ATLANTA, May 15, 2020 /PRNewswire/ -- Despite economic challenges posed by the COVID-19 pandemic, Norfolk Southern is well-positioned to safely and successfully weather the unprecedented situation, CEO James A. Squires said Thursday at the company's annual meeting of shareholders.
"We will get through the challenges ahead and emerge as an even stronger company," Squires said. "We'll continue to manage our assets well and control our costs. Our emphasis on superior service will continue to drive our long-term growth strategy. And through it all, our Norfolk Southern employees will continue to get the job done safely, with excellence and pride."
Squires addressed shareholders during the company's first virtual-only annual meeting, a board decision made in light of public health concerns and social distancing guidance arising from the COVID-19 pandemic.
In his remarks, Squires expressed confidence in the Norfolk Southern team, saying the company's agile response to the coronavirus pandemic demonstrates the railroad's resilience and unwavering commitment to customers and the communities it serves. The effort required innovation and collaboration, he noted, and ranged from equipping departments to work remotely, including most of Customer Service, to purchasing hand sanitizer from local distilleries in the midst of a nationwide shortage.
"As they always do in a crisis, our employees responded heroically," Squires said. "The entire Norfolk Southern team has rallied around our customers, and we're delivering with the best service product in the history of our company. We're keeping the steel wheels moving as we play our part to keep the shelves stocked and the lights on."
In addition to this strong employee performance, Squires said the company's Reimagine '21 strategic plan, rolled out in 2019 and built on the tenets of precision scheduled railroading, is driving long-term, transformational improvements in operating efficiencies and customer service. A centerpiece is the railroad's TOP21 operating plan, which has transformed how it operates trains on the network and contributed to record levels of train performance and service.
"As a result of our transformation, we've set records for metrics such as train speed, terminal dwell, and shipment consistency," Squires said. "We've decongested our yards and road network, allowing cars to turn quicker in the terminals and trains to move faster on the network. Our success enabled us to dispose of 703 locomotives that are no longer needed because our network is more efficient – a strong sign that our strategic plan is working."
These efficiency gains helped the railroad achieve an adjusted operating ratio of 63.7% in the first quarter of 2020, when excluding the charge related to the disposition of locomotives. While the company has withdrawn guidance for revenue and the operating ratio in 2020, Squires said the railroad remains committed to its 2021 goal of driving down the OR to 60%.
Squires said the economic downturn triggered by COVID-19 will impact the railroad's business, noting that traffic volumes decreased by 11% in the first quarter of 2020 and continue to trend downward.
While acknowledging that Norfolk Southern is not immune to COVID-19 disruptions, Squires reaffirmed his confidence in the company's overall financial standing, with access to ample liquidity and the lowest levels of capital expenditures since 2010. When paired with operational efficiencies and industry-leading personnel, the company is positioned for future growth opportunities that will create long-term shareholder value, he said.
"Norfolk Southern has a history of successfully managing through business cycles and challenging economic environments," Squires said. "None of us can predict the severity or duration of this economic downturn, so we are focused on the factors within our control. By continuing to execute our strategic plan and provide superior service to our customers, we will move through this period successfully and be ready to capture opportunities as the economy recovers."
Squires' full remarks are posted on the "Invest in NS" section of the Norfolk Southern website under "Presentations."
In official business, based on preliminary results, shareholders elected 13 directors for terms expiring in 2021:
Thomas D. Bell Jr., chairman of Mesa Capital Partners LLC;
Mitchell E. Daniels Jr., president of Purdue University;
Marcela E. Donadio, former partner and Americas oil and gas sector leader of Ernst & Young LLP;
John C. Huffard Jr., co-founder of Tenable Network Security and Tenable Holdings Inc.;
Christopher T. Jones, former corporate vice president and president of the technology services sector of Northrop Grumman Corporation;
Thomas C. Kelleher, former president of Morgan Stanley;
Steven F. Leer, lead director, former CEO and chairman of Arch Coal Inc.;
Michael D. Lockhart, former chairman, president, and CEO of Armstrong World Industries Inc.;
Amy E. Miles, former chair and CEO of Regal Entertainment Group;
Claude Mongeau, former president, CEO, and director of Canadian National Railway Company;
Jennifer F. Scanlon, president, CEO, and director of UL;
James A. Squires, chairman, president and CEO of Norfolk Southern; and
John R. Thompson, former senior vice president and general manager of Best Buy.com LLC.
In other preliminary results, shareholders approved three proposed amendments to the corporation's amended and restated articles of incorporation; ratified appointment of KPMG LLP as independent auditors for 2020; approved an advisory resolution on the compensation of executive officers; and rejected a proposal regarding shareholders' right to act by written consent.
About Norfolk Southern Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 19,500 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts.
Forward-looking statements Certain statements in this news release may be forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future performance of Norfolk Southern Corporation's (NYSE:NSC) ("Norfolk Southern," "NS" or the "Corporation"). In some cases, forward-looking statements may be identified by the use of words like "will," "believe," "expect," "targets," "anticipate," "estimate," "plan," "consider," "project," and similar references to the future. The Corporation has based these forward-looking statements on management's current expectations, assumptions, estimates, beliefs, and projections. While the Corporation believes these expectations, assumptions, estimates, and projections are reasonable, forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Corporation's control, including but not limited to: general North American and global economic conditions; changes in energy prices and fuel markets; uncertainty surrounding timing and volumes of commodities being shipped; changes in laws and regulations; uncertainties of claims and lawsuits; labor disputes; transportation of dangerous goods; effects of changes in capital market conditions; and severe weather. These and other important factors, including the risks and uncertainties related to the COVID-19 pandemic and those discussed under "Risk Factors" in the Corporation's Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission ("SEC"), as well as the Corporation's other public filings with the SEC, may cause actual results, benefits, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. Please refer to these SEC filings for a full discussion of those risks and uncertainties we view as most important. Forward-looking statements are not, and should not be relied upon as, a guarantee of future events or performance, nor will they necessarily prove to be accurate indications of the times at or by which any such events or performance will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, the occurrence of certain events, or otherwise, unless otherwise required by applicable securities law.