CSX (CSX) 22 Oct 202020 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen and welcome to the CSX Corporation Q3 2020 earnings 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].

introduction, Mr. like and call turn remarks to over opening I to would the For Head Investor Slater, Bill of Corporation. Relations for CSX

Thank everyone. good and you afternoon

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

and volume to truly call. been Bill in declines and we for have The last On joining largest quarter's call, CSX's history. Thanks today's thank you surreal. discussed months sequential last rapid six the everyone most

three band us recession increases. moves men it of volumes has absorb the a requires been even inspiring better. of period, to to as these am that. work later, record Think and see rebound and and as can every the together coordination employees figure increases in to and reassess the difficult great the CSX they just be deliver commitment where a business challenges. we largest just hard women extremely This and volatility continue level Their organization. out entire while few months this Managing Throughout allowed level high sequential aspect proud execution maintaining efficiently service. I of against the as of of CSX dedicated the to about in twice of in record this declines Volume historic months. is steep incredibly a of span we experienced Now,

will this these already the years continue come. seeing to results and We of efforts do so in to are in benefits quarter's

an for five slide financial to results. of overview go let's our Now

of combined headwinds EPS estate efficiency impressive. of pandemic, record from year's remained the XX% lower this level and coal line unfavorable results. points markets record Maintaining margin $X.XX ratio gains and operating approximately significantly XX.X% impact weaker quarter our truly with despite Second to from basis is declined in last the XXX real

six. to Moving slide

business XX% revenue the Third surcharge declines revenue volumes on offset to Other as growth Coal X% domestic tightening lower experiencing primarily truck quarter volumes fuel X% activity demand, revenue Merchandise markets higher be global demurrage lower negatively lower revenue in impacted of reduced pandemic. by declines were revenue and as the a X% affiliate market volumes continues inventory mostly coal all revenues. XX% from and lower on due prices. volumes, as declines. revenue XX% due to in production both lower by declined volumes benchmark to XX% charges. on result reduced volume a flat end decreased was X% lower declined Intermodal down and and international in on industrial restocking was electrical industrial with

well as any lows Turning new quarterly our safely. personal personal train injury injuries third for low frequency a to operating cannot for first realized new term both accidents without as goals seven. we quarter, We slide the quarterly long achieve In and record record rate. of

and The identifying continues and of be railroad. CSX one injured unsafe our can conditions even employees safety satisfied be to the While if at while industry better by we lead even across in to never metrics, work. gets is the eliminating team practices working

engagement rules increase of training goal employee improving compliance. and the to with continue We critical

eight. Turning to slide

fuel this quarter I fuels is efficiency and sustainable only Science-Based great in term consumption, the impact. U.S. these safety reduction record emissions inherent gallons Rail mode broader the is our Our Earlier year, emissions set also strides made day to to per have and an another most reducing by ton driving transportation railroad. part this And ambitious continue have X,XXX are most we commitment further hard and railroad Initiative, gross momentum. CSX's XXXX. CSX positive to the approved ensure by emissions goal of every focus XX% and of targets social target reducing first land benefits new is were by sustainable Target setting working we setting long including Class emissions the of ESG consuming We a intensity positive X.XX fuel miles. this we of to

our to profile, product CSX reduction did off customers on the improving service every the our it customers focused CSX by chain. Not targets. only years and fuel without emissions addition onto help meet In further own emissions are we to than best-in-class a supply reliability their reduce shipment consume few helping our on their emissions does but less of highway uniquely positions CSX freight ago, converting sacrificing XX%

slide Planned yard months between share power per further reducing more which asset the improved levels touches cars levels, per are record nine, continues the new March total, quarter. In increases, Despite asset pre-COVID the enacted challenges highlighted, set continuously Yard distributed trains We X. for compares also to blocking let's our the push these changes for against and third better railroad further day, volumes named two across record gains presented levels last Sustainably of the productivity volume the Most in and by in day balanced customers averaging the to ourselves Slide over and yards On even Companies volume XX of network are the be run honored above the received and lower finding serve. XXX upstream, quarter a recognition by drove system. new work ended from second but performance. Managed by be counts Journal, further XX productivity of pre-COVID dynamically local including across to employees, recently were board. Street communities power the the the and review productivity today, current trains ways our quarter at the Top XX, gains being trains. We the World strong the by Wall one we while our operating the in quarterly distributed the a high-level.

fewer currently on March. X% third volumes X% more starts year-over-year are with train to required XX% handling Looking basis, starts lower quarter at the volume. in we starts, compared train XX% On a a than down were we

lasting the growing changes leverage for you the you made May the call. challenging Additionally, volume as as might in fast this have last we trough, since testament growth. later am durable I strong the increased operating these highlights required the taking team's the pull nature serve in on were twice to a of how results, this starts to is environment we train No have matter to the of success the and quarter efficiencies. sure forward questions Jamie some advantage volume frame

trip lag Carload the beginning when exited plan the will intermodal to near surge trip quarter trip results. over Let's carload slide third plan and level at the to of XX% XX% plan slightly performance now of financial previous trailed quarter the we Kevin review for for handle to in and to volumes. our of quarter XX improved we performance the Trip to hand turn primarily hourly timing and performance the quarters plan XX% I intermodal. up the it to level throughout XX% step performance. and began due

been everyone. What good Thank you far. it's a and year Jim afternoon so

efficiencies changes rapidly we ago, record would experienced three structural adapted business activity. months on We serve driving focused Just results, declines were as in quarter well and us and we where reviewing volumes customer that returned. second

over can CSX sequential XX%. on leverage our volume you results, deliver, see of a to As quarter very increase from third generating able was strong operating

we today, here sit flow profile. growth a are and we As sheet strong with positioned balance free cash for

decision strategic our continue the made to levels exceeding invest in plan. infrastructure at also We to

As growth well returns. absorb slow activity. This we volume as we advantage took leverage business these efficiencies, position future will us to of

combined can the XX% down with at economic And income was headwinds was by you quarter. and in As see weak intermodal demand. coal the offset in volume revenue growth statement, merchandise

markets revenues a lower, through labor down coal sequentially improved line quarter. costs. decline XX% volume. overall challenged, in and X% on expense and significant headwinds, fringe reflecting revenue merchandise and While was the improvements each items, Partially volume-related remain XX% the was offsetting down ongoing efficiency expense Walking lower month the

make we Jim train highlighted, this structural during to As the pandemic to changes plan. took the opportunity

were mechanical in was to locomotive XX% train line plans. fuel workforce. and XX% road, active were in These Fewer result, in volume. local improvements and active a The in combined The crew starts with repair made the down a compared reduction count down drive quarter. of fleet decline online starts the year-over-year cars trains. year-over-year, efficiencies car XX% helped X% crew yard fewer smaller a freight across the As results and fewer and

You in the will was us cost key lever overtime the quarter. second a recall, for

in made year-over-year it overtime by versus second the We our workforce, flex operating As our back overtime total all able were volumes still in up Even headcount. sense, quarter makes adding increase can increased where XX%. with in quarter, without terminal reduced second reductions also volumes a recover, overtime sequentially. labor through small even a intermodal we using engineering expense expense departments, of as across contract we maintain to significant

well significant gains was million note, our these as the decreased reserve headwinds. restructuring ongoing With XX% the for headcount $XX from increase as in active include impacts quarter. locomotive quarter. in lower $XX that impact as by was and some locomotives expense MS&O estate well car versus and as X% XX% the nets flat will expense down fewer despite of non-railroad offset asset You third be These as headcount costs car repair the efficiencies, impacts, year the emergency support in was Adjusting real cycling the boards roughly were material quarter, the cycling million would in down XX%. impairment. to management in quarter, last average team second the of MS&O freight the prior

as efficiencies container intermodal grow, year-over-year. XX% at addition, cost our and it with volumes In are driving terminals down per absorbing over we

and of technology across all were of on where continue optimization Real and consumption to including expect cost minimizing lighting, contracts external quarter. use other we efficient sales areas, We as increased of are volume in control quarter current use to returns. continue leveraging minimal the in levels contracted labor activity the focused gains to will help initiatives minimal reflect third reducing possible the costs, and fourth to reduce and redundancies. and utility These estate

to XXXX, conditions Looking of a that future favorable. continue manage pipeline monetize we will when properties are we beyond

excited improvement opportunities estate real XX% about am a mentioned the year-over-year, have generate expense Fuel additional I per favorable, also a to driven I lower streams. $XXX and million our leverage recurring decrease was price, in utilization record As recycling revenue by software, handling gallon are relentless volume, before, matters focus power with enabled rules a to efficiency. fuel fuel by management of distributed train expense and on tax combined Ongoing prior-year non-recurring compliance. state and related fuel of efficiency net gains energy XX%

Equipment quarter. related the other expense million and at in to rents Looking Depreciation or increased inflation. higher $XX million due equipment intermodal X% increased expenses. cost $X X% or

Turning higher statement, below of the the operating mostly line. weighted Its balances tax XX.X% pre-tax coupon. $XX CSX average Interest by decreased Closing lower billion, a income income income. net expense ratio. debt XX%, flat. resulting Income million operating primarily or expense a reflecting essentially from delivered $X.X was lower out offset were

cash year-to-date the Turning basis, side infrastructure. and remain advantage costs, into utilize time to of and that drive is capital network slide investment safety the to the train use committed better service take negotiate the We a of On and on this XX. to reliability core We track, efficiencies to prioritize the of lower equation outside our signal levels. opportunity bridge to flat. savings and investments materials activity reinvestment track roughly

non-infrastructure a a we remains reflecting identify for XX% drive capital a are return the spent year, cash and term. of has flow longer focus amidst environment, that nearly free before from operating including third this returns conversion also but have net continued impacts projects, income, on lower prioritizing also and will have free Even needed to billion our made high dispositions. the prioritize cash that remains time lower no in investments long progress a was proceeds projects XXX%. down related quarter, Free key eliminating as team. Capital dividends allocation future. evaluating cash $X.X Through We flow lot high income property versus focus flow challenging from be prior while

ending the $X.X Our cash and billion. strong, at short balance term remained quarter investment

over this As referenced I previously, billion I to normalize $X have expect below time. balance

let today to $X opportunistic. of remain me committed saw with to of billion that, repurchase his our remarks. to announcement program, for capital share it another flexibility back closing As ongoing Jim return remain with we turn With you

volumes highest the Great. Thanks most prevailing we economic environment delivering particularly we Kevin. intermodal all a positive reliability by levels to on recovered from up the market. the trough, economic service XX, efficient the lot, the strength manner. the assessing are year-over-year customers by We Concluding were of are volumes momentum. pace slide Fourth activity which respond hope continued and quarter continually the in will and and in we at encouraged speed for the to-date of

low-end the for flow of $X.X our As result industry leading expenditures, at to cycle be is this to initial the confidently ability testament to billion invest range. of capital This free to we done our business is throughout the $X.X our still in cash billion transform to company. direct a profile work a and expect

I true succeed operating service, safely, and helping company values pandemic company. to to period a we to efficiently you program proud cash will commitment a recently now confident staying position by $X And billion $X We shareholders. are than by of excess our by entered providing high Thank buyback turn returning a CSX our say of back to and our We recent customers that you. also emerge Bill. I stronger more Dollar purchase affirmed flow We that would better of remain our core strength in this operating billion. total bringing this authority am level to committed by into today. expanding

time, you, take will Thank interest I question. one ask now Jim. questions. themselves of the to to that, With everyone please we limit In would

Thank you.

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

Our Credit Suisse. question Allison first from Landry with is

Your line is open.

in something at And past you so highway? few to the where specifically be take get think to fairly this where opportunity think side, quarter it to compliance But the start the you. you do start Jim, the beyond you need you here do chip in sounds this it improving like you to And to you. XXXX close further? were maybe, what those volume the about ended a Thank to quarters. from more merchandize address is and the throughout then plan could the on story? trip up numbers from Thank talked ultimately of if XXXX? that the least then is you convert away to is and accrue carload Or at could

a it's Allison, perfect Well, question.

get follow-up, compliance. say to are to back to are we turn just get to associated can. about we we that. some one, of Jamie back. and talk back we and over Jamie get going are then and to Mark then in me to plan were we And And where Number can are we were a to of as get we going but as surge the better quickly we with better going it we Let will going to of get volumes The to terms get are and going better are details going going get challenge, I and we are better. was trip to where and to

to last side. lose some everything with really, large was train didn't pretty on the tonnage, all respect were that was any train our throughout coming at his with it was Jim to Absolutely. weren't at some had sure road And made gained exactly wanted the We was amazing plan making different Look, changes months, where and reductions. pull place continue starts, as the traffic momentum going we that to up. we analyze we make it results, times bubbles. that to as and we to the off said, and we team, end over our it few Working we really Mark able close sure footage and

is up our tonnage take you train train, train year-over-year, at just XX%, up is look If our a our length XX%.

do locomotives. to with less able like are We that XXX

within and few to a we what these areas, plans, a at of able wasn't execution as out that like some that's people trains, of If used we were lot of our where in and on In exercising look the road all areas, days. little assets us, perfect, reduction some wasn't at pull making was running for reliability. take to starts what XX% them service And is it's about hours. to really trip different on changes trains. I that we getting to, bit than it the only missed were and used speed a there's we making some was it maybe So up It our time. heavier really, the about longer were a we a were network

I will So get it's let really customer And for continue that important forward. to us to and each working that and day comment the push we we the on are reliability it every Mark and will on to other.

a win question, is marketplace Jamie doing to And customers us our are to for great everything service great in with team It's really our deliver Yes. and the his customers. continue Allison. share helping

As down more used for look order open some they even and our share opportunities a their maybe QX traditionally have been wallet rails, seeing number lanes their focused gain to for we up more of of wins in we we where share, gain haven't truck they QX. are in sit to during us and and these in books or lanes

the service find will, it going as those opportunities. better get So of to we and continues are more to

are excited them. We by

We are lot. growing a

We ag. metals bulk have wins of and forest and seen in a products lot markets in like good even

wins. We are some great conversion seeing truck

is the on it. So team focused

them. to those his and making product team that delivering the We Jamie thanks with us, to with are those are customers. conversations identifying service our that's opportunities And easier

Thank you the guys for great color.

Bank. from question is with Oglenski Our Deutsche Brandon next

line Your open. is

PSR your obviously look your railroads the focus employer, if north and But former have the at transaction narrative Brandon ask some just It's bank of at I lot is a valuations border. been with unless But well. through to of with wanted pretty a out the there sectors Barclays, gone investor big already Jim, Hi. has on there big M&A doing and actually a side. there guys really with you, other you you

So I do few of next what to valuation some to to hopefully your reflect flow cash that years the investors measure you guess today? regain relative against want premium

against measure only now, railroads. don't necessarily other thought tail all far we they if we ourselves the them have ahead are so they but we is right Well, because that's I already gone guess through, our lights. of see

yes, benchmarking that's our help do here. grow out can he way base. And And are grow first can to this what what day been in we and got looking and we the out has our there how at operating also against I possibly any excellent continue expand Mark so continue services our and company revenue we think are about to to since profile companies

you You really until we going good and sell fantastic and excellent to now continue it. we sell anything can't created got to have a are product product. a And

Thank you, Jim.

question Mehrotra Bank. from next with Our Deutsche is Amit

Your line is open.

Thanks.

add at just some about First Barclays. on all, sequential and headcount glad there sequentially. the guys strong down, materially obviously Kevin, XXXX, could us still guys, increase you costs the at I maybe be XX% It's point recovery specifically revenue worried level operating am the more pretty see got and you be I I revenue. amazing thoughts give Jamie which in MSO second. to of Jim, we into in pretty to enter a hoping meaningfully a close high Brandon everybody have given Congrats as to back to down flat is for to was results.

the margins and trend just about type guys of If the to just achieved talk you. in XX% versus you on quarter? relative third Thank the that cost of performance runway can incremental revenue performance the can how in that terms you

it's Kevin here. Amit, Hi.

point. are to -- at the going when we this XXXX We to think about not get guidance in But,

asking not I No. XXXX am guidance. for

got it. Yes. I

mismatch. It's more the like

ahead. Go Yes. Okay.

the but next at we the a were we what think a margins, to new in some quarter model. point, Yes. that. Jamie good power, for the good will that add will one clearly won't preparing have story. leverage quarter third to do year, see the in to we increase I second It versus headcount. to have if we talk volume be incremental are one. When we Certainly, here about, pace little That shows your we Maybe will a be bit, for let able

you we have you look for G&A preparing the here. look things at cost, management lot leverage certainly around that in at done growth of are our But a structurally, We next workforce, will when year. our

I part anticipate of next a that work our we have of that fortunate pandemic forward. The accelerated So fully through is, that we we going year would this invested take network. advantage lot in

of capacity. lot a have We

what that from in I us today have out actually heard think market the there. differentiates we

grow we and So at to ability have the there. grow the volumes

look like? seven out so not that's to have an about the still look are that eye last right things great those keeping resource done months and to But efforts for all we capturing what we And XXXX, what do that were all losing talking we we to we achieve. and now How might it? able over the six as that

am -- yes, I So it sounds like sorry.

noted, a I still we can to XX% Kevin that As mean bring XX%. on we network got have

move I continuing are look mean, But well. The We bring business, forward. running on with plan quite we comfortable to as is itself the plan. at

analyze We continue it. to

with we close there. execute continue We Mark's will out work opportunities new with all continue analyze execute to team are to and that and and business very

We in out. storage number of a pull have can locomotives we that got

be We are hiring. going doing some to

working I we as very union We have as T&E some forward of with it's close are out we well there groups hiring And employees. we sure see that our and stay with ahead bring we proved the think unless classes we coming that on keep what and important hand time got some in it again we we have hand their I that I would. assets it. and And supplying them. We said look, they service don't with earn have sweat time said and think making

that's same towards. So to do on going stick we continue is model are been to have the what that we working to

significant CapEx go to comment to add is not terms CapEx? a about a yes, comment -- not of a to XX% also volume a Is the in amount that OpEx comment Or on needing growth, XX% add to ahead? of capital, needing

CapEx said, side, I the plant have on out Amit, got look As we there. a great

sidings. long got have We

double-track. a got have We

We mainline. a have good got

We have got yards. good

his business absolutely, Mark we team off. and continue on it mainline our as brings yes, absorb can to So

much. very you Thank Okay.

America is with The of next from Merrill Lynch. Hoexter Bank Ken question

line open. is Your

results. up. Good bit if Jim talk are just Great the strong Great. you your focused the on obviously I still our Mark, be to see. X% really on What could because Maybe region congrats little down Maybe bit revenue marketplace? to pricing? yielding for tough competitor Obviously, on And mix you share. a with don't impacts in and or car, Yet seem on about you afternoon. to focused seeing could know, us you the on overall. a talk is taking it's see little through

a about You what's business wins? can talk bit going on in pricing and

Hi Ken, you well. doing hope are

delta the and obviously, rest coal that export So was let's due RPU the domestic quarter, RPU go fuel RPU intermodal fuel back most was Merchandise and markets. headwind fuel the X%, was softness X% in utility that and surcharge down mix down some on The X%, given price surcharge the the different surcharge that benchmarks a X% of to to of this XX%, just price saw for we headwind. X% there markets. down coal

an overall mix play continue obviously of RPU. to driver Now,

like overall. negative saw the and had minerals This shorter of and haul in quarter exports declining like it positive in was COVID-XX. some export chemicals. a than budget to was does, that the coal. business. always That of some some equipment the project cuts larger giving just And was basically also saw cuts, aggregate of some net There declines because mix the there faster mix Northern due We We favorability and coal, thermal metals in exports.

of is know. bit you mix a us, as an for always issue So

the gap deliver price volume Ken, X% and on see and main changed not team to the X% and continued going our to sustainable to to into forward pricing be Pricing, I we probably, would for between QX. has growth. are as profitable and beyond. philosophy focus a going revenue QX continues expect that improve into sequentially We

customers and partnering the the to before it and price sacrificing it volume. delivering. product our for are that help price again, them And not to We his value with to Jim are solutions said I will of create team are say we and I service grow

Mark. appreciate I thoughts. Thanks Wonderful. the

from Wadewitz is next question Our with UBS. Tom

open. Your line is

view? question, will. two Yes. guess, industrial have industrial got, of I trucking How consumer or has thought picking such where you Great. a up? of the Are given conversion the Are optimistic dynamic Thanks. What's seeing retail maybe seeing that kind industrial your rail? that is guess, and seeing side And been Good about, intermodal had and tight the lot tight retail that customer afternoon. consumer like the I question hasn't super in for Or you rebounding. strong are that in are to kind and been a tightness you you they industrial seeing really of not market, thinking you on a what I you you. a are and side? slower encourages Mark, signs if of side? and they side the truck has improved different Thank

Yes.

So it's a great question.

intermodal been cetera. has going side, tight replenishments California, et truck Things there. the is capacity Southern in And been clearly have are, so There like been has we some it's Chicago, on. there market are seeing markets obviously several shortages on a out a tight, driver constrained,

in have highlighted. some We truck seen as Jim businesses, some our up intermodal pick conversions good with

performance quite good. Our has intermodal trip been plan

good. quite been has service Our

still happy that I is will obviously. that are strong. with we think continue The very, very So and consumer

time to We expect when season a that usually around peak Christmas robust we see e-commerce Thanksgiving time. peak

We through expect that to be strong Actually, very pandemic. it the strong. been has

to people forward, staying approach ordering and as expect it up we Thanksgiving. online. as pick stuff But even at been robustly more have we home Just going

with customers, the through with intermodal, speaking continue into expect business are So to looking deep to for that and then our happy overall we QX. we that And Christmas. quite continue

So good there. side

are has their tight significant on headwind. us business sit to conversations. levels different looking allowed customers are I some down merchandise save a think market and cost. the now costs, transportation our the Obviously is to They side, times truck on them, tighter side, the with and have for in industrial these down obviously

up. rail all The and we The us that sit XX% know, is down trucks. they get good service are as to can't truck has and offers product our given discount with our market spot so customers And XX% tight. with the rates allowed to go

we truck do performing are seeing continues remain little traffic up know conversions will a are and we so keep to that improve and to rail hopefully If And going hope power we post hopefully that forward. a and even us of stick the And comes like that that CSX bit. sticky show traffic eases on able we things lot the we there. of can, market

from Thank Scott you. Operator is Research. Wolfe The with Great. next question Group

open. line Your is

Hi. afternoon, Thanks. Good guys.

the then fourth how unusual the I are was quarter? your lumpy, know leverage ASR? up on this this And costs, an buyback, but on quarter, to anything Kevin, in you. one-time-ish MS&O Are wondering Thank on anyway? change thoughts So I any in just think Any you does the MS&O targets in down? they or thoughts or considering And with guys timing? about

Yes.

with quarter. yourselves Let's unusual third I No, Usually the unusual what quarter. the was almost MS&O. extraordinary the in call real estate, what's with or analysts which in call like like wouldn't the start the anything de minimis to out

have to there So year. and real we When look We seasonality. didn't obviously to the fourth expense. to I we extra number and in on had year-over-year the this at significant look estate a last headwind, start gains year quarter, nothing This go teams winter, the engineering, we start, that is had on capital costs once to have gains. OE some look of at When a business. they vacation, when vacations around related you our always areas hit vacations,

in We quarter. the have fourth G&A seasonality

improvement some year exclude real year-over-year last MS&O from estate expect quarter there. the when So in I fourth the into would you

year-over-year question? improvement uptick real see in we from year. sequentially, the the So estate What MS&O follow-up excluding gains was last will but an still

leverage and about Just the and and timing targets all that. buyback

Yes.

closely. we I are the evaluate I buyback and Jim talk to program. think going

as think we what implications the here, $X.X need is cash the in around pandemic more business. there. more our markets I as not clarity stability to we get and get operate Clearly of billion the visibility, we

So trend down to I next in would year. expect that the

expect back the could you So be us market. in to

Thank you.

is with Brian question Our next Ossenbeck JPMorgan. from

line open. Your is

revenue of can pretty maybe that ways the halfway this question. you maybe of more How taking year? grow some that are of Hi. projects? viewing and the thanks for Good business, those look you off elaborate with minimal land in recurring on leveraging at with you book the and development traffic you. the to gains you future the evaluating? And streams one the convert there Kevin, land opportunities in afternoon rest are are some of for As portfolio the industrial the much here for if for more

Absolutely.

last in are do at has We group. had the the to what She new great drive going actually over the to areas just working she or investing real is hire estate to how on very, of head I closely excited with conversations. whether hit with about our development very industrial know warehousing, that we she running it's assets might But locate here the Mark's I in able am side and team few us where opportunity ground those is it's opportunities, other weeks. it. identifying to others company. whether here a the really be partnering

a it's great So opportunity us. for

are great time pipeline. be prepared from we to to terms pipeline. store the will remarks, next going anything electronic In years when more whether we have once contracts, it's estate there there. probably And pretty value. billboards, tend mentioned can they months. have leverage the the of And these is really that then am are area. close, right, Whether focus time we a great fiber, working on to a revenue opportunities. that we recurring great, sales, maximize on get I But hard but sign we pretty just have next things I are to These on I These things, still here. on about continue. something real excited it's real it our to is we you to sell These asked lumpy the when it's few my estate in team do take side, a But portfolio. the It what six over the over robust can

every get year. after You revenue year

the it's we largest we leverage in can. are Eastern States. as United really, So, the that landowners should We one much of as

I do and that. have are job the far. they go And good I so, think And to doing out challenged team so a

All update Thanks, that. Kevin. right. Appreciate on the

with Wetherbee is Next question Citi. Chris from

line Your is open.

here function with Or resources quarter? Jim, afternoon of has improve of fourth maintain, kind be Conceptually, leverage. do up, October. you an ticking interesting have will like kind operating to is out really much feel even higher are resources? some on you the volume mentioned that in XX, feel how coming And a continued and like are capacity guys. Good volumes continue out slide the On step that right shows August September can you into there volume to Thanks. in these Hi. as you a growth as of even there you the with have have it flattened of chart and resources you operating as point now

two-part answered a I second a it's question, which clearly, ago. think Well, Jamie

availability not employees, business locomotives We have of all grow any without to But spending on tons storage ton going that. infrastructure you capacity a we in without of and the have having to are capital mainly from do to forever and additional perspective got business of bring a to physical that. add because more

where the to to split operating train. you it. able in your order to get to is, the to point utilize train When be with to where enough additional need to enough need where your point operate the heavy that split have you train, at when or So gets question employees performance. long And you the you length

doing to what staffing last a are And a was in do perspective seen new peers can years But months railroads have level Listen, couldn't so the have do. been in a we you what from we great this the I is, the today in things few moving few over last time. and detail and highlighted long the now.

Jamie country four, wouldn't would network And the major of If traffic you about the we five in gridlock mindset be across ago, common now are America minute North would the cities when this on had move said, talking not now we so we we them going across do, anything. and doing But rail start here and the our talk going more need we the and with are can be don't we not single and day. in we more all the much years surge and capacity, kind we and we railroad, thoughtfully. hope the But can more we we sooner much every that Mark put to of the people can add effectively a is day can better. we in add we to do, that to run more logically is you the growing assets, just the on five able nimble, the park how do them. to business we about capacity, we meantime, get But shrink we pivot, freight. business able mile to minute and and will we we right as respond, hiring I to are because growing can size back times growing are And the God, day, got of a

Got Okay. it. you. Thank

from is The next with Majors question Susquehanna. Bascome

open. is line Your

et economy, With ends you are buyback, upper the brakes tap the policy, Thanks stock earlier you refresh of what tax again? the comfort cetera? Yes. are back some for to want us on once level on leverage, start to for uncertainty that with of I Can question. guardrails your perhaps my go Kevin, to that taking given watching buying an you either question. the

we have sheet. $X Look, billion on as balance I talked our of cash about,

significant this think cash So through Plus, are about would leverage. generating point. get at to that I even we have of ever before amount got we

can significant and stress strong the we capital, during at on to So which are want second decline what a go grade have our position. when investment with we are that access is this look We create rating. the you standpoint, we with in great always that quite in quarter. algorithm didn't we had to under where the leverage compelling it's We

you So ability opportunistic. you a at point that's to important. the where And be have always to want be can

we it's And can so opportunity react we leverage I flexibility. are and when allows where for there. that today the think arises, If the opportunity

quite today we think where with are comfortable we are. I So,

you. Thank

is with from Our Justin Stephens. next question Long

is open. Your line

and good afternoon. Thanks

a any this had see So on play but you business out modeling? should high underlying revenue. a not called you I it's know from headed other year, like just gains that know guidance headwinds. real talked D&A, unique clean I on where giving year-over-year about are items leverage year, operating out? lower the the of had year sale, some Or irregular you that into sales, Kevin, XXXX, think estate do we next level, more should be of there are we you

Yes. in next right headwind mean, obviously is would will right relative here. I we industry be depreciation also would to that we depreciation the But there. our the more a have on to our the now. But out gap call I what into probably similar CapEx smallest get point

little headwind the So to that probably we Outside We Real into modest. up. of a there, pick any less into have bit up get next this significant continue significant step-up in it will on a side. life we remains be next Maybe saw any relatively the estate headwind year. year, around that other this probably good. was. inflation a the things going year come not the highlight a as will same next which Inflation, created headwind No depreciation level that call, year. on we of we don't think study taxes that, the is it

free being to change Okay. for flow it the your near isn't D&A going expectation XXX% in your CapEx, close sounds comment like pretty And to about cash based on conversion term?

on We our focused cash flow free are conversion. very

at for Okay. time. Thanks I the will leave it that.

is with question from next Stifel. Our Ross David

open. is line Your

of latest want comments about. industry What's Lots good think the your about of gentlemen. up XXXX. an talk lingering on levels maybe in about at in getting I to morning, to Good inventory recent the outlook? coal. pains flat terms and to But comps Kevin stuff conference one talk of I

coal helpful. any So be more color on would

Yes. Sure, David.

you just want you export to as well? coal? Or stick in are interested So to domestic

all me. it for Give

Perfect. right. All

largest business. with the start domestic. That's part of will our We coal

sort the of your at below to So are or the stockpiles now, North South. averages, in question, the and in both right

seen It was summer kind have a North good of South. hot burn. and We for in both

or net came we $X.XX bit. prices, the down. They prices, up back did creep to Gas gas diminish so. a them stockpiles So saw

$X, it to they as Now would like above is the which the sort We burn for to I we are high encouraged contract above to see back of the twos. economics XXXX, into forward the see and curve them to start by am encouraging. the coal. quite November really more to $X.XX, mid work utilities really up

the and half can more move back to So year into the of QX, going new QX. expect hopefully in that and continues in we coal

headwind U.S. The that's Brazil. as and quotas as Australian coal to met. it's about outputs XX% side, actually now XX%, you Unfortunately is some know, Most Asia. have with quarter Europe, the XX% challenged. low our be been India of about about the now, keeping thermal. been export offsetting to the about our was of prices met saw of But for XX%. We about met, coal. It a and XX/XX, restocking export the benchmarks, right some Met, to in Chinese It portfolio. starting XX% that have going in On benchmark used it's on it's XX/XX. XX% the

So production been season we with of have But volume been had coupled really really story, a the industrial more side, some the met monsoon it's has really obviously business than worldwide. on the a price impacted a situation issues there mostly, the side has Different volume and story. story. COVID thermal

these APIX has India, been was coal COVID Europe the in But thermal big to a a mostly we the India that really quarter. as thermal which some to of It to of No under $XX Our going thermal has going coal, situation to about the used outlet headwind. a there. no for impacted coal for days. have XX% volumes Morocco Asia, be Europe, India, goes coal to longer any lot well. us.

are to into and happens year, will volumes we be out guidance fourth be in at million year. on XX, beginning going the now for tons XX the However, around what we for will year. export going guess see the some said picking up is, right we were situation My XXXX. XXs should some the million tons plays right quarter things and as next We see At COVID provided low of we we increased the our coal. somewhere best itself

around the That's color. very much. helpful you world Thank

problem. No Yes.

from Sachs. Alliger with is question Goldman next Our Jordan

open. is line Your

cars I lasting I has talked know could structural have if know frankly, plan what per some along about give those was lines. changes structural such just talked as it these volumes you But you additional flat Yes. and you But sort example of of some the changes. can Maybe I things some sequentially? keeping are and perhaps with that provide so around even you color while Or sort surged allowed that headcount of of am about be little. operating So assuming metrics the extent well? processed the I I wondering, missed the the would changes. further that here do efficiencies a great? hour to

analyzing Thanks the guess plan. put ways constantly it is, easiest for the question, Jordan. I can of I some we the are

team So number this is, what when you think cars man and and hour, out of with and members we different it do we a change at about my terminals go we we do the question the per switched and take I how we do a way look things.

And that's when do railroading. done, Just the because of the you mean are been way scheduling think how you kind it's those always of guidelines it. doesn't that's

may cars one have you yards some way. So switched

made PSR the We hundreds of have we as greatest as here an mean beyond wasn't got to think we been necessarily built be, of train When our have said in what it a that you And are ongoing more move with changes size. switching being plant continue process a and that be. that And to years blessed we we different through. was earlier you those switch of that think that's forward. respect we method. and about X.X able we cars We needed efficient. always those probably to plan when some going ways when I then growing it that make have service as make we different find about the terminals have CSX And boxcars. network were opportunity run yards areas we to complicated can it where changes to and ago it a Well,

reduced sizes, by move pattern. about traffic able been to have when significantly, think traffic have just better we in train train you So miles increase miles, a our our train And moving our we better.

there, day each our every team is railroading more out find those opportunities plan continue to continue how every find So evolving how works day. just still we forward efficiencies, still find is to reliable and and The our more they continues to we are opportunities we as them opportunities with and move develop and different quicker better, there customer. scheduled to those those to for and more things respect

the for you color. Thank

Jon is Our from next Evercore question with ISI. Chappell

Your line is open.

know I this, Or up those for a investors when this needle wallet? some have customers conversations is the everyone. and afternoon, base? of Good you have operations it just as service to talking ESG really you recognition. lot the freight we a to starting a their the open still to the total time now, slide, this think sustainable your investor you. maybe is customers the you us on with to nice Mark, in spent move are price? new Or and relates Thank about as added conversations just right you are

customers. I a No, has question. to real really world impact point a think our Excellent now, gone with having ESG from talking especially

them in And years. last of and so several customers that several we our over the and of really negotiations, at CSX have done everything sitting back down peeling number showing

Jones of in performance factors came leader lot and them in this the for space this it's major, are some one having Jim tell real to showing recognized that Jamie of efficiency Index taking talked want well. targets, look that a trucks was his there to opening on safety. the our to discussion shippers, our that move ESG metrics. of big us out a by really ESG them I as year, traffic discussions highway, a Dow And one with given very off Journal was off position around targets long about efficiencies there, also, and look a and being efficiency trucks Street with and of are we Sustainability they their and especially as is lot that you, contracts business of emission and can And having leads and these bid and customers can up the things the a this those their leadership and talking about highway, clearly shippers would big of retail and safety for they as you major others been take said the time big have proud I Jim are if their We very and the as Wall targets opening customers And we achieving there spent clearly up impact. tell remarks, the real. all the they a more And I customer CSX time.

world And in so deals have paying and real we negotiations specifically real impact, world year. at this it's that many off looked

to the That's hear. for insights, Mark. Thanks great

Absolutely.

David from Vernon Bernstein. is question Next with

Your line is open.

the going Hi pipeline talk guys. over it what to seen wanted gives a taking of market get what little Thanks level going pipeline or to that's of either maybe maybe in growth to in the take infrastructure and little you truck you that a the put the in position as market? for what a what more intermodal better in investing channel you time. guys position are I to product, about improve at maybe market think the are you less years guys next Mark, that to level you you about an about three is intermodal have than the a the bit side? you in excited and is bit that's

Yes.

that has talk market to and terminals, will let some because his in the So ask intermodal terminals. talk the Jamie the me working I then about are the about efficiencies of they on group

love as economy year. the we continue where I of think there one is have is intermodal faster we before, than We really intermodal repeatedly can a listen, to this every space lot like, we business. so the growth. grow And And said

of And a about intermodal. off of so more on benefits products with lot we take talk are highway, really doing a to different looking the lot of different share the things, new working customers,

and We we of on our the the is with E-commerce grow working have future. different it's benefits having freight. and business. shippers business to continue that are big converting And there obviously very here think of going that in out and them we the on to lot impact we customers like a

to capture And future. about thinking With we forward Jamie, going position things ourselves want the in talk that, e-commerce need differently that do do a efficiencies terminals? of you the lot so to to in and that the are growth about we

Yes.

to flow I GPS Marshall probably automated terminals we Estrada led and maximum. their Scott that by again, built got operate to, an number technology out giving drivers our to terminals, us They they the built put Our them use cranes to have were in Marcelo time I autonomously we think, team. and intermodal in unbelievable and XGate, a utilize getting areas. and and truck over are opportunities have were, actually for of have got when a years cranes to some with over been terminals, able here, freely of allowing team to

So been over able bring down to turn you years in gain from to past these we of hours our of dwell. your some couple origin in XX space. over XX over the have circumstances significant. hours up you XX When down to That's dwell XX, traffic terminals, times

more. You And to the are way. able traffic come our just volume handle

a We bottleneck. haven't hit

through more and inviting definitely it. more are the and gate We forward come looking to

Shanker Morgan with question next Ravi comes from Our Stanley.

Your line open. is

off to everyone. just you. with Kevin, start evening maybe, Good Thanks.

more quality high than do You have you what obviously cash apparently to the of having problem with. know

the share your can of on thoughts maybe So you environment. M&A some

investments in your peers adjacent. infrastructure rail-related make You have seen to both and going assets, some of

any move these do to am on do the structural much. you see sense electrified of make sticky. get move come on how trying exciting very until of from the gap follow-up encouraging question. so as truck have I do to Or And to get So somewhat figure Jim, And a do and anytime rail on to we that ESG kind you are that are a basis? gains rail very you trucks? up on seeing as they you maybe expect stop this? a out ESG that to to looking shippers But opportunities out Obviously there soon?

me you public commitments All customers, To significant logistics globally Absolutely, the major, walk and door change supply to It's footprint. first. I help it's carbon users can chain second to answer question that. let able the their right, significant. the to begin say, do be of major reducing make when in a

XX XX% In to fact, early I you running these around make decade there all got might am trucks am be about this even was just I The news be years of reliable. that targets cleaner you do good to ESG you to that weren't whatever, conversation. we than was couldn't reliable have there enough, it a get your we or as ago able because able if out wouldn't and like I kind

PR, be. timing business globally to offering real people a be do environmentally we can to lines with not our just but as able our opportunity of commitment responsible be to to we lot want coming a real, that want for as service a and in together this of is all of So the creating us

to a the bit. But of other move so little the a that, And but client perspective, like and facilitator extent to us. great improvements the I Kevin player lines be for don't business M&A issue. in will a extent we be from that huge that's people can we up let coal, a for news on a follow

to network individual we together purpose to the systems individual the to network work us capabilities entities, the reason an we business than we with did relates being M&A purpose all that the business to do was, a with another the efficient for a exchange common with up thought, able rail with earlier, the and opening a I grow the now we understand said can't to I further is great basis, amount, for tremendous as interchange before, it common and a on one as billion question creates for better go information of it have got become and couple our one from get of sole dollars traffic other can everybody effective companies well, that focus synergies, it to out to what's we opportunities some benefits extent spend is of across as hundred and before that only the to the a but achieve for do have as We remember the more railroad. one and the lot as another, buy perspective, way as rail, a we you another,

don't look You it. know, we like

than be. we to much much, smarter used are what We

are we the today an it of companies better with those railroad of purpose so eagerly kinds sole as opportunities all because competitors And us as industry. makes pursuing individual individually, and

are our you that, And think Yes. terms position right of cash I add in to just Ravi, today.

exciting really We of are business. in opportunity invest a through we to It's our been some in us ahead, finding program, we next It a going opportunities us position through return of gives good and we years strength. lot some for the year gone are have that high as investments. for capital our really are still on

finished going a you most if the to quarter would the priority history. where, out, contributed And so sit our here our profile going for just the in it, least coal forward. our at revenue to that's first look be point cash the was But I first as we for intermodal and time, today, we

percentage on our the coal been has was has best and So revenue, of intermodal the we been least a it and ever did XX.X%.

of invest that It anything years. look And opportunity will over Here few we to railroad. we the a a strength. franchise in at strengthen next will in position gives our our of us are lot

opportunities and us. I So excited those at looking for value about driving am

Thank Great. you.

with Capital. next The Walter from question is Spracklin RBC

line open. is Your

Hi. everyone. Thanks very much. afternoon Good

way I would visibility? up I know opportunities of to volume if difficult and hit bit bit tightened a could quite a that through pandemic touched to coal, just I know Can some March, and the on on ask you you characterize you a in when to obviously Mark and few which mentioned, the others that of visibility there. the touched then other go with you little intermodal you about to rebound. of really I toss in XXXX? So, was it volumes into directionally going, direction which when as a big a you visibility basis. as indicate the whether at visibility. speak segment-by-segment that the down And really is to Mark, Jim early on improving want now, directionally coin than Or it here go is kind goes broad look customers were how turn, see you your period. you

No. Thanks, Walter, great question.

I shut kind out closing. think notes we was to had we just clearly emails the overnight, tanked. us and or fell of the in things economy saying, didn't the to are they us sort QX It down, when of when visibility send bottom

very close As customers, Teams computers needed made has were at and our and they even been, a challenge Jamie was know. it team to can on, of really and for things and But things from even relay back, rapidly. priority and video check are our that stay to it what all had and coming to it fancy them while close team. the And going to so was were tell and back, tough job them weeks. pinpoint home sales conferencing and back and we figure were pandemic on within came we a a them. dynamic, technology. the best changing to then Things phones marketing we and information to volumes was to out for a working could the literally so in home, when days stay the snap was Everyone the us Zoom laptops priority It

hard. very was it so And

and the morning and later are auto business one to reopening. a would they when was and for are probably for revenue then we or And shift the week to two was three then report a going open go we then are going And tell up we a say, like two. was wide. they boom, Our effectively, you know, you zeros you away it of said, plants right will we going month days couple to and go are it look, later,

likely and So spent we about for of going and to our customer to on react we fifth usually had meeting Zoom a what ideas. Two happen, we them was their share their views did probably on so questions a lot there, did and come listening and a to and lot Jacksonville a ago, to business really weeks where that this talk is to their we pretty and is We going what's We customers and their they partners New or to here think the markets and day see Jim forum. Chinese of we engagement had quickly by and Jamie visibility was good in challenge. into time. we myself it visibility. happening the deep clearly what's to lot international say, a of some to we our happen. have as our QX we would continued some cautiously said have as and and replenishment optimistic markets. best Year lines is, talk clearly steamship we in in And head earlier. and There seeing markets the into now intermodal, beyond half know back those ports We And I channel they XXXX. most there QX, strength are pretty of and visibility and into is I got strength are on it

mean, able are up the everyone coming into year what's the bit many will The continue next into merchandise, people of and their business. as that cases we a a have is closely. fall to will overall of our concerned workers we and there see into the mean the if people the health like what's still we The other head again, what's markets markets and about they risks, is Coal and be that. year. and pandemic is an that that as then dynamic said, happens to export world winter I of clearly on the And monitoring look couple perspective, little going stimulus, I the good. are and started domestically. are to watching in of and extremely earlier factors for we the effects gas I to going while I clearly But natural the happen end lot impact from on with So spike and remains on? talked heading There the are producing. are There geopolitical going pandemic, watching the economy And the we right. into of election Government pandemic. weeks. with what

that and is challenging seen ever is much when murky. handle It's to we job probably the something to us continue team before. the to prepared comes year, that freight to as been clarity and as our we so So But visibility it none stay of have provide a close careers are back. in our can Jamie

appreciate I Okay. Mark. That's it, great color.

Seidl Jason with from is question last Cowen. Our

is Your open. line

Yes. guys, the Thank that you, I me. operator. appreciate you Jim, here. clean-up intrigued back something mentioned And to opportunity

give together more partners more the examples future of mentioned You doing And go you some was in the do wondering, some the of they what life of other as guys you of your us railroads working also, in have PSR? than more cycle can I past. about you now? now if through are see that

have gateways drive But It's forcing to from the when the by business. perspective you or an the And grow like an and off that can on of and to together something in can jump and a want significant practices be companies years a effectively we And out it years might to together bit. extra think for obviously, runs And railroad standalone they one having ourselves, individuals or and how we able and Again, another, a reliably Jamie truck. you moves move miles at railroad business had shape entities. have car of efficiently by we so industry routes or Exactly. unnatural all influence we longer. work end $XX.XX that, years this group more model way, the make built little basically maybe XXX business as of now those are hauling farther about in not you and per company. a traffic with that of work that operate. and day,

shrinking, are a focus shrinking, like the and shrinking, with So shrinking, end and shrink shrinking, cut shrinking, narrow you shrink. shrinking, cut at day and cut of the that, cut and and

are all else. terminates to business we the or together business on So working somebody XX% as of business the and originates grow else on somebody network, about the by growing a

island. an not am I So

better think railroad of organization, forward concept. I the other focus me or hopefully continues, relevant whether grow else When we place to sense transportation market it's you in our there customer the urgency it's much think foreign Jamie small. in become that's will service so And talk begin Mark MO more only going but hopefully what anybody very, that is or is the not greater there whether or a to and past. in spend And it's better and been not I share a than on today, and transportation overall greater and get can executives, that, so it's the of the we very has it's and at a better the much

to want get bigger. So we

makes it locked get interchange like would I thinks them. with issues easier whole and Always, with we sure you a there. lot had partner like didn't nailed visibility you that Just, a do acts will When it say, points. railroad down. and the years have you, Jim railroad. it up have between to business Traffic Customers over

getting and at are what grow customers So it difference for makes as have us, better a around continue to big who better we it industry. to partners our and do, helps the they

really course, So starting the And to exciting some of it's to who work western with around work the know the of game. roads, Canadians are and with come us.

can it So when difference flow makes a we big all together.

time I always, Well, appreciate gentlemen. the Thank as and color you.

teleconference. today's Thank disconnect on participation now call. conclude you does lines. may And this And for you your today's your

you, Thank participating. for everyone,