Edward Wolfe (Wolfe Research): Is that trend flattening at all year-over-year or is it still ramping?
John P. Lanigan, Jr: It''s flattening. It has been over the last couple of months.
Edward Wolfe (Wolfe Research): What is your view on the position regarding the corn and soyabean?
John P. Lanigan, Jr: Our drawing territory was not really in the flooded area. The flooded area impacted a lot of our true freight and inter-modal, coal and all the businesses. However, our drawing arc is more northern plains than the traditional lower Midwest. We didn''t have near the impact from the standpoint of our growers that we serve.
Edward Wolfe (Wolfe Research): What is your best guess at this point in terms of when year-over-year inter-modal volumes turn positive?
John P. Lanigan, Jr: That''s really going to be driven by the import picture. If imports are down as much as they are then that''s just a tough hill to climb. We feel very good about the domestic performance in the second quarter and think that''s going to hold going forward.
Edward Wolfe (Wolfe Research): Would you say the turn could be in 2009?
John P. Lanigan, Jr: That would be our best guess.
Gary Chase (Lehman Brothers): Did you give a final estimate of what the weather cost you in the quarter?
Thomas N. Hund: We didn''t but we would answer it as probably in the 6 cents to 8 cents a share range.
Gary Chase (Lehman Brothers): The cost per head growth was lower than we were expecting given what had happened in the first quarter. Any explanation for that or was the first quarter something we should consider to be more anomalous and how does that look going forward?
Thomas N. Hund: First quarter was a little bit high and some of this relates to the incentive comp accruals last year versus this year. Remember last was a low payout year for us. It''s somewhat the timing on those. Going forward, we''d probably be a little north of what we were this quarter but not as high as the first.
Walter Spracklin (RBC Capital Markets): On your guidance, what''s your assumption for your diesel price?
Thomas N. Hund: When we prepared this forecast, it probably was in the high 130''s, probably about 135 or 136. It''s really come down from there. That goes into the question I answered earlier about the sensitivity drop by 5 to 10 and we''d probably pick up a couple of cents a share.
Walter Spracklin (RBC Capital Markets): Looking at your CapEx, you''d talked about growth projects are lower than average on a yearly basis. Considering that for 2009 and given the ramp up, is it fair to say that there might be a pop into 2008 relative to 2009?
John P. Lanigan, Jr: Given the volumes on the road, this year we won''t have the expansion capital requirements for next year. On the locomotive side though, we''re going to continue to take advantage of the options that we have. This acquisition of 35 locomotives is very opportunistic because of what we believe are going to be relatively systemic high fuel prices. We''re going to be able to put a much more efficient locomotive.
Walter Spracklin (RBC Capital Markets): Any update on what your plans are in terms of share buyback?
Thomas N. Hund: It''s more of the same. We''re using cash flow metrics to be able to monetarily fit what we have available. Those are things like interest coverage as well as debt to cash flow.
Walter Spracklin (RBC Capital Markets): Coal yields are doing well and just always thought that they would trend a little lower given that you got some legacy contracts. They''re not covered by fuel surcharge. What''s driving the good yields on your coal business?
Matthew K. Rose: A big part of it is on the legacy deals. The R cap factor was 20% or little north of 20% for the quarter. That certainly helped.
|
