Union Pacific (UNP) 25 Apr 242024 Q1 Earnings call transcript

Greetings, and welcome to the Union Pacific First Quarter 2024 Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website.

It is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. Mr. you, Thank Vena.

begin. now You may

Thanks, Rob, Omaha, It Beautiful in to absolutely good degrees, a morning X rain. for everyone. little perfect day railroading. and bit is of

we Pacific's first results. for don't So thank quarter started? to Union today you why discuss joining get us And

Executive Rocker; Eric I'm in and Vice of Operations, our our our of Marketing Officer, Jennifer Chief Executive joined President Financial and Gehringer. by Haymann; Omaha Vice Sales, Kenny President

strategy continue you'll and Union to quarter. hear took multiyear from that execute As first leader operational service in towards goal again, establish we as safety to industry team, We, the positive Pacific steps the our the in excellence.

While for challenges establishing are control a we long-term outside foundation our persists, success.

This share. report of Pacific environment, to net last to share of $X.XX let's pleased a $X.XX gain. Xst quarter billion be XXXX $X.X $X.X XXXX morning, Union share. real tough quarter a discuss We're Xst Slide Now in per first This estate income to reported $X.XX per results or per starting able net especially results growth compares included quarter X. or billion year's income since on earnings

inflation, partially new by down higher by for fuel lower and offset productivity offset revenue revenue transportation to the positive solid and driven as was This year-over-year X%, X% business fuel operating surcharge, fuel from and impact up depreciation. versus lower core gains year. mix was were agreements Expenses was pricing quarter last First prices reduced and flat volumes. for were by workforce surcharge a labor gains. compensate increased Normalizing revenue freight levels

the of on there's pleased coming to to points sequentially do. the our I'm team. also how a ratio possible Pacific Union fourth which from is lots operating work XX start by But of basis a demonstrates year. basis versus with year. last lot together team the a This for great improvement Look, quarter represents work further first the quarter, the point strong it's company. XX.X% improved Our XXX

quarter in let question up come I'll before and back and the wrap to go team I'll and detail, you more the through it answer. walk we

Jennifer, that, first the through with why you quarter So don't go financials.

Jim, right. that where I'll of begin billion by revenue was quarter was of driven income down Slide first our a reduction good on shipments. with walk Thanks, statement significantly All X% operating year a last coal in flat morning. decline volume and X, a XX% $X on versus

volumes X% coal, In excluding would in close freight even this fact, up year-over-year tough been to environment. have

the declined total revenue as Looking million The XXX prices freight then single X%. further, revenue surcharge billion largest basis impacted negatively XX% fuel lower $X.X revenue in driver was at revenue a $XXX the of to components reduction of year-over-year fuel points. freight decrease

to XXX points Solid carloads freight the gains to business Reduced favorable shipment and and soda core positive pricing well add as mix dynamic. basis [indiscernible] combined and as drove petroleum mix increased revenue. coal a ash

diversity surcharge, Excluding year franchise. grew the a a to start the demonstration solid fuel revenue UP of great the [X%,] Freight of and

of was year. a included X%, up solid line. against revenue expense million. accessorial lower productivity operating Digging to expense that Switching of a by billion benefits expenses, top the $X.X up increased demand. X% contract onetime increased compensation into Wrapping revenue Other generated we expense last decreased settlement X% deeper as driven $XX lines, and few of the versus

employees reductions than in more quarter increase a levels X% X% workforce. active TE&Y decreased in First non-transportation offset workforce as our

best a our offset train reduced, Although our buffer and agreements. continue employees benefits training pipeline sick pay of to as and is services the we impact operations carry for newly to work significantly additional available

quick do to mention I While housekeeping talking one about item. want levels, workforce

in Chicago you process transferring certain of the aware, operating passenger Metro. of responsibility As for might are in lines some be we to

be quarter will roughly around employee in the we a On As to transferring million. the in $X.XX revenue declined $XX X%, part decrease on expense quarterly additional both in mechanical Cost this XX% per increased reflecting in employees XXX and lower $X.XX quarter a first wage by will Metro. expense to that, from per agreements. basis, new June, Fuel inflation fuel prices XX% with costs per and associated gallon gallon. labor of

versus We Purchased more given as mix coal last also a services locomotive maintained a locomotive smaller we decreased by improved incurred active productivity in and [trade] fleet, X% fuel-efficient offset expense. and our materials fuel as less shipments. logistics decline business consumption rate the than expense less X% our subsidiary year

of half less resolution dispute. than to of related In a a contract addition, the year-over-year variance little

controlling billion and real the debt increased interest $X.X X% last year. transaction year's other Jim income our of line, Finally, more structure, equipment a declined cost through and network last lease seen cycle and versus Below and other the estate reflecting X% first By on lower controllables average expenses. noted levels. income our operating lower rents fluid quarter declined in improved times X%, expense

First and XXXX. quarter of income from per ratio versus year-over-year, XX.X% fuel prices. lower XXX basis our operating both improved X% points basis includes $X.XX headwind point net which improved billion share XX of earnings of quarterly $X.X And a

Turning to Slide sheet on shareholder returns on the X. balance

impact year. the from well that are payments in as billion, First XXXX quarter totaled $XXX as increase. agreement cash last million operating up operations roughly from Growth in labor $X.X reflected versus income

both free nice and rate, cash flow showed conversion cash our addition, In flow improvements.

the planned, million. quarter, Also adjusted the debt paid As to paid be down maturities totaling at rating A-rated declining That we quarter, by X.Xx $X.X we debt-to-EBITDA $XXX continue the X resulted we our of ratio in to of our end and agencies. dividends in March. during billion credit

on X. Wrapping things Slide up

we lot outlook. the outlook environment and What same Yes, pluses am the will with we hear since January. grow meet service customers strengthen, been Kenny, is need volumes have original be I still and meeting us. uncertainty. the our our product totality, demand on some the freight continue overall there they And to hasn't our is however, that see marketplace. the economic provide from ready certain you'll to of, when in changed minuses will in our As service from a with But to

first to by our quarter we results, network that generate our evidenced addition, In efficiency. continue will productivity improves as

results Also those dollars. first excess demonstrated quarter commitment dollars is pricing in our inflation of to by generating

If for you volume. XXXX our positive mix aside, set as to as of commitment well allow in freight fuel ahead expectations us should price pace revenue

and continuing the finally, to future. the plan building. shareholder drive safety, And excellence and operational in this with our we're service a momentum financials, to in repurchases The XXXX actions further into will are have we second in taking our allocation, confidence in and is demonstration -- and capital on strategy with improve quarter, restart share strategy start that of the reflected value the we

it me to now turn to business the Let over on update an Kenny provide environment.

morning. good and Jennifer, you, Thank

$X.X revenues billion a . X% drop in which for the pricing freight volume. aforementioned, down lower as was core quarter, X% was offset As totaled and surcharges fuel by

key on Let's our per in to talk in about drivers each jump X% a quarter volume groups. revenue and down in bulk, X% and business last in Starting compared with car. revenue average right a the increase decrease year of was for X%

largely segments that index most and natural Solid fuel coal core surcharges. impacted gas unfavorably offset pricing low by contract our across prices lower were bulk gains

the and difficult as up more Mexico shipments to overall face prices significant Canadian from to quarter products warmer market caused for natural with gas to led of low first demand. grain origins. record conditions temperatures continued volume shipments declines and corn coal stated, well as was in increased Grain As the quarter in as

Lastly, shipments network despite solid goods, refrigerated competition, service business and improvement. truck of strong and new a result food demand as increased dry for

a the quarter, for X% up were was Strong Revenue mix lower positive volume. surcharges. partially in increase driven by gains Industrial. and to pricing offset Moving fuel a traffic X% and by core

along contract improved for both Our wins. allowed export our strong business to domestic capitalize with domestic new petrochem us business Demand development those and of markets. petroleum on opportunity in

challenges high impacted However, our volumes. rock weather and negatively with inventories

West driven X% to X% by in Intermodal demand, increase offset strong business conditions per international in quarter international in average wins was truck the Motors, with XX. a fuel which continued market volume dealer were market and positive to volumes intermodal, Turning Volkswagen by replenishment. volumes reflecting mentioned for strength due I Automotive in loss along the [X%] inventory soft from Coast down were contract Slide car, January with quarter, revenue domestic the and partially revenue positive was and development and General Premium surcharges a lower pressures. on

serve. Here we bulk, is in coal key to our XXXX be anticipate and outlook challenges continued the Starting as we markets with it at levels today remain natural see are depressed. inventories for projected gas futures record we as

conditions as to relates it particularly crop we new demand. fourth stable. to grain watching demand expect quarter are domestic export and We be hopefully grain,

Lastly, growth in we grain see we as continue about optimistic feedstocks. biofuel products are to

product that and competitive grain Additionally, products business. we our business by year moving started this service incremental Iowa demonstrating to earlier customers' solutions, our recently of consistent won out developing support

to market rock The last volume. exceed year's challenged Industrial. record to Turning be will

our due development, petroleum However, we excellence. and to our Coast investments focus favorable expect to on petrochem business supported operational markets the and Gulf in by remain

finally, on will the the what strong And half in to happen expect see back to early Coast near term, we still year. but side, it's intermodal of the West Premium consistent imports predict for too the in

softness but and our up to strong well set domestic partners asset diversified the intermodal expect product service when we and of see will private demand On side, continue returns. set market us IMC

OEM will production. and strength see continued improved due to business automotive, we our For development wins

there. has In taken on summary, The volumes Poland Domestic pressure Intermodal action. will put our team

take quarter, excluding first we service able as win revenue with we fuel, confident volumes improved continue will our to you even business that to and overall. in were As the the we am face I road. saw grow lower new off trucks product,

side, increases with given customers product team backed compete win. those Eric's up and price an pressures. conversations that that service efficient are On we deliberate overcome having price customers And conversations our inflationary to the so by has are can on they to

being serve us in U.S. and the great positions We that cross-border the well both rail have with to from and Mexico. provider franchise. a Along Mexico premier to markets

service the customers. with the us and opportunities added allows in service legacy grow in marketplace, to us offerings win of we've we new and strong front our see to Our

turn to our to And with it that, Eric over performance. review I'll operational

Kenny, and good Thank you, morning.

momentum XX. with weather operational our product strong Slide task. quickly rose the presented with And which Moving to is of XXXX to challenges, strategy board. its testament the The a We network. recovered while the resiliency to team and across our our the exited service speed

a on our direct see in to and steadfast of industry-leading We improvements is This focus continue providing year-over-year result operational metrics. excellence. safety, our service meaningful

and seeing led to and Starting velocity in mix our primarily to XXXX. compared services. quarter between due with in Improvements fluidity manifest bulk, declined Particularly, car network improvement are we X% shifts car first Sequentially, freight terminal product velocity. freight intermodal to to dwell and a our overall and our our customers. miles. Key remains car in daily higher intermodal an that if we shipments, impact win, sold from consistent, what bulk are And is delivering they win. average product generally want we contribute to We declines win. we customers which service X%,

new we deliver the To to a Index, our we further SPI. service recently customers, measure or Performance Service on sold introduced

implies, the plan we believe that service measure As compliance it's provided, alone. better a and name combined a actual reflects metric than the trip is

commitments, And with who with measure performance we to against their aligns our transit SPI on those a For specific transportation that. historical decision, many rely planning the that customers this rail practice. customers for provides measure inform

in first derailment For fronts. and safety both also and intermodal on SPI XX performance saw injury manifest personal quarter, and improvement, a the respectively. the year-over-year The X-point both auto team sizable and delivered quarter,

operate the continue tools investing in process, and culture and also we're they we safely the to have to our of ensuring emphasize technology need safety, employees As efficiently.

to is safely and each industry everyone goal change, day. want home the so goes We tangible drive Our clear. lead

Now metrics efficiency on XX. let's key our review Slide

our metrics, on team maintaining the Kenny it safety enabling enhancing we and broader crucial with efficiency do indicating the that manner, range that equally the to markets. While we in service, quarter so saw all In improvement cost-effective railroad of across on compete alignment this right a objective, in our and is year-over-year track. a of is focus of first

of the a to an fewer improved that satisfy productivity XX% and to transportation run efficient requires operation as the business. continues and the team first compared Locomotive locomotives plan to quarter demands XXXX

our last fleet XXX year. active In have fact, by we to locomotives compared reduced about

all which includes productivity, X% car daily as compared slightly XXXX. and employees Workforce decreased miles employees, improved average X% declined to

capacity and While support yard as overall agreements necessary provide continue navigate we the work training buffer scheduled and our environment. pipeline, to ever-changing an workforce engine to train, X% increased counts employees our declined,

adjusted and by to compared February a particularly records due After X% quarter improved March. manifest set winter increased feet. length XXXX. January in we Train Notably, quickly around challenging to length XXX first train train weather, length both

performance. generally which intermodal length year-over-year, moderated nearly train train longer While sequential for trains, shipments, increased categories move declines all on in

encouraged and we network. Although efficiency by of us opportunities utilization are to results, improve the ample ahead these our for further there are asset

activities, automate consumption instance, engineering are optimizers car management to plan terminal leveraging increasing renewal developing functions For reduce technology fuel energy and car utilization we improve and to to touches.

are just operational for key pushing as a and move we excellence. all the a initiatives, stakeholders we is While safe, these in our safety, running reliable forward, of envelope of efficient and our few pursuit continue service will And vital. industry-leading railroad

So that, to Jim. it with I'll turn back

Eric. Thank you,

Turning XX. now Slide to

get your we to I'd from quickly you've Before summarize to questions, team. like heard our what

as markets you continues outlook heard from volume Jennifer First, Kenny, some our to challenged. and be in

those by confidence network, provides repurchasing to quarter. start and this the driving in which in challenges efficiency stronger mitigating financial second are driving We the shares is returns,

It impact. year. give we headwind. also Coal we markets the is to customers. of it with quarter going volumes we're provide overview grow outperform I'm out is. what imperative we sold offset that updated for service the and if our pricing be us need confident naturally to us. the our we thoughts what to that some the laid customers, And first value providing an a for they'll generate to to is our with you provided Kenny It's

but the allowing first at drove on fluidly success, we're -- to meet you Eric the improvement is in across the When to in and see market. right the us There's excellence. the here And through saw operating certainly service network path. that look safety, more operational The I as board. efficiently. and do, quarter. making financial the walked we're Lastly, progress across performing, I demand you the how we're

the spectrum ahead. best will a little the the value years of In improvement, sustainable we're At each better for run, across our generate end demonstrating the day, on continuous getting the day. long-term long being the focus

Save item One for you the final all. date.

demonstrate follow, September on ours. great possible we're of Texas. to an Day XX more planning to in our to lay what's Investor are and excited for More of this Dallas, but We XX details out vision company

with to that, Rob, take questions. on we're And ready of some the

of Bernstein. first [Operator David line Vernon our And Instructions]. question the from comes with

of start maybe a it or So doing efforts. joint team what like But Can network? working of CN that. I'd to been operations well, growth of and Kenny or to the Falcon with you're bit talk at about seems of his UNP more in team and the maybe on kind the We hasn't little pretty emphasizing stuff us kind to development the you more of there's kind terms like focusing internally and couple the with just what like done little Jim. driving business in talk initiatives of making a a the on services on kind what you're that's the different are been focusing you're to about past. start you know bit growth changes

we're the And very the I'll more we on and You look of to we're expect railroad okay? It in in be with some grow important how model. customers it -- In speed concern. the model. is able resiliency is we to of in specifics, bet. then, the at we're bit get doing. just into what David, if grow a what and our thanks side, Kenny, And customers doing customers others, for real our and question. going that's you summarize want the to maybe is little consistency is have quick speed So less a --

out doing, blocks you and we are that are So from else. at to provide building a can a if it. go like able what we We one take no fundamental there look service selling we're we're the

X,XXX against very modes that other than makes have miles in that of we in X less competitive market service a high-speed the us So transportation. speak, days to operates market,

the our other it's at win. want automobile way we whether interchanges for whether win we we customers the the and we in Mexico us all consistency, have, to it's and that best together. the customers with access how handle, we our the the If look is that business we And the we export can it's business and to grow into whether handle, with Gulf that railroads originate our it's whether

might that. time would I'm all we're -- wishes on spending more -- of things. I'm So not I some doing spend he other Eric say,

I It's still So there. the still operation. look at

win. a a lot an you analysis to analysis and do be on what there's the like And more better I'm comfortable, needs think on when but like, regression there's we and service do way consistent that, I is to able and I more to do. that to deliver And We is the a operation delivered. be do the pressure to more faster be product.

Kenny our to spent with to service. future grow and consistent we with the want path a and they customers with to like a we this which are. such time partner UP, going, meeting grow I And to win, with continue easy I we want them need we very think, I've way we go. we customers, partner and of what customers to keep you, our to customers. customers Kenny, And for then personally, it pretty provide be also understanding can confident business if should But myself really we down value and and can that them think I you that want team I hate his where to lot for can, And present the in I'm with consistency, this to you is they David, because tell win,

just hit our development of teams and head. it talk some and Right? doing So the product to I doing I What about are you are you want we look, on David, the And to together. differently? Eric that

seen more we'll just It come We've gives service You about look there seeing We Houston to We our is there, grow excited we've volume it. on. the customers that ramp. Port X. growth of the We're the to add destinations We're about sequentially. BCOs and continue of Phoenix there. off optionality. back out excited and that one. are and that in on that at come started with been put

Now we're at XX.

You on just a look product at Inland added there. we Empire, new

Now the naturally because we are we're cities, the NS the going seeing cycle side with and more Chicago of times to on CSX unit train volume. getting east we're the XX improve,

that So like piece. we

about great vehicle brash the for at business getting cost new moving off water we we're opens On that east. Look back markets that's development. the lower the really coming us. that you finished at land that's talk product up side, have margins. of

So we're network. of get pushing a We franchise our advantage and we every onto we're on offense. Jim got taking mean beautiful I lever to business can we're as it. mentioned,

All right. follow-up. Eagle one know How FXE out And accommodate then over thinking border, capacity onto the of of performing sort you there's extra the growth over volume? If quick you I could the Mexico? maybe sound squeak I Gateway in lot with are been a expanding is Pass about of that. future shift the to

a of done as strive concern going a good job has They're down the think in goal our run spent closely trips months David, service I on with to where FXE with a together points time, ownership of I've in made We lot here, good to them. we they Mexico with real I have been working like very the working FXE I've quick, X we're same to position know they it. do, to X are. already of or continue think X I've and the and identifying what have product.

down to couple FXE of railroad train going fact, to more. take head look a write on train In a a at freight the their I'm weeks, even of end

at Canada makes we border have stop falls. the just in international which the crews it across, trains The just and place between easier U.S. our and to get not like for and right sense, border, make to processes

that for across the cleaning So in of limit the we efficiency the get to the are items our up speed customers border. and those process

locomotives Union So see work But those traffic some the have you Their and we I'm growth both that's excess don't we growth. large happy railroads to railroad. can to a that don't that's And to where see let we exact seen number provided I'll northbound why and they've optimize market FXE And to have get can and -- explain I one touchpoints other -- are. number, we it. them into there. to want the it give I locomotives, to trying when Mexico use they is but very make and Pacific. we give we're X move for as the sure understand Mexico, like in southbound, you out a my

is line question next from Stephens. Our of the from Long Justin

sequentially OR the prevent in it the good but OR But translate the see expecting gaining the over that we're So seasonality can balance typical of despite XXXX, that momentum. sub-XX you to you seems profitability horizon talked help . us like there how to the was you're that that trend towards see improve anything into the rest bit little tracking outlook, a in you about happening? of the It the could from year? is on the

Thanks, Justin.

-- describing providing not your number. terms you're improvement. to OR the guidance, not so from think continue are We on is expect what ourselves make way I that I'm But we comment to of it but going to in

We control. the lot You about how know about that's And Kenny doing and of with against and there's what's good his we made we're talk can't continue the don't We that rates to structure our go quarter-over-quarter that heard but things, Obviously, more team happen to really and that but an that especially we going are do. totally our environment a and service that cost little focus doing pricing, control market make is into yet. do economic we uncertain. to that's a Jim product gains. in to how are backdrop our interest to gains, fact an

that are us, fuel those So impact things an have including on prices. the do

the about . our to and good perform. really feel are very We about ability setup confident tuned. stay just So

question with of Our is the Amit from Mehrotra line Bank. next Deutsche

you X-day more you and feel and kind XX,XXX how week. Kenny you X,XXX, phenomenal carload and you carloads to team strong We've comfortable with a to the number. gives the have the curious Eric, metrics. the on about confidence on job done results. get Congrats when this been that perspective per can in XXX,XXX-ish obviously, handle of operations more how moving handle much your stuck

talk about that? can you If

asked, Jennifer meaningful just that a advantage as XQ It's carloads. the then XQ move more you question move gets from from just you weather better And related a was to pretty to XQ, to just XQ. that industrial

you a noise If I fuel little moderates think fuel, and about bit. can -- any just talk

can you about I'm anything might as XQ think just If of talk the negative we that that there on ledger. be XQ to the side from missing about

I'll Good. start meat. much question. for that very you the with Thank

Now right I to off clear really want be the bat.

We have specifically, the our have, past capacity think about capacity. is you More in clearly to custody, continue base. be when enough crew What a to we've critical than the clearly that have brings able talked XXX,XXX to maintain buffer the handle and about have carloads. resource in more we mainline tremendous confidence us we we enough

that of based to crews have couple point, We that the are available when your have extra the system comes hundred across crews. on, as volume we

XXX we've months, said my able in XX to the us. last in the store the are fluidity over because largely that Those prepared to comments, I been locomotives increased system. available Locomotives, of

As Kenny us. more a the have the don't system have We week. XX days. to wait don't parked to available volume to We railroad. to brings They're across wait

been working of have system have right cars cars we spaced actually cars, then, not which in but the call that we storing on side, we only course, the at out across their facility. with customers we're And ready car the

load, pick up. that ready So we're to the moment it to us ready give they're

some That's is last to improvement accomplishment that's good often things the we quarter the a we quarter the by you We really operate you manifest that length network have driving come same lengths. do volume the of the existing on. it. one the that about as tells the think final add is ways about our one railroad. in we intermodal capacity, length take of What and don't to do team, can in work have hardest thing it. building latent at train our the train of volume we on the a the year, you pairs have do is when we We we approach things variable we XXX-foot think if do. how massive starts Now is peers lift. to talk capacity to utilize hardest manifest train versus about huge Train a we're in At train back,

we're So ready.

So Amit, a because of and ex guidance given add the fuel, $XX.X you the on million railroad, and you ratio But result last that's quarter the only is operate would really -- how where okay know thing I operating important. I've never what world. what with did the were, the at way with price It's pretty with on volumes did in a I look efficiency it's number. we that's the we railroad, good and

Some would good. say it's it's excellent. I pretty go, people

the continue we get operate we're the that the railroad moving So the not able see and see his us in and I delivering, efficiently properly, Oman to service underneath are and decision-making railroad, does we to down of the don't the numbers because I day we that here make to forward, that look and clear how and view Kenny unless product people need have very we at comfortable surprised, at, job return me proper price numbers a that people every of decision trying it great and to the this to closer level the make ground productive in in that driving we headquarters. more the do become

give a Pacific. comfortable going but to in with Amit, the Union for we're long I'm number, term headed not I'm So where

Our is the Chappell with next Jon of ISI. Evercore line from question

with you In left And just here January, improvement ask with volumes kind basis to difficult admitted of volume where somewhat off. you without it would core you are kind going of was I XXX be a of tailwind. points to modestly that Jim, down improve year-over-year. margin the

in the improvement couple volume how months. able of the And was guess, lot Eric a network? get comfort actually the of last huge what's to such what of time? the of make touched a tailwind are things, on in such I a a period . you in you your change short So but when do in sustainability that

revenue. love question. end and let's start the of the Well, I with I love volume,

right end easy Union very, worked the at us what to out complicated don't we operate operates. the involved important way at people the it railroad We're network side as making It's that's in very forward. and the us it railroad. hard. to think sure of a level. job Pacific I is that did the is It's focusing So is be see of drive impact on of can the as a a It it, done great And those. and looks the everything headcount really when not every spread it we improve right especially to I able and and service. we've to and But one the it, we're expense we that's day, think complicated. in I because comes linear doing And it things sometimes

is what Kenny ahead we markets possible markets to and Eric more can even sure have have of to is if deliver going to us we to deliver. up margins, us the are everything because today. rest than make going to going moves sure make this can opens it that that do company So we better we

the you that is forward and I'm looking it me have game, delivering in So years. and is, basically what asked of couple the next end our to strategy

America. of of Bank line Our comes Hoexter Ken the next question from with

and focused So wanted as a of train efficient? the the room -- on examples to for [indiscernible] online, to about volume run, the pull ability getting as increasing you maybe you to on results life. other you're now. just the question the out you've PSR months is out but understand improving maybe further into bit of get -- pull continued been you some focus kind a talked continue go employees flipping tough right? forward. you in X Congrats ability equipment more I on to want, is there locomotives come side. Maybe give typically ability get volumes to But move Eric on the service for environment. a operations service great Amit's want team to Isn't there dig to but then I cars and before these you and where little some the to more

. to that. keep maybe talk about So opportunity just doing the

base Eric me get be And sell did optimize I in always what in from to network that, always to we but how customers, look is to tell we're for able to going way Listen, Yes. up. plan to summarize just the plan. that network. efficiencies like and at the But make we look about let seize build ways it to is Kenya, and what to you what's customers did I'm going the talk we and to great the drive the operationally things deliver base the moving question. forward try you that's sure

forward train length. in more on can we see allows the improvements we network. But efficient how for a had not handle also better the We we a train. That's terminals, we how in cars It cars So longer to few touch look touching without very the at every in cars capacity. only have the us points distance. them

able be still right And and now to the way next fast train piece our service that can to we we that the long plan react plan train sold. we so is takes that to our too provide how for so it adjust us us

further versus allow tools time developing few we place more. weeks that period plan optimize our or even so that even week to change railroad in a them in a us shorter days and of a we can the So have much in we're

So and that very excited a see step. about being that, as I positive

anything Kenny, to add? Eric?

for up that. building start I'll

of we Jim's of faster. quarterly car half again, the a our X% you dwell at from every a that's have point, how cars a look X the when and Union improvement to quarter, on the are full in hour we during That's move able off performance perspective, our dwell car So Pacific. to

Now as we out the just the in more able touchpoints and beyond we ways first looked agile, faster. modify the to on more to took being when be that that X,XXX quarter going for think move point you plan Jim's . to transportation about cars to

Even investments the get build you you off our a are Certainly, in the that in that XXX we when working to signed we all of and improvements ensure out. fundamentals Now about mobile productive about we about break as made deal We've CO technology, our well still to locomotives. the that's both there's with to NX, opportunities. more recrew rate, capitalize as those talked start the opportunity spoke of yards. already getting person we've on last railroad, the think there. that about year in

opportunities. more We see

how your don't You have instead railroad. made we sometimes material the We trains our using quarter hit but question on did to also We great on and to the reported things Jennifer purchase the maximizing we vehicles start about that services. link talk in many as of your movement everything services. progress, trucks purchased from from

our You've vehicles to last over out. has seen done We've about vehicle fleet a aligned from perspective to that what coming the our year. headcount XXX

in work single that that play ensure changes our but improve it we're drive is look We it financial safe is meaningful We us day. now, product, only not make Ken. we single do for at make to looking day. biggest every while And everything thing how we the we So right service through success. every also

add? to anything Ken,

we mean about. up plant the at more by cars business audit by in things more . like showed talked efficiency. right customer's I It that the in about It up customer, for shows small talked and development discrete plant. we these asking all adding

is question of Shanker next with Stanley. Ravi from Our the Morgan line

the So puts in the well. cetera, takes kind the the year? And do of over et how mix macro, as of and that obviously, and think price/mix the movements XQ, on some number course side truck you in about X.X% pricing,

. So how do we number think the evolves?

about just you, positive ability I'll most staying we intermodal . the Ravi, So to markets. us the think you with to surprise mix probably year. to the have number, some for of from isn't mix through business within to our which give we're but the Kenny? rest going probably of going year, a going Kenny perspective, as that give probably that to But not the is let talk weeks a

with making. encouraged end little proud and the on has to customers customers business. results, improved market, articulating aligning the price to the and to they're bit there a risk been inflationary that that price you customers are capital And with the we're very our taking as that about at I've see and can the more talking with we're of Yes. investments product to the conversations that day, pressures the that in those of team and commercial our the service having price working and

very or is customers. coincidence deliberate not with it a luck, So are having by conversations we our

you and different there guess and ones? well? contract a other super settlement quick you of or the said same just think X Is I as . had could I settlement there a are Kind was there's follow-up. X Understood. that in expenses a other revenue, claim

different Those . ones, are X Ravi.

the Ossenbeck of JPMorgan. from Brian with is question next Our line .

to up last wanted of kind question follow Just Ravi. on that from

In take of terms of the us momentum. mix, always bit color can some of in pace just it's of going with Maybe better here. terms to rest helping it was getting to of as that touch the it renewals the you a like give from sounds Kenny, time business the services

So it would be to helpful that. hear

agreements side, on obviously And well. network both the just And rightsized you've had coal, drop do. to some more now, of the to coal those like new then agreements labor secondarily, in for right bit a are there's big you little the as labor seen or adjust on

sort things trying and at where the the of just terms looking year. So figure of to of where those they stand are now rest in X out

shared it's have that early started close woke last And that touch start like half to to deliberate deciding the our not Yes, these question. started January, said in annually. we I well. with of year. January this, and off. we for They conversations I'll Thanks price needed Xst back can we've we up customers.

talk deals. markets. the about other couple that's little And multiyear conversations touched a we that I about it is and The deliberate have there. out a I'll bit. on the then in of half risk

today, that last at at market from spot stand a were look markets, those we perspective year. spot domestic here same if they they intermodal, You look where you it, are the

So been for thing on rate, long a long this been Same they those time over time. where a rates months. contracted X the are contract has

prepared. so am, things optimist trough know if and the will there will not -- already, product the And development don't that thing, they going We're a volume we're we're that is you're know you on working happen. and get the we're comes you're more you I on. an in when thing -- better, tell forecast or the I but ready. position about team, good that talked -- improve like will where bringing with I when We're to at we're and Eric you, What

but see can I you And tell happens and excited. what that so we'll there, we're prepared

question about and your Brian, And crews coal the to lines.

just remind XXX, we're an up made adjustments. or changes And make system. outs we that every we ourselves shows pointed make market single the you of adjustments. week, We've board looking, out, reminds every year ago, So as we review me that XXX to were continue the across system. demand. about all for We'll reduced And to in the it across sure borrow to you a talking increased

system. For borrow in across month the third entire X row, a the have we outs

put to don't we out Now been a get with it's manage that any grain and some for business because might have massive that mean doesn't accomplishment some that there, harvest, borrow. way we to credit the but able the they've in I adjustments some team seasonal a like crews

So long. day agility all

of from comes Alliger with line Jordan question next Sachs. the Our Goldman

times our of PT, rents which it trend a morning, as as this we've would -- few tech we out you in move what than such and have had particularly model. as this delta lately can well cost line better to current the of but alluded have talk quite seem to areas to of the alluded a maybe forward productive in you You've as a some from because was sustainability the here. we bit versus certainly seen

Jordan, question. that Yes, for thanks

right. you're think I So

momentum the by because more the the are that You're hearing positivity momentum, team it's it's keeping know we of lot building cost sustaining there opportunities. first, And and the out. then a

think really dwell rents, about the that and all time So drive to the drive velocity, equipment cycle if to that continuing referenced. about continue you car is Eric the

that impacting those are line. directly So

appropriate fleet that and opportunity and services, locomotive our locomotive the make numbers, purchased of certainly, one that improve wise is, to that's at your of continue it. that's as dollar that it's return part the at as own Jim's then we is sustain use to dollar we spent protectively being big use you're been an more spending. to across reduce getting the a fleet looking those the you're And the that well messages that's we're potentially the dollars the every And there for as is a looking spend rest like deeper and sure when and that. contract smarter of resources, services we're team being and

to So make progress. about continuing feel good

Our next with question is McGlinsky from of Brandon the Barclays. line

well. just I X mix. was any volumes Or about OR This international the intermodal impact sort with detail to I helped drag drive swings effects because on strong Eric mix I for on to if be Brandon. the to another it these yields, coal being margins in ask a appreciate wanted is on down, as really impact? RPU but thinking just an of in actually we Should speak curious could the Morgan right the to now big is just you on quarter? just

that Thanks Yes. question. for

our that. terms mix and mix, of to that is cost our So have. that's help profitability there And we different does think about the we on the every RPU. some line business behind in improve when mix job of is opportunity of profile the

sweet Eric for intermodal for our talked But as as those profitable us are very proud of franchise. sure. are very That's our well. spot business so manifest coal, And grain, we really

all but we extent going agnostic, want totally So we we to of to the drive greater So and lines can to to train grow that we're length, across want I'm business. grow, not say

come see I you're that. think going the that like from margins if us to do so that, And you .

the You see I forward. of I the bet. don't summarize what we sort to moving quarter just look And why at -- way and

the that we in and all what the which price the quarter, is non-intermodal was return -- want and level are capability term the just different look the that's U.S. that items with the few a was will that people helped at handle seen First I Mexico in in And I that consumers our later of hoping that's a our I see. and results, if happen cut Pacific us industrial an to product you don't can't that on take know love gives have products where about for rate I in see months of except and and to year. you it interest all, what we changing, And next be what short I macro this is that's would -- going industrial, the originations, if ship maybe look our and Union strong. first is us

So are an spending products. and number us interest rate would what their homes from on people help and of cut lumber

take efficiency. of roll to middle what cars Gulf domestic those return our and you by. look of wheels we look drive in And and whatever train in We improve better business. full United we that's a with international for and a the we time But at of see the out get are music we the ears when where States. cars, box every always price my if I we tank to originations it's heartland I franchise in have that like, ways of leverage And the the

much. very you thank So

comes line Kauffman the Research question Vertical Next of Partners. from Jeff with

but are I telling customers those there, need see terms they step customer your And effect in for Kenny. are before And a near-shoring terms Congratulations a to or a . seeing back rebasing bring clearly, that tremendous that your metrics commitments in back. took what they take to then question result. you of a of up. rail, would to flywheel the service there's maybe business business away are What back, wanted manufacturing? to you this coming quarter,

Yes. Thanks for the question.

real. it's On the nearshoring piece,

rail, that's investments you overall there, still the You've it seen at presence rail We've got the market share you a so. mid-teens that's is Mexico and in put low, talking commercial out if the strong or I'm into the relatively of industry amount look and there.

new going steam we the Hanjin the it on we've product Southeast. service place seen seen product we new grow have the has We've that and put that that corridor. in picking it in in that we North-South seen Our that in grow. up grow been We've on, it traffic put

growth tremendous So there.

that. for just I'll some also We're We're industrial some online a will on to autos come them set plants those and more is are online business customers. of come just pieces. for the will call up going that come and of that that more some carload There other what engaging

an out move to strength Mexico. both lot network franchise Mexico gives finished us of in the the and of the a and feedstocks product Our opportunity that,

So a out and had coming want very strong into X a place we build great on Mexico, for quarter. to and The gateways. us. of that. We

truck those able sit with business, sustain, about carloads to to As able customers little to piece month down lane and adding we're to capture bit with talk percentage. about rail them back by X their far ensure we're to but reliable them or that versus a or we us, as the more a X truck to every coming product are talk able talk about lane them also them to or

their the and certainly our been every for has carload. hustle and product service team us they stronger positive very a out is get aggressive So commercial

question is next Wadewitz the UBS. with line of Tom Our from

Nice performance the and network everything. on and the OR

or So I head on that. I to color, how congratulations do on couple a and side? just got you've comp I or going count jump you whether think, benefits, -- onetime think expense Is the I wanted And little forward? more Does small you is we should we services get that there's of go kind then to where whoever Jennifer, purchase questions, a that else in on I But about wants of stable? the know said but that little storing a kind down identify that's know of of flat locomotives kind didn't guess line, meaningful. helpful. that Or bit? looking cars, that's model a forward?

from perspective, think just it modeling do benefits and sequentially a and Or purchase comp is how and on kind So we I about improvement? further there of think services?

You bet, Tom.

the services. with start purchased me let So

I about the say onetime for So decrease. think accounted that did of half the I item there, year-over-year

set opportunities that about talk question, thinking still you there. rolling we think But that we again, obviously aside you're have on another as me should when you heard So forward.

switch pay inflation, what how And in were the we're in about a We thought some first offset guarantee probably said doing increase and kind that benefit really you at sick would so comp back headcount. managing then, to benefits the that we're we in pay X% we year. here If January, quarter, know the see for and we by line of wage you to they're higher overall the right our the think improve drivers, online productivity I there. they're X%

work benefits those an those of agreements, our a in When in that of rest think count pay head little new elevation anticipation the sick is of about the when you we're resulting in out also terms in benefits. of bit is terms rolling contract TE&Y

to productivity, a And and encouraging is same think to so we're really, the going of that offsetting our agreements paying bit those that's we're the due more forward. that plan about unit for think way that But there with work. some little our of I what's is

Okay.

that the to flying right it? is look So stable benefit of at probably way kind

good Yes. significant volume pretty impact, that I or we but change right we're down perspective, feel think have a there's I like mean, if can a from in a up . obviously, place now. an

tackle we that you to But the know at have few it, the a Tom, and short one inflation. see to we we in have It's quarters. way great that the look next in is term, wage challenge

You and deal that a service price you and with product you properly. absolutely, have great

on that car employee But doing level the technology, we're there where efficiency-wise, the what we're so impact to to figure marketplace. of that can't don't the number our that of out be us at if costs the it you everything hand number a that per that business for comfortable doing look the how think things they I we're we're right the that we at. I'm and point to win we'll people slope way on line in switching to change cars able with customers very and

back but little to -- next line hard for bit a work, lot over So I it's see of us were. years to where get we a couple of the in

Bascome question the Majors next is with Susquehanna. coming line Our from of

create ago. public midterm? opportunities their owners that competitor that . you of to some for And few and or really comments a you different made business? speak Western can Can to if they in about very the you've out how of is market approach in operate seen or margin either grow being business profitability The any your the wanting just months more

But provide the Bascome, did in beat I we're to And it's for charge we modes because Absolutely. great price where that, industry think an that I transportation. like question. very we most a hear competitive of and we

service provide how for to to I need be you need sold. think and smart price, that make price I So we think the that sure on we you you that

I win. in that competitor, they And So we we're do them what day we'll complex what put us compete do. think markets, we including our better, makes against their Railroad It we're the and I great gives have, at Mexico things. us it to I the to They love we're industry they're every great tell hopefully, love doing piece, head-to-head, theirs. and here to you have our look opportunity the compete. very of And I others. better. competition a And prudent way comfortable it. is whole against to and And need a right the thing. the to think wonderful great makes a don't

I road. the but go as down we their actions them see So are love the what comments, we'll see

Group is of Research. question Our with line from the Scott Wolfe next

are price better And seen good. is gas becoming on cost wondering, bit that headwind that we or know if if not about lower I'm any yet. the a then quarter, don't full of inflection coal can right, just could a headwind you with price that pretty closer closer just sounded some the you year. get tailwind, the the there? Kenny getting to I step another we've the we down if price. coming RPU to if we're stuff Jennifer, from clarify that just impact there's combine of productivity margins know So margin getting can I cost last for talked a

and Yes. a they're But quarter. deliver hearing the margins up we putting it pressure improved to Obviously, and the much you're price, I'll Kenny challenge lot let right. that on are the out the and that aggressive marketplace. taking on and our that take Kenny question. in of in cold stepping being there go and to team We're very

productivity but of driving that goal. margin is a combination is little which absolutely can't bit, accretive price from price what's we're the pure was and the say So standpoint, a a yet inflation down that the our volume, improvement. I just

though exceeding exceeding are dollars. the very are that. still just We inflation Kenny? confident the of We're dollars

dollars. just same have, On our you that question to Jennifer at said, this exceed inflationary reiterate we're coal looking what I want thing. we'll the

here the the if team to come . depressed. the the levels, is But they to can and be we'll coal in we natural muggy to lift we're question. intermodal, looking that our at the customers, think to efficiently when talking yet trough still similar see and seasonal happen, Thank so business. want up for some hot, into You're going terms to see more and will the at move around of They're I you business. futures, we're seen. summer my if yes, we We'll gas spring what summer. domestic I comments us the Eric move a do for doesn't get

everybody I'm prepared on comments and my and to purpose. it it jump is and telling you, I in said in have I is, team Kenny this coal on one here, what and

business. take we able care trains of a originate, that markets coal a to replace other we originate to are It's we We to that going be do more grow we it. number to today, need and of to lot but have heck than tough of used that

we have for can win. processes, way see do right we things and is And with level is, term, might So it, hope. or way deliver deliver the go call. us to will let's Pacific long that's the of commodity go to not what a provide That's going what I than that okay? at hope a the the it to times happens We I'm I've and into that's offset good it that more and win I'm into, and anything team right a out possible, win. change have service is. few We're large over short and Union spoken but the coming it look on will term happens and the us that what at to here our regardless coal. don't about I It back this we franchise one ship. allows we

line is Stephanie Jefferies. with the next Moore Our of from question

here So service. and nice safety really across Jim, progress

maybe post of get on Kind seeing these accelerate And from hearing you So all? engagement customers? opportunity in improvements, what the have Are here? maybe I'd hear, holds to love to side, apparent. thoughts. noticed I'd revenue you customer terms love network, are then at fill flip from the you less were to any challenges to what's engagement the of that looking maybe your

question. a great It's

and up and them. our the to meetings so feedback gone in, industrial, -- was of I to bulk, on work, I'd in have think be I first us a the winning people I marketplace -- if themselves it's on concentrate is I came can there. strategy it when our is want them when the the in thought spent I time business to followed have operations, win, some been spending lot thing only I've successful see But back with that the premium what job, customers. they week to lot time Union I've a our did bring our of Pacific they I we is.

has There's impacts to markets and they understand we So and them and that win. some are positive. their have where feedback because some always to survive we the truly what are want customers been

speak more bit And can. what with a engagement our doing we you little So customers. and we're we're maybe, about Kenny, doing everything can

Yes.

we so significantly customers, this customer at contact look ways. you meetings, a in our engagement year, touching more it different and strong lot far them If we're more strategies have with face-to-face the

as the at unique how more I'm Eric, grow X/X have of our One to meetings there. can an is we of that we strategies see operating looking specifically. And have that local doing person or operating we're leader business

customer at the . strong engagement for it. strategy going we're and Thanks levels, So all keep question. to at

is Elliot line with question the Our TD next from Cowen. of Alper

West the so more the on My pretty muted West ports. offset? understand intermodal some there I continued there of Seidl. mean, I I Jason strong for We've would for Coast continue could on on -- volumes -- Coast quarter. coming last appreciate think that on I upside loss seen question that customer outlook mostly strength continues? Elliot year, is should be the about called that? I the some is out calls international a the context out international This you West if Or for to intermodal Coast guess, the we around acceleration guess was some

for thanks the question. Elliot,

few a here. So things

to into been referenced. of Intermodal or strong able set bit going aside We're It's a capitalize on been a our business for network that's IPI by that few loss you increased been a us surprise for business Let's International more seeing has we've contract pleasant us, little it. the strong. points.

there labor a has with see the bit been BCOs because some of aware more of side we second what their about in any feel issues Panama go as with quarter, the are volumes pipeline. We that staying if of We'll pretty small the challenges Coast. are East Canal. positive on concerned the are happens where on those little they to the a our impact we through some customers I talk But good the as

half I'd what a in to second like see of year. few we as weeks out the happens move the

going today the to second not to I'm year. in So April of what's on here ready happen bet half in the

talked a preparing for to end do last it does East get The this products Coast, it the happens I what fact quite the I'll I've more transloaded for if West we're bit, the thing with, like regardless and holistically move business at the of that said to entire those our leveraging to get that and and CSX, I after product of franchise cities the with being us the Houston. that Coast Port NS your Thanks XX of about, more Phoenix the out go for will question. and

The the RBC with Capital from line is Markets. Spracklin next of question Walter

out when take West want how called So the bit Nordic campaign, alliance. with I competitors, and environment you we interact your attending the a CSX both the CP-KCS they a actual session a and with Southern an were little on and of recent competitive East bigger picture to as

could you a closer or as there given naturally able coordinate interplay being the one service product a in companies. company to Just with effective, cooperate, network see particular between operations customers? your the higher to align bring more curious that to whether yourself bit you little Is

that a Just customer. the curious or increased bring cooperation to longer you're you about higher term be absence there of acquisitions service could thinking allows the to what . in mergers,

morning. the question, good I and appreciate Walter,

either the it You of starts think about have receive that traffic that XX% else. somewhere or originate to we

both one can't be number rather CP Canadian I with the them. quickest. it and need short that and at and put lines all what The railroads partner Eastern and apologize to you on when we say fastest do international to best is look we'd the I But or or perspective, is CN I the and railroads anymore. in that touch. So the choosy that can't we what railroad we of guess, call Canadian, I way

in running that So downs able all ups are the very and all we win. has handle Walter, if that railroad have service. a efficient, be buffer we fluid to we're We naturally smart good occur all to

So don't a have preference. I

very together, meetings we have to detailed we fluid. some. we them, love with compete we to interchanges of NS lots I compete Now Interline that with on business? is of But which those CSX are, and cars, CPKC, it beat originate which that one think with to wants NS Is we say, it get it and say some how and we CSX about or we we business, with many them, do we CN, with or the or work on and when talk

hours we the some we one So go when interchange at cars spend XX way other. interchange don't to or

requires especially win work. that and we in trucks, beat that that So speed kind of network,

wins, you one carrier were and velocity, Walter, why once it train we the with we that's get time? good origination? measure people to the customer look road. to we be So the because end-to-end, you because And don't and can looks best the illogical West, look tell in move get we ?And I productivity I over the Are at it's we it at what's because at and markets BNSF how the on able that's have want How speed, us to you important. on quick. are best the get no versus want interchange you other an fastest the fast preference, the on car there railroad. at

answered So hopefully, your question, Walter. I

on great a Congrats It quarter. . does.

Ben from Nolan Our final line Stifel. question is from the of

guys as talk much -- we as specific don't about want you And to markets.

how something forward, Is was One the a been more And guys you to the are you by if lately needle of the a is sort could about outlook seeing? hearing you lot think elaborate business? wondering crude that. that I that rail. moving is Kenny, that little that as things about I've going on of bit

the for Thanks question. Yes.

as excited a business moving You business. our we're of been seen it that and petroleum right can. And team about, as heard grow oil We've to moving development has some of we're that there. my Eric's around a comments markets it's help much and of bit strength. wins get it's that little type able and us domestically. now we

the market So we seeing to years saw that for don't rail emerging by going excited moving another see we and commodity us. it's traditional of great . but we're XX that ago, we're that kind in crude be

question, possible I quick railroad. Rob, want just sure the possible. have that key I to because that highlight. is, X summarize think that last points shown One important last really real make let -- me that's if we the And us there's quarters was to just is this let what's me I for a what's think few

We will headwinds. have

That's increase a Xst. have We wage a July coming headwind.

entire so can the and this entire and others going it, We that I'm impact have are are that of But business and are to that we railroad. be and proud our certain way up down segments of up us. at the look team

We're in right providing driving the term. is customers more win we're the high If decision-making and have that the level. doing possibility making efficient. gives you we're what service that our the network the look goal. ourselves franchise us we a we to at every And We're we to that level. sold at have That's long

forward look looking X a what of to or for looking looking is And very years, I'm much to and with forward we and I'm today. it franchise, in X run great going before. into the to like us a this longer-term great next where to start in is moving Thank I'm that our next you quarter carloads joining some April forward railroad, have everybody. you a closes. the forward. deep diving otherwise, sure September, are But plan great for I'm

Thank you. This teleconference. today's concludes

at for participation. You this you your may time. Thank disconnect your lines