CSX (CSX) 17 Jan 202019 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation Fourth Quarter 2019 Call.

As a reminder, today’s call is being recorded.

During this call, all participants will be in a listen-only mode.

Following the presentation, we will be conducting a question-and-answer session. [Operator Instructions] For opening remarks and introduction, I would like to turn the call over to Mr. Relations CSX Investor Chief Slater, Officer Corporation. for Bill

may begin. You

good Thank afternoon, and everyone. you,

on Jim slide non-GAAP of three. Joining Chief call President by Officer; today’s me are our Executive Boychuk, our Mark Kevin Chief Vice Executive forward-looking and Marketing; followed Jamie Executive Operations. Foote, slide Wallace, Vice is and disclosure President On on Sales of Boone, Financial two Officer; and President disclosure,

Jim Foote. that, and Officer, With is Chief to my President introduce it pleasure Executive

Thank good our begin employees show this and the you, thanking for by continue industry. are They job to Bill, best want I afternoon. the operators great all to CSX of they quarter. in that another

and fourth both operating quarter low and the own ratios. again For records new set they all-time year, once full broke their

it is has been and service the ever getting better. Our best

key is reliability. The here

responsible. we Our able and is inconsistency, operating opportunity but are with service we for us have needs to tremendous when offer environmentally shippers efficient simpler, cost that more users a for their truck-like More growth. a lower shipping are selecting network, rail more

Slide turn X the presentation. to now Let's of

to improved Our line Fourth point to Kevin EPS The few out a top headwinds. of operating a are minutes. with a by ratio XX% $X.XX. XX X% record unique basis will offset items, new in declined operating straightforward financial few continued momentum results which quarter only points as

XXX improved second considering year, full points results half by ratio the EPS XX.X%. For basis operating These $X.XX, increased performance. to economy's truly the to X% industrial the great are and

in continued Food markets impact growth auto declined economy, and revenue markets. softer quarter in revenue coal and declines as declined volume to other chemicals, was offset year-over-year, intermodal Ag headwinds. Fourth to and industrial X% Turning the by than Minerals and Slide the Merchandise due more & of X% lane rationalizations X.

primarily due accounted on The quarter. to around the XXXX implemented of volume, than lane of declined X% Intermodal volume X% revenue Philadelphia impact GM explosion two-thirds more rationalizations and declines lower refinery the for season. strike the in peak the

the on of changes. markets, lapped export export prices. natural well volumes now impact XX% and these prices, have with revenue decreased the benchmark Coal low and to as lower lower We of due impact gas as demand declines in domestic both XX%

other from storage and lower charges. at Lastly, intermodal revenue revenue resulted declines lower facilities demurrage

Moving to Slide X.

The reduced fourth the Let's At accident is see the needed. the accident we safety additional result rate review of another declined of the daily performing XX%, setting the rate. part our time, concerted and performance. lowest the progress including injury personal work. we same for on full-year This full-year train improvement XX%, employees record by a company rate in still is the effort where areas quarter

our will empowering rules further to to rigorous the In and maintain if courage act our on have education compliance safety continuing of strengthening workforce, program see XXXX, we focused they employees unsafe. something

have one will we at I if never with employees be before, satisfied performance said while injured of As our work. gets our just

X. to Moving Slide

as well translate to Company and utilization for improvements, as strong incremental momentum. the operating of per miles achieving Let's CSX as review performance these for day improved new efficiencies quarter. higher we our records significant significantly the combination both increase network. metrics asset set sequential into continue The velocity dwell helped all-time car year-over-year operating across

quarter. despite X to records this per gallon continue of below operating GTM fuel in typical seasonal efficiency headwinds also We fuel set X,XXX

of transportation have significant leaders given well space. and to remains to financial the Class are the the to our is only serve. have believe for from recognized and as various benefits we forward. combination as customers efficiency going focus railroad threshold. CSX emissions crossed important the reducing sustainability us, X to as Fuel Reducing by proud key been for And US institutions remain environmental a opportunities fuel better this we team, get the communities even is we in consumption,

into quarter for hitting and operational of most our are these translating XX% reliable their more merchandise records we plan service this with again containers Slide our XX% importantly, of performance hourly intermodal customers. On targets. cars X, improvements trip set Trip new plan

we of trip providing we of our intermodal Additionally, very plan to tool CSX's to will Feedback service. merchandise performance transparency roll-out differentiate unique data continue successfully and customers positive, completed the level our and customers. been the best-in-class to on believe individualized has this

the to results. over review I'll who Kevin, now financial turn it will

you good afternoon and Jim everyone. Thank

Turning highlights walk to the statement. Slide through you the I'll XX of summary income

the fuel down recovery, as mix impact X% and fourth of merchandise revenue lower in As and gains as the and was well the Jim benefit more intermodal intermodal. volume offset and of other than total lower quarter coal pricing mentioned revenue reduced as unfavorable

to labor down markets and sustained were operating significant changing X,XXX. nearly to and efficiency. Moving Labor headcount significant X% X% lower company's improvements or the reflect average trends A service was and quarter. CSX's delivering expenses gains in while ability operating and fourth expenses. reflects with results X% that levels. expense Overall, achievement these the to react asset Total lower record

gains strong still retirement competition and employees. to in accelerations in other the inflation, Efficiency including by of eligible stock related certain were quarter partially offset compensation costs

reduction engine drive is year-over-year ongoing and a engine and and enabling plan accrue the from crew Our X% train measured driving gross per utilization train employee. the pure in savings of the improvement refinement in active ton operating miles as base active by X% employee continues starts

XX% and time XX% nearly the approximately the The across workforce by execution over management department fourth quarter XXXX. efficiency operating versus sequentially or reduce

with smaller efficiencies in overtime expense a X% freight will car the drive active also while the mechanical repair reducing XX%. The over fleet XX% reduction mechanical and workforce average in the Additionally, locomotive that down count online was by combined fewer cars year-over-year quarter.

retirement year. XX% a prior related prior expense tax unique the Finally, we railroad cycle refund. benefit the MS&O year improved to versus the in

plan an Continued expenses. crew improvements network repositioning train in enabled with and combined to the reduction have increased fluidity X% travel

and versus the counts drove locomotive of XXXX. XX% in quarter also lower savings contracted and the locomotive expense a including side mechanical the service MS&O fourth On materials reduction

estate million line in sales quarter. Real were the and lower XX

currently purposes million these we quarter gains from and uneven estate will We of continue years. while XXXX quarter at we three conference sales to March pipeline million transactions investor estate remain of our $XX XXXX planning expect to as for a impact real the real to you in in of approximately see in for be remember opportunities over proceeds guided $XXX

We XXXX with will significantly expected this our exceed guidance results.

were favorable XX% driven million were per in gallon significant efficiency $XX was or expense by and a aided volume decrease but the by in improvements. These lower X% quarter. Fuel savings price the year-over-year further

training management a fourth-quarter drove on fuel rules for with software focus efficiency utilization compliance distributed efficiency. train of enhanced handling an and Our power XXXX also fuel record best Full-year CSX. all-time energy combined was

flat year-over-year. other at Looking was Depreciation expense the relatively items.

recognize were none million other due individually this While depreciation of $XX quarter we more a an expense significant. XXXX items to study which this additional did offset by than was

offset affiliates. to and into net efficiency costs the study expense the rents inflation and to impact as related expect $XX higher million a base. asset expense $XX earnings than well XXXX in as the of depreciation $X We increased approximately reflecting of the Equity higher million items X% at increase million Equipment net volume quarter benefit recent of continued lower our gains. impact earnings the in as increased other more

the a Other debt line. partially million balances Looking recognized income million lower redemption all-in below million October. of coupon. make as $X the to offset expense on by due premium long-term notes company hold decreased Interest higher in increased the a $XX XXX early primarily of

and due balances. million tax lower to This higher and from expense legislative federal earnings decreased was $XX by tax investment partially matters offset Income by further benefits. aided increased state income pre-tax certain

we quarter opening income rate XX.X% X% Absent remarks the CSX highlighted operating expect of ratio declined basis company volume items, year-over-year another unique quarters. tough the effective quarter in Despite his environment. an reflecting improvement fourth out would fourth XX tax the backdrop Closing for the XXXX. in of the Jim over operating XX%, as delivered P&L approximately record point future challenging the a

to or investment prioritize our Slide safe we investments investment XXXX Finally, overall in saw declined of operations. on track, XX, side reliable to year-over-year $XX an that equation while capital XX% provide the the XX, signal train turning to infrastructure core of and and as turning investments X% million increase in cash bridge capital continued declined Slide

asset rolling of without Overall, of to the PTC has spending enabled come sustain investment lower in safety last has especially reduced capital levels us stock also The significantly level our down intensity reliability. in compromising years. two or

to differentiated free in including cash in be productivity efficiency continued improvements key flow flow X% Free generating has cash core flow drove a in conversion. XXXX. while generation billion in produced operating team has this adjusted to working CFX's improved cash Growth for capital increase driving free operating flow cash $X.X a capital focus

in billion $X.X over including in $XXX returned buybacks in over shareholders $X.X billion dividends. million to and nearly XXXX We’ve

cash in $X opportunities short-term are billion to with generation with year exiting XXXX the substantial shareholders. we investments combined cash which in to free provides return to flow another continue business reinvest and Additionally, cash significant nearly of of

me remarks. let that to back turn for With Jim his it closing

Thank good everyone. afternoon, and you, Jim,

I'll highlights you the summary XX, walk Slide through the to Turning statement. of income

other total X% offset reduced gains as recovery, the quarter more intermodal well benefit and intermodal. unfavorable revenue merchandise volume, fourth down was the as coal pricing mentioned, lower as Jim revenue As the fuel impact and than lower and in of and of mix

service lower, X% offset incentive significant gains retirement expenses. X,XXX. react related and CSX's operating partially to markets, Total were and acceleration significant expense expenses reflects of a in fringe compensation certain delivering efficiency. asset stock including in achievement record Labor to and results was gains employees. inflation, down other Efficiency improvements were changing to Company's levels. the headcount or eligible labor Overall, the average these cost reflect sustained fourth lower to nearly strong and while quarter, quarter, X% Moving the in compensation, ability that by with operating X%

execution driving operating gross the time train or Our by X% in year-over-year The management crew employee. drive fourth as starts, miles nearly plan XXXX. train versus across X% base, efficiency active sequentially, to department utilization, ton measured reduction from by workforce a crew XX% ongoing engine employee in and and of operating the improvement enabling quarter and XX% refinement the the over per fewer rereduce approximately a and savings continue engine active

in reducing over active average car freight locomotive with the cars efficiencies, also year-over-year drive reduction mechanical mechanical Additionally, fleet, XX% X% a workforce, The expense combined down while and smaller XX%. in fewer online the by repair overtime count help the was quarter.

Finally, we year. repositioning the prior to improved versus crew reduction prior the MS&O railroad in combined continued unique X% plan, have travel and to the with year cycled network an XX% retirement fluidity tax a train refund. expense enabled in expenses. the related improvements benefit increased

drove service expense contracted locomotive and fourth the including XX% a locomotive of materials mechanical the in in versus savings MS&O, XXXX. also On side, counts the lower reduction quarter

and sales line million lower estate in quarter. Real $XX were the

purposes, planning while in for currently And of opportunities. estate approximately remain be real expect to of these $XX pipeline gains we the million, quarter-to-quarter. a see uneven to from impact will continue We XXXX transactions

guided our As you remember, we in of proceeds sale in years. at estate Investor March million real for $XXX over XXXX, three Conference,

will guidance results. We XXXX this significantly our with expected exceed

quarter. a X% expense by aided year-over-year volume Fuel million savings decrease or were lower price, in was XX% driven efficiency but by in These further $XX improvements. and favorable per-gallon were significant the the

combined on Our utilization train-handling of and software, efficiency was record XXXX Full-year drove -- with training compliance, enhanced CSX. rules power all-time in focus distributed also fourth best fuel quarter for efficiency. energy a fuel management

Looking other flat year-over-year. was relatively the items. at Depreciation expense

items, individually additional none recognize were was did quarter, XXXX we While this million depreciation due more other study, this to in a offset than of significant. which expense by $XX

We volume-related quarter, continued asset than expect lower impact efficiency as impact our affiliates. offset expense the as reflecting more $XX earnings increased benefit in inflation of $X as X% due the increase of to to XXXX, net depreciation of million well Equipment recent million gains. the a net earnings costs in other the increased study, the base. rents to $XX higher expense Equity higher and million items approximately at and

$XXX partially partially recognized million Looking $XX by income debt notes was on Company due a of their balances. line, of below offset coupon. $X as primarily higher redemption premium Other offset a higher decreased October. This the make-whole early million expense in by all-in million to interest increased from long-term the income balances, investment lower increased

effective by quarters. a future expense tax aided decreased tax would expect further, state for an $XX XX.X% due tax of Income to legislative rate matters and items, pre-tax we approximately federal million lower Absent certain unique benefits. earnings and

in over the point Closing out his improvement XX declined operating the XXXX. reflecting quarter the the Despite Jim operating the another highlighted in XX%, opening income CSX Company tough the fourth year-over-year quarter, remarks, backdrop, delivered volume basis environment. ratio as X% P&L, of fourth record a challenging

XX. Slide to turning Finally,

the of side cash equation $XX the on million to Slide X% capital Turning XXXX, declined XX. or investment year-over-year. In

operations. asset investment we to and track, prioritize increase declined, our XX% in provide our as train investments While to safe bridge reduced investments down intensity, without of two significantly The infrastructure of especially sustain signal that core also an come years. of enrolling level and stock, Overall, compromising capital has saw safety investment capital overall continue or levels reliable in has enabled PTC last the lower reliability. us spending

in in $X.X nearly has productivity capital to increase flow Generating cash this operating in efficiency operating dividends. improvements CSX's billion X% buybacks working flow a in million in We drove including to $X.X focus including to returned conversion. over XXXX, over driving cash flow free for team. capital, cash continued XXXX. billion adjusted in Free in $XXX $X.X and billion differentiated improved shareholders a be has generation, core while produced free Growth cash flow key

Additionally, which combined reinvest provide short-term significant continue billion another of business in XXXX flow exiting the to free $X with cash investments, year return cash are we cash shareholders. opportunities nearly and with substantial and of generation, to to

it that, for let his me back With Jim closing to remarks. turn

Great, Kevin. thank you,

our XX in for turn XXXX. outlook to Let's Slide

volumes down to the by take be expect top with up. export than activity industrial flat relatively will on X% remain took underlying primarily business, current to It a we We awhile off, this, and XXXX. to coal back driven levels. demand pricing. line expect includes heat to cool Based while headwinds consistent revenue to economic This forecast it lower $XXX full-year of million versus more from and coal

For the merchandise growth business higher turn expect higher of to the lap half economic we first year. level in will to positive the -- first half from activity level year, half merchandise XXXX, the of continue the but volume the the of economic the second of

volumes the to have intermodal reengineered XXXX look to rationalization fully impact grow lapped lane expect we the as network. in We increase and now

maintain to product. As possible as while our ratio, service we the as efficiently is ensuring goal operating to operate reliable our

inhibit Our on cost focus to in well must that out not for we targeting when There are additional us efficiencies growing pull, but capture are service. make business new positioned to moves respond the we are demand sure and up. is we will business levers to context, industrial cost production there that and

realize of XXXX Adjusting estate across income approximately lower Despite results, operating headwinds coal this outperformance ratio margins. estate lower our even the related maintain items to and $XXX million at non-core again hopefully, we ratio operating implies Looking XXXX improve $XXX export to million as we a revenue, year. the in expect such other outperformed baseline XX%. real and roughly savings incremental real our operating to for gains, higher business still target enough a of or depreciation of

our For integrity capital on cash our allocation, the is first of maintaining reliability and railroad. call

any total, infrastructure, expenditures signals, for forward. the As Kevin $X.X be of In with next again in of significantly and noted year going targets. this principal project spending return absence In we our in level XXXX, additional increased billion rail share capital to through of use return of ballasts and investments ties, on expect of we both and expect we the growth continued in projects, to maintain buybacks. rail, dividends the high XXXX we billion, to flow investment more cash $X.X will shareholders capital line

strong our investment-grade doing committing maintains Importantly, credit we in that way to so a are rating.

two CSX last years, and way exciting accomplished fundamentally business. have at Company we many the the Over does transformed the things

are that success. none resting However, of us on

the is in believe for our Bill? have continue come potential. best be In journey coming North as the CSX to I America. of railroad surface to fact, only this the best scratched yet we Company's we

would one of everyone to time question ask limit please themselves I interest With to like only you In and questions. if Thank necessary. take follow-up now to Jim. that one will the we

Thank you.

be will We now conducting session. the question-and-answer

comes Brandon question Barclays first Our Capital. from Oglenski

open. is line Your

on And you Hey do digging as behind guys coal Mark a deeper in down to Wallace into good conditions. you flat but a repeating X% call pretty good if again? some Jim Do macro headwinds congrats well. pretty line year on afternoon know bit to mind did your that out don't assumptions I everyone revenue is and little just relative the mind think assumption? I or difficult the you

Yes It's sure Brandon. Mark.

into PMI the December for trends current continue. near-term know the we year signaling was in the contraction. activity. increase and industrial of in not strong flat going PMI see the continuation since which Xth relatively the XX.X other macroeconomic to and was to going to IDP So month indicators second read XXXX projected ‘XX the is but macro consumer remains worst a We be consecutive expect economy and we're that suggest a and IDP

So the us. be upside hockey stick recovery macro a forecasting for environment in given not improvement we're but this any would

challenges what continue Despite to providing control we're better our service customers can high-quality we and on get these going executing. to to

not term as changed said GDP we've long many times I think X-ish GDP revenue times have merchandise We and plus. can we we our grow think outlook we for growth intermodal

to our any throughout we're we're customers, as year. in So improves said stay the year to I and not of if close clearly type watch things sentiment going see but big forecasting a the recovery

and how intermodal Mark just merchandise? and related related guess marketing it's strategy CSX sales a strategy I you changed Okay. has tell to follow-up us with especially can the

entire discussed of people, in Yes. XXXX team, actually We've a talent. lot past. great team is a team some as we've marketing no mean we with them a doing in after our and share Sure. marketing opportunities pricing are in doing changed the I sales fantastic service developed a from organization. at team working his leads that longer We've marketing brought for providing and spent time to and Jim we a The looking the strong opportunities operating a activities fantastic this the provided and marketing as the revamping sales actual colleagues and product sell. those grow have job team leveraging sales and going to truck those hard to share lot gain

the intermodal again through we our lane in of side are On as that rationalizations alluded late Jim XXXX. began to

there. our Jim note or even some a are and other intermodal that and and said trip executing have with excited our taking exciting customers customers and in sell we're well as network plan in higher is some XX% numbers great are to we compliance leveraging We performance trip really and intermodal we're lanes our plus doing plan

you. Thank

Thank you.

Next we UBS. Wadewitz from have Tom

open. is line Your

Good Yes. I coal the detail the afternoon. perspective. wanted on I to see, appreciate

revenue any that of would on terms might thoughts incremental you coal think in to we million EBITD fairly that a EBITD margin revenue related the how you about think margin? is or an number, comment $XXX presumably Is incremental how of a a provided? I high XX% Is that think that the that headwind number?

Hey business can different between the much as move segments we Tom, down and on Kevin. that side. to broken always want profitability as but really We've attractive is for we've business it's coal as to the coal far but go as our continue going probably to there we're that's a profitability said very us obviously the never we

the Is for to format? guess the of down of about broad benchmark brush area down coal assumption that kind headwind I like in to mean you kind sense I within you or What start went went seaborne pricing of look the Okay. prices it there seaborne? seems it you're think assuming come what any XXX. XXX terms you've back see think market have the Queensland for to I I like

The coal. XXX continued there has weakened decline Mark and about this again the the is currently have to and global export met production of again. are our as benchmark XX% benchmarks prices bucks. Tom net about The is Yes.

a it you what that's reminder but a expect see see RPU so on into and a throughout bit kind should quarterly of As the the where drag happens is will to of contracts year. we QX our reprice

prices As into bucks. this met about time first a the reminder or last were year quarter the the year coming of XXX

to Is where that are about of assume So they the you it? right just think way kind stay today. they

Correct. Yes.

to the see So the sequentially to we RPU. for step think the get quarter rest don't year of it's going we are will the going any we worse the first in see overall coal throughout on down a but

you time. Thank Okay. it. for Appreciate the

Sure.

America from Ken Hoexter Bank of Lynch. Merrill

Your line is open.

for of talk be good of and think light with expense do here the how being side if along costs the afternoon but the in you've can of maybe reduced going specifically not and you are to to in Jim employees. about in if Hey too statement Great. about at just volumes you volumes down over, the your about PSR cautious kind going to far expenses most reducing contrast accelerated maybe are moving prepared gains looking about like rebound these be

to significant the are just that in Yes, Jim a little amount that guidance to increases depreciation, terms reduction on I in we other that cost inflation we cost will here etc. ask it of in embedded there give color of increases offset but set and out provided

So and not good foremost thing color but initiatives. really first little again to sure the the this customers is the and specific Jamie well-positioned do that and we're over future provide a a game more quality to product going in offer our a to to we're on make is

Absolutely.

We moves finding on the are more improvements our for end railroad do for this definitely fluid fuel things. to as are there yards become more better, bigger good and to car us. out our continuing we look towards able We're higher of year

So route we're of out miles. more rid looking at getting of

out the on repairs as costs go and great getting what's and and is and line the keeps involved and is our fleet engines walking there at getting we're we're locomotive most out going line the which balanced chipping fewer more us but getting Our probably supply improve switch just at we're that's out to out on industry important turns that week give a a that of each every what get we as opportunity right it parts piece myself out does by we different only with some doing them, balanced we headquarters look as looking and again there we every and utilize looking there at that team to each the team all can into to each is and not we're an the keep on respect miles his team product along. moving to to day on and continue can really and in to to reduce and taking more gain and sure continues out it continue how we asset away the do getting including better of Mark direction better costs get able how on do into business and making things to

I side. specific guess but Thanks maybe on I was the trying more to be employee

So prepared that holding, employees not at too volume that you were is down point over understand X,XXX to something accelerating commentary given this taking given don't much declines rebound. the see year-on-year. be Is or for out Jim's the I over

you just We've significant labor not not as before made cost heads. reduction. know we've and headcount focus in the just our Well, on is a targeting costs said labor reduction

you an should increase some headcount around to the upon volume going So get terms going to business you we numbers think the the what which do We'll point do on every and we'll here we now guys out company. the kind reasonable given as a be activities. side in manage and and reduce we've as have continue that the we every did to stability the in. where look direction we the you there's that side terms guidance we'll of will something the that this you to it for what's our miss or in we week in we'll be line ways quarter merchandise especially it costs of on necessary to according intermodal business quarter based goes if Right and manage labor numbers of that to week sideways see are sequentially if of in and downward or

strong a now? of XX% Great the two beyond to kind highlight follow-up time a positive you that and guess arrivals I maybe execution on to there? on something really Jamie or there the Is quarters Jim, quick just want side just jumped that something XX% ago performance really you're from

bit can a the is are look at the mean going look to I We're executing. the trains. bit. ground number things on probably little our on now going The some We'll hours with on going get sometimes the because across cutting we tell might things right times faster taking tighten the up. quarter to get to guys we team We're into to long pull bump at network out the next respect out crank we're down you how ,I can. to that everything it a network out of moving takes and a little

at start and some on up the it removing a the take to we times side team at same that a our to make that's So them turn to tells go so gauge can from end hours sure for myself get and getting we other when and back the people can look design network. service that our see assets number us but the time trains I across that the

Appreciate guys. the Thanks thoughts.

from Landry Credit Suisse. Allison

open. is line Your

Thanks. Good afternoon.

of order really more a leverage the So I to and also normal XXs. but just high costs about in environment was the really talked you this in mid terms have think How broadly should but that the to headwinds speaking get we somewhere on outlined OR even about obviously that just different you you've more in a need lower volume year those revenue to environments? of want and you number the understand to that do do and cost side helpful

positioning Hey for cost The is Clearly, we're when what we've continue and think higher created. that to of there's setting leverage a us. in a think and revenue at and this pursuing savings the There's diligently incremental opportunities up model here where really we ourselves the we're do growth as lot that. model drop are Mark excited about Allison model forward the team to looking I growth we're we're for Kevin. it's the that comes outlined we've runway leverage growth to very more margin. and really That's so

revenue react we Jim and We new that and was but in that last Jamie after came job. explained react. point $XXX adjust quarter we just So great did we in the pulled team volume we it thinking think as the too to saw together the from to the we on on going worse million did we have We what a a all came if up than We and to XXXX volume with expect based second environment higher. and I we it plan know year. be had to gets

to. So we'll it have again do if we

great will incremental out what tremendous operating the company math when We're levels should are volumes a with to back. terms of in the The just here come come back. advantage they business margins of work building take be leverage

willing helpful. Okay, on If time truck to first at this a volume that's through XXXX point point you might a intermodal for traffic of weak you to shore for year. which bit little give wait for drive expectations maybe there And time some the up and price to to just or rates then of that remain growth that for just maybe but specifically period is would network your definitely into on be the volumes? wait capacity

to prices grow we're Allison business. not listen the going be cutting No, to

good that just it environment of happens portion That's going side last contracts long-term snapback as meaningful on environment the loose to plan. any rates. worked clearly to We quarter. going truck saw that We're still prevent team driven provide is here tightening is the there. slashing happened. by but CSX's we're looking out to don't away do we our what to not it'll pretty exceptional grow there's to to not out be or demand our would everything too think there with be the a but for game vast to be the build domestic going customers that to our and intermodal of not if do is hard network under majority think done That's anyway. intermodal Large I we've and service

you. Thank

from Amit Mehrotra Deutsche Bank.

open. Your line is

operator. Thanks $XXX confirm just Hi to million Kevin number that wanted everybody. revenue quickly right? a the for was coal

Yes. Absolutely. was That revenue number.

see per sense obviously didn't the million. you by makes $XX between quarter how color what's Any What's decline. DNA last That on and expenses we on to and I some thought it's implied can obviously had the about provide that. that? then of Okay. revenue said pick on up the volume maybe can we're that makeup split yield sequentially XX% help going you in We

should impact from DNA the and Just wondering from about we there's perspective? first sequential a quarter think any if what a

have I'll the to question Mark. question. pass I off the might DNA coal Yes.

You want to first. do DNA

Yes.

life by bit On the zero. did to the so uptick little range incremental fourth I XX quarter the the for have of guide depreciation a year-over-year. like in XX which million was expect million items offset from to and the netted basically out did XXXX we here we depreciation smaller study some

That's up the life some capital study some see year. the we'll So from expectations. next incremental spend bump and

XXXX at there. change no So expectation

met we've on can answer with between cities me about Amit export the we let two as specifically get and coal me the through environment before coal a to just of run starting it's talked but and side hopefully answering thermal. without the tale your been

up tried this to low through As we year coal to round XXs We the will million allow to missed we guided XX it and be had it that coming so year tons. XX our expect up expectations now to around slightly export around for to me XX I XXXX it XX for deliver in XXXX. but million. number Kevin to was was

side. As declines met I for the larger we met on said the probably than thermal both for thermal but expect and

per On the low and as we've the gas little in largest coal ton. third winters again impacting export Europe to there obviously talked one about volume thermal bucks and declines our mild earlier shipments side API a we where is bit of seen benchmark natural demand given the it's XX prices

So really low.

back mostly met a continued earlier volume comment story to per side it today. have I On price my a again ton to prices $XXX went down slide a not but about the a story. the to price story

see kind the coal front. export we that's on what of So

we and I Okay. stock follow-up sizable some you was pretty just know comp. one acceleration in saw, me. That's for I Kevin helpful then very the that per employee guess call for inch labor incentives a uptake there

what guys So cross have about right kind there been with you being have of line it I environment and wondering also because some volume overtime could the be just to focusing regular managing but what's you think in XXXX that on way inflation the currents is item there.

can XXXX end Thanks. just of well. at think that be how you I about it just headcount if talk help if the as about will and missed us So

Yes.

that when You talked comp little the about number you to a headwind incentive bit as calculated.

you lot expense. is into their they ROE of thing other a side have The starts capital once of year that and on we our engineering particularly in have lot over to once go fourth it is hit vacation but to a the quarter teams the that the go on remember through vacation labor towards going capital

employee cost quarter. saw a in the to there our seasonality so what bit fourth of and you So per there that's is

was a year-over-year it year-over-year? over up was But X% It number.

Yes.

obviously well see I year in number. and the was of in next What set significant the impact some rise inflation that employee part current little of as a mix had then within question? as going wouldn't that any cost. well I think our on but There's bit other that of the the

headcount in XXXX? the Just year-end

Yes.

managing that carried look through into of XXXX necessary. model where that that the go that focus job given is we process every here XXXX. lot to the at available we think a attrition. I whether We'll ourselves comes will obviously momentum on have continue job look and we've ask There's a

we'll those. So evaluate continue to

volume With on side find. the we'll lower there's the that opportunities operating

saw to So the overtime about about headcount. the side. It's continue quarter. great in which labor manage some fourth all we not success It's we'll

to well. as continue have drive big down We next targets the to year overtime

So it's the labor board savings. across the on

right. Appreciate time All Okay. it. Thank for you gentlemen. the

JPMorgan. Brian Ossenbeck from

open. Your line is

sales about were year of environment they how the same the industrial mentioned. store Mark, gave softness ask pricing economies trending. rare to you here question. start you the and thanks the and Hey my some for in want to given I indication last In especially quarter taking volumes

perspective came what and volume pricing rail for wanted it to to the the current on was when that temperature price. from see on given backdrop is gaining just commented we're not what realizing So thought kind market you just industry a the of you seeing price

you would market what helpful. see just be the So

renewals we're in intermodal same in about store was the in the again same then QX sales going in said which within had pricing but was strongest but with our renewals was the merchandise our that think pricing came I our contract I past I was to strongest repeat not line pricing. contract and up Yes. QX so store sales three and exceeded quarter our that we the seen what the on we years in saw back

a great great is pricing job to service product the we're value So and the we're that doing I with team that clearly team side. work the pleased the on and is the the for doing pleased am offering to customers

contracts naturally of of lot in terms a just reset have inflation indices lower not? this do coming the exposure you in is in And they're or the year that

mean met XXX-ish the about I the reset annual so being as now QX. met retrace I they No, so on that sort reset are will talked XXX-ish $XXX will thermal clearly they the a quarter of h and but every ton of benchmarks those on contracts side contracts sort or those in in earlier QX

yes. So

Mark. Thanks Okay.

Group, Scott Wolfe Research.

line Your open. is

Thanks. Hey. Afternoon.

I operating about earlier profit So talked $XXX think million you of headwinds.

I cost that's any of want plus coal cost stuff. So presume review that thing. discrete discrete just the to I

the you through walk other can you got see I Kevin real but maybe of just us XXXX? discrete headwinds any So estate and that costs in depreciation

step items what kind $XX saw for we realized $XX in XXXX of The the which obviously comments. Yes, are of sales and $XXX we’ve million outside of the called that out. XXXX $XX that about we my real depreciation the estate called out this I versus is up coal million opening guidance talked to I in we roughly million really think million we've year

the railway Anything or that on to income us want be other about? thinking you revenue the other

Yes.

today think a it rating we where going in way consistent year. the probably to run good a think is I about next

side stuff gone a headwind other over the year. customers, little on there as the So down the our merge be will revenue bit cost lowered

half in of the right now. and we are where So year the we will have a little kind to bit of normalized first higher other revenue

And right get back about margins What we that should incremental we when just Okay. lastly Is back when yourself XX%, think to growth? for margin? to revenue XX%, you we growth? Sounds how positioning revenue like said you're then the margins. are incremental get incremental XX%

other incremental best be the would envy margins Probably businesses itself. that

business we some trains comes level of a capacity. you that have where it have At but know matter doesn't the lot

up adding manifest the margins So add train merchandise a to of of obviously the we're I in there's of not business be when incremental those you car on bit lot bit a think car little train, fuel will hire situations of attractive. a it, little a the back to but cost existing quite

guys. you Thank

from Wetherbee Citigroup. Chris

open. is line Your

afternoon. revenue Good ask thanks. to I want the Hey about line.

know up coal merchandise you might from of year. last revenue the bit the seems that other we too. of How of up you're addition headwinds intermodal you go maybe take the thought some have So cadence? to sort in bridge be revenues that some and negative about mix have should been Is volume thinking earlier if that or a we bit have of million in headwind if X.X% from from like to I stuff little guiding we a some maybe gap through out improves kind so would sort because we the volume? it year that with can help as Maybe $XXX of year ancillary

be So that color helpful would any there.

Sure Chris.

mid going revenue about alluded digits coal double down expect significant service I XX% to. to being we're talked a return to plus as talked environment compliance. headwind lane we plus to a rationalizations Jim as in our strong to GDP said we XXXX is we product our intermodal [indiscernible] lap So we of and many sort with as In times

exited to think half. [technical slight growth improvement and stronger with year-over-year the a and I really strong half there. good can a On a So product momentum the very first we even revenue environment difficulty] merchandise and comps see second tough positioned service grow in despite a tough with we I well a the XXXX think

Okay.

for does maybe inherently right? sound ex So the full volume year coal up that

I that would yes say absolutely.

norm. the which in specific pointed out rest merchandise been the of Again is segment a new been natural not down When strike the to when flat reasonably these and This for if kind going close Things have in would the which This don't up environment than go we different fantastic GM is terms of intermodal back said would always and that's and we see back I two volumes the what items positive is as things volumes go industry they start year we franchise. the have up. merchandise begin to and go expect increase we're point merchandise it business know evolution. to time in we then of happen. a refinery explosion to significantly the we to so I in the at business intermodal believe begins to have hadn't this

had said it bite as the we re-engineer and XXXX. a that's going have what two to to GDP. doing we we're times to as the to better make intermodal hopefully We service bullet growth we a Mark see two-year knew fantastic franchise were and into period over now go We

together those discrete extremely of simultaneously our and XX% put overcome. doing well. is for hit business which should Unfortunately, segments difficult be So are of four us coal getting the all business to

time. That's Appreciate Thank the very hopeful Okay. you. color.

you. Thank

Next Bascome Majors from International. Susquehanna

Your open. line is

Good to wanted evening guys. the levels. Yes. go I back to service

time? pretty steady or lumpy points in you're performance Can look in customers the XXs hire. and your the forward going there changing? with the drive this ground? You you a if of us plan Thank your that's how yields that's period into how you something that to such by It big little there's improvement is dig Are tell the XQ this before car you over business on able full a quarter. excess anything trip just in load X had growth this as mid load conversation improved gap you. more been Can feeling sustainable you car business in some

I feedback we've look got off gone plans a transition half were for trip the over this that then and us some to the two getting CSX years piece a as but difficult years almost we we've and a with railroaders and was of three on past and of Mark out touch the with start on team will let customers create to product a fantastic here the from he's able group. work there through

order the piece we want We And achieved we been over the point. achieve with plan discussions, Mark grinding, still out for has each what but XX%. to on day tackled internally it and it had each trip the out a every just to inside mentioned haven't of operators first the intermodal side move in of is and out park and merchandise which of team with the knocking talking up our one day in percentage field working

most hard buffer with So week to it. to which we believe we respect have We a empties railroad hand-in-hand the trip plan two-hour and that don't I work other would days really a stringent seven say I any like that's and measure does driving product.

continue I that to make percentage sales. those to jump to there see to we're continue get So that improve say and prepare we as would going ready Mark's and out team

measure the to And minute. intermodal we

Yes intermodal absolutely.

Within hours. two

we So out plan trip if we missed X, October by a a failure. plans. rolled trip minute, it's

load, impact. trip on customers an we're Jim provided so all it's we're doing, tool, to Listen, the car to unprecedented how how December, the lane, total car never doing I the our it's are of to know ever As out been every customers, railroad love in every to These what trip they whether our performance to something think, it's a merchandise plan said empty his whether opening CSX ship have and has an we're this in we remarks unprecedented our every visibility visibility. on CSX plans type visibility on customers, X, in their having network. they've rolled

the X%; X%. ago Jim's QX, in industry think comments if minutes look I performance down we at to few you down a going back our carload were was

And not we're push. with and some of this is GM If us high team rest for strike, as and day of of the is their performance -- share low to PES, in the X%. trucks. continue great. XX% impact of was we're you going to customers are were And that. PES and their take level of to more the from with and we're with industry not winning And plus today know, every and that rewarding merchandise; refineries business satisfied the XXs responding down to performance type XXs going satisfied Clearly, out flat we I the We're continue hitting to quarter customers. Jamie

more to business. push better, we're as with great provide continue we And service. going and to truck-like get rewarded So and become be more

and thought the And were piece I for got the look Trip little this doing what, beyond by across at a trip this we we us, anyone look, one guess we've what bit to on think what to plans plans taken but his putting are it. The has thought on team trip go, hitting as ever be. think as see internal of going can we pressure more be. trip to Mark plans are what and team, definitely could anyone put to plans an beyond so hour-by-hour taken operating costs out work well metrics, we were ever the more how getting remember network but the customers, I

has piece ever are to what taken trip Mark think are trip plans plans plans us going and metric. thought I remember trip on The more what anyone one beyond team to of an for his be has internal

across how on more it were put definitely but work the team look see little plans guess look by I and could can beyond to anyone taken trip go we're as think thought what what but operating we've bit network we by So the customers at pressure hitting we be. doing and putting this out to this got ever a costs hour as a well getting we've the hour

to that our service is our will rail, visibility we product number quarters, in was XX%. that the going XX% And -- as mechanisms to try tracking compliance is have to his to last new customer that compliance. to and plan going on-time a to customers trust of the terms carload to reliable the switch of plan get say, that a was years truck. from them trip trying ago XX% give a moving prove were of they whatever number to lot you're of his a couple on it and was couple XX%. Two over years reason customer a to get When was to to was our The have XX% us as so didn't trip confidence performance today the ago, your he you in when freight from his truck freight time

important metric. this we on so that it's why that's focus So

so but that, even would that believes is be and importantly, customer we're confident that and more this then, reliable And number that consistent. consistent, reliable product

transparent that So product he said in we're us the this to it always to get been a can to to to there. the there pay through show is premium XX% willing truck. shift. buy He's he trust need tool reliability when get his him We we to willing going

appreciated comprehensive everyone. answer Thank Great. the I you. from

Stephens. from Long Justin

line is open. Your

afternoon. Thanks, and good

single-digit could the So for around to-mid of color in should assumes I a wondering was and think consolidated bit half then like back low-single-digit the that the ease? the you half to decline Is if it we number what guidance the more right like in a as give growth something something about that little comps quarterly it see first cadence a volumes. low- way

we of said. as XXXX. first in -- pretty Clearly, the Yes. some going lapping But great half of quarter I as in we some got here second can. to as against first we're had a good we're comps the first And up as much quarter do going in a -- tough environment the the half service We I product.

I a But we will first of we to be sure. eke volume the As the we're first I merchandise, out bit of little than in growth think think said, as able hopefully, for year, in in to intermodal back be in going half the well we some half positive merchandise. stronger sort will, half into and it get the that do

Yes.

of the headwinds mark that some first this probably -- saw across and only get the low some there XXXX, lapping from point on other coal growth EPS will lot and And not a I think, that throughout That's Justin, -- across comps income, a of the of half the year the board. we of of perspective. the growth the in is from as in you'll operating the quarter back see based improve. going all just we year revenue, the but then should

assumption? Okay. But do in this year, basis, year-over-year that be half up on of can you the the put when pieces, is a the volumes think you all together second

Yes.

the And obviously, cash free Great. right now. business highlight secondly flow, that's then, a on of Okay.

framework free the flow maybe to year? to we in saw could XXXX Kevin, beyond, So XXXX thinking cash in then, right you're expecting provide ask buybacks, on last little conversion and for relative to be the I color wanted percentage? about mind also the a your what's magnitude you in And on what

goal Yes. is remain conversion, our Free high. to cash keep flow that --

efficient We're time, look tax everything to some capital be at higher. trend -- rate offset we to can have terms will really capital on on that save dollars and working headwinds that do -- that side We cash in initiatives our to of over that's there. taking how going a can going and with program to we

of So, to back a don't industry. only plans free have cash conversion very that of any lot opportunities. we we to but not go saw I old the think ways CSX, from low historically flow the

that's -- we pride we ourselves something So in.

maintain to have strive to every and continue We to. plan

are It a on $X gives of us as $X billion us for amount I reason cash billion no we On sheet. to flexibility. the of balance buyback, end our the taking retain of cash, tremendous of mentioned, There in is year.

next well. dividend also to we'll that that. flexibility markets So some present year going be when at do allows look as We'll opportunities and us the opportunistic the

cash returning and do we'll of that. to shareholders, history a continue to have we So

the for Thanks Great. Okay. time.

David Vernon from Sanford Bernstein.

open. Your is line

more their start are growth. to about just going in a you on expectation Hey, that coming actually X%, you to dig front of of might call where that get to switch a the start domestic share? down, we the kind intermodal were is talking that's on to coming the the whatever wanted volume to to Mark, terms little sounds a see it like better, bit thinking your return back in it, for network? to is I year flip going get What's How that in We're intermodal ability half intermodal outlook to X%. partners the to attract business off to going

Yes.

part international domestic year, talk a business rest bit strategy down it the the still our business, early But with the -- intermodal We're service side, soft. doing there. with and less some domestic. of was into overall the split port me international remains offerings XXXX on for to the of see see to side. international some growth customers. good But on we new the up Let both market well the side going But up continuing than and with on the little continuing inland hopefully, it are we're and picking there

doing to they and to are that. franchise. intermodal again, I And well lapping we're efficiently. from think service, and more -- listen faster reliably customers And those we're network. not are to we're those repositioned moving and us growing all lane responding like behind It's the grow now more our and rationalizations,

again, So, and given thing. environment got -- we think product can the grow given we this we service and the

about than some better to existing using thinking more you just as going more pricing Maybe book? that or to try extract value service follow-up, kind forward, as Okay. service, sort of a to standard get should business going obviously, even the to really the about a than that be kind from we think leverage give of improved be as drive being to of Is better is going and run the growth to you're contract. under you rate some

we customers, giving -- service. business fronts, to again, contracts got and Well, away We're with we there's we're there price get rate get price. with going not but and in continue long-term we're going it right. them And and and to from going bring to our our we're we've escalators on all to attack more -- can where grow

so, from And it attack all we're fronts. to going

guys. Thanks right. All

Cherilyn Radbourne from TD Securities.

open. is line Your

much. very afternoon. Thanks Good

growth remain that sustainable wanted between to be may lower of process would and with optimization how in network improvements question improvements ask associated traffic that would with a evaluation, versus associated terms the volume once you be performance that volumes on differentiate Just returns? performance

is and I we the internally, a here revenue got to you drive you to growing offset decline before way you declining even measure it think when in market, environment productivity the because at we volume easier it a to productivity. any first, look generate a got lot productivity, -- in

about year, call a adding big there's up of So, board. the a smaller talked numbers we have that headwinds implies offset that the lot are fact things a to lot to productivity that of lot able across on and this the this we're

a percentages lower getting and When of tackling, That's I out aren't more side, lot I of we overtime lot being different a than we're D&A the look driven those at of and lot blocking volumes. employees at have. our productivity look ever by the a things, even at

measure volume we -- we So, a an productivity to in more would increasing harder us. year internally. outlook this certainly lot can if It's tell I it right have if productivity you the realized was for would -- that market now,

how to out. the at run I metrics the and I easier railroad. -- is right with in going we've are environment, we of Kevin's there'd proven out, point, can out metrics along it's me that conditions think the look easier a were We even cash in we're look sitting, falling now, and Right ultimately, know mean, and to that, falling hey, a savings. metrics volume then improving at growing falling that the made, be because in we you base. where hitting are the our tough cash But all -- you the the direction, we I wasn't metrics take point cash If -- is in, a can put are the environment we're But the it's and up numbers we're putting. the things that it's if the to give do metrics in

And nature therefore, many in and changes sustainable. of transformational these are

the road. just can not are kicking We down the

are changing way stay respect we we as changes every the in are these going these us fundamentally go run are Company, with is in to efficiency gains a this and degree to forward. that We large resulting

Okay.

metrics converge should makes the operating industry that way between maybe high-XXs, you to start that the the ratios think of by various free quick some franchises, what sense. or Maybe focusing across of pivot differentiate to follow-up, conversion flow a it's whether investors other as do on start and ROIC, All just in to cash it's metric?

think easy lot to around our cash pretty flow about proud Cash flow, flow, cash a we've and conversion. of it that. lot talk think generate we're improve I of It's here, not proven and OR I we a both

drive as So income see growth we're we here we there. longer well. shift out that term, as that's operating differentiator the to And really

I things So the those we'll focused are think that two be on.

you. for me. Thank all That's

Jordan Alliger from Goldman.

Your line is open.

Hi, Yes. you line million side? coal all headwind on be touch really on it might a talked and the We much a can export the to export bit $XXX side how that question. that the on Thanks. front, domestic tied lot side, just of quick the or is little a about base top

Yes. No. Sure.

stubbornly we to But to going prices, impact. there -- On unfortunately, we've going and XXXX be forward. impact don't as about is gas recently. in domestic I the negative did have remained some side, Net $X saw low much dropping quarter the it's a core like seen of coal as in When But in not be from -- for to $X competitive, increase see have of of they surge we the that the to XXXX. prices a weeks. current for hit couple fourth prices would levels. for utility think

many we coal electric for in to is demand generation. as locations, need know all And total Yes, used would peaking increase.

have upside bad is always our the seen a much cold or fortunately, that's for the for on so, seen conditions we weather And these northern you're but weather, the not seeing Unfortunately, people half extreme when and or cases country, cold. call coal. of utility many in the

been for year. relatively had has tonnage natural will some do our the utility stretched declines. do we this offsetting have flat we wins, see XXXX, expect as and some gas so So we market far that capacity not be But

the quick I follow-up on is just coal say And that's shouldn't or a question. not per sure mean, coal I'm stay, does domestic that stay I pricing, revenue positive the carload, positive? it does

There's the going domestic on and are to utility? they be

Yes.

contracts multi-year a tied contracts RPU. all But coal little with But utility price we it where -- these Those have adjustments. Well, just on given there be contracts the again, bit pressure but of on minimums we will our them, are in are. things expect customers. do with are down, to

very you Thank Great. much.

problem. No

from Hartford Ben Baird.

open. Your line is

floor move full we're evolves not of we ahead hold, one as extent, what this plan activity. as you the this model's toward PMI a next had said, near for one industrial OR case? we and look that XXXX operating do for beyond view as here. OR or Why would Mark takes related a as here representative so? Kevin, and had or trough as Thanks To year growth trough ratings for -- and the in level, focus XX% just cycle a me XXXX the be Okay. thereabout a for XX% perspective levels for target the model trough this to decade getting or

be XX% floor. the wouldn't Why

for model's out growth? this couldn't with for forward? going Why thereabout trough floor be trough Why floor readings a OR viewed XX% shouldn't OR cycle we're and be looking toward as of PMI this XX% a for dealing levels the or representative

you're -- here? get it that from floor, why meaning wouldn't say is You better

a treat we Can trough, this cycle Yes. XX%, low as Correct. point? this the

as in model. I to has and longer growing this look comments as leverage way. operating in talked We're We about the income think built effective on focus EPS maybe this well. have we really generating Jim on Well, we term some we most growth going and the

-- we drop have way that a Jamie we can about margin, at on that have to return. operating implies think done we'll what's through and to high everything so side, is the effective incremental So, team very good most margin grow but at and his revenue that income given the outcome a very high think, pretty

I to we'll are a get it's the as contemplate. -- think But that further have things we those have So out, service. better we

we'll as next getting go operating after -- clearly, XXXX. be but flow striving cash in service beyond it's few and So income we'll that years really for price and the for

with Right -- volumes. operating for our for our and number as easier improve to said, ratio XX-or-so as Kevin that increasing go margins at margins to -- our down

to that share grow consider regain industry, continue our good cash leverage is strategy been the to and margins be from to operating long-term has lost while and flow earnings I of the service, maintaining income, extremely per business our what Company. Our

you. Thank Understood.

from Ravi Morgan Shankar Stanley.

Your line is open.

[indiscernible]. Thanks.

normalize you is. XQ benchmark the from a you again that the Just of hit and there quick if one, probably coal, kind on things then where worst-ever it stays said

leg come for, the it be you is all the Given or impact of to there five in contract side kind isolated take-or-pay in let's have another or the stays reset. XXXX kind on the is of to is of, the to three coal as way your, XXXX? next the where and forever, say, going If the years volume benchmark like

gosh Coal Oh to my stay going be here. Ravi. That's not benchmark happy.

making the I'm end you Sorry, at do call. math of the

Pakistan, Turkey, speculate thermal, in years, thermal worldwide. These it's going whether other to going to met. it's I the -- met and -- happen is internationally It's places, shipping the for cyclical. India going anymore position XX probably mean, it's what's coal not down. no not be in by to -- coal in industrial Europe. I'm internationally, going Listen, on to it's production again side, again, And driven to next demand agility the coal to we're be things... It's Yes. to going

it more starting or in of if don't lap mean, your I where it that. and of get contracts going kind But to was, go. coal point I just there going was, We right. I really visibility that. any tomorrow, reset are get if XXXX? completely is is Right, in to my come have just all to stayed didn't where XXXX it change

keep Yes. going. They it last. No would would

so same. a the another expire contract not drop, where there's on stay to underlying the that's prices -- There's to if XXXX, commodity -- to in shoe commodity to going speak

represent today underlying the I the think at. what volumes prices is are what commodity

export XXXX. after coal contracts no business set to that So, within are all our long-term else equal, there is expire

volumes see that that of one incremental getting guys come you at. was here? kind hey, margins If until do back, maybe next cyclical I haven't environment of, cut the have. operations half going Maybe other seeing what on can more at That's just it. to of implies you're implied don't volume rails some necessarily say some come of what year, we for you cost point the right back Got side Maybe kind the you're guys significant more completely your when a the now. that, back the you that volumes downsized

was what it. XXXX, And responding appropriate of steps it's six everybody watch saying, gangbusters, I this the just when saying, cost were we the to months like, let's don't It man, on were kind in transition and half of be to ago daily. we month we see was of making that -- delivered back and going kind and second side we We do the accordingly than just than are right volumes better assess we'll the we'll this as them we to sure go and year make earnings same the and and expect an respond growth almost in And or this difficult accordingly. each now year are. worse we where double-digit extremely environment, be every

Very good. guys. Thank

Markets. RBC Capital Walter from Spracklin

line Your is open.

to very here. want much. Thanks Thanks Yes. back, in me Jim. for I sneaking go

and had were service a the in and improvement you echoing You operating certainly talking lot how metrics improving that that's is that. about Mark

convince -- moving over. going Is and XXXX? to you truck on over, gain You do other at truck notable or the thoughts XXXX they coming are to opportunity against about consider? share gain to What share are you're capitulating how a mentioned some see you look it against -- an into that using switch evidence here they up you truck? factor for Any to opportunity that customer waiting and seeing are are for

briefly. onto industry business the Yes. Well, railroad touch railroads real me poor off drive took of took decades It the the it service let the decades, to us trucks. it

business back railroad off to in on to get weeks. going the not are We two the highway to

earn to have to it. going we're So

earlier, only to model truck prove are equal to is put that and that we customers have metrics metrics as about talking As going not this we're business good to a were sustainable. but the to up these

your get as that well, result take to past, trust his need skeptical do put to months long-term, off thing time. truck, He a the in a wasn't next it had lot that on and business it me rightly conversion we and later, have as is business and truck We they've of that way so. I'm it prove railroad rail. of the that structural a the walked the six And fundamental to is In to railroad, lost sure said, there on performing customer this hey, customer I in from business. I'll as said, change guys

industry. It's after incremental this year the And rate the to going year, be to we our X% that than isn't at industry industry. grow that's growth and we model. when quarter, to that, prove faster Is the to greater industry? we after to going merchandise to quarter that Is where quarter than do XX% the continue industry? have see be It business be going is than than that greater outsized we'll volumes to intermodal the after be relative greater going X.X% where year going a after

a for a your now customers, talked to metrics, shown an had that that against share that see against me running have here, of significantly Let opportunity a and gain number the could competitor? operating around than ask ratio rail we they notable gain against -- more operating working continue and turn relative a company are if confirmed experience rail Is of competitor, competitor. -- question to has to had improve in with improvement. we your your same you've better metric your service competitor. your share its certainly, as We've shift rail they've upward the opportunity Jim,

I the as business environment in our Well, I it's than United of think environment than different say, States eastern half Canada. in here is the different the significantly -- business would

for commodity of is a decades. shipping are we is go for truck truck of us their up to that crazy that And more price that railroad has That's XX% and couple billions is and are truck. which products because business that down bucks have my shipping to other model over product XX% of today not business available opportunity, the We that pursuing. billions. in in me of a us to the I run the opportunity of million boxcar that industry dollars want that with a the as there pick service also is reliable. Customers the try model from railroad. a are It

Got it. That makes a sense. time. lot of Appreciate the

from Wells Fargo. Poliniak Allison

open. line Your is

and Hi, my guys. Thanks for my question. call taking

made you few in levers years. And past XXXX. progress the you talk, about that talked can operations lot to on wanted you a pull of the Just the over

if do those, you -- as environment there feel ones you look anything? which be is you If particularly at challenging, most in this could the

challenging. levers always The are

off this we eight, this saying said, the for take more. been -- have -- XX six, if scenario, recession had XX%, Company. and six, would have couple last last kind been a there for a XX% equivalent the saying business eight been the the the weeks in us in it to of of find months just to amount we I've and of As go in If and wanted it traditional dropped easier of take costs or for we out

today, service When to we that it to the for the and that difficult year business a month, driving an we would drip slow down, cut week it downward more we reduce respond in areas us as after after down, by a on we to and here -- the expressed because down, railroad was again in would perpetuate in would percent and were to continue we were more to cost, highway. where attempt week, down, here, half fearful was trend month a off percent and the down, we

volumes And a to service. maintain our is little levels just more it some can decline, you in cut creates point opportunities where continue aggressive. get If for time, we at of where the we can a that challenge, us. So and

that have We have but we it done if necessary. -- the and ability, not was

then in optimistic, just we trying half. get do be the if And may even to significant inflection Great. be more back

of any pull of moderated bit? get sort or little those a in levers Just

Boy, we're really -- we are optimistic. We like to think we're realistic.

optimistic. We are

we'll which to get the just intermodal our cyclical. year, do easier to said, our It and May We're We're a going jump business our about if it We back, as business I It's up the -- -- especially -- right of and of back. the is reason, we to -- to things do Not our all wait just being manage a a the come business grow volume now, we're we And well, for volumes order expect businesses all expect norm. I that of comes a XX% be X% be position a the vigilant other see. sudden more if it If going this does little to going come Jamie? have is, and making going business and of -- We're are second in then this comps. we in to hope all half to. we're going question in Business XX. well of -- the in merchandise clearly as We're no question, back, to And does, on Company. to business. when quite not be is cautious. the year. saying said, back. we the of is it's come yes, to handle in don't as new pessimistic

we isn't work side, Look, Mark very we've exercise close slash-and-burn with operating his very, that on through. And costs. team. as the controlling Jim said, been this It's going the and

come got behind. starts business the we're to to we the ready be for leave We've going we We're going We back, sure the people, alone and it. assets. make to it. be don't have prepared As for

may that. carload then and this coming does, businesses continue -- starts be we a it us. we need quick to to have So to cost the purely will controlling come do is we thought back But because every look, grab control we'll to are as the prepared being as toward that

Thank you. Great.

no questions. have further we And

joining road call. If and forward I right. so All there's us the next Thank much Great. to the on questions the you. no look seeing today further next you thank conference or at for you on

Thank you.

call. This concludes today's today's you participation in your teleconference. for Thank

lines. your disconnect may You