Posts Tagged ‘James Squires’

NS Leasing More Locomotives, Reopening Hump Yard

May 16, 2018

Norfolk Southern has continued leasing locomotives to handle traffic surges and alleviate congestion that has occurred in particular in the southern reaches of its network.

The Class 1 carrier leased 90 locomotives in the first quarter and has added another 50 leased units to its fleet

NS CEO James Squires said the additional motive power will help handle traffic growth and enable the carrier to convert 120 older six-axle DC units to like-new AC-traction locomotives as part of its ongoing DC-to-AC conversion program.

It has also hired 400 new conductors to keep its train and engine crew headcount up.

Speaking to the Bank of America Merrill Lynch 2018 Transportation Conference, Squires said congestion in the South prompted NS to plan to reopen a hump yard in Chattanooga, Tennessee.

Squires said the hump at DeButts Yard will be a hybrid operation, meaning it will be used to classify traffic for local customers. Block swapping will continue to be done in the yard as well.

In the past year NS has increased its building of large blocks of cars and swapping them en route to minimize handling and to speed shipments along.

NS had closed the DeButts hump in May 2017. Since them terminal dwell times in Chattanooga have risen sharply.

Dwell times in Chattanooga have increased from an average of 33.5 hours in the second quarter of 2017 to 49.5 hours in April and to 62.7 hours this month.

Squires did not say when the hump would reopen. It remains in place, but workers must re-install the retarders used in hump operations.

Dwell times have also risen in other yards in the South as have average train speeds.

Despite efforts NS has made since last year, the service metrics in that region have not improved.

“We’re holding our own against strong volume growth,” Squires says. “Volume on our network is at a 12-year high.”

The NS CEO said that humps allow resiliency and operational flexibility when traffic rises by absorbing surges in traffic and metering the flow of volume by holding cars until they are ready to be released to customers.

“Customer service is not where we want it to be,” Squires said. “I want our customers to feel fully satisfied with the service they are getting from us, and right now many of them don’t.”

Despite the problems it has experienced, Squires said NS had the strongest volume growth among the Class I railroads for the year to date and that demand for rail service is the strongest he’s ever seen.


NS CEO Squires Gives Upbeat View at Annual Meeting

May 12, 2018

Norfolk Southern CEO James A. Squires gave an upbeat assessment of the railroad’s business prospects this week during the company’s annual meeting in Norfolk, saying it is achieving key financial targets, improving operating efficiencies, and advancing sustainable growth.

“Our business is about movement, and I can tell you that we are moving forward,” Squires said. “The Norfolk Southern team’s continued success in executing our plan is driving long-term value, and that’s a good story for our shareholders.”

Among the achievements that Squires cited were a record best earnings per share and operating ratio last year and productivity savings of $150 million.

Squires said this progress came despite hurricanes and winter storms that disrupted rail operations.

He also singled out use of digital and remote-sensing technologies to enhance operating efficiencies and customer service, which will give NS a competitive edge.

“With them, we are helping customers better manage supply chains in this demanding era of e-commerce, and we are improving the way we monitor and manage things, from locomotive performance to rail wear,” Squires said.

Squires said operating and financial results in 2018 have been strong thus far with year-over-year growth in shipment volumes and revenue, and first quarter records in net income, earnings per share, and operating ratio.

“Favorable economic conditions and market trends point to continued business growth this year and Norfolk Southern is in an excellent position to grow, Squires said.

During the meeting, NS shareholders re-elected 12 directors, including Squires, for terms expiring in 2019.

They include Thomas D. Bell Jr., chairman of Mesa Capital Partners LLC; Wesley G. Bush, chairman and chief executive of Northrop Grumman Corporation; Daniel A. Carp, former chairman and chief executive of Eastman Kodak Company; Mitchell E. Daniels Jr., president of Purdue University; Marcela E. Donadio, former partner and Americas Oil & Gas Sector Leader of Ernst & Young LLP; Steven F. Leer, former chief executive and chairman of Arch Coal Inc.; Michael D. Lockhart, former chairman, president, and chief executive of Armstrong World Industries; Amy E. Miles, former chair and chief executive of Regal Entertainment Group; Martin H. Nesbitt, co-founder of The Vistria Group; Jennifer F. Scanlon, president and chief executive of USG Corporation; and John R. Thompson, former senior vice president and general manager of LLC.

NS Outlines Plans to Improve Service

April 5, 2018

Norfolk Southern has acknowledged in a letter to the U.S. Surface Transportation Board that its service “is not where we or our customers need it to be.”

NS CEO James Squires said in the letter that restoring service levels is the railroad’s top priority.

Squires was writing in response to an STB request for Class 1 railroads to outline their service plans for 2018. The request came in the wake of persistent shipper complaints about deteriorating freight service.

In his letter, Squires said NS service challenges began in its southern network after a series of hurricanes last September and October.

Exacerbating the problems were snowstorms in December and January.

All of this resulted in the weekly average speed during the first 11 weeks of this year being down 16 percent compared with the same period in 2017.

It also fell by 11 percent in the first quarter of 2018 compared with the last quarter of 2017.

The average dwell time in terminals was 21 percent higher during the first quarter of this year compared with the same period in 2017 and 9 percent higher compared with the fourth quarter of 2017.

“Our local performance is currently 7 percent below where we typically perform,” Squires wrote. “Terminals and yards in the southeastern portion of our network in particular are performing below historical norms. These metrics are not where we want them to be. But, we are committed to improving for our customers.”

NS outlined the steps that it plans to take to improve customer service, which include:

• Resuming through freight operations on the former Central of Georgia route. “While we never idled this line, we ceased through freight operations over the route in the first half of 2017. We restored full through freight service to help improve network fluidity,” Squires wrote.

• Removing 100 road locomotives from storage and leasing 90 road locomotives. “Through March 23, 2018, we have 27 of the anticipated 90 locomotives on our property and have deployed 22 of these 27 in active service,” Squires said.

• Increasing the number of operating crews.

• Using technological solutions to improve operations.

• Developing a new customer notification system when shipments are delayed.

NS CEO Squires Cites Improving Performance

May 12, 2017

Norfolk Southern is touting its improving performance through a “successful execution” of the railroad’s five-year strategic plan.

NS President and CEO James Squires said at the company’s annual meeting this week that 2016 was the first full year of the company’s strategic plan to operate a faster, lower-cost and more profitable railroad.

He said NS achieved an “all-time best” operating ratio of 68.9 percent, productivity savings of $250 million, near record levels of network service performance and record locomotive fuel efficiency.

“Through successful execution of our plan, we achieved our key first-year financial and operational targets and we are well on pace to achieve our 2020 performance goals,” Squires said in a statement.

During the first quarter of 2017, Squires said, NS set records in operating ratio, operations income and earnings per share (EPS).

Among the company’s 2020 goals are annual expense savings of more than $650 million, double-digit percentage compound annual growth rate in earnings per share and an operating ratio below 65 percent.

“We are driving growth by providing superior service that optimizes pricing and increases volume and top-line revenue,” Squires said. “We are relentlessly focused on meeting the unique needs of our customers – and we are measuring service excellence as they define it.”

Squires said that in the longer term service will be NS’ competitive differentiator and will propel shareholder value.

NS Cites 2016 Progress in Meeting Strategic Goals

March 23, 2017

Norfolk Southern released it 2016 annual report this week and claims to be well on its way to achieving goals that it hopes to reach by 2020.

NS CEO James Squires said in a news release that the railroad is in the midst of implementing a five-year strategic plan to streamline operations and drive profitability and growth.

Squires told NS stockholders that the railroad in 2016  met or exceeded its targets to lower operating costs, increase profitability and improve customer service.

In a news release, NS said that during 2016 it:

• Achieved an all-time best operating ratio of 68.9 percent.
• Reduced expenses in all areas of operations to generate $250 million worth of savings, surpassing a targeted $130 million.
• Increased income from railway operations and net income by 7 percent each, driven by an 11 percent decrease in operating costs.
• Disposed of 1,000 miles of secondary rail lines.

Squires said NS also made progress in its efforts to improve locomotive fuel-efficiency, reliability and emissions reduction continued as a cornerstone of the company’s sustainability and business strategy, he said.

NS is seeking to be “more focused than ever on services that will help convert freight from highway to rail,” Squires said.

This means focusing on customer-service initiatives that range from modernizing its e-commerce platforms to developing shared performance indicators for measuring service.

“We are changing the way we do business in order to meet and exceed our customers’ expectations and to drive superior value creation for shareholders,” Squires said.

NS Income up 15% in 4th Quarter of 2016

January 26, 2017

Norfolk Southern reported that its income rose 15 percent in the fourth quarter of 2016 when it also posted a record low operating ratio. All comparisons are with the fourth quarter of 2015.

NS logo 2NS net income for the 2016 quarter was $416 million compared to $361 million in 2015. Diluted earnings per share were $1.42, up 18 percent compared with $1.20 in 2015.

The operating ratio in the fourth quarter was 69.4 percent, a 510 basis point improvement compared with 74.5 percent in 2015.

For all of 2016, the NS operating ratio was a record 68.9 percent, a 370 basis point improvement compared with 72.6 percent in 2015.

The company said the quarterly dividend for stock holders will be 61 cents per share, a 3 percent, increase over the dividend for the third quarter of 2016.

On the downside, the railway operating revenues for the fourth quarter of 2016 was $2.5 billion, a drop of 1 percent from 2015.

In a news release, NS said this reflected lower merchandise and coal traffic and reduced fuel surcharges. Those declines were offset in part by intermodal volume growth that eclipsed the effects of the 2015 Triple Crown restructuring.

General merchandise revenues were $1.5 billion, 1 percent lower than in 2015. Volume was 3 percent lower overall, as growth in steel and agriculture was offset by declines in energy markets, vehicles, and paper and forest products.

In the railroad’s five merchandise commodity groups, NS reported the following year-over-year revenue results:

  • Agriculture: $399 million, up 4 percent.
  • Chemicals: $395 million, down 7 percent.
  • Metals/Construction: $296 million, up 6 percent.
  • Automotive: $237 million, down 5 percent.
  • Paper/Forest: $177 million, down 5 percent.

Intermodal revenues increased to $583 million, a 4 percent gain compared with the fourth quarter of 2015. Volumes increased 7 percent with growth in domestic and international traffic offsetting the Triple Crown restructuring.

Coal revenues declined 7 percent to $403 million compared with 2015. Volume fell 4 percent with an increase in export coal softening the decline in the utility market.

Railway operating expenses declined $147 million, or 8 percent, to $1.7 billion compared with same period last year due to expense reductions and the absence of last year’s restructuring costs.

Income from railway operations was $761 million, an increase of 19 percent compared with fourth-quarter 2015.

NS said its composite service metric, which measures train performance, terminal operations, and operating plan adherence, was 80 percent, a 200 basis point improvement compared with 78 percent in 2015.

For all of 2016, net income was $1.7 billion, up 7 percent compared with $1.6 billion in 2015.

Diluted EPS increased 10 percent to $5.62 compared with $5.10 per diluted share in the prior year.

Results for 2015 included restructuring expenses that reduced 2015 fourth quarter net income by $31 million, or $0.10 per diluted share, and lowered 2015 net income by $58 million, or $0.19 per diluted share for the full year.

Railway operating revenues were $9.9 billion, 6 percent lower compared with 2015. The decrease was driven by a 3 percent volume decline due to reductions in energy-related markets and the Triple Crown restructuring, as well as reduced fuel surcharges.

General merchandise revenues were $6.2 billion, a 2 percent decrease compared with the prior year. Volume declined 2 percent, primarily due to reduced demand in energy markets and lower fuel surcharges.

Intermodal revenues totaled $2.2 billion, 8 percent lower compared with 2015, reflecting the Triple Crown restructuring, as well as reduced fuel surcharges. International and domestic growth more than offset the volume decline from the Triple Crown restructuring.

Coal revenues were $1.5 billion, down 18 percent year-over-year. Reduced utility volumes combined with a weak global export market lowered total volume by 16 percent.

Railway operating expenses declined $813 million, or 11 percent, to $6.8 billion primarily due to cost cutting, lower fuel expenses, the absence of last year’s restructuring cost, and service improvements.

Income from railway operations was $3.1 billion, a 7 percent increase compared with the previous year.

The composite service metric was 80 percent, an 800 basis point improvement compared with 72 percent last year.

NS said that during 2017 it would invest $1.9 billion to maintain the safety of its rail network, enhance service, improve operational efficiency, and support growth opportunities. It invested a like amount in capital expenditures in 2016.

“2016 was a pivotal year as Norfolk Southern began implementing its new Strategic Plan. We delivered $250 million of productivity savings and recorded our best ever operating ratio, notwithstanding challenging business conditions,” said CEO James A. Squires.

“With the dedication and support of our talented employees, we improved service for customers while positioning the company for further growth in 2017 and beyond. We are poised to continue building on our success and deliver an additional $100 million of productivity savings in 2017 on the way to our goal of $650 million of annual savings by 2020. We remain steadfast in our commitment to delivering superior shareholder value through the execution of our Strategic Plan.”

NS Revenue, Profits Fell in 2nd Quarter of 2016

July 28, 2016

Norfolk Southern’s financial performance in the second quarter of 2016 followed a similar path of other Class 1 railroads with falling net income and profits, but an improved operating ratio.

NS logo 2NS said that its second quarter net income declined to $405 million, or $1.36 diluted earnings per share, from $433 million, or $1.41 earnings per share. The comparisons are to the second quarter of 2015.

Operating revenue declined by 10 percent to $2.5 billion compared with 2015 quarterly results. NS said that the fall in revenue was due to reduced volumes and lower fuel surcharge revenue. Overall, volume dropped 7 percent to 1.8 million units for the quarter.

Income from railroad operations was $770 million, a slip of 5 percent from the results of the second quarter of 2015.

However, NS said its operating ratio improved 1.4 points to 68.6 percent.

That was in part a result of cost-cutting measures the company imposed. It said lowering expenses and lower fuel costs resulted in an 11 percent decline in operating expenses, which totaled $1.7 billion for the second quarter of 2016.

“Our second-quarter results reflect our unwavering focus on cost-control, steadfast commitment to customer service, and significant improvements in network performance,” said NS Chairman, President and Chief Executive Officer James Squires in a statement.

Squires said NS expects to reap productivity savings of at least $200 million for 2016 and noted that the operating ratio of 69.4 percent for the first half of 2016 is a record.

NS is aiming to have an operating ratio of below 70 percent for all of 2016.

“Through the continued execution of our strategic plan, we remain confident in our ability to drive superior shareholder value through excellent customer service that positions us for future revenue growth, combined with network efficiency and asset utilization,” Squires said.

In looking at individual traffic figures, NS said that coal revenue plummeted 25 percent to $339 million and coal volume fell 24 percent.

It attributed that to continued high stockpiles of coal by utility companies, limited coal burn due to a mild winter and lower natural gas prices.

Merchandise revenue fell 3 percent to $1.6 billion, primarily because low oil prices have resulted in fewer chemicals being shipped.

The five merchandise commodity groups’ year-over-year revenue results were chemicals, down 6 percent to $426 million; agriculture, up 1 percent to $383 million; metals/construction, down 3 percent to $334 million; automotive, down 2 percent to $248 million; and paper/forest, down 5 percent to $186 million.

Intermodal revenue fell by 15 percent to $538 million, with volume down 5 percent. NS said this was a result of its restructuring of its Triple Crown Services subsidiary.

The Wall Street Journal reported that the NS second quarter earnings were better than had been anticipated by Wall Street analysts.

CP’s Harrison Highest Paid Class 1 CEO in 2015

May 7, 2016

He may have lost out on becoming the CEO of Norfolk Southern, but E. Hunter Harrison has 15 million reasons to be happy with being the head of Canadian Pacific.

Trains magazine reported that Harrison is the highest paid CEO among North American Class I railroads.

In 2015, he took home $15.4 million in compensation (C$19.9 million). That was well above the $10 million made by Union Pacific CEO Lance Fritz.

E. Hunter Harrison

E. Hunter Harrison

Other CEO pay last year included: Michael Ward, CSX, $9.2 million; James Squires, NS, $7.9 million; David Starling, Kansas City Southern, $7.9 million; and Claude Mongeau, Canadian National, $7.7 million.

BNSF is a part of privately-owned Berkshire Hathaway and executive compensation figures are not publically available.

Not everyone at CP believes Harrison should be so well compensated. At last month’s CP annual meeting, stockholders rejected by 50.1 to 49.9 percent CP’s executive compensation package.

In response, the CP board of directors said it would take the non-binding resolution into account when setting the pay for executives this year.

However, Harrison and the CP board won re-election to their posts, receiving 96.6 percent of the votes cast.

In 2015, Harrison was paid a base salary of $2,803,522, stock awards of $4,749,089, options awards of $5,163,279, non-equity incentive plan compensation of $6,002,537, and other compensation of $1,184,026. All figures are in Canadian dollars.

Trains reported that Harrison’s base salary is high because he had to forfeit $1.5 million in annual CN pension payments in order to take the job at CP. Harrison was the CEO of CN before joining CP in June 2012.

In a proxy filing, CP asserted that by subtracting the pension makeup payments, Harrison’s base salary is $700,000, which the Calgary-based company said is “significantly below his prior salary at CN, industry norms, and CEO salaries in CP’s comparator group.”

The proxy filing justified Harrison’s pay package by saying that under his leadership CP has transformed from the industry’s worst financial performer to among its best.

“Although Mr. Harrison’s total compensation is much higher than his peers, the return to shareholders during his tenure is equally impressive,” CP said, adding that during Harrison’s tenure as CEO that CP added $14.2 billion in total additional shareholder value.

Fritz, who became CEO of UP in February 2015, earned a salary of $966,000, a bonus of $2 million, stock awards of $3,600,488, option awards of $2,400,008, change in pension value and deferred compensation earnings of $980,911, and other compensation of $139,220.

Ward of CSX had a base salary of $1.2 million, stock awards of $7,064,833, non-equity incentive plan compensation of $864,000, and other compensation of $80,728.

Squires took over as NS CEO on June 1, 2015, and was paid a base salary of $837,500, stock awards of $1,625,268, option awards of $4,375,050, a change in pension value and deferred compensation earnings of $1,036,596, and other compensation of $115,151.

Starling at KCS pulled down a base salary of $900,000, a bonus of $326,669, stock awards of $5,529,963, option awards of $551,195, non-equity incentive plan compensation of $468,000, and other compensation of $124,683.

CN’s Mongeau received a base salary of $1,075,000, an incentive bonus of $1,290,000, performance share units of $3,256,065, and stock options worth $2,144,000.

NS 1st Quarter Performance Exceeded Expectations

April 24, 2016

Analysts participating in a first quarter conference call to discuss Norfolk Southern’s first quarter earnings praised the railroad’s performance, taking note that the company’s profit rose by 25 percent, which proved to be better than projected.

“We’re on the right track and showing tangible results,” said NS CEO James Squires.

NS logo 1One analyst said the first quarter results will make the negativity of the bruising battle to fend off a takeover by Canadian Pacific go away.

NS revenue fell by 6 percent during the quarter when compared with the first quarter of 2015. But expenses were down 13 percent and income was up by 19 percent. The operating ratio fell by 8 percent to 70.1 percent.

NS officials said during the conference call that it expects to reach $200 million in productivity savings, which would best the $130 million objective that it had earlier set.

Its longer-term objectives are to lower its operating ratio to below 70 percent in 2016 and to get it to down to 65 percent or lower by 2020.

Squires said that despite a 2 percent fall in traffic volume, service improvements helped the railroad increase its profit.

Overall train speed was up by 15 percent and terminal dwell time was down 14 percent. The number of trains that needed a new crew fell by 51 percent.

Like its chief competitor CSX, NS has been running longer trains, which led to a decrease in crew starts.

NS Executive President and Chief Operating Officer Michael Wheeler said train length has expanded by 2.5 percent.

Wheeler said NS is running longer trains and expanding the use of distributed power where it makes sense.

The railroad has stored 200 road locomotives and idled 150 engines assigned to yard and local service. It returned during the first quarter 28 leased units. The company will take delivery of 50 new locomotives this year.

Although NS during the quarter furloughed 1,300 operating employees along with 450 non-crew works, it expects to recall 500 operating employees to replace employees lost to attrition and handle an anticipated second quarter traffic increase.

Among the service reductions that NS has made are a planned May 1 closing of a hump yard in Knoxville, Tennessee, and reduced switching operating at 25 other yards, including Moorman Yard in Bellevue.

NS plans to downgrade, sell, or lease or sell to a short-line carrier 1,000 miles of track this year.

“We’re pulling out all the stops on costs,” Squires said. “We have the pedal to the metal and that’s where it’s going to stay.”

Squires said during the conference call that the cost cutting campaign was helped by a mild winter.

The warmer than usual winter also meant that coal traffic fell by 23 percent in part because utility companies had large stockpiles of coal that they did not need to use.

Merchandise traffic grew 3 percent. Within that segment, automotive traffic was up 18 percent.

However, Alan Shaw, executive vice president and chief marketing officer, said auto traffic would not continue to grow at that pace the rest of the year.

Domestic intermodal traffic was flat, but international intermodal shipments were up 15 percent for the quarter.

NS Had Mixed Financial Results in 1st Quarter

April 22, 2016

Norfolk Southern reported on Thursday that its first quarter operating revenue was down by $2.4 billion or 6 percent over the same period in 2015.

However, its operating expenses also fell by $1.7 billion, a 13 percent decline to go with a 2 percent fall in traffic volume.

The operating ratio was 70.1 percent, which set an NS first quarter record.

NS logo 2NS was able to earn $387 million in net income, which was a 25 percent increase over the first quarter of 2015.

Diluted earnings per share were $1.29, up 29 percent compared with $1 diluted earnings per share in the first quarter last year.

“Our strong first-quarter results demonstrate the significant progress we are making in line with our strategic plan,” said Chairman, President, and CEO James A. Squires. “Since I became CEO in June, our team has been committed to streamlining operations, reducing expenses and maintaining superior customer service levels. Our focus on strengthening Norfolk Southern is yielding results, and the company is now on track to achieve productivity savings of about $200 million and an operating ratio below 70 in 2016.

“We are confident the continued execution of our strategic plan will deliver superior shareholder value by best positioning Norfolk Southern to succeed while ensuring the company is prepared to capture revenue and volume growth opportunities in 2016 and beyond.”

The NS strategic plan is seeking to achieve annual productivity savings of more than $650 million by 2020 and an operating ratio below 65 percent.

In a news release, NS said the fall in traffic volume was largely the result of falling coal traffic. At $349 million, coal revenue was 23 percent lower than in the first quarter of 2015.

The railroad attributed the falling coal revenue to mild winter temperatures, low natural gas prices, and a weak global export market.

Merchandise freight revenue was $1.5 billion, 2 percent higher than the same period last year. NS said the merchandise revenue was led by an 18 percent increase in automotive traffic.

Volume grew in all business groups except chemicals, which was affected by fewer crude oil shipments due to low oil prices.

Intermodal revenues were $522 million, down 12 percent compared with the first quarter of 2015.

NS said volume was even for the quarter as growth in international volumes was offset by lower domestic volumes due to the restructuring of the company’s Triple Crown Services subsidiary.