CSX Corp (NASDAQ:CSX) Q2 2020 Earnings Conference Call - Final Transcript

Jul 22, 2020 • 04:30 pm ET


CSX Corp (NASDAQ:CSX) Q2 2020 Earnings Conference Call - Final Transcript


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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. [Operator Instructions]

For opening remarks and introduction, I would like to turn the call over to Mr. Bill Slater, Chief Investor Relations Officer for CSX Corporation.

Bill Slater

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.

James M. Foote

Thanks, Bill, and thank you to everyone for joining our call this afternoon. Well, 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 40% to $0.65, 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. Sequentially, 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 as both the international and domestic businesses were impacted by lower consumer and industrial demand. Coal revenue decreased 48% on 44% lower volumes. Both the domestic and export markets were