CSX (CSX) 21 Jan 212020 Q4 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] For opening remarks and introduction, I would like to turn the call over to Mr. Relations CSX Investor Chief Slater, Officer Corporation. for Bill

everyone. you and afternoon good Thank

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

listening to everyone by to today. of you I CSX's begin thank and Bill to in recognizing employees want Thanks XXXX. for the of all continually responding challenges

act results of with alignment and the to our Our over coordinated our company. strength core across The and to principles instilled the years testament decisively a company. few the effort amazing are last people us allowed

to the identify come. railroad. Over up as uncovered ground reexamined of across we These years made the changes steps opportunities provide year, upon course from result, benefits And to will every the process for during our the build and a the transformation. unnecessary progress eliminate to significant

turn Operating let's to XX%. grew slide Now, points basis billion and the new improved quarter to $X.X ratio the XXX income and operating X% financial quarter a five our fourth of presentation fourth to results. of record

debt. $X.XX reported per share of related per a that charge $X.XX, retirement share figure but were this I the Our includes earnings out want to point to early

lower overall of exceeding full guidance year, activity our For a XX.X%, ratio. year volatility, XX% despite the of produced operating a historic ratio full economic and demand operating CSX initial

for by fertilizers by due domestic be was record to revenue surcharges. was from fuel XX% in East in down volumes ag volumes as utility Coast to demand volume Other declined revenue lower strong a more surcharge freight coal in and of quarter negatively This combination business lower and transportation X% as revenue storage global markets revenue revenue and increased and and a impacted the performance intermodal X% fuel inventory than grew volume coal. replenishments and and as for levels. volumes new fourth flat and and food, Merchandise down declines continues more higher and was declines benchmark quarterly six, Intermodal lower other to were as by by reserve X% slide to Moving by and prices. offset services revenue revenue industrial growth XX%, chemicals, Works. lower revenue charges. revenue on offset demand, equipment, growth a was Core production metals higher driven demurrage X% lower was than offer was higher transit growth intermodal X%

and X, we being we the quarter, personal year injuries for slide low to both Turning number a record full committed of fourth railroad. personal quarterly lows accidents. In new record and injuries achieved train to safest remain the

While our be annual seen in performance can trends, efforts always to build a can be culture better. of we safety

programs concerns. We new to hazard have workplace safety employees near-miss potential report reporting that launched encourage and

and awareness it's and local and unsafe We and representatives. proactive practices eliminate joint the with reporting management, labor of increased tours conducting working by drive are communications, across engagement incidents terminal also This CSX increase to identify we employee approach railroad. as trends to helping

Turning to X. slide

improve to safety programs of discussed track autonomous is goals. invest to have our us how helping new technologies safety. We meet we use in And previously the car and continue inspection will

vision of growth. the our a and increased to However, technology Technology we much have in foundational is business. broader our use

but across a technologies actively the the of is railroad, investing in barely new what surface scratching possible. are We

and We are making smarter our intermodal autonomous. more yard

allow of the converting the us of field, to faster getting capture, efficiency, train. it fuel ones are compliance. speed optimize processes communications piloting programs safety trip and full that rid we're paper-based are that such improves in We further a allowing across that data And will to as digital

enhanced we through more look lay in future, to dispatch are We our reduce system in for failures groundwork to the we of to identify predictive to both mechanical the track maintenance dynamic our performance, programs systematically see areas real-time and analytics investment. opportunities network of upgrading implement need As routing decisions. most

our and significant investing is with Additionally, benefits, do and beyond we these take Every smarter, streamlined operating improve our experience processes business designed easier make are more CSX and CSX. more we customer to reliable. action create faster to for to customers

reliable customer more We To as metric as figure avoided customers supply of constant put City our to improve remain benefits, committed sustainably by X. New produced York roughly efficiency their a their emissions customers sacrifice full for is environmental only the into year. million continuing own emissions. without tons of our equivalent to buildings the helping remain to well powering to goals all carbon on focused alternative the shipping in XXXX, that managing trucking slide to this emissions our by to to a these reliability almost chain. than context, We allows business, having CSX not own XX Turning operations, with also emissions. their In furthering this providing our reduce meet but the dioxide of

rail in sustainability. benefits transportation. We mode sustainable expanding are we as to order set long-term most remain ambitious goals And have to in offers the land-based committed of the leaders

further per slide in at impacted the record absences achieved overall Clearly XX and ton efficiency, quarter miles. running for still incremental XX, quarter. GTMs performance a fourth network, is gallons for compares we the able operating thousand and which were we to slide set asset against prior and record well On year improved related our illustrated, volumes the our to Locomotive both quarterly Let's employee and and efficiency X.XX railroad is for productivity fuel the rapid but gross turn for a a drive new period. pre-COVID simultaneous COVID and the horsepower look efficiencies. volumes available new levels increase

as utilization. both in between where volume as is revised of to trends double sustainably level sequential plan our we well operating This and return year asset of a reflected aligning in digit at the volumes twice have operate As productivity rate the year maintained gains is second half. us asset have over the increased levels at volumes asset redeployment, higher

While to our customers a more product. to service as excellent the plan. leverage make the an will team and well. working one add this high-quality customers our of serve have and needed But during been is crews our network significant remains still did grow, operating our to continue as period locomotives number we efficient, built into job priority providing volumes There

and plan was and XX, slide XX%. companies, trip performance rising plan from our was all the with we COVID transportation supply the to Like trip inventory volatile shortages of these return carload Turning trip cases quarter plan figures exceed broader faced logistics flows. number then and along challenges and XX% have our imbalanced admiral of for from intermodal will disruptions XXXX. team environment. done This an freight from has both job navigating beginning chain the demand, to expect results we But this

performance leading review I'll our hold finances. levels, is industry over a still Kevin the to of standard. While we at ourselves to for it now a turn higher

year, of sets That pandemic. the good excited to said a and Jim, all past which economy up challenging the XXXX. recovers we us as lot are this you, to well, turn we page After the afternoon, accomplished impact the a year, everyone. Thank from

improving result and we many business environment While growth challenged, did a income as fourth both operating first volume an in see remain for the time quarter delivered the in markets and once costs We which operating will delivered again manage leverage return. record ratio. and We to quarterly drive XXXX. the through the as sustainable operating volumes made improvements year train plan a

Navigating uncertain third the environment, the extraordinary quarterly what successfully an real control. while volatile accomplishment business team. this year, This record could Excluding driving focused gains, on past in efficiencies this marked and across entire by estate XXXX, business. we we the

goal driving sustaining business. the is XXXX beyond Our by further the across us, gains of to these ahead in improvement and efficiency and growth leverage

above terminal X%. up The crew also fewer drove locomotives. starts volume smaller on our train We plan the walking fourth environment. down a reduction Lower our was the statement. expense Merchandise with were These Looking labor the and fourth expense. and, volume, locomotive from in in increase result, overall improvements Revenue dynamic to labor per an line and Throughout weak quarter, contract well ongoing of on quarter benefit improved lower intermodal was of XXXX. year expense, have line our plan offset items, compared X% expenses as hold income earlier improved recovery. were continued a engineering seen by and the as man-hour, the the workforce of as third measure the and down in also to Total even coal for efficiency volume XXXX, as demand starts fourth XX% in the fringe the trains to enabled pricing in the reduction reduced volumes the the of the continue significant X% seasonality. key the XX% translated our and the reductions our Lifts fuel significant to X% as down the headcount. quarter for XXXX, our business optimization were volumes effects workforce, revenue in a to need while in able revenue made of were down response labor continued when X% growth as as we XX% quarter reflecting line was X% in refine in to a train crew to operating increase active normal in fleet XX% at were intermodal quarter lower, momentum quarter fourth sequentially. total team efficiency and intermodal positive but sequentially gains the quarter,

employees best Moving impacting wish our unpredictable recovery. environment challenging forward, hope related with significantly pockets we these and the The for mark remains for We COVID for network. growth. of speedy are preparing and their current offs,

we current hopefully see to levels. will forward, begin improvement from Moving

half focus are of availability event in be We to hiring on the continue currently our stronger efforts demand. first to crew accelerating prepared and

provide in exceed likely should in flexibility, the the half to surprise will headcount expect particularly half. the of positively, demand year second first attrition We

as lower as inflation train or quarter. million and expense and expense before, well quarter. the locomotive minimal costs, have our and headwind Adjusting The I closely volume recovery. were fourth also travel would in contracted items. savings were we MS&O roughly improvements potential from gains, as it real estate and other $XX in materials to X% Real gains by million MS&O trajectory the accordingly, manage will and service We plan, the lower the the as including of $XX estate monitor efficiency for offset volume-related adjust flat, repositioning drove increased savings, crew expense. fourth mentioned been

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

sales to is activity case real Our be base for estate flat. roughly

a XX% real to before, efficiency. record continue opportunities per revenue $XX leverage As to decrease gallon recurring fuel year-over-year, also was quarter pursue and favorable, by improvement will streams. generate we I've expense price the said to our in driven million Fuel XX% a estate fourth

widening to continue drive invest in efficiency, truck continued in our We improvement demonstrating will technologies the and over advantage commitment further to that sustainability. fuel

Looking be road impact of days a million the higher as expected increased at across expense base study. $XX in increased X% the XXXX. expense to resulted other X%, markets depreciation million $X or a Equipment million track as $X larger rents quarter. $XX increased rents. headwind all asset per freight is in This as reflects well car load Depreciation to expenses, in a million and depreciation or

fourth reflecting expense that was to million, a XXXX. to were a weighted redemption $XXX lower XX% related as balances recognized of offset increased notes statement. benefits income, and due income operating delivered in pre-tax higher million X long-term or operating set Income average net the as quarter ratio. $XX expense higher early state Closing coupon. federal by in well line. of as XX%, cycling were record of of tax reflecting the million a mature billion, Interest income the debt certain charge XXXX. $X. tax make-whole Other of the the decreased out below income fourth Turning CSX $XX to flat, quarter

bridge investments, return reflecting Capital remains of loading invest commitment proceeds have the maintenance was cash will key remains team. committed spend, remain prioritize signal full of forward. billion, impacted a $X. flow XXXX, And relatively core requiring and from on lower network Even environment, core and a operating year a during we healthy of high free capital by investments income income free XX. allocation generation pandemic, track, flow the even fluidity the infrastructure. In year. XXXX's not primarily equation we without Slide cash before spend lower change. a Turning a going to we This step-up investment focus. are On while our XXXX, flow cash property And cash the of net by about improving dividends in to our XX%. level was expect to the basis, reliability flat sales. safety infrastructure safety in was and down pipeline this that also versus conversion, we during side Free focus but of this challenging the X

We increase with tax XX%, expect CapEx even to stay rate. higher an slightly above cash expected in and

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

With Our remarks. expectation dividends balance his time remains shareholders to to as it business me invest let Jim and that over in turn to that, normalize and this capital share we the closing will repurchases. continue through back return for

growth Concluding XXXX XX, a for Thanks in and both with lot Kevin. Great. U.S. return to expect to CSX the slide economy. we

COVID to this pace the is the convert to well-positioned prevailing truck off stimulus we around growth in CSX. grow potential While XXXX. the volumes CSX as headwinds GDP rate believe volumes industrial we much we've Merchandise should transitioned faster onto highway production outpace from additional remains growth as and than growth debate tailwinds, fuel of volumes

volumes market. expect And XXXX begin faster benefit to continues expect the restocking from a an extremely business we intermodal as truck the from to business to inventory following grow than and challenging tight recovering levels. We trough merchandise ongoing year, the coal even

levels the incremental we We reflects to increase, marketing we'll We our volumes cars project and spend sales will high operating opportunity as several year have infrastructure, drive service. by still significant core high-return and train needed trains of investments full revised the $X.X have train for combined investments $X.X to in volumes customer billion. ongoing efficiently absorbing billion of starts maintain This our initiatives. add technology and As growth into containers CapEx and to leverage additional plan. with existing onto

perspective, growth still attractive But ample evaluate opportunities have to we of terminal continue they will network road as and from line arise. We investment a capacity.

excess to we returning cash flow Lastly, to shareholders. committed remain

new shares repurchase billion utilize opportunistic of to $X necessary finding and transformation, to ever excited This through in be questions. program past team We authority. and we the opportunities actions year company the I'll in as year with things to our now for will our XXXX. been although ensure have the for CSX taken during we heights. that this we XXXX is that steps for as positioned prepared push will roughly proved success look have handle as are have future buyback what it taking expected has to share our Bill accomplished we repurchases growth this great still back to CSX. I we to buyback for and I ongoing enter holds our Thank you turn The are

will issue. questions not at As today the team a Wallace beginning of have. the call, us best dealing do its he's as may joining noted any you the unfortunately personal is with non-COVID health have marketing Mark you answer rest may to of The

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

you. Thank

conduct We question-and-answer now our will session.

comes from the from Barclays. Brandon question line first Oglenski Your of

Your line is open.

even everyone better maybe industrial thanks here, said, there, good I confidence can my grow question. but of and Hey, Mark, production intermodal you outcomes. Well, in than Jim, we he's guys guess do like for and not start you've merchandise merchandise, taking excess think sound unfortunate will you for your have that some afternoon I

years? examples you're couple So, winning the are you service a we've there translating and delivering can about this where this that for I into network in that heard specific product guess, Now any year? give how's confidence new of us

we've become what them a that to lot an of a up talked now we with their of product it their conversion sending about And -- existing years really work our system -- many of take And business from at they're know out on already the so but has it's the back Well, been the other the service where pulp look them in of where we've boxcar it highway other truck. our onto many for customers more the -- speak, fleet. doing whether so had rail whether on in we're more opportunity today, it's the doing side the capture well, we've it's And trucks very respects, to book been reliable, has on it's products, share. where in doors plant, they're applies that in in whether it's board, chemicals. to more in wallet that metals, in and whether able force never

have And with been that's ways strategy customers' through reach last do where customer's we we pursue it, to clearly because to our the the I able business that. directly that that didn't business think on at along will didn't can transflow a mile we've capability focus we if connect handle before, looking name we the didn't location. continue we opportunities You to to

there network. getting we're franchise, of bringing worked So that's entire again similarly, for we the that that principally service business is with somewhat improve and customers And we service business before disjointed out on and rationalize a had it's in way, the of know the is shake additional hard to network, couldn't go intermodal but the spread maybe we, tree factors because it's compete our ton looking us again, a a that at where and and merchandise, different us. we've in business. as And of easy is we're because the lanes obviously, a truck. more opportunity our combination now already really across And let's and do reliable as there. our spectrum we And to of

XXXX. been number on and to it of expect for a pay we've we continue So years, in this building benefits to

Jim. you, Thank

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

is Your open. line

Kevin, mix threw opportunity. talk out about quantify a looking afternoon. how XXXX? there that back maybe just Jim, your into as was kind COVID, some opportunity Can you fast employees bring you the given and a of, could maybe that thoughts bit business what back means thoughts Great. Good you missed

In -- and the anybody the thing are -- workers, terms making single across and ride people in get the not else, if take And they're transportation essential more, we on of same because been in missed and out. have everyone opportunities, as we have the the there sector luxury out impacted our by the that in country. different day, have frontline every virus they're sure sit than else CSX are we no care the to employees to this goods the and home and -- country of can out degree

So opportunities, if quarter, with any of clearly, as virus just And traffic began about the it's been we've surge back the we the holiday. off the in the missed Thanksgiving up. time to tick came third took then

So we're And prepared the way. We're aware of along we've that. maybe missed something for that.

on potential maybe to with comes something I upon this. to think was was for and his And express rebound be for the we've transportation dazzle what additional on the don't the maybe we think more want with the ready business. is handle if and for the potential it. done sure and for that We the Kevin it not the Kevin that this work stimulus along, grow opinions can to with want concerned economy to we miss company a we more out in potential and to spend government, based all make by

to these this takes put want can track we them assets some go sure is the And terms We're have and we're next It we to X, have street is, get months What the etcetera. capacity. planning, employees. clearly, to hire preparing. not ready. train X sure locomotives, we So have people to in make guy we off day. we -- them work the we're making Clearly, of like

that the want of curve. curve sure we're managing aware the to that make we're to So we

I make to to And think comes. that's we're to missed sure so, Kevin it referring that in prepared growth was any when what opportunity, was handle

Thanks.

Your line from Bank. Amit of next the question comes Deutsche Mehrotra from

is Your line open.

think can think everybody. guess, of also higher Hi intermodal with I then in OR the this but of improvement? growth magnitude outpacing mix then you talk we Kevin, outpacing of be And yields dynamic about comes obviously, XXXX merchandise. the benefits Thank versus OR adverse intermodal the of the given if you up the year, just How with do about improvement, you, merchandise operator. XXXX? some can growth should volume, that

Yes.

which profitable as mentioned greatest think, the I put yes, of I we a been record had up we contribution our least traditionally viewed has a OR. business. quarter, our last from as segment business, But Intermodal

I proved that think we again in fourth quarter. the

having normal want were your obviously, have there's inflation business, And As the intermodal overcome any going into costs deliver performance to to as we next to into the you able again, OR go with that saw record margins XXXX you year, improve growth. strongest You offset and as we year.

inflation, what We than little bit have XXXX. saw labor a higher we in

expectations it's costs and health than last little saw look so ticking really significant the to long-term our inflation, what up that that growth welfare is long-term variable that here bit through confident a really, drop growth. have headwind. a very not when I'm average, year. little incremental a exceeds But very the a more We we'll be probably going over we attractive margin. bit at average, huge the if I under But

be about It's goal and exciting prepare talking grow Our about prepared here. around we're to That's goal income. really to is the talk for of for the what operating growth here growth. to

will first which be for to change we second things I be prepared this if it so for we'll environment dynamic the we're at. looking quickly accelerate whatever our make And what of prepared half. in mentioned half year, of be and we And we're know, hiring accordingly adjust to Jamie ahead in and a want sure that's the able deliver. the curve. has the comes on environment us, to as been just And

all can't shame I growth think comes. it us, deliver if we when the on say, we

what internally. that's here so And about we're talking

question terms think yield in will XXXX? you answer of up be just year-over-year you in yields whether Could the

Yes.

will first some really fuel you we'll in look when will -- start quarter. to the surcharge. start think I a be you the year, Fuel quarter, get still the first have moderate in at that as headwind the second half will of

year, headwind. on the the year. be particularly the you'll of a of of side. second So, headwind. second market’s half the pretty bit will in the see some dynamic, basis, going half the on little bit see of less export fuel Obviously, a yield But little Coal first a half in surcharge a support year, that probably

definitely other I half see half helps of back say, second whether So, or always dynamic would the we some goes but should going business, as expect mix chemicals really first improved certainly continued be first to half, higher over that areas, as much strength, our a RPU not dynamic it's well to be there. forward. But that as moderate year of the and the coal headwind of see

Thank very Okay. much. you

line Landry of next the Suisse. Your comes question from from Credit Allison

line is open. Your

been Thanks. OR on focusing XXXX. like boundaries you do on longer-term can Good possible question. the we the remotely sort and what quarter. I just for seems of where seems OR Eastern wanted specifically in to great it I the afternoon might pushing it year. ask to rail. Without have are a XX sort guys But, a go mean, I of job this of either mean, thought feasible an

love for that from number highlighted I the the your investments. you obviously, longer-term gaining business. mean, view in a how share. the efficiencies I to of So thoughts would just technology you profitability Jim, future are And will the guys come of potential hear you on

as structural of railroad could and are short-haul comes long-term sort to, you a the long-haul it think between a you differences? already down So sort any lastly, it's then if Thank and us thought what a truly any tell profitability there if you. there? difference Jim, And about just of

Great, Allison. Good one question.

when earnings we were York up, years singularly and out, how share, income have years, are now down it nickels operating done. our three ratio. shareholders want I everybody a years a per ratio you grow to you of operating going this trying a to in only just So, win crazy, ago, of And a on next three so couple and think year. these that just XX% about wore New railroad reward said, were was guys we not couple here three beat in couple we double be ago said operating get talking -- take and and run We're you can focused can't

get provide ratio future I in to we this and result, do better marketing the running in that So product we what that that take system needs out what believe, activities reliably the truly the focused result much, operating the much, order be we as crazy today, is of saw in all the his we and ultimate is. much of with unnecessary need we our when and to of get Mark -- more down collaboration will do more get you and Jamie it dirty faster can to of lot a and that Obviously, drives team, the much hands even our a done in to be pretty team necessary what get how better. company on quality The company to customers. sales cost. collaborate order run and the on we

firmly focus – driving but do as believe that in for building and a on drive efficiency, – we to specific on reduction continue without we we'll focus that – focused we'll and I on the we So will focusing a – as operating as better product we our ratio, customers.

terms back railroads across little nuances. for with really, work different. and routes of Canada slightly the to go weren't of of in that, a railroads – operating any was Every used when really and bit customers. has – railroad some this, And take nice the railroad have used terms to couple – versus of long-haul is day the there and ride a Again, there. some it very along every In But miles. nice greenfields long-haul I with to ratio. Western in thousand a Used really, little bit we of moose look at to in short-haul its a

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into business of part it it – days started goes what comes River which my in advantage the is lot – back take line And Railroad built with thing. to ratio the come history fields that a when miles This an Powder a long, good opportunity subsidiary to is the XXX that And of. we activity another we Chicago they properties, about at a my four the hit operating have handle. that's Northwestern is. So with called Basin the east Western here there's coal of

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you. Thank

question comes of next Wadewitz from the UBS. from line Your Tom

is line Your open.

afternoon. I if said time wanted them of above to system. headcount the Kevin, to you I think, them good the trained sense you about attrition. to recruited and you're lead could I pace get add a going there's know get a and Yes, on up see -- have give T&Y,

I assume you visibility to would is. So have good that pretty what number

or it should think or if margin a or it is and X%, you is that's that doesn't is how a Is it could that modeling with of of wanted the the affect incrementals give year, see just pretty of our terms we or kind margins? kind do so first sense about it in big gradual step or something really look you If next half in just up, small, sequentially quarter X% or you two magnitude? us and is at to something increase of

step-up coming that – of he's little No. to Jamie leverage it aren't over it This rates talk to about these maybe XXXX. we're bit we're to our magnitude, his I really strategy we hand is But think huge what a no, see of and that, ahead planning we've order pretty in have in hiring in here. the for I'll confident of continued to lot again, ahead And going attrition really, deliver. A the get process. to that operating and

here we'll as diminish expect we're volatility and forward half move And are Jamie? more more the the the and volumes revenue a So seen to a of going accordingly to every have to second I we on volatility headcount the see wouldn't visibility, the there. as year. going to We've adjust market bit volumes where lot I hopefully, think up that than trending. increases, in go hopefully, of out model starts we the

of want if keep to around kind that per you team to back through go year, it, about business in rate us what the that might eye our our somewhere the as and we the year. we to the we'll attrit which ahead I towards percentages, a year of come, the that with least allows Mark on the discussions of we backfill situation coming end attrition way look doesn't his Look, when do year, to progress of so the rest business sure we're be can thanks. to front-load at and was end If X% our of out then attrition good think be rate, is is that make from Yes, attrition a where at there.

Jim said, to four as conductor. it takes So, to a months six make

to last going we're ground, want the and the get the So, comes this we along, ahead business we of to it be do. on leaving thing that's and don't now

headcount business attrition if that the saying? the is in in kick the sequentially year. could Is And back there, you're could it early essentially So, the what then in fall increases and off.

up. setting we're Absolutely. That's it how

you. Thank

next Your of from from line comes Long Stephens. question Justin the

open. Your line is

employee. what and rate course I in storage comp of good could any over provide you're And to today afternoon. for going Wanted maybe wondering if locomotives can of number the there that expecting anticipating an forward? ask Thanks you're what then we was on update the utilization get Jamie, XXXX? color about for Kevin, on and for you

comp take effect I'll to more seen see increase per see this the labor bit we've inflation a a We'll employee. years. little my different going remarks, management I we're previous in little as year. opening talked what bit take here, which in of about Look, than X, Yes, the January is

quarter-to-quarter. around those But kind starting So, X% incentive effective talked and things, the I in think really historically, be think move knowing point. that of what All good will a comp I quarter. we is overall, about range can increase this first X% a without

on in this XXXX we fleets right today, the think, that particular, asset locomotives, locomotives, look, X,XXX started area. down $XX.XX, in with around And side, I our back almost

the we reliability. to distributed important as optimizer, do continue fuel I that locomotives. we to to going to fleet. locomotives really us as But rebuild we that got when to continue as that savings, still hundreds ready year, plan in put mean pull we're power, It's to well this year. We're needed. and continuing in forward. that storage in So, our CapEx to We've out go assets locomotive in coming the got of continuing invest invest also we've have. trip our XX this And allows up

to that to we comfortable with we We continue have in So, just we're have now. invest forward. going assets the rebuilding what want

Thanks for time. great. the Okay,

comes Group question Your next Wolfe Research. line of from from the Scott

Your open. line is

guys. Hey, thanks afternoon

you give year? color expect wrong there on now? getting year guidance, the know with fourth then almost And than but you line I is volatile, not better I on right for So, any costs there? the we're the M Kevin, color quarter. OR, full any S&O Is anything of thinking OR always it's us but that can know that

quarter. first better quarter, the fourth than The

at No. Meaning, if fourth better you year, quarter had. you just look than the full And always fourth it's the almost quarter… a

I will through Again, some second see of gave I get strengthened think little year. you into talked hold of initiatives that is back as these uncertainty, hopefully, we'll because a half, guidance bit the Jim the we revenue the take there and about think, half of economy Yeah. relative the

the to that incremental continue get revenue just there. to saying margins stronger that, and in deliver, confident we'll expect we if I able pretty think we're do we're that been comfortable than growth we've we real particularly

opportunity. So that's the

estate focus, on take really, a But into to there. we'll find flat, it's continue costs costs. real look we Real we're to able guided the do big third On at we the a deliver we're the fourth factor quarter. MS&O, what so going going be will sales XXXX not thought you quarter, in when when us out a to those area again, have to on opportunities driver inflation XXXX or try to we where an hit and year-over-year do lot We basis. in to of expect

normal So real moving item, It impact inflation to XXXX. move I will impactful also think but with that line there expect volume. nothing some into

volume than a if what bit little So expect. we higher is

move costs as some would up well. variable that with You see

guys. Okay. Thank you,

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is Your open. line

have where and a level service, you were guess, in of Thanks. headcount hey. number sort I afternoon. the or good, little the Is think bit Good about was one, and the maybe guess, about quite think a more the still We a you of where need you of back resources. move to think feel maybe from like front-load address you you second, on the perspective, you of to you're move that comfortable needle-moving year? impact as it on would the first or up? one service. the but year, Yeah, level, challenge I first when you maybe expect into service, a about question last have a then year, the second that half headcount impact on services little the an down does obviously, bit half of service or half an about to And the from the when there

Yeah.

about me are comment terms we in details where make Jamie can headcount. then general a and just of into Let you answer

in of the volatile. of of day, creating of railroads situation say, the the side volumes the year. whether on east not The with next have it day, railroad. it's up Everybody whether we the hundreds, logistics In foreign time, one in west ports, ocean employees next is are side in the you side of it. the the in The trying rail, be rail. dealing ports, it’s in second Florida. it's next West it's north is the day service this East where whether think quarantine. volume the same everyone it on Coast sick At providers, a trucks, in phenomena ports, name the unprecedented hundreds when with I are issues unprecedented or keep are Coast literally the be and railroads, it the in to be half with This unique vessels, the

us so think And doing. job way problems really, the Jamie job railroads And is be don't anybody detail through right of in up. for doing standpoint is some good We're we're service talk really, I'll because more a to screwed our having this. it what really let about are the managing I a from saying, doing now, they're

say, of it with nailed some Jim, look levels really where we're really respect of the you that's to to at move about the -- historically. off, were Jim today, I some some we as talk we of see and aren't think, tell I of seeing see pockets that starting feel continue as today employees than they why And But train everything even let's you start that the all-time stuff we hundreds yes well. weeks fluid. to a and to gained we've we're forward keep were as increase we the record else more have XXXX. are hundreds can few getting to as and less, employees efficiency, look to length we at you said, though year-over-year, and a XXX that been ago, we're correct. maintain XX% – When able fuel

the feel we number of if work. -- down, out to we people returned come numbers like there, those as right we everyone if have So

next to pocket was predict wish, do I to people difficult send could that but way, the I where Now it's try that. going be and to

continue and No, absolutely limit a next hit there levels, we going so. but wants we're some quarter it to to or dwell the there question, a of I where isn't pushing. happy? our if are it's And some else That's ask On bruises, are an left? we're our is yes, think, the anything velocity we anyone Well, you bumps where get -- is normally got do, to and to to What We've be. So question opportunity. going over not. needs service asked.

percentage. day out forward. some issues. it. of us out commodities helps it gone understand got exercise move have on today have what around continue new hiring, But will much we that better. about I great depending a where exercise that which of again, having are with the our our some where is to property. work velocity a a you, tell can there, matter XX% do work new in we numbers it continue into we as plan, work there working It really, pockets it's and and hit we But XX% we're small we And it's we as team being with daily as what's as out continue in hard do there. doesn't the for terminals But online. back it get that product. we how see a just dealing of that, that day is and to are some maintain and to trying terminals, to come and in We we helps done COVID Look, the around on our we moves and improve pockets hard on all that dwell is work time. comes the on we've to as our we're the great we move that sometimes the through do off the it, across I've of the going daily period going normally team business employees just We have have We out. can ourselves employees move COVID. got have the We've a network a -- So

it. Appreciate Got it. the Thanks guys. for color

of from next Bascome Your question Susquehanna. line the from Majors comes

Your line is open.

would could Just targeting afternoon. thoughts gradual? how year you liquidity good any you're be that want it balance more this Yes, cash is something year your normalize and that expect this looking and manage be balance about with the helpful? Kevin, on to sheet talked flow Thanks. to or cash to overtime, for your generate you excess you

Yes.

exit look, think, we this year. by something the time I would lower I expect

be more here. and probably yes, we'll it So We'll want discussions event. this those trajectory sense. here what I with year opportunistic. have things, Certainly, always as makes watch of get closely that's We a those to we economy comfortable think on the the internally

stock there the we'll be So opportunistically well. as in

flexibility. lot this year as gives of cash a of generate well. lot a to it us going So We're

we good best of to And be position can. in. strength. a position do the a It's it's we'll So

Thank you.

Your Ossenbeck next from Brian comes from of JPMorgan. question line the

Your line is open.

on a one. They for deteriorated have to They Hey, help challenge. for seen financially and I'll we've up offset seem dwell Jamie, taking volumes but also good you the cars up a headwind question. been velocity longer doesn't bit. quite here. now, It have evening. Obviously, volatile. Thanks have while the online to quite come that take be trains maybe

for see capacity the outside labor doesn't customers maybe and what just for give time to as there can sense been seeing some on So a comment what you a the as to and but tough you us affecting of of can really growth are dig truck if challenges the can everybody. in the any needing like sound are the have anything, little frame challenge if opportunities improvement. now sort as seeing of maybe or and in then, Jimmy, opportunities, conversion it's the you deeper if maybe bit side. you're a you And us that That quarters really out service well, just it, recent clarify just for and you has

a at some with to I'll stab sitting metrics. to where our Okay. take try down let -- try respect we're with to to you're hard hear, of work but me

it's if again, for month, a that important at take of COVID an past -- a of more velocity to our here our some past yes, our as So, impacted couple lot And But probably you a we've over the deterioration a has as the couple over really been probably, of of really definitely seen and that's but numbers. well. us, months, look opportunity related. dwell show

bit when to think, above in Cars online, where started cars were our are plan. got over But As faster will to we want our can our be. target, things we and our this going to target get we continue we we're are really continue it back that we as to to where move and at online. costs be it dwell XXXX, out a know be. we you where Those XXX,XXX -- come we little look to

Now, you're around we're on maybe XXX,XXX looking where XXX,XXX, it. depending somewhere at

didn't now, and going why that Mark the the you and fill some were to extra online, We team fulfilling fill point, rate, I we have done things unbelievable were are us working business us got year us was for have Whether have on our bring whether that allow correct? a necessarily job with you reliability. differently to time, say, a was rate hey, ordering rate. you an that. about rail fill about, at to ordering. on to a that that, and a you're There would give XXX%, service, rate cars understand on knocking customers' talking when some fill That we ago shooting XX% done some doors it as been gives where to say, because XXX% at us means it that customers pushing Jim understand take his to trucking has look not

keeping for anything, at now with we're those those And car eye move look we what that as we So spin to in which we that's picking fleet velocity, like loads towards to a cars they We're on that comfortable the our that. going cars good model. opportunity, as look the be around. what pushing as opportunity out We're to customer more able get there, us out is of have, start cars. more the we're up are if

that are numbers highest the we of year-over-year private Some have cars.

give cars So four or that's year an a us more opportunity get there for to customers loads spin their five faster quicker. we as and

it's we the as move with forward we in. plan opportunity, So, opportunity opportunity, yes, that put

what's correctly business marketing, highway things by rail. the that's operations And sales from those and and coordinated in Yes. all fashion driving this doing onto between the a

Thank you. it. Got

of Vernon from line question David comes the from Your Bernstein. next

Your line open. is

Hi, taking guys. Thanks for question. the

understand addition to resource So of wondering relation Jamie, in volume kind that I growth. rate us was if help could you of

the in I'm says mid-single to asking at guys as do at today's resource I'm level with we're pace just the get you are from level to volume. digits to that provide? sense be And that think a need not for, add growth, somewhere volume picture levels you kind confirm if of a guide. to you trying you what that I service to network want on of a to that volume level keep out going into the of laying

our we we more we'll back. that you volume definitely, assets use of locomotives a When we're boxcars. to less fulfillment hard need as think rate But continues hit you are was some we as That's XX% to business, talk move year-or-so down ago. with sure look We're car look come a forward, we're dwell train fleet, a to respect XXX%, some in about spot. to going starts Look, as that to When going about right? Yes. difference that locomotives, starts. XX% bulk when per you a I'm need come good make at comfortable when target to at our those really

as see XXX% showing to with it's Now we going supply of the being car customers, But say an spot. bit move we we're with to a there of our going reliability now we're you're Yes, the at a is be. good increase. forward right where

happen get many going As that to that the we've there, cars think to more which we as move out really towards the continue I we attrition gives as and Front-loading forward. to us we'll half. on people is four things. that and thing prepare help there out of to with out practice It second growth faster, hiring that move are right the I six side do. for to that is do And we going to months deal of the the mentioned, us loads what's touched that see

Yes, expect the get volume upside really offsetting to we and really front-end David, But so is the can attrition full we occur year. that ahead of it any hiring react that the loading that in the half. through second could

accommodate Yes. a than added need higher bit does I'm to need little what's current the to the at back? growth it X% headcount the volume be that? just level, this of can And headcount point, could trying be with we need we proportion – – we would to XXXX a do or to which to be

ability wrong, lot the now – a correct right I is this, need the going the see pockets were think really redistributing on growth us a employees going think, I'm crews redistributing low were lot give hit if to I me of to the Well, where and of to Jamie, we where we it's coming. hot and to where we

with X% off the – expect we that obviously, close that we Mark as Yes. look at to is teams at team. in full attrit those we Could we at us out. employees But very percentage work and look working from. myself could. the really, very where to our and make rate make marketing Jim It's that as closer this and we're those we're of really, stands you those right an and to curveball? this and now, have our – is it's – is where we're But it want mentioned we where business attrition prior together, the capture idea look – come XX%. to growth and going that online, This earlier, in cars is know a it going when areas throw year down sure at Sure, sure to, need hire full we it can growth. But year. preparing versus you And year-over-year, to based

So we convert card we're about of big customers points over. the XXX% really getting if talking it's not here. to a those reliability we And that important that give box want percentage fulfillment,

Thank you.

ISI. next from Chappell Evercore comes from of Your the line Jon question

Your line is open.

XXXX trade export market? everyone. because latter, regions evening from you opportunities the bitter as of the it world Thanks of uptick on trough of that Good you. those how levels. weather improving your wanted any coal seeing domestic get we're the of your on shortages winter confirming the certain seen some in export And given to some of and relates is the issues? in issues. versus much Have to the market for anticipation views coal Thank I view the

Yes.

you fourth three. when -- versus coal strength business; showed think previous I at a look was of bit quarter our little

a the the year than bit position the exiting what saw, year better call we it, we're at middle So, here. little of

the bit be stockpiles year, on levels. next that anticipate the little really a we probably of into strength side normal below utility the will domestic Going with

some there. So, opportunity we see

below prices the the hope side from They a so. we levels sign. stabilize, an benchmark same see. that that's opportunity pre-pandemic, the still saw see You export that which is good we here, whether They're well on we

in probably is a has more coming balanced risk/reward XXXX. it previous the years or bit little think particularly been than I into

referencing and right have not right prices probably helping on spat side us. the global now, the they the not China, now you're so So, Australia, coal really helping

and forward, for us So, gets we'll going difficult hopefully, some that's but predict. very see price maybe a net here that to market resolved, upside

On our med side, if and in you quarter, the is export fourth at thermal. thermal today business XX% really, business that the XX% look

get of Maybe wave opportunity polar some to delivering we're some these little impacting an get Europe here. global the that's very of If other you markets a vortex areas and today. cold because and

and little off we're see of strength So, case, see a stability of the fourth quarter. don't bit the optimistic. going I huge a year upside cautiously but into

Thanks Kevin. Sounds great.

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

is open. line Your

Yes hi.

question. economic those volumes underpin greater two of Just one made you extent saying the on than quick other you the it, GDP, have your production. greater around you What's that measures? -- sort thoughts To economic your volume, have the merchandise in guys words, industrial do than commentary

underlying I number Well, -- said, is going of to different views are a there's lot be. what there as on the

everybody degree, to at. And also they're trying adjusting now, a reliable -- at know, is their And the not down. find look to so right you and we're time, is -- them numbers most us the from we're as what large number same for to adjusting

XXXX, to move I'm so something clearer further necessarily us clearer progress. we as and get have what don't at into to going it's have they guys view, hopefully, they guys willing -- have the company. bet think we our viewpoints but something that So, and the all to to right as -- to and the we're independent going that out run as now not trying pharma, there -- we're our put a different have speak, is sure and we how for We're an we're look things

so much. Thanks Okay.

of question from next Seidl the from Jason line Your Cowen. comes

open. is line Your

really talk It direction looks things the in on sort Talk bit to right are some trip doing better. can or facilities? then Hey, bit the that? that is And compliance. hope wanted some plan like side. he of are all my is compliance, a to just, ports of needs right to there operator. anything inland this intermodal of, Mark, the now gentlemen, work the to going you, about plan do little a there feels I the about through improve what guys and carload Thank the to your best you congestion little materially railroad move trip

on both measure -- Let out that always making me start we Look, arriving like loads are merchandise we the have side. we ends, plans the intermodal and the trip or whether some where, trip on considered the to you're with with to empties, stringent the minute. plans that's on look side, to I'd at probably times stringent intermodal there sure both of side. the the probably And say there intermodal out our times respect on the most most

a the quarter. a that's big big, areas, than in month felt even pressure Over ports a more so, traffic It we expected to. or we to UPS the amazing. was we different couple UPS different was past I don't of peak move opportunity And as months at think some got or surprise.

And our is to above as above we So some team getting. be XX% already some that we're of fully would time going I'm look move of time-sensitive, make hit as respect XX% see we traffic. some we're our on may isn't off our there. the sure with for starting past those traffic taken side, that UPS the But numbers normally sensitive intermodal moved numbers confident the -- forward, we've to to I and is than we to may have port peak. that, at that get should international I shooting have where longer mean, of a little

side, again, car We're by terminal some you if It's And mile. COVID hours to our six XX carload a a it side, it. to metrics to an to extra missed of of last empty, tight terminals two off, terminal. you terminal, on and that or to to that's getting get to eight where change you not willing your with are the from or failure. it's those the a takes and and carload XX% our that’s whether a pockets, or connections sit hours respect have loader On we're our failed, standards they

would some through with have there work continue to as like see best Not look those the metrics to at we going some plans But as the I to forward. we on respect numbers. to out we're move So this, who We've do those have. of which seen trip improvement quick today.

we're So target his Mark get product team that go will this push sell to to going which the we're allow to our built. we've there XXs. to for up will reliability forward, and forward that And with up see that, confident that moving number continue to be that into continue and

numbers, Appreciate and right the there. always. moving the as color, things I'm direction to great glad and in be That's out on the are safe hear everyone time

question from Shanker comes line Stanley. the from Your Morgan of next Ravi

Your open. line is

everyone. evening, Good Thanks.

bit shift the expecting tone kind here, wind a to, just of, of -- from here. am the I So up a OR

not time, to guys going be clearly of you of, going -- over a you and of kind only saying, we're you're going starting are to here. sound think forward, more pursuing Canadian we to think to have, a the rails extent that OR who we're little standalone, as are thing growing algorithm at or bit great growth I EBIT like to is year forward. hey, X the kind looking growth But going X that mentioned as a again, be to going dollars

from sticking a much OR, the top but line high higher XXs So here? you pushing targeting are to

XX sure process. that as We operating things trying have at Well, focused terms, ratio we if always ratio, like what want in are we would a simplistic quickly. down. – we'd a ratio. operating one -- that's so do on to to XX company the I'm thing do you trying only, we've to it's again, a and not never possibly And you singularly just left the between it get can. operating said efficiently be balance the in as But

generate good some able While And can since run I from right to one, get the always be so the it And to can business. while to business. walked you're day you because the product railroad to just a grow plan. delivering customer, the here takes a start to that's new door the in you being

money customer, forward product place the if of for we've get shareholders efficiency. drive delivering and high-quality, a that, a had that make in focused you allows That's to costs company really is bunch a reliable of money, So the X that, increase years, the algorithm lot business. plan. out X make the business going you algorithm lot which a to whole you And last on When on of unnecessary the more you you do going you good, happy. of you and do are our simple

follow-up. maybe Great. a as And quick

new a We a this a things have as tailwind looking you're kind headwind? there or or DC Are X X out any for you're from something administration watching for morning. of either

to that Government stability be – a much be that for. too ask I would start. would good

we're or significant let's there's We're start agenda. any real if in federal debt, with of not to weeks out, we figure give out going and whether working then used have anybody's on them to XX, only can level. we to operate a So change couple states. But not the in figuring XX

a a some by by Some Republican are led them Democratic Governor of led Governor. and are

So we're business. relations to used kinds to relates government with all in of dealing as viewpoints philosophies with it

what do us. not it's with we'll to out just interact, then and and fine get to to figure along And how new We'll so, everybody.

Great. Thanks guys.

question of next Markets. line the RBC from Walter Your from Spracklin comes Capital

line is open. Your

much. so evening. Hi, thanks good Well,

follow-up put of swing Democrat ORs standpoint. the regulators towards close a more in from getting railroad back, not a in customer are start see trending where of good looking or favoritism here? with And attention you're Just and regulatory And that introduce your the any they on you are, returns Washington. on leniency to Jim, of thing a or now has been risk new the favor swing regards now that favor, risk power to to do question that changes

remix. a before, at goes terms it There's there's versus and now, STB it's on a -- No, one maybe two-three that of forth guess a not two-three, back necessarily. whether was I it versus in maybe -- the I there's it's what what mix point in mix time. mean, again, was

regulated always a or We're that this again, a have So, with. the sense unique we we're dealing -- something in we're not is regulator.

years it we been are. figure days. sudden name couple out anybody railroad, is doing with so, company, company, a and And is all of not a TV it's this airline we just successfully. We got you regulator, a telephone like for worried it And about and them. we've doing And their what adapt, end the hundred of every of concerns work it, appropriately that's

Okay. if Understood. for could, question Kevin And just a clarification I here.

of to that possibly the to segmented on on year yield? of what at Because yield in part I direction turn depending positive the all obviously question this going in magnitude big you look am I that negative the back the right basis. a it's is so way have early we answered together, will been and half. it If go on which of right On know negative the year, impact, the Is pretty the a here. it you yield, in of lump interpreting I that kind said, yield be

what Yes. you markets, and in a they prices, commodity our performance. to in coal some with to the to similarly be participate Like as markets, strong obviously -- hopefully, upside, others, yield and And our export some then fuel the our strengthens, the mix see if will in and the on to business matters, have will impact revenue weigh that I saw quarter. I market here. in huge like the right? depending headwind That caveat improvement. fourth will said, continue always will If are the the to I chemical think on you'll moderate a first That quarter contracts be we or the the have strengthen. know, surcharge it structured yield second what quarter

talk on good that the would back us RPU, a It us. business us So bullish about year. of for there. be very but a for as the to the happens into we side, make think, I are opportunity an on, heard you also good we lower half have money still that, Offsetting really intermodal it's

to more we more ready so and And after a opportunities. great going handle we there, is have -- would Jamie growth team

into a strengthening see headwind So, the probably of quarter, although, in bit which first change equal, back it's the half year. we probably tomorrow. little of will it where the today, Yes,

Thank Okay. you. Appreciate time. the

Stifel. comes question next Your from of the Ross from David line

Your line is open.

for normal comment yield type I last to cost more a to recovery, there about Kevin, to going on specifically market, of related intermodal the the Is pricing. Thank Love than your the what's pricing, going better enthusiasm, wanted operator. is intermodal, follow-up low you. on truckload intermodal story? be it given expectation improvement single-digit in or

a inflation lag Well, see lag of occur, of basis see don't some generally see partners our There's there. -- in want a adjusters also as We'll real-time we well. price. they that terms

Today, half, need we and over improvement strong probably So, over strong again, book around our first business. get these it of with to my happen kind some markets markets, commentary showing entire half. We'll the of fits in to second the don't Unfortunately, things hopefully remain reprice time. supportive.

I back the happens going half think And optimistic, of we're are so economy that the there's yes, strengthen certainly tell. somewhat in but having. year the team a lot What and marketing help that of time – will discussions if will forward, our the can sales

So right now. there they're business out hard selling the

Good. Thanks.

concludes participation in our and your call. you today’s Ladies this and concludes Thank for gentlemen, today's session question-and-answer teleconference.

disconnect. now may You