CSX (CSX) 20 Oct 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the CSX Corporation Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank my Mr. now turn call today's It pleasure to over is to Matthew Relations. Investor Korn, of Head

Thank Good quarter call. you, our to operator. afternoon, everyone, welcome and third

me and Chief forward-looking disclosure and and Vice X. you our Executive Officer, President President my Financial Kevin Boone, will our of Joe Jim Joining our Operations; by President Sean our Executive our Boychuk, Officer; call of Executive Vice Executive President Officer. Sales And Foote, and introduce Hinrichs. and President it's Slide Slide Executive presentation, earnings Chief Jamie on non-GAAP Chief Officer; Hinrichs, In President that, pleasure on outgoing Executive followed to today's Joe Chief X, on Marketing; find disclosure with Pelkey, and are Vice

Matthew, for call to leadership All to excited this we my CSX. me entire and opportunity with here and appreciate hello, strong quarter you. and afternoon, conference and The our results right. call. first everyone, Thank President on third joining with today I'm is discuss thank here you, of the earnings with you be CEO our as team you CSX

our Our deliver years provide motivated very team build momentum, customers to come. relationships, to whole our strengthen profitable key better on our is to for service current and growth

working this will team all its to together at one achieve through means serve We key our One which CSX core culture, our stakeholders.

here already to cares invaluable my Jim, great -- as to this call successful deeply given him on you. Jim a and happy Jim everyone role. personally this you us during Matthew who last thank tonight's through at know, is me resource have behalf and several advice for I he employees, want I company and I'll on his privilege railroad these follow this five get be transformation mentioned, first remarkably the joining him. also the CSX, all has its remarkable As led been you months thank all weeks help about ahead, in of Foote, over years. its have to in the as

Joe. Thanks,

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We'll Earnings presentation minutes. carloads revenue. in financial and to a about $X.X the quarter with our quarter But to share. billion, third include that have last $X.X now month. Results and per our expense turn last lower gains the which one year. the CSX to quarter talk this X.X bring the estate We let's real in for XX% nearly tentative to approximately the effect share highlights in year-over-year related reached labor of additional $X.XX XX% review few increased moved to a more increased income XXXX. million life. also CSX reflected compared generated agreements billion of third unions Operating to to to fringe

quarter for ratio the operating was XX.X%. Our

turn me to it and the let Kevin, Jamie Now over Sean for details.

Thank you, Joe.

to X. Turning Slide

cost at quarter as our infrastructure to the with from able fuel additional sites. some the opportunities decline Volumes stronger and volume opportunities, by provides up quarter, crew customers service strong the to market, including increased core revenue reflects driven cost the volume. Third availability a alternatives and XX% equipment prices. Overall Fertilizers declines volumes, XX% continues and across end increase coal. the manpower lower and and to well saw XX% be also growth increased and We were for truck. shipments pricing growth domestic Semiconductor equipment year-over-year identify Fertilizer market, export strong at rising quarter commodity challenges of new volume also operations of The were terminals to revenue quarter. turnarounds. ethanol offset revenue tight revenue to and phosphate due volume as remained higher the which of by our and saw XX% quarter. reduced growth. in continue to line more offset mine, capacity on to continuing XX% Other on times, higher revenue. constraints and largely surcharge as shortages, volume, and as volume significant volumes pricing Customers despite limited fuel the revenue customer mainly strong revenue facility growth Ag constraints shipments revenue pricing higher the seek a to that and as lower where intermodal ease to improving higher with softer higher spot XX% increased in quarter. at storage increased challenging X% were on demand portions truck reopen though rose as metals benefit than due collaborate our September, shipments emission revenue continue wheat which as by demand on Demand to and inventory improvement yields supported volume in shipments to We strength into remain intermodal to revenues in in pricing bright and in we team benchmarks. we grain, general XX% as as did opportunities availability and more service ease. all production lower and XX% minor to production vehicle remains modest issues revenue increased show lower industry-leading see see on export volume Intermodal Merchandise impacted the mill market. was that resulted Coal markets. X% inflation in a they warehouse remained these X% was strong a growth product both in International contributed international continue X% partially cycle by of the with recognize sequential driven needs higher and in volatile fees. Terminal equipment and increased Lower reflect move. normalize. food outages. Bay volumes, Curtis strong that strong recovery. maintenance merchandise high higher move automotive in and metals usage and limited reflected due equipment fuel continued Intermodal by Trucking XX%, new modest finished

there Looking addressing obvious forward, macroeconomic raising committed is rates to and high Fed as inflation. the remains uncertainty

truck focused the backdrop, its opportunities this on target CSX's that expand Given drive team market. is to addressable efforts strategic highly growth and

our Last facilitate million manufacturing the a the serve in lithium of EV site seen, battery emerging to on construction announced markets for As select continues a program partnerships. new Tennessee. domestic supplier and key refining you've facility and $XXX site CSX customer a month,

potential also several We stages other various of projects in have development.

our moving with see ESG our also customers. to facilitate across solutions network. new investing projects continue to We're efforts for customers We in forward

our into the benefits Before real enable an much CSX deeper calculator our carbon can year ShipCSX we is will be in calculator drive detail will that to new releasing This within provide. updated and integrated that of customers interface. version end, Rail time, environmental understand

also that turn are now opportunities to I it performance we customers. trend is and will Finally, over upward positive expect Jamie we service an discuss encouraged with to this to into momentum on operations. additional turn

foundation employees I'm the operating Though rate injury In are our of and is our the top performance, across accident the to priority satisfied Thanks, third Kevin. our network. decreased our success, we remains the given with new Safety and CSX personal rate by number quarter, efforts. at train not encouraged restoration service safely sequentially. our especially

take the throughout that quarter, every one. safety reinforce to on commonly emphasis field accidents, attention from safety focus are ensure learn actively employees injuries hires does In instill Increased incidents other. to new quarter, help not employees protected T&E are we That safety As our employees our our recent of as when changes. important to each day we graduate discuss engaging to and efforts railroader's and to awareness sure critically from a continue our it from risks will It with education each mentioned opportunity the weather in of will end team our in culture making new that To safer. occur employees of last fourth on and we career. new requires seasonal is training. this, become from continuous all

look all If compliance to at to slide showed XXX in though to plan train basis devotion encouraged carload the prior points. performance. team quarter the CSX results serving the trip recent one our only These are velocity, year, to operational by strong versus their and testament are improvement and a customers. performance the unrelenting intermodal plan the Turning deterioration continue improve third we well the we trip averages, X, our

side improvements However, on quarter and of weeks. the continue the made right shows of into this throughout slide, we have chart recent each the substantial

week in performance. these here, four third operational all the of shown quarter As they're quarter also XXXX. four But key above recent measures performance, XXXX the the are third averages for most of ahead

a make customers. efforts that operational hire, to employees show by momentum, will retain for the our confident Though let are and to new these take starting hold that are difference train encouraged and our not are we We we metrics up.

level to push customers necessary take continue forward is will We a until and actions our to restored service expect. that fully

overall the are new network. of conductors, promoting operational the assets number resilience and We our improving and allocating of reliability appropriate

again sequential increase headcount Turning level to the average March X,XXX, robust. than quarter. T&E since third the XXX XXXX. quarter quarter, reached active X, remains third quarterly And with total. the trainees a less the slide over The we exited averaged XXX the Though in hiring highest we shows pipeline over in of employees,

to down in by Conductor the us locomotive over allowing quarter goal and have Currently, months. training active finished spring full, of number we lower pipeline cycled the training remained employees promotions XXX engineer sizes employees was work to additionally towards filling up keep class and continue third the year-end. to increase increase classes that determined are The in We the number slightly in as summer have active we of have our X,XXX as training. we conductors T&E the class to the elevated started the continue through as anticipate and sizes We T&E year. from fourth will in earlier headcount. late this quarter, marked

are to hand contributing minimize now over highlighted hiring the the in financial have believe a and preceding the months pay hire attrition it in conductors I are lower, last our results. Sean initiatives to that for review bearing we efforts to will fruit. we Our factor. attrition recent and new trended agreements quarter We

carriers. The Thank and accompanied across inflation, Operating strong line million, impacts outpaced $X.X Jamie operating $XXX will of of was favorable ratio was than union in as on a slide. income all momentum, discuss basis XX.X%, in by good result rate from XXX point more effective higher markets. tax up agreement as a The change. statutory impact quarter headwinds expense was fuel the discussed includes operating costs, The that detail revenue Interest tax a roughly was I reminder, lower rate XX.X%, you, quality XX% the Jamie, next legislative as gains including top afternoon. as XX% from a growth state was favorable our to expense flat ongoing other billion was or income expense. and and tentative which, roughly gains

billion, $X.X up EPS of earnings up was XX%. with net such, XX%, As

labor primarily take prior quarter a the slide. third above agreements. expense let's to inflation and versus Now, on historical increased up $XX at proposed $XX from levels Inflation million, was look remains million, PS&L higher Labor with [ph] next Fuel nearly reflects $XXX the closer inflation union around prices. which million across was increase rate due tentative million Total expense rents. of wage alone year. the the $XXX

tentative of recorded addition, When the related the labor labor accruals million adjusting for $XX of agreements. expenses union the expense piece union most is bonuses. you to In impact we this The about proposed out-of-period is and excluding of significant employee, of for the million The a rate is the recur. first into labor expected new will base be to $XX catch-up QX and run forward, not next going the per net this impact half year. think

mix per course, seasonality the comp employee but and agreement factors, full base Of the impacted will our of now costs. in other labor be impact is union also by tentative

increase reflects revenues, gains expense between ownership. is Quality of evenly year, all the we Am the less Pan the increasing million combined process $XX full million. Pan Real network. the growth Am Quality to Pan Next, two. invest while estate Pan increase with integration Am continue correlate million we well Am were customer and of CSX prior higher expenses split receive of about with higher than and $XX as the and underway, former expenses quarter first speed for indications and with strong volume around to positive $XX other opportunities reliability The

efficiency to sustained of and the be to operating of realized improved we fourth in network opportunities incremental balance fluidity additional do approximately intermodal as into other as the expect focus the we remains, We related represented these Volume-related terminal costs related achieved some costs but improvements performance. congestion the quarter, view While to the increase. expense continue our depreciation the activity locomotive expenses first items. through quarter, of higher incurred training, higher count, $XX hiring and million T&E costs and congestion-related

is this including but Now, the network acquisitions investing billion have our Year-to-date, quality This cash for capital slide flow million of continue position all growth. $XXX from capital for we future $XXX free the and $XX Pan needs dividends. to nearly after-tax the $X.X before adjusting to for in on XX. approximately of $X.X when cash dividends flow of turning over down million, distributions of to the business, Virginia billion share nearly as million, funding repurchases up support year, of despite additional health close exceeded After the is $XXX transaction. million spend, shareholder and Am proceeds cash

billion the sheet, a Additionally, $X.X cash and quarter we ended with including of balance short-term strong investments.

to forward, Looking returning maintain expect that, Joe closing shareholders. remarks. to excess me And to we our it opportunistic his balanced back cash approach turn to with let for

Sean. Thank right. you, All

with our our double-digit the the transaction. of full revenue Virginia conclude excluding for the estate effects review shown XX. to and There change let's outlook on for year, real no Now operating is as expectation a of growth slide

uncertainty in is global we the on our ability as there remainder this over confident of in this year. feel economy, the deliver guidance While we look to

And so to together, back turn working there much you building our mentioned hiring to needed drive priority have we ONE why more on continue fluidity. metrics. strengthen accomplish. a reiterate have efforts I'm these we And excited will is improved in of We that's momentum stakeholders. service is with network that ensure the cohesive in This remarks, we we unified to with our pleased As that for we positive customers finally, all remain it our we earlier now all. I'll are saw to to and be our a returning And Thank the that company. And committed the capital training you quarter. great Matthew trends past and this to and so as shareholders, over excess relationships resources other build can to culture CSX employees, our Q&A. we here.

Joe. you, Thank

yourselves one the with open time, that, of up please Questions-and-Answers please ask Session only I’d to question. limit interest And operator, line. the in Now everyone, that

with America. of of from comes Your first Hoexter [Operator question Ken line Bank the Instructions]

open. is line Your

you you to little a rate chemical background then, hope is mean be the that with right I'll Can the for stick And the I you, you with. the by Joe, my learning mean -- role, on a is it's question. general big business to gets on for But your side? about one or your Like that the And curve, bit talk And different what accomplish? would ramp? specific impacted why loose about trucking, I right? capacity, something talked from just start trucking more

relationship. side area. things lot make that from show I'm those a look to team our is of things, And to side at to of improvement and the situation applicable us working have customer of ratification with sure issues. very shared customer labor really Well, Jamie a Thanks, we're think and work those higher the our the the mentioned in service -- the certainly, accountability through in for I partners, industry the is our the team labor Ken. automotive and a and really working in this business Jim you more agreements to proud experiences Okay. industry are at that our opportunity auto a business. to with a certainly now, holding industry couple through ourselves and to highlighted union perspective of importantly, that complex I and we Jim of operations tenant but that look doing are But obviously, years experience when XX of challenged a be have the continue for rail to that standard had of

of bring of better our life us our work my our it's complexities. handle second around really here Kevin so bring when can to say, industry, applicable. our excited background experience, the serve would And think a CSX, opportunity I an the around the customers together and day, objectives back from let home to I step of create bring to align and But there's the at for customers. that's together and is workforce, and a that. types we everybody better, I'll an part. the even lot second be to of it's And for better end that different But we people that's the rail and core and a serve opportunity part to and

right, question If I chemical the on quality got chemical, you're asking about and. trucking the your

obviously, just of is And to that's Yes. other just the more seeing just is understand, Kevin, spot business that can terms right sustainable? pricing or the I trucking guess, on something expect business, I revenues the market want different we're in basis. maybe and chemical from what in we is collapsing the the how

about that that remember Yes. awareness business when are the touch I were business, have not product typically and a This mean care you for to around. looking this it's we have quality is high moves very at customers high. a very, is they quality really brand

you've what so great actually, drivers done seen attracting some And is year. this a they've of job

good continues versus -- been I an has that's the and And job remain that so think done very, excellent then there. they've way. And to Pricing market been very

so what trained, It's to people they do to we workforce doing market. it. different have not have very see. And skilled highly -- highly It's that's very, great to and a continue a be business, that

Thanks, Kevin Thanks, Great. Jim.

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

open. line Your is

ability or maybe Sean, over on more anything ratio it how per growth like Hi, culture, the a just maybe, to QX. grow comp Joe, guys. you guidance just Just operating going sounds labor ratio thinking service is any big the in about other revenue, and I near-term growth, I guess, focus. your time, a it the about just more both? guess so forward. is picture focus of then, operating strategy improve it more And afternoon, are on employee, of color on or Thanks,

start I'll with Scott, questions. of modeling the sort

that with get a that increase year. and of is what for chains the In other the to should around here Clearly, the come supply same as the to we happen remains next expectation But normal. other expect line. into normalize employee. that the that third revenue, it do here quarter didn't per terms fourth your we back while comp again in see we've it revenue To other the said point quarter in we saw in down

that about, into about going strip of we to July in way the run that to employee QX the XXXX. take question. agreement, the you're the related well expenses let tentative think million Union to of was the labor $XX the out-of-period I next next that is of year which of and talked to -- out think the increase that's before best going take half place as to the use Joe I'll into as part the probably takes first second want rate

Thanks, thanks, Scott. Sean. And

I I'd think to it on summer is and on how way describe looking a the really had back tailor is Board my at the just CSX. take for step get second like I get just Jim to the with with this educated we're to all the -- really conversations railroading opportunity educated to throughout and on

looking way describe I we're asset customer in and and costs, service, the control employees. improved the improved are around like things So five guiding then your is your of scale how improve safety, utilization to principles and at engage really is value ultimately, evolve

they're all you those things, And of all look important. a very at if five so take

asset and a big your And is so costs in pieces utilization at of ratio a that part number looking there. go other frankly, operating controlling and of

and So get and a away number never industry. as earlier, clearly, a that we'll in is of very objectives. our us part talked very Jamie really Improving from important that's safety, important about ever for this important

us. areas around employees our are two other The for and opportunities customers

as improve service employees the the customers that model have our the built provide leverage a our and we the and continue our So feel to we engagement number part team Jim of that over here operating how experience of years have strong one team. CSX we and to do

and almost that better on eight customers growth? a had we now service those tell of does lead and for to last calls a reliable, provide or deliver customers. you. our COO you when CEO of they've out with performance with couple them over leverage One, told that me capacity, business of can I've how of we that that all directly weeks have I'll quickly one which largest increases opportunity more and of Now want customers, the service, the reach our has you told to our do to me increased manpower service and the we're to about all the every more single with predictable to putting ways. video couple our

better have continue to for kinds things we'll our other unnatural through to We we're that growth of way opportunities So, service comes a serve lower the the we're better. model to customers do And doing, because to because do and deliver our that trying with and there's leverage through to better better look increase for there. all serve to we're the opportunity And to chase need operating opportunity way. us we to the us at cost, environment the the because there's to our things. headcount for manning, by with that's have through customer the increased customers opportunity that opportunity the reasons, service business grow of capacity the more and we continue

Thanks.

Nolan Ben of line with the Stifel. from is question next Your

sort the the of appreciating Those side of the normal. bit. wanted a and back and of to get little Thanks. I outages ports both to guys. it to continued at the kind I time getting mines coal now we're appreciate back have that

possible give much to or for than to or used months any volume better How normalize? some incremental how it that your let's it be next is achievable, bottlenecks demand seeing currently think. do is color to is than as long say, the from of the it customers, however Given six you it you're it these much takes in to is,

Yes.

of the actually a the looking produce. labor Coal probably have we lot obviously money there can are for what our resolving into quite been and in mines producers in think equipment, as undercapitalized, year, as now gating we confident issues – I next have are reinvesting. get factor frankly, and

will anticipate better. get And it so, I

next a and we them have that have mine are number ramping that do will year middle also us We coming still online a help up. of of

We would like at year wood. So. up it probably have looks be on year, production said time, too. last that this knock could next

fourth -- a struggled, as things mines into of but have on lot previously coming we've here of there's the are happen So mentioned out quarter. some call, the that that had that we can you – recently

really a lot next those there optimistic strong So There's to we are the inventories; need a you a the South. where coal the at ago, export to so replenish a clearly demand lot see much very, a we that serve, to of see They probably continue very and need look a areas year out production replenish the and mines and Europe particularly they utility on utilities and year demand. in continue lot didn't anticipate of of in have consistent you the geopolitical the risk over more deliveries side. levels we when to have as other market lot

you mind So and profitable deliver have to to year. into that, for to serve the going next to it's them, anticipate resources able be we want

I potential? the business, appreciate it that into the area we're categorizing of that the there's if just you areas Okay. that's next of sort looking year, way? one How probably growth that you're best it. think Is of do

think price side, market. on commodity on we the the I volume the of kind moved with remember, international

saw depending coal biggest bit factor the the healthy year, So as we highs will we think but on next today. does, for be overall in I from look revenue little A at levels that that what previously very, year. at that they're the down that the very

Thank it. appreciate I right. you. All

line Amit Mehrotra. Your the next of question is from

Your line open. is

else the best, XX operator. hopefully, hearty that you ask congratulations sure to we conferences do. everyone. wish find all the I the you'll questions but you. Jim will Hi, I'm something and miss you'll all Thanks, you, to Joe, miss you. and

talks ask you Sean, fourth we're really structure about XXXX, cost So for kind obviously wanted quarter you in think the -- Kevin, a Obviously, it see about your I'm to ex-fuel. to franchise being environment. once to all. that that, but in that, the related And grow how growth the enough of interested to you to about just still congratulations Sean of both next and EBIT relative because just able can I inflationary talk high about growth confidence to you in pretty XXXX. earnings actually year

of out on volume netted confidence of Just against what obviously is given your these in level uncertainty macro the factors idiosyncratic some some side?

Amit. started on get question. the cost Thanks, I'll

fact the has been cost So think the reset. that I about labor mean, now

signs XXXX on our inflationary any Inflation more on the some abating outside set of going So costs in based year. year. of into of they'll we and that is recognize indicators, know our of lagging based what are are meaning here show rates next for next get base kind broadly doesn't labor where

into being operated here the So not there's we going wanted year way That places. those between in carrying throughout getting party problem not proves a some year that has right outside labor be as and inflationary no it the contracts having we have. been That environment sustained costs we'll in here. to of on the extra is doubt we've fixed have network based next said, rapidly enough the would

the You can last it in the over see of couple numbers weeks.

we us And of are so into opportunity to the for plenty offset quarter. sticky headwinds as fourth help the to we're some of into efficiencies some there's the see. next some But bit take to going those inflationary going drive cost get probably a I of be costs to year, out going and think that

in on our and that confident of year. service I'm confidence what to where really going you my and next Yeah. is. we're but factors, to that level, of I'll to My level doing a into really team able have number what is control control, hold we tremendous are product a expect there's And of the the that year. next going be confidence we to out tell are obviously, going initiatives capitalize deliver are amount taking

a customers making mentioned, Joe that As of and I there. more they're want producing give out there's us to share what what lot they're

pandemic will place initiatives of in very that's terms the those, as so in year. that them process realizing those that next the during at what's particular, out happened around we next confidence know we -- the that We And started very, us of participated benefits us markets can different in lies. we my And be But through of there. looking on move early the year. in a could is into have reap where move haven't existed there really all lot growth that railroad,

economy the our taking of position that's we're what fair share no more matter that it. holds then our and objective so And to ourselves

the out share And market think that go short-line whole of confidence they from into very, partners. we and opportunities with high take so to just very confidence have that's the team. where the there a were And And across truck. there's is our lot I

one follow-up That point quick just sense. I Yes. makes you what wanted Sean, just to on And said.

kind $X.X in So quarter ex-fuel that there's number seems right is if like $XX year, listen, costs I that It XXXX. lot of at this inflation structural X%, cost of the base billion. inefficiency of guess, I million is, it's off like your X% But, a a look up. kind go you're what saying

the that that's that. opportunity lower fair fluidity an characterization? net see to than you actually, So better, actually maybe inflation opportunity gets would -- an a if to is Is there's say

more I Well, how construct, general that on right million should better, quarter a as network beyond premise see we're Sure. well spends. thinking $XX much to that? million year cost there $XX got based away. is out you're opportunity to that mean, Is think cycle take But can the we we about the I go we how this the going

Thanks, Appreciate guys. Thank it. you.

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

Your line is open.

you Thank quarter, asked still as think force. Jamie, labor trying capacity up you're to you. afternoon. last the about I Good ramp I

feels sure you're labor for given that the the make or issues? of off the go short to much excess pretty perspective. take the the a network period is table demand to of the business, you new phrase labor it you short, again, what if other those network have capacity this network kind on little on And, capacity downturn, leaving do time, that rightsizing a the to never talked the keep would to the for I equipment it's is pretty Now to bit today, to of guess, months. on a last today estimate of a it, is from that network be into you'd been close deep meet you're about spare some want on something XX some too, we We've of you've you flex willing like way

the about quarter. now, all after right Jon. quarter to we have it's currently Thanks few out look but you're still people there quarter When And saying question, a we've that been at for we capacity getting we take we're a this our off. hundred are the closer people, right, targets, people, after And people.

we isn't that as we as there have want. flu So points pinch out

dwells see velocity the to not performance is in trip can our picking definitely -- creeping but You be. that coming where down. starting up, to numbers or plan up we Even we're our is want it

see quarters, many help the our still to as to should locomotives next Sean really, than have will you're to that And where on velocity of mentioned, the out over pick even are too end. online there. we going couple up. And continue us that cars they momentum yes, So start And higher be.

is it. are network assets plant opportunity a So way to got CSX sidings move long a as an there we've that's is We've easily there easily and and that at to fantastic. some that of that as and pull there's I with mean, handle we there with capacity of good XX%, years as operating right we the said that lot capacity lot. fantastic the have issue to as said continue always team out yards a track, long an the people cost But really blessed ago, us move and And out forward, can we isn't out. big we XX%, all this there do -- we set the we've that's doing with XX% up just here manpower, with but double this quicker, as for move need we the

us continue they've to we time and to that that to again, have So grow. proven capacity time

still is story people we this move forward. for as So us a

X%? Now, I it folks, as a different times that's that X%? demand when what discussed what XX%? Kevin is number that, Is -- pent-up been that Is there? be mentioned, that and about mean I pent-up a out number there. can you and of really has talk mean, of a from other number out port we demand that that Is

And to if happen today. from protect from next we for to we But want we get where up just with something a situation now now. to can't month able and at forward-looking natural be any that different, we dip us, not have of on the that attrition. to the up see or So, need in XX now, we if from months TV months some into count economy, to pick needed type to of we view two we stay in expect what's nine months do -- head freight picking a there's start really we going And look that just that have.

pause we needed ultimately, we're that. that And But each do we to that's T&E want protect XX% Our to natural year. attrition to if there. is X% to workforce classes, able

I organization. and question, mentioned there's I of pull other guess Sean the the at of lot the mentioned, can just we As a we start throughout did, levers

assets. our as So and all and railroads will we are we we would that always make a think sit I sure have heavy and down discussion team, rightsize that on assets

come this if out ever out of we're to that's get all traffic of we've out do that lot if on prepared comes, we and workforce strong. there, as all we're of going be have come in situation. And But want to in stronger So forward-looking. we cost to and some a market can into type it we the great T&E protect than prepared get we savings the We'll got softening be a of to -- that going that all, end.

Thanks detail. great Jamie. That’s so much

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

is open. line Your

operating quick Wanted Great. on Good you in if thought afternoon. fourth to versus could third ratio a see quarter offer maybe quarter.

with Pacific seasonal Another people surprised versus reported bit XQ Union normal worse earlier about I railroad today, XQ. OR to think, in and a talking

truck that to that more price, I with counterpoint if and inflation in a think that. So see higher the wanted is market a thought then you'd like And environment, you truck. I get you the to weaker quick compete Kevin, is to but offer could do on for

that's mindful should barrier be So getting how factors? those do a about inflation, of Thank more and truckload or kind because of Can you you. get price. you think have we priced pricing you to more lower more

OR the Tommy, QX on start I'll question.

QX projects, hit. that always think to expenses not of I some way, this we've a some typical bit primarily usually, winter-related got and seasonality, worse and little we it's to because So, but it's wrap start QX, from up our that's capital

this occur year. dynamic same to would reason believe that, all that So,

because Some the going had. constant expect be going to prices could other lag fuel basis the headwind of relatively of would third curve QX, that the operating that bit XXX was here things in is we QX or will the on that from sequential of the now. points forward curve, based to is If the OR. forward be more follow a the ratio a impact benefit or quarter where stay fuel we positive It a to right fuel

just of noise. a that's So little bit

volume as starts that, costs network pick up we're out. the Beyond able hopefully, some some to spinning, take

factor on sit And So a side can that what because I right a matter see we as then it's things. storage of bit a swing us we be now. of intermodal for those are think the do good

really seeing they our we're And on the good our and get long-term news agreements other Hey lot Tom, on the the XX% in we I of right of understand. understand trucking that XX%, that's they not end, environment truckers and some things, market getting you and a are what what rate we price, increases, now, is was don't the think have operate to spot customers we're when facing. the occurring with remember have pressures cost customers

know them. we're as we high that you truck And they I having versus the truck aren't think have rates. with which surcharge, constructive And the and is were as great fuel right but maybe conversations flows before, spreads those now, so through very

value still -- to from for compelling customers truck from proposition rail so shift there's rail. very a And very, to

lot leaning do environmental wanting of to still that, the into and we're to and so, a well. hear as companies appetite continue there's that And that we for reasons of

Okay.

falling truckload pretty like the kind So not overly you're sounds concerned maybe price? still on optimistic rates, of you're it contract about

more the our a in wasn't participating of but the maybe reality XX%, was That rate of that would be increases, business risk, XX% that model. Yeah.

Make sense.

perspective. Thanks the for Okay.

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

is open. line Your

afternoon. good Thanks Hey, for the question. taking

out a you $XX,XXX around getting mentioned, what from follow-up million, maybe $XX a you from a So, don't Sean, at that taking reported. as so step employee. perspective labor know, I quick not huge looking per really it's year-over-year for up first

now a can in there's something some the incentive bit, Pan missing, Am first you maybe decipher or if been with little that maybe So, comp help I'm mix full quarter.

Jamie then a would and the one performing, you're just any on does we I targets that service STB that mentioned of best recovery and you it? the we forward that some be take maybe with -- do Thank for the gains? it worried in pent-up that it agreement potential you with you. Are second completely term, long slowdown demand, service what really about see helpful hand? back? union or like you still long come and run track. about does you as well. as not quick shippers of are about against you a seeing shutdown So still thoughts think potential in So, for When take the to And those How the benefit how think think, some near from

just right, the really the on and comp over employee settlement. is inflationary yeah, per and it impact So the question, above is math your

that railroad -- So, impact more for than to comp per really bit having little drivers lower which than from employee the quality, The little that's worker, small around more offset. that. only the mix get per $X,XXX $XX million, bit for right is I a but at a a employee

seen that You can gains rise. we've in see the headcount service our with already

forward. coming that move continue qualify week, So, of as -- XX, trend XX XX, weeks here, to sometimes a the some continue we up you should to see employees

Now we've winter coming. got

moving the the women side on run are this feel But the feeling cars we And and better, few now. in be. metrics. making our spent points -- have and we're from or it. in out we feeling day, men is weeks each over who numbers delivering, field So a I winter feeling the that a time at the service towers to the discussions always discussion feel service can I in starting better whether have it's and are lot we're it to us starting of the on last Joe when we need happen We're railroad and that of our throws out the the few look you ground everyone are tell the where field challenges at our faster. every customers the to

confident these the that's to to on that's forward ratification. move that about big continue don't to on And we're any I excited and helped highlight anything for look metrics. So like we're comment that going

I that out are what we think employees any other it's that have discussions just important make continue that any prefer not leaders doing. on discussions that who they're and allow and to with working the really those ongoing are the comments and then We union folks allow to doing our there negotiations. to on

comp Understood. there quarter? any Sean, was this in last was impact there like quarter incentive

No.

Thanks it. for time. Appreciate

is from question the line Chris of next Wetherbee with Your Citi.

perception perspective? worse, I macro guess what of using headwinds, or guys guys demand out be Jamie, to pretty that in quickly afternoon. the guess able about decently carry? that's attrition would about respond demand? as I just thanks crosscurrents of you – is in you there's slowing there I has the level above terms talked been And you of your something been little guys to related think Yes, good the that a but realized I out whether there, about potential want some be of a to is the then quickly to what service that think thinking XQ you of allowed guess, sort second begin more we a think kind is things how ramp are case? up still get do become particular, point, improvement sense do shorter you're as maybe to to meaningfully can Do to able use that as you service demand heavy number. maybe it provide the you how the a in you above willingness should think start numbers? we get think attrition bit in And out that still to carloads a is Is I you Just see from term, that? see maybe think response service weekly a if relatively furlough And heads, the you

as touch and I our out railroad. there, half I hand of to network don't maybe off Look, well Jamie another network one, than another that. I'll on it our the on aware, part first well of Why more the think second business such over you're

could there haven't to we that of housing be some our even some market capture to if And we And some slowdown, been seeing seeing frankly, there's would because and the magnitude us where of Clearly, the ag to of lot to together a they great products is that be a in issues, able there. the demand what industry meet. of slowdown customers coal talk been other out quite the there's demand for important about. of like it's able so, for like continue these markets the we're their there. to that some slower think question And haven't opportunities see But signals. of because are that I labor signs work there's a meet some areas

it's and one the we're CSX. whole just all of not So, up supply It's chain part catching that.

as and time a coming we And and see uncertainty important how lot the to is demand customers have and and over but provide customers a that to things a somewhat ultimately new us win settles opportunity of the could perspective, into for well, how think, of hand in we're I'll a us. saying, we does we we a are So, rail I work willing Jamie. out, it from in some that's share to maybe to we lean question, go of share and service see existing have the market, those do we and first an wallet with thing, for lot

we forward when you stay we question, pull to our a kind earlier, of I quick? got Well, looking about Well, think looking. mean, cost. that's that, we costs the as answered it can. -- when I Can out at daily absolutely, I locomotives,

many down for have we even though tomorrow. assets locomotive haven't bought And you which paying have other on tomorrow, I a use you of put rebuild a around a years, the are long cost You mean day new depreciation, that them. it locomotive been heaviest we stop these time. program it every a in than is

we into So, we we important we need I'm conductor. on And other that -- we T&E it if it's our six example can And a very but going takes get continue costs be. the and build get But attrition, look going are classes, that to softening themselves. and we where make deeper prepared we get it company, we're as market differently, that, use Chris, to and that all we T&E a will is to four the any it's things on this, us a we're if commitment to through the like making, to pausing where continue we if that our we're that, those and as I months rate, mean, things position is workforce be keep a side, on of one side, our a handle. traffic emphasizing that handle you at and T&E position that going come train important that. to that's natural get of take care of numbers. heavy to -- comes follow able to to attrition control months out back it And a to in just or to by that to way numbers we mentioned, And

come want of to levers, point. we're We pull to other a this to that all we softening can So there's we lot sure industry. those that get out any if in make prepared

it. Appreciate Thank you. helpful. very That’s Okay.

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

Your line is open.

your any Thanks. to Jim as that then, are expectation total coal share the quarter? fourth the RPU well. you there role. Sean, And Good on on volumes congrats can moving Congrats thoughts and Joe, new for into afternoon.

growth requires a that from Going back customer versus on step think fluid need do the costs to you it's that opportunity a you're next improving improving additional growth, think, improve for you service, experience. I there's on stage Do XXXX think margins for to future margins clear or can running margins, question the a the set so cost network more to back year? and in take enough focused

take I'll coal one. the guess, I

to expect to I better. step bit of fluidity little volume perform starting could and producers think up -- that some a the get network you more hopeful our given we're some starting

little the maybe So benchmark better prices. a to of at the bit margin,

we very, impact healthy, in So those that from have They're coal perspective. also export down. very see quarter still what RPU would an but would fourth come the

given numbers into third bit quarter So a and there, down little little bit down are that the quarter. those probably a we're sequentially from already

Thanks. Yes.

strong So volume opportunity my ratios goal this again. very From margin our is more first that our should to perspective, give very operating capacity, that leverage to our operating is all of Joe performance. give and to ourselves clear, complementary be some incremental to model our be

to margin. So share chase not by we degrading should our have

to takes up of It lot volume make a for of margin. point not fact, be In would wise. a that

for as So to really operating about team model leverage free focus our be and they're to to up the is in the then great that clear, to this with the opportunity manpower put really here focused, you've we're over to keep tonight provide us volume asking that for our growth our customers capacity that's allow has for. the and side. heard naturally to And momentum more place over what going

it. Got Thank you.

Credit is Your line next from question Rosa the Ari of with Suisse.

Your line is open.

Hey, good afternoon.

with what talk think the labor of experience. you So a auto your the you customer in you Joe, that And on you've there from this experience what question a then the Thanks. carryover experience is railroads. you could could customer what shared little background what missed take unions anything are was to internally from I of learnings And what and teammates maybe about wanted dealing more misunderstood that that to standpoint, But stick like? new on like maybe at kind was industry if from about was that being customer with CSX your is give about color a internally standpoint? or maybe being your

Yeah, thanks.

quarters there's a applaud partners. the of unions union the and different front, of to a with have the the relationship need last It's I have desire this relationship. spoken and on labor So bargaining. really couple industry its are over better industry XX There very about complex openly Jim,

on team can both in best get CSX some which a than win-win the core, parties are different spend find industry. I listening if are the believe But doing at has things those you can each bit to to you auto this bargaining other, here solutions and and So the that into time that interest interest-based solutions. success the at relationships can find little develop

that to think to certainly, lately. the couple a a that. us doing It same we're thing, experienced experienced decades fortunate what the maybe to the took same to going we keep be here but we're So any it we and we end already that. because we won't I long I get And do time, in us that were happen. industry, there I already able of if to And want take recognize in auto of up don't was we've part all think in place of -- years,

been that. out customers there relationship in that opportunity to we the progress can big areas opportunity together. and the and can employees. find leaders ones opportunity best Jamie our our of here If find mutually we our form together union union I've really we've met the start field our believe building they're that want work day, talking So we field into leaders. And every to I in really We've to make to talking to with of because employees. and solutions already of to in leaning out mentioned some are just been serving so interest put the first employees key

things, the take especially not to team, the challenging trip expect the to able it Steve to what because coming that and of of beyond and us the of transparency we around opportunity around other was frustrations on here. of communication of visibility, really visibility, there's a lots that transparency the as having about to And so the side be this and for also principles our would some core industry here service of And in and ready XXXX better around and should really customer think commitment was on our serve provide all back on technology side our in but living us customers. or to cars to get and regard. in to around up terms customers kind us We're an compliance in those just from type only or company of of go frankly, as we're experienced why business plan side,

commitment talk our they better you've so to that a us heard that honoring commitment. about and a -- to honor always they to job pay do lot. And of And we need and Jamie pay us

team And customers to way. to right able CSX those pandemic. going You've kind reference This want improvement that's heard really to Kevin significant there. sidewall place before is our metrics get back the of was to to show with then, in And this it. We committed happen got a delivering course, improvement dramatic in better really COVID. little and was of to showing

base expect and to As want further from then there. to go We we -- want get that's camp. Jamie said, to there ourselves our back we to

about together. engaged working can of exclusive how So we they because just and do, work obviously, the and forefront more deliver they're employees about at we it's better good keeping employees we itself. the customers help stuff feeling everything with really If the our culture they're are mutually our attracting on and can Thanks. to service less and and together, how reinforces all people attrition customers, that deliver the

Thanks wonderful. thoughts. Okay, for the

Brandon the Barclays. Oglenski of comes question line from next with Your

line is Your open.

but guess I that comment think question. the evening, Jim, and priorities? into on last the to successful what it. to relationship Good the found customer don't still And I and welcome all see you railroading. Hey. years thanks Joe, the how retirement. you're everyone you last CSX congrats ONE question, on on and on, to was for appreciate focusing fitting that want your left And I answer know we'd if And what five the you do on right culture unturned, most

Well, job. our The sure. this okay. phenomenal, the big railroad management just in here. you're taken when nap of doing best I'm I've everybody to tenor. it smile agree today in is This especially best business, guys a the there team said puts getting and on railroad a oftentimes is phenomenal I thing my face, out owners the the it's and wasn't success listening ago, years that a These new Five all an little room. was me. team, all today are is roles, in here. what That's executive biggest

CSX, on in better which creates union the here equally it then -- more and that. we that the my excited and I heart, our a your a relationship of Jim, field team. because partners I'm attention to Thanks, and workforce to and here, rolled here with initiative rail on I'm at by our before out I and CSX, thank above work the was with from team able team, culture that great the the progress the question out the about I focus we and you every have be have the is we're you the for blessed customers work end everyone with in day. to appreciate industry On value going together, really At the the day, make as our of initiative put have got doing to ONE the if

about energy our that team. valuable. here -- appreciated, We focusing channeling ultimately, should -- and really We're one more really our respected make we're recognize way. and and on to all being all serve help really we're we part in successful, getting energy CSX in will to our So our company of recognizing that more be all be be all should and the employees and if make customers field successful, that team that and the

We great have operating model. a

a great process. We have

helping of believe, if I better we -- customers, We believes our our our get people. I can for people deliver that can a better better and solving together, problems, know on business. us team have think team I And have and aspects we better our overall working performance great railroad

each the CSX So build real internally be shareholders. one working will to financially happen. that ultimately, all negotiations model appreciating employees customers. is we've operating our and these with our of impetus we starts and performance to the -- things other, and been supporting say, team to we're provide it have we're for really And after our that to for for with are and our bringing other transformation going team around better delivering labor all COVID our if going really to from where ONE and together, through deliver that's each the better service, together, we business make engage And and

Thanks response. for the

Fadi comes Your Chamoun next BMO. with from of the line question

Your line is open.

and this on call. Joe going you. on I want Thank the retirement. of Jim the both to that's all kind Congratulations of ask question a to on seeing role kind and night about

labor is cruise experienced kind from markets some cost, and way has times managed I in of which service, look there believe the benefits I remove kind issue maybe of differently you many environmental because framework in sure agreement generally probably what of in of have so we where there has availability to consistency operation service, we've And on. seasons hindrance pandemic there just been change is is, been of opportunity to how rails over in that search all a of and we going of shippers capacity, different some of past, can of the over framework those forward. service the Is labor volatility the this that of growth cycle. the an see kind I of was I'm is the you for the not kind to out that on through level maybe think last think think across the but year that approach or capacity agreement these But kind than at in grow not share coming and of hear past. I big issues a

ever this just learning as industry, coming our I the along lessons haven't no. there. and from I'll out take out this – Fadi. going customers what's out okay? we If listening and stronger Well, one, this than believe coming of not it's an have we're We're of we or than been we to lessons, haven't way, watching learned seeing CSX on

yes, opportunities their there union So agreements, is. there absolutely with is

comments. those things provide able our a any about up you relationships, do this times, schedule opportunity employees. get before. to a retain now better past to schedule But employees for to we been possibly the haven't and number a for us like going as we Let's of the unions has as talked And provide get Jim open and continue and ratification it's to mentioned, between differently before relationships our improve Joe

wanting that to rested, and docs to the want come They about they're us They give and that. face And grow. positive they the our company. want with they it. work opportunity the to have delivers to to to that believe they work the when them customers to tools give me, grow us attitude So to facing this they do question and being want grow come work, their on There to come is no face. to them employees they work us to our to a cars a come smile

as big forward. that's a move opportunity So we

We are staffing up.

Kevin single team we together. make forward his that and can up talk go are numbers the and that handle every staffing team. day. sure to Weekly, Kevin the I We we to brings operating demand through

are teams out team some great facilities us. there. on been We opportunities close. opening Our of know up big on are through the that through number customers very where A announcements and have made Kevin his who are wins

over said times. forward, in staffed a number going that. opportunities up we're of make I've are sure We've storage. So going great next the and those for couple got locomotives that years, we're of to

we Waycross, out we and pulling if know dreams I a of of there. number can. storage point, that into And saw to and field had the that locomotives to pulling took it's think like freight we that beyond maybe where get I this surprise. day, we'll Joe in the company he think have really those we we've when I one we out tonnage call all locomotives there, grown

to I believe the this drive theme never here, try before. heard, if there's provide how you've they've we're that's theme to answered the my and downturn matter of So we I before. are And And bit great, like to going to the said around a what comes on it's you're prepared forward-looking you've And I'm move sure to make are never to colleagues opportunity I question because the going -- And we're seen stay that business, to tonight. same that goal. our ourselves been fully a it heard all all the that, there going thing. happens that's like if no customers that think prep table is right, softening, to service we we we're done the and a believe continuing in is happy a you that everyone

Thank you.

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

open. line Your is

kind the near-term and the last end on, have of the is one, railroads, cetera, of what the shortage of but eases, hopefully hat asks the think how increases Thank Thank production chip wearing an contract you do these labor as share of, does of, that eventually And market A as kind you. us rejected future ones. you do do think Good i.e., your evening, to can ramps is for quick of, cycling everyone. near-shoring just et you'll you. auto when up think the I help rails long-term? basis, auto the Joe, couple probably cetera, with your still et in on like summer then BMW, up? follow-up, industry, a and commentary strike, kind end in kind how like that and any you

take one first, Thanks. Okay. about autos. then talk and the I'll the second I'll

play itself Jamie As to the we're out. let mentioned, process going

lot for tentative have agreements process. union and leaders, reached We a in the and they're respect of our ratification we've

the with is to BMW labor I a bit the out. And ED play really us I Union think, talked that side. together work union process to this about the Pacific think some I want process morning. for little issues here opportunity respect the to let on of just

new I plants. it's of rail of a --, the it's have especially auto on with EV to, mean, been many announcements going I whether assembly a relationship On things a of been investments significant of or side, there's the on having been or there's batteries mean, the which in manufacturing a lot -- number on. having access we've Southeast, beneficiary whether

things of government's but deliver electrification the to health industry, to that is more that out. seeing playing we and not think, going I these the well-positioned the the more vehicles. So frankly, how We're continue you to are see take are that, I'm production picking autos were comment hearing on with production chip to up. shortage, for increased from support you'll obviously, automotive with of advantage opportunity

but in opportunity us we're for of of has customers in these good a on And we're thing vehicles side, automotive that to investment to deliver CSX at increased the seeing again, of electrification. that's longer announcements. here as we're our course, term, And going happening significant number CSX. opportunity certainly, And a more demand the a for what's So near-term. that of part be been seeing, there's successful a part watching

will So we're continue, a that be to part of and excited it. Thanks.

Thank you.

line the comes final Vernon Your question David of Bernstein. with from

line open. Your is

for to model you to you should going terms be next in get congratulations training store Hey. afternoon, to in headcount to Jamie, Hopefully, what road. Thanks my need to those want rooms transportation guys. large the full be Jim, into productivity levels Good adding good the out expectations headcount. taking expecting as to to The can is here. service the you, stay increase how or come Can be? we're think about we're it on And service. us we continue back count to where you the year, to your get to question. the and going frame head guidance to drag of luck. are as the down resources we be trying Wanted that you

Well, year, that as end active you of the said, T&E. X,XXX one. this at I we thank our say would for target,

are around excess that. fortunate the as don't red part that to where trickiest pushing and of still very who good We're employees. taken caught change advantage over take forward. employees And to And look, now, areas locomotive headcount we're years, we're want spot. do to now areas of we're engineered short want in and ourselves have conditions doing in And on as number a get is that. we're as taking for the XX headcount And training. railroad out We We we the we getting temporary of move up field, move on of we advantage the to right behind have things right transfers but we some of those XX market where we're hiring. have the

into with likely year, attrition we our take forward us move yes, to absolutely are our our to as where start happy see what where number And that. going the of that rightsize places. see XX% continue most which continues and to depending rate to. class quite rate. looks see like with the I'm keep attrition. that's But make want to We So to normalized to that numbers on up next fall heading. will more mentioned X% we heading We're area let's And that, and an to sizes continue right rightsize we to sure attrition don't in we on decline network behind as we

little in So start those yes, those feel appreciate numbers. class a as confident class the those see but we you will the I take of when I our see with start we'll had class to will we hitting headcount we we're numbers, need sizes drop we heading to that and quite there. wish that it get and time move I you the right sizes question. bit today But will it, sizes forward. drop normalize direction

little And in one end there if here. one just the at squeeze could I

the you maybe earlier changes bit in or any result ramp around contract, you recent attrition seeing the As longer are pandemic some the or about of coming have trying like -- the some in of rates were the maybe saw we up? than on a to a graduates, that little as when you noticed are of think labor any stick differences seen you the

time point Yeah. it's not since put for contract We're ratification. definitely that I the still this in necessarily seeing it out lately, and at would change to

scales. hard to build XX%. done get a relationships before has that we years continuing five group we're scale from over I changing scale labor the and The work pay is went takes step think union our of groups to our that that we great with a where XXX%. on It pay

would they our rate the as as we retention next the offering a soon to in them the our sitting that make same cab, new change saw person definitely we As to money in way. positive started hires in a

make and as So that's we think doing some better are only those as things we differently. we build get going forward. those changes I And continue to to relationships, of move

Thanks of again. in here. appreciate you squeeze End letting us I Q&A

turn over to like back now would Matthew call Korn. I the to Mr.

for you, you again everyone, to Thank with forward your in our speaking look interest We you, you. next on operator, quarter. and CSX. thank Thank

thank This today's gentlemen, call. for participating. and Ladies conference concludes you

now may disconnect. You