Union Pacific 2Q17 Earnings Call Notes

Lance Fritz – Chairman, President & CEO

Headwinds in wheat exports

“high global production of both seed grains and wheat, coupled with a lower quality domestic wheat harvest will create headwinds in our export markets.”

Cautious with respect to auto sales

“We remain cautious with respect to auto sales due to current sales trend, higher inventory, and rising interest rates. The reduced SAR will impact both the finished vehicles and parts with a potential upset in over-the-road conversion opportunities.”

Permian could require 40-50m tons of frac sand

“the Permian is roughly 15% brown and 85% white sand. And the demand this year, call it 28 million or 29 million tons. We see estimates going into next year where there are proposed mines that would bring on anywhere from 20 million to 40 million or 50 million tons and perhaps demand in the Permian being in that 40 million to 50 million tons.”

Rob Knight

We think volume should be our friend in the third quarter

“volume, we think is going to be our friend certainly in the third quarter improving from the second quarter. And we’ll just have to see how the numbers play out.”

Lance Fritz 1Q17 Earnings Call Notes

Lance M. Fritz – Union Pacific Corp.

Frac sand and coal stabilized

“we’re seeing particular strength in a few markets such as frac sand. Coal seems to have stabilized and we’re seeing some signs of gradual improvement in other areas of the economy.”

See 3% Inflation rate

“a higher inflation rate, which for the full year we still see overall inflation in that 3% range which is obviously is higher than what we ended up with last year.”

We think the administration gets that US economy linked to trade

“in terms of trade overall, our perspective is the following: that the U.S. economy is tightly connected to our trading partners. We understand that open global trade and more markets available to U.S. manufacturers and producers is critical both for jobs in the United States as well as for the economic vibrancy of the United States. We believe that that’s well understood also in our current administration and we believe that while there are opportunities to both enforce existing trade agreements, enhance them and negotiate new ones, that the long-term answer is more markets available to U.S. manufacturers and producers is better than fewer markets available. That’s essentially the pathway towards economic prosperity and job creation.”

Elizabeth F. Whited – Union Pacific Corp.

Seeing substantial increases in demand for Frac sand in Texas

Okay. So, we are seeing substantial increases in demand in Texas, specifically in the Permian Basin. We’d mentioned that we were up 59% in the quarter. We were up almost 100% in the Permian Basin and we’re up around 40% in Eagle Ford. We’re seeing some spiking demand as well in the Niobrara, but not as substantial. I would say that that is sustaining and maybe even growing a little bit as we enter into the second quarter. And I don’t see anything right now that changes that, so that’s been a bright spot for us.

Union Pacific 4Q16 Earnings Call Notes

Union Pacific’s (UNP) CEO Lance Fritz on Q4 2016 Results

Mexican trade is inextricably linked to our economy

“Sure. So we are paying close attention to all of the talk about potential outcomes as we go forward in terms of impact on either NAFTA or other international trade agreements. Our perspective is that the United States is tightly woven with its trading partners and our consumers benefit greatly from free and open international trade, both from a standard of living perspective, making goods available to them at lower cost than they would be otherwise, as well as creating markets for U.S. goods to be sold into, creating a robust potential growth for U.S. jobs and typically the higher paying U.S. jobs. When we look at the cross-border trade let’s say specifically with Mexico, when you really dig deep, you see that a large percentage, certainly more than half, a lion’s share has value added on both sides of the border and is inextricably linked to our economy. So we’ve been giving that kind of feedback to our elected officials and regulators for a long time. ”

Rob Knight

Core pricing will continue to be challenged in 2017

“In fact, if you exclude coal and international intermodal from the calculation, our core price on the rest of our business lines would be in the neighborhood of about 2% to 3%. Given these market dynamics, our core pricing will continue to be challenged throughout the first part of 2017 before beginning to strengthen later in the year, assuming market conditions improve. That said, I want to reiterate that our pricing philosophy has not changed. We will continue to price our service product based on the value proposition that it represents in the competitive marketplace, at levels that generate re-investable returns. This should result in real core pricing gains, and contribute toward improving margins over the longer term.”

While inflation is rising we have pricing pressures

“Yes, Justin, I guess, I would just kind of build on Lance’s point. We don’t give specific guidance as Lance pointed out, but we are – take one message from us here, that while inflation’s rising, while we have some challenges in the marketplace as it relates to pricing, we are still committed to pricing at reinvestable levels that are above the overall inflation costs in the year. ”

We’re not sitting here holding back investment decisions based on the tax rate

“. I mean, we’re not sitting here thinking about making – holding back, making capital investment decisions based on the tax rate as an example. So I would anticipate that that wouldn’t impact sort of how we treat that and I think it would be to the benefit of us and our shareholders if that played out and we would have the expectation of hanging onto it.”

Union Pacific 3Q16 Earnings Call Notes

Union Pacific’s (UNP) CEO Lance Fritz Q3 2016 Results

Remain cautious of auto sales sustaining these levels

“Turning to autos, light vehicle sales are forecasted to finish 2016 at $17.4 million, down less than 0.5% from the 2015 record rate of $17.5 million. Although we expect sales incentives, low gasoline prices and consumer preference will continue to drive demand. We remain cautious with respect to auto sales sustaining at these levels. A continued focus on over-the-road conversions will support auto parts growth.”

Some segments showing signs of life

“The macroeconomic environment still has its challenges and unstable global economy, the relatively strong U.S. dollar and continued soft demand for consumer goods. However, certain segments of the economy are showing signs of life. A recent rally in energy prices has crude oil over $50 a barrel and natural gas over $3 per million btu, which are both encouraging for our coal and shale-related businesses.”

Going to continue to push our pricing power

“Scott our philosophy is not changing and as a matter of fact, our top line this quarter reflects that it’s not changing. We are pursuing business in the marketplace that we can price for the value that we represent and that’s re-investable. And if we can’t find that we walk away from it. So nothing has changed about that philosophy.”

Port strike bigger than the Canal in terms of west to east coast traffic shift

“No, I think the Panama Canal story is what we’ve been saying for the last several years and certainly I think the last couple of quarters we’ve been mentioning that the amount of traffics hitting the West Coast versus the East Coast did – there was traffic that moved to the East Coast because of the strike and BCO’s trying to diversify their risk and not be dependent upon the West Coast. We did see that phenomena. We have seen some of that business start to come back, but it hasn’t all come back from before the strike. That has probably been a larger factor than any Canal opening factor. The fact that the BCOs are diversifying their flows and a lot of ways just to not have that risk.”

Eric Butler

Container ship companies face tough times

As you mentioned Cherilyn there is a significant volatility going on in the international container ship business. There have been three major mergers, one bankruptcy, there are a number of other entities that are in dire or questionable financial shape. One of the things that all of the container ship companies are looking at doing is finding ways to have match backs or exports from the U.S. to Asia.”

$3 natural gas is good for coal

“The below $2 natural gas prices has created a headwind for coal in the past. We’re excited or we think that with natural gas being above $3 now and even some of the futures market showing it in the mid-3s that that certainly will improve the competitive condition for coal, but that has clearly had an impact likewise.”

Union Pacific (UNP) Q2 2016 Earnings Call

Union Pacific (UNP) CEO Lance Fritz said their was widespread weakness across a majority of their business groups

“Total volume decreased 11% in the quarter compared to 2015. Carload volume declined in five of our six commodity groups, with coal, Intermodal and industrial products all down double-digits. Agricultural products was the only group to show positive year-over-year growth, with volumes up 2% this quarter, reflecting stronger grain shipments versus 2015.”

The division that transports automobiles decelerated meaningfully 

“Automotive revenue was down 13% in the quarter, driven by 2% decrease in volume and 11% reduction in average revenue per car. Revenue in all were negatively impacted by mix of stronger parts growth, which has a lower average revenue per car then finished vehicles. Finished vehicle shipments decreased 10% driven by mix, production levels of passenger vehicles impacting key Union Pacific plants and contract changes.  The seasonally adjusted annual rate for the second quarter automotive sales were 17.1 million vehicles; however, June finished at 16.6 million, perhaps indicating softening consumer demand. Auto parts volume increased 9%, driven primarily by new over the road conversions.”

Union Pacific (UNP) COO Cameron Scott said they are lengthening trains in order to improve efficiency 

“While adjusting our resource to demand will always be a key focus area, overall productivity for us goes well beyond this effort. One primary area we continue to make progress is train length. While we’re unable to overcome the volume decline within the scheduled Intermodal network, we did run record train lengths in all other major categories.”

Weak economy is influencing volume levels for the company

“We continued to experience a challenging business environment in the second quarter, resulting in weak demand across many of our commodity groups.  A soft global economy, the negative impact of the strong U.S. dollar on exports, and relatively weak demand for consumer goods will continue to pressure volumes through the second half of the year.”

Union Pacific 2Q16 Earnings Call Notes

Union Pacific (UNP) Lance Fritz Q2 2016 Results

Volumes declined in five of six groups

“Total volume decreased 11% in the quarter compared to 2015. Carload volume declined in five of our six commodity groups, with coal, Intermodal and industrial products all down double-digits. Agricultural products was the only group to show positive year-over-year growth, with volumes up 2% this quarter, reflecting stronger grain shipments versus 2015.”

Soft global economy will continue to pressure volumes

“A soft global economy, the negative impact of the strong U.S. dollar on exports, and relatively weak demand for consumer goods will continue to pressure volumes through the second half of the year.”

Eric Butler

Reduced drilling activity continues to negatively impact minerals

“In industrial products, reduced drilling activity will continue to negatively impact our minerals and metals rock volumes for the remainder of the year. The improving construction and housing market should drive growth in our lumber and rock volumes.”

Cameron Scott

Robert Knight

Expect 2% wage inflation

“Labor inflation was about 1.5% in the second quarter, driven primarily by health and welfare, which is partially offset by some favorable pension expense. We expect full year labor inflation to be around 2%.”

We have a lot of strong competitors

“Yeah, Chris I think you said it right, we compete vigorously every day for business we have strong real competitor, strong truck competitors. We have strong water barge shipping competitors and you’re exactly right we compete vigorously. We do think we have a strong value proposition and we think that with that strong value proposition we can compete effectively on that value proposition and price for the value that we’re providing to the marketplace. As I said earlier you’re seeing capacity tighten and many of those modes and we think that’s positive for the competitive environment, but, yes, we compete vigorously every day.”

Eric Butler

There will probably be more opportunity to move grain in the second half than the first

“if you look at the crop there was something like 6 million more acres of corn planted this year and it’s still dependent upon kind of the weather and the harvest, but right now it looks like it’s going to be pretty decent yields from the current crop. And so if you look at the pretty decent yields from the current crop if you look at the high storage levels on a historical basis, if you look at some of the challenges — in particular South American crops that have had, it suggests that there’s going to be opportunity to move grain in the second half of the year at a higher run rate than what we saw in the first half.”

Half of auto business is to or from Mexico

“Yeah. So, about half of our franchises to or from Mexico that’s all unfinished vehicles and parts. We — the Mexico volume is growing as you know. Historically, it was like 2 million vehicles, I think they are probably up to about 3.7 million vehicles produced in Mexico. The forecasts is they are going to get close to about 5 million vehicles produced in Mexico.”

Union Pacific 1Q16 Earnings Call Notes

Lance M. Fritz – Chairman, President & Chief Executive Officer

2016 has brought continuation of trends from 2015

“2016 has brought a continuation of many of the same trends that we experienced throughout most of last year. An energy market recession, low commodity prices, the strength of the U.S. dollar and soft global economy, and muted domestic retail demand have all contributed to overall market weakness across many of our business lines. And it’s likely that many of these themes will be with us for some time. That said, we are stronger coming into this year than we were a year ago.”

I think we’ll continue to invest in the southern tier of our network

“as we look forward, our capital spend will depend on the first three things I mentioned. First and foremost, what’s the outlook for volume, what’s that environment look like, where is that volume showing up, and what are the projects that we have in front of us that generate attractive returns? In my mind’s eye, you’re still going to see us spend down in our Southern tier of our network. That’s still an area where we would like to continue to enhance our capacity.”

Eric L. Butler – Executive Vice President-Marketing & Sales, Union Pacific Railroad Co.

Auto sals are forecasted to be 17.8m vehicles, but we’re cautious about sales supporting these levels

“Turning to autos, light vehicle sales are forecasted at 17.8 million vehicles, a 2% increase above the 2015 seasonally adjustable annual rate of 17.5 million vehicles, driving both finished autos and parts, including over-the-road conversions. While we expect low gasoline prices will continue to sustain demand, we remain cautious with respect to auto sales supporting these levels.”

Expect growth in intermodal impacted by sluggish retail inventories and sales

“in Intermodal, we see growth potential in domestic Intermodal from highway conversions, though muted by high retail inventories and sluggish retail sales. With trans-Pacific market challenges, we expect continued volatility in international Intermodal”

US is still a great producer of global ag

“if you look at our Ag business, it really is dependent on the fact that the U.S. still is a great producer. Generally speaking, long term it is in the sweet spot in terms of world competitiveness. We have had wins this year with the strong dollar, but it’s in the sweet spot, and the U.S. as a producer will continue to be a good producer.”

The dollar is still very high in any relative sense

“I’m not a central banker, but I would say the dollar is still very high in any relative sense. It has dropped a little from the peak, but it still is very high. And as you know, dollars impact the competitiveness of U.S. exports across the board. So whether it’s Ag, whether it’s things like steel, whether it’s things like our iron or metals business or other commodities business, it impacts all of those things. And so I don’t have any prediction of how much the dollar needs to fall. It still is very high in any relative historical sense…The dollar is still a headwind. The strong dollar is still a headwind to U.S. exports.”

West Coast port entry is still fastest option to Eastern markets

“that West Coast port entry still is the fastest option to get to the Eastern markets, usually by two weeks. Another factor is with all of the rationalization going on in the container shipping industry, all of the alliances and the mergers and all that’s going on, there does seem to be a migration to the larger ships. ”

Coal was even softer than we anticipated

“So clearly, as Rob said earlier, the coal side was a lot softer than what we anticipated. Again, warmest winter on weather, we did not expect these low natural gas prices. The shale impact is significant. But if you set aside the shale impact, the energy, the coal impact, you do have some variability going on in terms of retail sales that is probably a little softer than what we anticipated.”

There is general economic strength in our industrial products business

“there is general economic strength that we’re seeing in our industrial products business in terms of construction coming back, housing coming back. Chemicals has the benefit of plastics going to the automotive industry as you see automotive sales. And so there’s a slowly strengthening economy out there and we’re doing a lot of business development to go after it, which again is being overshadowed by just the huge volume numbers for coal and shale and the other headwinds we have.”

There is a lot of grain stockpiled in storage

“There is a lot of grain in storage. There is about 200 million bushels that were carried out from last year. I think the USDA estimates are that can grow by another 500 million bushels based on the number of acres that are being planted and the types of yields that are expected. So there is a lot of grain out there. We believe that eventually it has to move. And so we are certainly optimistic that when it does move, we’re going to get our fair share of that, and it will move. It’s just right now, U.S. grain is not competitive on world markets. The strong dollar is an issue. There are other issues in terms of really good crops in other places, growing regions around the world. But we do think it will ultimately will move, and we’re going get our fair share of it when it does.”

Cameron A. Scott – Executive Vice President-Operations

Adjusting aspects of business to lower demand

“we also continue to adjust other aspects of our business to lower demand. At the end of the first quarter, we had around 600 total engineering and mechanical employees on furlough as well.”

Robert M. Knight – Chief Financial Officer

Operating revenue down 14% driven by significantly lower volumes

“Operating revenue was $4.8 billion in the quarter, down 14% versus last year. Significantly lower volumes, a challenging business mix, and lower fuel surcharges more than offset solid core pricing achieved in the quarter.”

Union Pacific 4Q15 Earnings Call Notes

Union Pacific’s (UNP) CEO Lance Fritz on Q4 2015 Results

Auto continues to be a bright spot, but volume declined in 5/6 commodity groups and industrial products

“Carload volume declined in five of our six commodity groups with coal and industrial products down 22% and 16% respectively. Automotive continued to be a bright spot for us in the quarter with the volume up 8% versus 2014.”

There are questions about the US consumer

“I will share with you though there is also questions that we have about U.S. consumers. There are indicators that the consumers are healthy like the unemployment rate is at a comfortable 5% level, the consumers are buying automobiles as Eric outlined. But labor participation rate isn’t that great and fourth quarter retail sales for goods was not that great.”

The drop-off in volume has been pretty dramatic, but nowhere near as bad as 2009

“Ken it is hard for me to speak and predict on whether the economy is going into a recession. Certainly our volume drop off as the 2015 year progressed quarter to quarter and as we are entering 2016 is dramatic and it is dramatic in historical reference but it is nothing, it is not approaching what we experienced in 2008 to 2009. I will tell again, a 6% decrease year-over-year and a quarterly 6%, 7%, 8%, 9% decrease year-over-year is pretty dramatic volume change.”

Eric L. Butler

Ag was down driven by lower exports

“Ag products revenue was down 12% on a 5% reduction and a 7% decrease in average revenue per car. Grain was down 12% in the fourth quarter. High worldwide production and a strong U.S. dollar reduced grain exports by 23%. Ethanol shipments were down 3% driven by lower exports.”

Auto was up

“Automotive revenue was up 1% in the fourth quarter as an 8% increase in volume was largely offset by a 6% reduction in average revenue per car. Finished vehicle shipments were up 8% this quarter, driven by continued strength in consumer demand.”

2% reduction in volume in chemicals

“Chemicals revenue was down 7% for the quarter on a 2% reduction in volume and a 5% decrease in average revenue per car. Lower crude oil prices and unfavorable price spreads continued to impact our crude oil shipments which were down 42% in the fourth quarter. Partially offsetting this decline was continued strength in the LPG markets including Propolene, Propane, and Bueten demand.”

Industrial products volumes down 16%

“Industrial products revenue was down 23% and a 16% decline in volume and 8% decrease in average revenue per car during the quarter. Reduced rig counts and shale drilling resulted in a 42% decline in minerals volume, primarily driven by a 52% decrease in frac sand car loadings. Metal shipments were down 27% from softening industrial production, reduced drilling activity, and a strong U.S. dollar.’

Intermodal revenue down 7%

“Intermodal revenue was down 14% in the fourth quarter and a 7% lower volume and an 8% decrease in average revenue per unit. ”

I think across the board you hear every customer talking about trying to right size their inventories

“I would say that every BCO is looking at rationalizing their inventories because they expect the holiday season higher than I think expected on inventories with sluggish retail sales. I think across the Board you hear every customer talking about trying to right size their inventories.”

Chemicals volumes from the gulf coast should come online in 2017-2018 time frame

‘We are seeing capital investment occurring specifically along the Gulf Coast in our chemical franchise. Those investments just haven’t yet turned over into operating units and so that’s a matter of time. That’s an end of this year 2017-2018 kind of impact. We are still hopeful for that impact”

Consumers are doing something with lower energy cost, but it’s not spending on goods

“The other part of it is consumers doing something with the windfall of lower energy cost and that’s where it is really hard to see that showing through in the goods that we shipped for retailers. And their feedback is while maybe services consumption is relatively healthy, goods consumption isn’t necessarily showing that.”

Robert M. Knight, Jr

We currently expect volumes to be slightly negative in 2016. Preparing ourselves for volume and mix pressures throughout March of 2016

“For the full year we currently expect total volumes to be slightly negative depending on coal and the strength of the overall economy as the year plays out. Fuel prices will have a negative impact on earnings at least in the first quarter given the $0.08 positive fuel benefit that we reported in the first quarter of 2015. While it is still early we are preparing ourselves for volume and mix pressures particularly in the first quarter and likely throughout March of 2016.”

At this point in time we do not see record earnings

“That is correct. Now nothing would please us more than to see the economy turn and things are going to go favorable. So we are going to fight like heck to do the best we can. But yes, you are correct. At this point in time, we do not see record earnings.”

Union Pacific 3Q15 Earnings Call Notes

6.5% decline in volume

“our volume was down 6.5%, with gains in automotive more than offset by declines in the other business groups. We generated core pricing gains of 3.5%, but it was not enough to offset decreased fuel surcharge and mix headwinds, as average revenue per car declined 4% in the quarter. Overall, the declines in volume and lower average revenue per car drove a 10% reduction in freight revenue.”

Business mix will continue to be a headwind to freight revenue

“business mix will continue to be a headwind to freight revenue for the remainder of the year.”

Reevaluating capital spending plans for next year

“Given the uncertain environment, we are taking a hard look at our capital spending for next year. We haven’t finalized our plans, so it too early to tell how it will relate to our long-term guidance of 16% to 17% of revenue. But from an absolute dollar perspective we do currently expect that it will be somewhat less than this year’s $4.2 billion, and the plan does include the acquisition of around 200 locomotives as part of a long-term purchase commitment.”

We are very pleased with our ability to move autos

” What we really are pleased with is the UP Automotive franchise. It’s outstanding, it gives us great access to Mexico, products produced in Mexico, gives us great access to the ports of products produced over season imported. And we have an excellent distribution system for finished vehicles on in the Western United States. We’re in a very good place when it comes to the automotive franchise.”

It would be a mistake to artificially regulate away coal

“I want to provide a little editorial comment as well. I think United States is blessed with the coal reserves that we are and our ability to generate electricity with coal, relatively cleanly, and it’s never been as clean as it is today. It would be a mistake from the U.S. economy perspective, our competitiveness globally to continue to regulate that out artificially. I think we have to work on continuous improvement with the emissions from coal fuel generation, but it would be a mistake to artificially retard that too much.’

Miscellaneous Notes Week of 9.17

Stronger than expected turnout at Credit Suisse Basic Materials conference

John McNulty – Credit Suisse Analyst (From Dow Presentation Transcript)

“Okay. If you all take your seats we’ll get on with the presentation for today. Yesterday was a big day for us actually for what it’s worth, those keeping track, I mean, the rooms are certainly more full than we’ve seen them actually. We are – attendance was up about 45% for our first day, yesterday. So apologize if there are logistical issues, because it’s a bigger crowd than even we had expected, but it’s a nice problem to have.” –Credit Suisse (Investment Bank)

Sirius’ CEO was bullish on car sales

Jim Meyer – CEO Sirius XM

“I spend a lot of time with the senior executives in the automotive industry and all of them along with me are pretty confident that what the next six or 12 months looks like in auto sales. And we see them continuing strong.” –Sirius XM (Satellite Radio)

40% of millenials do not have a TV and 20% say they are considering cutting it

Lowell McAdam – Chairman and Chief Executive Officer

“40% of millennials do not and have never had a TV in their home and another 20% have said they have got it, but they don’t use it that much and they are considering cutting it.” –Verizon (Telecom)

Verizon doesn’t think Apple’s installment plan is a threat to them

Lowell McAdam – Chairman and Chief Executive Officer

“They love to have people stay on iPhones forever. And if I look at it from our perspective, from a cash flow perspective, it is – it’s a relatively positive, marginally positive I guess. So, it’s not a threat. It’s similar. I think about it the way I think about bring-your-own-device, which we have been doing for quite a while. Apple today is a very small piece of our distribution. So, it’s not going to shift the way we do business in anyway. And right now, it doesn’t look like a threat to us.” –Verizon (Telecom)

Fifth Third echoed that credit remains benign

Tayfun Tuzun – Chief Financial Officer

“We are operating at very low levels of charge-offs in historical terms and ongoing quarterly improvement every year in charge-offs will be difficult to achieve, but nevertheless credit should generally remained benign.” –Fifth Third (Bank)

You have to optimize your business to perform well over the course of a whole cycle

“If there is one lesson that we as managers have learned during the crisis it’s the importance of relentless focus on through the cycle performance. Business models created for the present part of the business cycle that are not grounded in long-term fundamental value creation will outperform for a period of time, but will not increase the value for shareholders who have longer time horizons, as they are now sustainable.” –Fifth Third (Bank)

Sustainability is the key focus

“I wish I could tell you that it is possible to tailor our strategy in a very timely manner to every turn of the business cycle, but it is not. Therefore sustainability has to be the key focus. Our top goal is to perform well throughout the full cycle.” –Fifth Third (Bank)

Necessity has been the mother of invention in driving more efficiency in the oil industry

Bob Gwin – Executive Vice President-Finance and Chief Financial Officer

“necessity being the mother of invention that, I think, is largely true across industry. Very proud of our folks driving efficiencies, working very hard to drive down costs, increase in our oil production everything operationally has gotten better. Now that obviously for a macro perspective, continues to put pressure on commodity prices as we see the resiliency of U.S. production. But our view is that we’re going to see that – we’re starting to see it roll over a bit and that – in this era of prices with this double dip and without a real strong outlook on the underlying commodity, we see that the need to continue to focus on cost and the need to continue to focus on driving returns” –Anadarko (E&P)

The focus is on returns, not growth

“The focus right now is not on growth, it’s on returns. We don’t look at growth as being a deliverable that’s going to be valued by the market or by our shareholders, rather growth will be – the growth rate will come out of the capital allocation work that we do” –Anadarko (E&P)

HCA thinks of itself as the preferred healthcare provider in the markets they operate

Bill Rutherford – Chief Financial Officer

“we want to be the preferred healthcare provider in the markets that we operate and we create what we think is a high value integrated delivery system. It’s anchored by our hospital network, supported by outpatient centers, ambulatory surgery centers, we have 120 surgery centers, outpatient imaging, physician clinics, we employ close to 4,000 physicians in our marketplace, freestanding EDs and urgent cares. So, we deploy access points in the marketplace. So, there are multiple ways patients can access the HCA network in multiple service dynamics. And then we develop deep service line capability generally organized around patient conditions in cardiology, in women’s services things or orthopedics, oncology, neurosciences, emergency room and we developed deep service line capability.” –HCA (Hospitals)

We may get more medicaid expansion post 2016 when it’s not so politically charged

“I don’t see much movement until post-2016 election, once we have someone else as President and the office maybe Medicaid expansion becomes something that’s more state-driven rather than considered Obama Care.” –HCA (Hospitals)

An exchange enrollee is worth much more than medicaid

“the one thing you do have to remember as Bill pointed out, our significant benefits have come through the insurance exchange. I mean if you just look at the pricing differential on what you get on an exchange enrollee versus a Medicaid enrollee it’s three times on an exchange. So remember if we get one exchange to three Medicaid, we benefit substantially more.” –HCA (Hospitals)

Union Pacific is optimistic that ex-energy volumes look not too bad

Rob Knight – CFO

“And as we look at the macro, it actually sort of — I think it speaks to what we’re seeing at the macro level, clearly the energy related activities are a drag on our volumes right now. But the rest of our business volumes are ever so slightly and we’re very cautious, we’re not getting exuberant here, but are on the positive side of the volume trends. We’re watching very carefully, things like our intermodal business. Our intermodal is roughly half international, half domestic. If you look at our third quarter numbers, our international is down about 7%, our domestics flattish, and what we’re seeing in our international space and our intermodal world is a cautiousness, as people are cautious not to build inventories too high.”

“We think the peak season that we would normally experience is a couple of weeks still in front of us, so we would hope to see some improvement in that space, if that holds. While we don’t think it’s going to be a rocket ship kind of peak. We do expect it’s going to build, but there is clearly some cautiousness in the space with people not wanting to overbuild inventories and I guess [indiscernible] away we would feel about the macro economy cautious, steady as she goes, things are positive when you separate all the energy challenges we have.” –Union Pacific (Railroad)

Twitter is full steam ahead under Jack Dorsey

Anthony Noto – Chief Financial Officer

” we’re focused on what we control which is executing on the business, we haven’t missed a step since the transition to Jack, we’ve been full steam ahead.” –Twitter (Social Media)