Brian Ossenbeck: Thank you, Jim. Thank you.
Jim Vena: Thank you, Brian.
Operator: Our next question is from the line of Scott Group with Wolfe Research. Please proceed with your question.
Scott Group: Hey, thanks. Good morning and welcome back, Jim. So it sounds like we want to get more price more productivity, but we still have inflation. You said you want to get to best-in-class margin. I guess we got to get improvement first. So when do you think you can start improving margins again? And then separately, Jennifer, the buyback has just been a big part of the earnings growth for a long time. Is this a temporary pause, more of a prolonged change, now you’re thinking about the buyback? Any thoughts there? Thank you.
Jim Vena: Jennifer, why don’t you answer the first piece of Scott’s question.
Jennifer Hamann: Sure. No. This is not a change in our philosophy around capital allocation, Scott, as we talked back in July. This is just looking at cash flows, looking at the balance sheet and taking a temporary pause. You heard me mention that our debt-to-EBITDA levels are around three times here at the end of the quarter, a little bit elevated from where they have been historically. And so our job is to hit on the things you mentioned earlier with the price, productivity, grow the business and generate more EBITDA, generate more cash flow and resume our share repurchase program.
Jim Vena: And Scott, on the second piece is, the last time I showed up in January 14th of 2019 versus August 14th of this year is the railroad is more efficient. It did not back up to the place where it was before. It was very easy pickings to go park a 1000 locomotives. So we don’t have that. But what we do have is we still have productivity. I see productivity across everything that we do from how management works, how many people we need to operate the railroad to how well we use our assets. So it won’t be quite as large. It won’t be the $1.3 billion that we did last time, but there is productivity gain that we can do. So with that, it’s going to take a little bit longer. Some of these changes that I see will not be as quick.
I won’t be able to go to North Platte and Park 90 locomotives because we had them parked outside the diesel shop first day. But there is ways for us to speed it up and there’s still locomotives that we can park and make sure that they’re used efficiently. So it will take us a little bit longer. And stay tuned with us and you’ll see hopefully incremental changes to our numbers that will tell you that we’re headed the right way. And there’ll be ups and downs. There is no advantage of budgeted some things we can’t control. I really don’t know what’s going to happen to the economy next year. Are we going to have a recession? Are we not going to have a recession? I’m hoping we — the country does not have a recession and that would help us. So hopefully, I answered your question, Scott.
Scott Group: Thank you, guys.
Jim Vena: Thank you.
Operator: Our next question is from the line of Walter Spracklin with RBC. Please proceed with your question.
Walter Spracklin: Thanks very much, operator, and welcome back, Jim. I know when you first came back and you just mentioned locomotive storage employee productivity improvement, we’re really a key focus for you very successful on that. They had some pretty quick turnarounds. Just wondering now, you’re in the seat, you probably have multiyear views here and whether you can grab some longer-term kind of structural efficiency objectives. And I’m referring here to things like comp yards and things that take a little longer time to address that perhaps you didn’t look at immediately when you first were in the role that that you may be looking at here now. I’m just wondering if when you look at the hump yards that Union Pacific has on its network, do you think they’re right aligned? Or do you see some opportunity to reduce some of those or any other infrastructure assets that are on the network?
Jim Vena: Walter, nice talking to you again and good question. So the real world, the way I look at it is there’s nothing wrong with hump yards, but they have to fit into the fluidity and the touch points of how many times we touch cars and how many cars we actually have to handle. And hump yards are okay. So at this point, with the way the network is as far as getting into that detail is good. What I don’t like that I’ve seen is our put through is not as fast. Our dwell needs to drop our dwell and the amount of time that we have railcars in yards at the intermodal terminals at intermediate points will drive productivity gains so that we are able to have more fluidity and that’s real important to me. Now when I came back last time I came with one goal, I came back, I came to work drive operational efficiency.
I didn’t look at the rest of the company very much and the rest of the company needs to be looked at. And that’s what we’re doing now. So everything that we did operationally, we are going to look at what we’ve done. And 1 example is the delayering exercise, you can’t have 9 levels from the CEO to the people who actually do the work and expect that the message is clear, the decisions are made clear, and there isn’t some hiccup in the decision stops. And I want to drive it so that we have way less layers. And that means with less layers, the people out in the field are empowered to make the right decision, which trained the hump, which trained the switch? How we move the cars? What are we doing to customers? What are we doing for scheduling?
How are we loading? Is our loading pattern, right? So many things that we can do. And if we do that, they’re better at it than us, Walter. There’s no way that Jim Vena, even though I think I’m a decent operator, I could go operate the hump yard, maybe when I retire next time we become just a hump yard operator in one place and see how well because I think a few people would love me to go out there and see if I’m as good as I say sometimes, okay? But at the end of the day, that’s what’s important. And that’s one of the things. That’s a big change this dealer and exercise that we’re going through and stay tuned, we’ll announce what the findings are as we move ahead.
Walter Spracklin: Looking forward to hearing about it. Thank you.
Operator: Our next question is from the line of Tom Wadewitz with UBS. Please proceed with your question.
Thomas Wadewitz: Yes. Good morning, and Jim, I also wanted to say welcome back. I think the — this is a bit of a high-level question, and I’m guessing the answer is kind of both. But wanted to see if you could give some color on how we should look at the opportunity in terms of being a volume story or a cost story. I mean you clearly did a lot with cost last time in 2019, 2020. You are talking a lot about productivity. But what’s the — what’s really the more important lever for operating income growth in the next couple of years? Is this a little bit of productivity and a lot of volume? And then I guess to the extent that there’s the productivity side, is that driven by headcount reduction? Or is that really more other cost buckets like locomotive costs, car costs, that type of thing? Thank you.
Jim Vena: Good question. Why don’t we start with, Kenny, why don’t you talk about the opportunity on the growth side, the pricing side and what we have — what we’re looking forward to?
