Posts Tagged ‘NS CEO James Squires’

Squires to Retire in 2022 as NS CEO

December 3, 2021

Alan Shaw (left) will replace James Squires as NS CEO in 2022.

Norfolk Southern CEO James A. Squires plans to retire on May 1, 2022.

He will be succeeded by Alan Shaw, who is currently an NS executive vice president and the chief marketing officer.

Shaw will assume the position of NS president immediately as part of the transition plan. In a news release, NS said its top managers will report to Shaw.

In addition to his CEO duties, Squires serves as president and chairman of the board of directors.

NS also said Ed Elkins, vice president of industrial products, has been promoted to the positions of executive vice president and chief marketing officer.

Shaw has worked at NS for 27 years in marketing, operations and finance. He was been chief marketing officer since May 2015.

Squires was appointed CEO by NS in 2021 to replace the retiring Charles “Wick” Moorman.

He was named chairman of the NS board in October 2015.

Previously Squires served at NS as executive vice president administration, executive vice president finance and chief financial officer, senior vice president finance, senior vice president law, and vice president law.

NS Vows to Pursue Sustainability

May 15, 2021

Norfolk Southern may favor black locomotives, but its top executives were seeing green during their remarks at the annual meeting held last Thursday.

CEO James Squires focused on the carrier’s “digital transformation” and sustainability initiatives during his speech.

“Having made significant progress in our company’s transformation, technology remains at the center of our strategy,” Squires said.

“We are moving quickly to lead the industry in innovation, launching our Digital | NS initiative, and building the digital railroad of the future.

Squires said the company’s goals, both short term and long term, reflect a pursuit of operational excellence as well as a deep commitment to sustainability as core to its business.

“We are excited to move forward with our transition to diesel-electric hybrid cranes at our intermodal facilities, advance plans to further reduce fuel consumption, and develop our science-based target to reduce emissions consistent with the Paris Agreement on climate change,” Squires said.

“By combining these measures with innovative initiatives such as our industry-first issuance of green bonds, we’re partnering with our customers and investors to reduce our respective carbon footprints and business costs while pursuing responsible growth.” 

A shareholder proposal requesting that NS management report on how its lobbying activity aligns with the Paris Agreement on climate change received support from a majority of the shares voted at the annual meeting.

“Our board of directors will determine appropriate next steps, but it’s important to note that sustainability and political transparency are already areas of strength for our company,” said Executive Vice President and Chief Legal Officer Vanessa Allen Sutherland.

“We have committed to set a science-based target for emissions reductions consistent with the Paris Agreement, and recently issued $500 million in green bonds to fund investments in sustainable business practices. We also have been consistently recognized as a leader in corporate political transparency by such organizations as the Center for Political Accountability.”

Squires also said NS is well positioned to offer superior service and enjoy financial gains as the economy improves.

“We’re now accelerating our implementation of precision scheduled railroading principles to drive the productivity and efficiency of our organization even further, helping us better serve customers, support growth and drive long-term value,” Squires said.

NS shareholders elected 13 directors for one-year terms expiring in 2022.

They include Thomas D. Bell Jr., chairman of Mesa Capital Partners; Mitchell E. Daniels Jr., president of Purdue University; Marcela E. Donadio, former partner and Americas oil and gas sector leader of Ernst & Young; John C. Huffard Jr., co-founder of Tenable Network Security and Tenable Holdings; 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 Stanle; Steven F. Leer, lead director, former CEO and chairman of Arch Coal; Michael D. Lockhart, former chairman, president and CEO of Armstrong World Industries; Amy E. Miles, former chair and CEO of Regal Entertainment Group; Claude Mongeau, former president and CEO of Canadian National; Jennifer F. Scanlon, president, CEO and director of UL; Squires; and John R. Thompson, former senior vice president and general manager of Best

NS Net Income Up in 1st Quarter

April 29, 2021

Norfolk Southern said on Wednesday that its first quarter 2021 net income was $673 million, or $2.66 earnings per diluted share, compared with $381 million, or $1.47 per diluted share during the same period in 2020.

Railway operating revenue of $2.6 billion was up 1 percent, or $14 million, compared with last year.

In a news release, NS said this gain was driven primarily by a 3 percent increase in volume.

The quarter’s diluted earnings per share was a first quarter record. Likewise, NS set an operating ratio record during the first quarter of 61.5 percent.

A year ago, the operating ratio for the first quarter was an adjusted 63.7 percent. The operating ratio is the percentage of revenue devoted to paying expenses.

First quarter 2021 railway operating expenses were $1.6 billion, down 21 percent or $433 million, compared with the same period last year.

The first quarter 2020 results included a $385 million non-cash locomotive rationalization charge as a result of productivity gains achieved through implementing the precision scheduled railroading operating model.

Last year NS sold 703 locomotives “deemed excess and no longer needed for railroad operations,” and thereby recorded a $385 million loss “to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit,” NS said in a news release.

Excluding the locomotive rationalization charge, operating expenses were down 3 percent, or $48 million, compared with adjusted operating expenses in 2020.

NS said it benefited from lower fuel, compensation and benefits, and materials expenses.

Income from railway operations reached a first-quarter record of $1 billion, an increase of 79 percent or $447 million compared to 2020.

Excluding the effect of the locomotive rationalization charge last year, income from railway operations was up 7 percent or $62 million.

“The reopening of the economy provides meaningful tailwinds for continued strength in both the consumer and manufacturing sectors, and our long history of delivering sustainable transportation solutions for customers will continue to drive long-term value for our shareholders, customers, and the communities we serve,” said NS CEO James Squires.

NS executives expect 9 percent year-over-year growth in revenue, with intermodal and merchandise as the leading drivers, and coal continuing a “secular decline.”

The company anticipates a “greater than 300 basis points improvement” for the operating ratio in 2021, vs. the 2020 adjusted operating ratio of 64.4 percent

Capital expenditures are expected to be $1.6 billion.

Class 1 CEOs Optimistic About Traffic Growth

January 28, 2021

Optimism was the underlying theme this week in investor calls hosted by top executives of Norfolk Southern and Canadian National.

CEOs of both Class 1 railroad systems expect intermodal traffic to drive growth this year as the economy recovers from the COVID-19 pandemic induced economic downturn of 2020 that at times threw the nation into a recession.

Both railroads expect to see growth in carload traffic although it is likely to lag behind intermodal volume in terms of percentage growth.

“As we take stock of what we achieved in 2020 while managing both the pandemic and energy market challenges, including the successful idling of four additional hump operations while driving productivity to record levels, we see much more opportunity ahead,” CEO James Squires said.

CN CEO J.J. Ruest made similar comments, noting that the economic recovery remains uneven but traffic continues to grow.

“We are increasingly optimistic about 2021 and we are reinstating our full-year financial outlook,” he said.

NS expects revenue growth this year of intermodal and merchandise volume in the high single-digit range.

But energy-related traffic is another story. NS management expects coal volume to continue to decline due to low natural gas prices, increased use of renewable energy, and unusually high utility stockpiles.

NS Chief Marketing Officer Alan Shaw said demand for intermodal traffic is expected to remain strong due to consumer spending and retailers restocking depleted inventories.

The decline in merchandise traffic was due to falloffs in crude oil, natural gas liquids, and frac sand shipments.

All of those declined due to the effects of the pandemic, lower refinery production, additional pipeline capacity, and reduced oil and gas drilling.

However, Shaw said there are signs that steel, automotive, plastics, forest products and agricultural shipments are picking up.

Further boosting carload traffic will be a rebounding manufacturing and housing market.

NS said 2020 operating income and revenue fell 13 percent as traffic skidded by 12 percent.

NS managers said 70 percent of the revenue decline came from energy-related traffic. Earnings per share fell 10 percent, to $9.25. 

The 2020 operating ratio set a record by falling 0.3 points to 64.4 percent, the fifth straight year of improvement.

“We see ample opportunity to affect more positive change and remain focused on closing the operating ratio gap with the industry,” Squires said. 

NS is aiming to shave 3 points off its operating ratio this year, hoping it will fall to 60 percent by the fourth quarter. 

The operating ratio reflects the percentage of revenues that are devoted to expenses.

At CN, management expects traffic growth of 5 percent this year.

Driving that is a record Canadian grain tonnage, demand for lumber and propane, and international and domestic intermodal gains driven by e-commerce and refrigerated grocery shipments.

CN expects earnings to rise in the high single-digit range this year, with an operating ratio below 60 percent.

The capital budget of $3 billion remains unchanged from last year.

Ruest said CN will continue to focus on managing capacity, increasing profit margins, and deploying technology that makes the railroad safer and more efficient, as well as easier for customers to do business with.

NS Expected to Open Atlanta HQ in September

January 9, 2021

Norfolk Southern expects to move into its new Atlanta headquarters in September.

James Squires

NS CEO James Squires said this week that construction of the facility is well under way in midtown Atlanta.

Work on the new headquarters began with a groundbreaking ceremony in March 2019

NS is currently headquartered in Norfolk, Virginia. The move to Atlanta was announced in December 2018.

Speaking to the National Railroad Construction and Maintenance Association, Squires also predicted the economy will recover from the COVID-19 pandemic during the second half of 2021.

“It’s the darkness before the dawn right now,” he said. “The pandemic is still raging, and we are continuing to make the maximum effort to protect our front-line employees in ways that will keep them safe.”

Squires said that as COVID-19 vaccines become more widely available he expects to see a big pickup in freight traffic volume.

“I’m optimistic that in the second half of the year, we expect to see a great deal of activity,” he said.

NS Revenue, Profits Fell in 3rd Quarter

October 29, 2020

As expected Norfolk Southern reported this week that its revenue and profits sank during the third quarter due to traffic declines that the railroad tied to the COVID-19 pandemic.

Operating income fell 6 percent to $939 million while revenue dropped 12 percent to $2.5 billion.

Adjusted  earnings per share rose 1 percent to $2.51.

During the period NS posted an adjusted operating ratio of 62.5 percent.

During the quarter NS reduced expenses by 15 percent while its traffic volume fell by 7 percent.

Intermodal volume grew 1 percent during the quarter, but merchandise traffic and coal combined fell 11 percent.

Domestic intermodal was up 9 percent while international intermodal volume fell 11 percent.

Coal volume alone fell by 32 percent, which represented most of the volume declines said NS Chief Marketing Officer Alan Shaw.

NS CEO James Squires said the railroad plans to pick up the pace of precision scheduled railroading changes, including closing hump operations in Macon, Georgia, and revising its southern service plans.

“As we continue rolling out PSR, our team sees additional opportunity for efficiency and growth that will close the [operating ratio] gap with the rest of the industry,” Squires said during an investor’s conference call.

The carrier said it is aiming to reach an operating ratio of 60 percent in 2021.

Chief Operating Officer Cindy Sanborn said the change NS is making to its operating plans are more than tweaking.

She said there will be longer trains that will move faster. Train length was up 12 percent this quarter compared to 6,600 feet a year ago.

Increases in intermodal and merchandise traffic have been added to existing trains.

Crew starts in August and September did not increase even though traffic volume rose.

The NS workforce in the third quarter was 18 percent below what it was a year ago.

Shaw predicted a rebound in consumer-related traffic, including intermodal and automotive, but expects anything connected to energy to recover more slowly.

He said there is no hope for coal traffic to improve so long as natural gas prices remain low and utility stockpiles stay 45 percent higher than they were at this time last year.

Sanborn said NS still has the ability to increase train length because only 9 percent of merchandise trains at at the maximum of the horsepower of their locomotive consists.

Just 10 percent of NS intermodal trains are longer than 10,000 feet.

NS in September closed its hump at Enola Yard near Harrisburg, Pennsylvania.

The closing of the hump in Macon next week will mark the sixth hump that NS has idled since 2019.

 “A lot of these hump conversions that you’ve seen  . . . actually improves car speed,” Sanborn said. “And at a system level what we want to do is avoid touches all together if at all possible. If we can speed the cars up, that’s good for us in terms of asset intensity and it’s also good for our customers. It provides them a more timely service product.”

As part of its redesign of southern operations, NS also plans to close several local yards around Atlanta.

As other railroads practicing PSR have done, NS is pre-blocking more traffic at origin and focusing on block-swapping en route.

NS will still have jump yards in Elkhart, Indiana; Conway (Pittsburgh), Pennsylvania; Birmingham, Alabama; and Chattanooga, Tennessee.

NS CEO Extols the Virtues of PSR

September 18, 2020

Norfolk Southern CEO touted the virtues of precision scheduled railroading this week during a presentation to investors, crowing about how the railroad is doing more with less.

That includes fewer trains, fewer employees and maybe soon fewer hump yard operations.

Squires said during the Morgan Stanley investor conference on Thursday morning that NS may idle more hump yards after closing humps at four classification yards this year.

NS has labeled its PSR plan as TOP21 and before it was implemented last year NS had 10 active hump yards.

But this year it has ceased hump operations in Bellevue; Sheffield, Alabama, Linwood, North Carolina, and Allentown, Pennsylvania.

Squires said that under the TOP21 operating plan NS has substantially reduced its dependence on major classification yards.

“Over the past year we’ve fundamentally changed the way we run our railroad to ensure the greatest efficiency across our operations,” Squires said.

“Step change is hardly adequate to describe the pace at which we’ve reduced resources and assets. And yet we’ve dramatically improved the service we’re providing to our customers and have created new capacity in the process.”

He said the potential exists for curtailing more hump operations.

NS has six hump yards still in operation including Elkhart, Indiana; Conway Yard near Pittsburgh; Enola Yard near Harrisburg, Pennsylvania; Chattanooga, Tennessee; Birmingham, Alabama; and Macon, Georgia.

Some changes NS has implemented were a response to falling traffic during the COVID-19 pandemic, including the end of dedicated auto rack trains due to auto assembly plants shutting down.

But once those plants resumed production, NS did not return to running auto rack trains but instead began carrying finished vehicles in the consists of general merchandise trains.

However, not all of the lost traffic is due to the pandemic. NS has seen its daily carloads fall 4 percent since TOP21 was fully implemented in July 2019.

Crew starts are 19 percent lower, train weight has increased 6 percent compared with last year, and the average train length has risen 11 percent.

NS has reduced its workforce by 24 percent since early 2019 and the active locomotive fleet is down 27 percent to 2,561 units as of July 31.

A surge in domestic containers has pushed NS intermodal volumes in recent weeks to fall peak levels as retailers seek to restock low inventories and e-commerce business and related parcel traffic has risen.

The carrier is working with such freight companies as J.B. Hunt, Hub Group, FedEx, and UPS to bring increase intermodal volume.

CEOs Say They’re Ready for Traffic Surge

September 3, 2020

Five of the seven Class I railroads have responded to a letter from federal regulators expressing concern about their ability to handle traffic surges that could follow as the nation rebounds from the COVID-19 pandemic-induced economic downturn.

The carriers sought to assure the U.S. Surface Transportation Board and the Federal Railroad Administration that they are prepared to handle any traffic surges that may occur, saying they have sufficient personnel and equipment to handle rising volume.

Norfolk Southern CEO James Squires said in his letter that NS adjusted benefits for union members during the pandemic and that train and engine employees have agreed to return sooner than the standard 15-day call back.

Squires said NS has recalled 550 train and engine employees with a net increase of 217 such employees and a furlough return rate of 67 percent.

“Our future success in recalling crews could be affected by a significant resurgence of the virus or because of other factors beyond our control,” he wrote in his letter, which added that NS has begun a training class for new hires in July and plans to launch another training class.

NS does not anticipate needing to remove any of its 270 locomotives or 15,500 railcars now in storage in order to meet traffic demands.

But Squires said those assets are available if needed and that NS has “engaged in an aggressive campaign to meet with customers” to prepare to meet their needs.

CSX CEO James Foote in his letter primarily focused on service metrics to show that the carrier is doing well.

He said velocity and dwell “remain consistent with our historically strong 2019 levels, and our broader array of service metrics have been returning to pre-pandemic levels.”

CSX has recalled about 80 percent of its furloughed employees, and the percentage of locomotives in storage has dropped from 30 percent at the peak of the pandemic to 9 percent.

NS CEO Optimistic About Company Future

May 19, 2020

Norfolk Southern CEO James Squires expressed optimism during the company’s annual meeting that the railroad will emerge from the COVID-19 pandemic that has sapped freight traffic on the nation’s railroads as a stronger company.

“We’ll continue to manage our assets well and control our costs,” he said. “Our emphasis on superior service will continue to drive our long-term growth strategy.”

The meeting was held online due to the pandemic.

Squires said the pandemic has forced NS to be innovative and collaborative, undertaking such measures as equipping departments to work remotely, including most of customer service, and purchasing hand sanitizer from local distilleries in the midst of a nationwide shortage.

Last year NS implemented its version of precision scheduled railroading, which it named the TOP21 operating plan, and Squires said it has changed as NS operates trains.

“As a result of our transformation, we’ve set records for metrics such as train speed, terminal dwell and shipment constituency,” Squires said.

Squires cited the fact that NS has reduced its locomotive fleet by 703 locomotives as evidence that the plan is working and the NS network was become efficient, reaching an adjusted operating ratio of 63.7 percent in the first quarter this year.

NS is seeking to get it operating ratio to 60 percent in 2021.

During his address, Squires said that although traffic fell 11 percent in the first quarter the overall financial standing of NS is good.

“With access to ample liquidity and the lowest levels of capital expenditures since 2010 . . . operational efficiencies and industry-leading personnel, the company is positioned for future growth opportunities that will create long-term shareholder value,.” Squires said.

NS Net Income Down 5% in 4th Quarter

January 31, 2020

Norfolk Southern said this week that during the fourth quarter of 2019 its net income fell 5 percent to $666 million, or $2.55 per diluted share, compared with net income of $702 million, or $2.57 per share in the fourth quarter of 2019.

Operating revenue dropped by 7 percent to $2.7 billion as a result of a 9 percent decrease in total volume.

In a news release, NS said operating expenses were $1.7 billion, which was down $90 million compared with the same period of 2018.

Lower compensation and benefits, fuel costs, equipment rents and materials usage were partially offset by lower gains on operating property sales and increased purchased services expense.

Income from railway operations was $1 billion, down $116 million year over year.

NS posted an operating ratio of 64.2 percent for the quarter and 64.7 percent for the full year, both of them records.

For calendar year 2019, NS reported net income of $2.72 billion, or $10.25 per share, compared with $2.67 billion, or $9.51 per share, a year earlier.

On a year to year comparison between 2018 and 2019, NS said its railway operating revenue fell 1 percent to $11.3 billion on a 5 percent decrease in overall volume. Carloads declined in all major commodity categories.

NS reduced operating expenses by 3 percent to $7.3 billion. Income from railway operations rose 1 percent to a record $4 billion.

“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” NS CEO James Squires said in a statement.

During the fourth quarter of 2019 NS saw its coal traffic fall by 21 percent.

Company officials attributed that to low natural gas prices putting pressure on coal for use in electricity generation, and reduced steel production and a weakening market for export coal.

Squires said the annual operating ratio improvement was “particularly impressive against the backdrop of declining volumes.”

NS Chief Operating Officer Mike Wheeler said the carrier set records last year for on-time performance records for merchandise and automotive traffic and posted its best intermodal on-time performance since 2009.

“Our network is running fast and on time,” Wheeler said, citing a 17 percent improvement in average train speed and a record low terminal dwell that was 30 percent below the levels of 2018. He said crew starts were down 15 percent.

During 2019 NS cut its locomotive fleet size by 20 percent and ended 600 mechanical positions.

It expects to eliminated another 135 positions this year.

NS’s merchandise volume dropped 6 percent in the fourth quarter due to a slowdown in the industrial economy. Intermodal volume was off 8 percent.

Chief Marketing Officer Alan Shaw says coal traffic is expected to continue lagging this year but intermodal volumes should resume growth in the second half of the year.

He said uncertainty in the industrial economy means the outlook for merchandise traffic is cloudy.

Squires said NS expects flat revenue this year but should shave 2.35 points off its operating ratio as it continues to cut costs. The carrier is targeting a 60 percent operating ratio by 2021.

Shaw said the fourth quarter of 2019 was the 12 consecutive period in which NS has enjoyed growth in revenue per unit for all three of its business segments.