Scott Hoexter - Bank of America Merrill Lynch

Chris Wetherbee - Citigroup Global Markets, Inc. (Broker)

Scott H. Group - Wolfe Research LLC

Jason H. Seidl - Cowen and Company, LLC

Brandon Oglenski - Barclays Capital, Inc.

Robert H. Salmon - Deutsche Bank Securities, Inc.

J. David Scott Vernon - Sanford C. Bernstein & Co. LLC

Thomas Wadewitz - UBS Securities LLC

Patrick Tyler Brown - Raymond James & Associates, Inc.

Ben J. Hartford - Robert W. Baird & Co., Inc. (Broker)


Greetings and welcome to the Norfolk Southern Corporation First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. And a question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ms. Katie Cook. Thank you. Ms. Cook, you may now begin.

Katie U. Cook - Director-Investor Relations

Thank you, Chris, and good afternoon. Before we begin today's call, I would like to mention a few items. First, the slides of the presenters are available on our website at in the Investors section. Additionally, transcripts and downloads of today's call will be posted on our website.

As noted in our disclosures found on slide two of our presentation, please be advised that during this call, we may make certain forward-looking statements. These statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. 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.

Additionally, keep in mind that all references to reported results, excluding certain adjustments, that is non-GAAP numbers, have been reconciled on our website in the Investors section.

Now, it is my pleasure to introduce Norfolk Southern's, Chairman, President and CEO, Jim Squires.

James A. Squires - Chairman, President, and Chief Executive Officer

Good afternoon, everyone, and welcome to Norfolk Southern's first quarter of 2016 earnings call. With me today are NS's Chief Marketing Officer, Alan Shaw; our Chief Operating Officer, Mike Wheeler; and our Chief Financial Officer, Marta Stewart. We'll share the details of our strong first quarter financial results with you momentarily. But let me begin by saying how proud I am of the men and women of Norfolk Southern who are so successfully executing our strategic plan their flexibility and initiative are driving shareholder value even in the midst of a challenging and ever-changing marketplace.

Turning to our results on slide four, our team delivered a record-setting first quarter operating ratio of 70.1%, 630 basis points lower than last year's first quarter. This performance was in the face of weak commodities, a strong dollar, and coal volumes down 23%. Norfolk Southern's earnings for the first quarter were $1.29 per share, 29% higher than last year's dollar per share. Marta will go over the details shortly.

We were able to generate these results; thanks in large part to improved network performance. Mike will follow with an update on operations. But let me highlight here that our team increased the composite service measure by 23%, increased train speeds by 15%, and reduced terminal dwell by 14%. These strong improvements helped us control costs, while enhancing the value of our product. Better service is, of course, a pre-requisite to growth and a foundation of our strategy. It is what allowed us to grow in the first quarter in markets like automotive and intermodal even within a challenging macroenvironment.