CSX (CSX) 19 Oct 232023 Q3 Earnings call transcript

Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2023 CSX Corporation Earnings Conference Call. [Operator Instructions]

Mr. Investor of Head Korn, Relations. Matt

your You may begin conference.

welcome you, quarter third Hello, and Krista. everyone, to earnings our Thank call.

President Officer; Joining me and Vice Officer; Vice President Executive President Chief and Chief this afternoon Sean Financial are Mike Joe Commercial Officer; and Cory, Pelkey, Vice Chief Boone, Executive Kevin Hinrichs, and Chief and President Operating Executive Executive Officer.

that, call, by it forward-looking disclosure X. X followed our In to disclosure Joe our And now introduce the on Hinrichs. is find with presentation my pleasure you will accompanying Slide non-GAAP this on Mr. Slide

everyone, All call right. Thank and year, have you, thank this Over and for Matthew, CSX conference and our clear and message hello, remained joining last mission you today. consistent.

levels in term, which enables to culture same to service reliable and our At responding have truly continue focused, dedicated collaborative of a over These providing the all focused are together. helping as industry. feel progress positively. seen on that are CSX We is great engaged, see long the that build and the employees with time, customers our service to our better hand energized go CSX lead hand working they consistent, initiatives, ONE to successes our

hard forward we step that on As we we this sustainable, put clear, running our well. to this are by work opportunities making railroad drive in CSX another are team, the path these thanks ahead, forward look all confident will we our And the is to efforts profitable took ONE quarter, growth.

shipments strong. steady, coal were business remained merchandise Our very and our

international intermodal to compared has Our our business while stabilized. growing domestic year-over-year intermodal well are year, volumes though down last

about in can I to perform, am be CSX. has the with very all continue to that control. we the Overall, potential excited for things team the ahead pleased our network managing how I and continues succeeded

for the quarter. to Now review let's to X the turn highlights third Slide

flat ago from merchandise year-over-year coal. just First, quarter, this which down growth was in year we moved a and over X% X.X with slightly performance million carloads in

we Our up year, that with operating intermodal ticked we have inflation, ratio higher in notably with contract. as our prices talking storage recovery, revenue, all labor coal low been lower of fuel most cost reduced XXs face challenges and export lower and the about

quarters, As the trucking business. quality previous our margin in of the include impact does carriers

Second, we we generated benefited billion was diesel Last X% the much prices this quarter. year. $X.X and year, both in high than coal export which from revenue, record that previous were lower benchmarks lower

came changes at under our with last face quarter in even compared -- the changes and $X.XX, operating we to for the $X.X a $X.XX. billion down were per income share year Third, year-over-year we little earnings from and still faced, billion $X.X

quarter for I'm results. waiting sitting with proud of not all the are challenges, accomplished turn. given We're what While here these us to markets satisfied we of simply and back none this

We are more can operate efficiently. where looking the throughout entire we network see to

our locations. continue cost We our customers are every every X build importance discipline we with onto drive railroad to team and of the emphasizing and pipeline volume to more our business to of the in work closely

CSX great reasons about confident a that of for leadership the One is I'm in ahead have so what we team place. is

now also Operating of that scheduled saw as understanding very and the us this here thorough announce arrived shares brings railroad were to you a has Officer. and in day that customer Mike who we joined Mike employees As our Cory out. experience joining few our month, all and weeks pleased ago service and and provide appreciation great service is on Chief deep Jacksonville railroading day a last and call. he Mike dedication in for

Mike few performance over operational to it the now will words and I over so quarter. our turn to cover a say And

we're the and appreciate with customers stakeholders customer service. opportunity the you this with less of great lead And Joe. yards, thank such how much, with to I've committed people industry of and going great franchise I with the time, thankful pretty with safety, visited a really I different truly efficiency month, other, to of much here for to so this time very and been short a best-in-class. array potential people be our work extremely service, And Well, along words, in spent than to railroad. each and team functions engagement facilities I'm is busy. been with headquarters leverage much export coal from but major I've meeting I've an

on plan and In people the the sales across the their [ me of resonates listened they spoken people But their marketing, the all ops, got list the the is be and maximize person, the I've and to, great and to really with executing facilities network developing finance, talent on. to CSX goes with be fielded desire from employees our is what in the company. from IT collective value talent our ground for ] From efforts. best and connect our I've can team We've customers. and job functions our to ONE all plan,

effects our customer's said, nimble and close stage know, as needs. as doing see of our continuation to at drive visible a the be opportunities, information to collective most opportunity is efficient and and in me, best this and to to We're on as which decision-making, will safest need define of this acting and We're I where because way. scheduled of the that share for the fast lean the they see the X That to We must to need place. our robust our possible more order is through team flow most be see responsive customers done create principles the in this be railroad. improvement what of to decisions to doing and taking and what the at important quick all providing

to learn learn and as platform practices a the other it throughout best collectively, available from happens. gives well, we'll it As as and us organization data share this

together the to This we team. will as speed and the create trust X move need that

over the and go slides safety we'll our looking start let's metrics. to So at

Our environment upward. acceptable rates And we're trend continuously a human saw action and aren't factor outcomes of as increased accident been Human And overall has the as incidents trends employees have newly with quarter third for as the taking X us. culture. well these hired increase. safety to improve incidents employees the factor this our track operate injury and in we caused the especially year driven that

for ready training QX, added in our our the new at team conductors time In initial centered Atlanta. additional for

at We increased more training length spend we time of we them. to length time determined also us we new well. of hires when and their increased terminals training hires, as to that skills from gives develop our The new home to the place Atlanta resources training and also graduate to with report back with looked needed the but that

reinforcing trained teach and are mentors questions, and mentors we their answer culture These part available hired have ONE So coaching by we them now newly across unionized hires. and being of to new CSX property the the the peers. with developing

an taking safety, DEKRA, off to in life-changing to our on risk specialty training employees with we're risk focus Lastly, partnered We've help events. environment. self-identify not group roll ever-changing management out

and into that for and QX positive But railroads traditionally, everything operating train risk to eliminating of when rules. safety our beyond. we risk identification is Now a of test possible or a way rule goals write can't moving X Both our culture. on major

slide our go on to highlights. operating the over next let's So

miles in period third of in an same slightly Our quarter, from averaged period hours, compared the end-to-end hour velocity train still the the improvement but lower last averaged XX% Well last to up nearly XX.X X.X quarter, substantially than same XXXX. year. an

trip plan Intermodal trip plan improved X was performance year-over-year, by was while performance XX% and and XX points. increased percentage by XX% percentage carload points

all Our vacation middle and are the service slight seasonal rebounding we're holiday a all working during the quarter. know we and together we -- will, peak will all And fluid. see performance did know season, though our these remains during quarter to into fourth dip the and results. We of improve we metrics we

in reliable, those really for to the X principles consistent our ability really is key vast importantly, the connecting connecting bench management of dots they more great I'm going service. and by allow is drive this of strong strong us goal. now focus to on bring talent with that will lean Our improve leverage business to and that people This our future. all a aspects strength franchise a all these CSX result confident together team the

Kevin. to And you, that, over with so

how all thank levels and Mike I are are you CSX have entire Thank partner and initiatives together, been lot and you. the our on key And and team customers the I'm marketplace. service a in for our recognized a pleased growth. time discussions differentiator to have start, are new of leading work. of the spending that with to enough around improving customers I by improvements can't really our To for being can These hard great to say the team. it's

profitably of ability adapt to proud of Mike able changing and With to markets in to Our have how both coordinate this only efficiencies. requires been we encouraging grow think conditions to has improving our over It's quickly to these operations several proactive, been with us and markets drive differently. be growth past well but accelerate. I'm that have sequential seen we remain across end efforts uncertain, surprise role, his economic no trends quarter. overall gradually to it see

XXXX We reasons build eye business pipeline to we with and to as continue our toward optimistic be see an many beyond.

merchandise our the quarter. XX Slide to to performance Turning at for look

year last flat volumes offset Our solid in surcharge revenues mix by markets. compared certain down to pricing effects as were on fuel gains negative and were modestly core lower

volume by with from is Metals infrastructure demand continued service business production to cement XX% facilities automotive healthy aggregates. higher in and new well, for continues increase leading has activity, wins Minerals solid Our benefited levels, very competitive demand. wins, to also performance perform show business to and that sustained and our driving supporting strength a year-over-year.

while promising Fertilizer impacted production growth domestic despite quarter. was challenges even the quarter franchise, to volumes were in begun in that revenue showed weaker has short-haul chemical with Our plastics movements some stabilize improvement the by and over strong Florida. challenged in

grain mills X areas rail of products As strong the and corn remains still meaningful many taking challenged we for the most meant crop downtime. Forest Southeastern less expected, volume with

win quarter, start the opportunities in Midwest we And markets a volume a food are we to anticipate momentum. for encouraged agg and drive marketplace expect most as kicks we improvements across the conversion. in. October markets, We strong fourth sequential as focus on service harvest early strong we by other trends our with showing modal the to As rebound

XX. Slide to Turning

coal X% Third demand to were XX% lower prices, solid hot the benchmark strong, to international RPU growing benchmarks was year. continued southern longer difference export coal moderate with utility summer in coal demand. setting year. revenue though where this pricing which of stronger-than-expected last than haul even with XX% volume key last of customers driver met to our major a to declined records the Strong lower driving last were The supporting of period shipments quarter declined be effects volumes decline time much domestic global the compared mid-teens coal compared Sequentially, very same also year. guidance outperformance. X%, growing our were volumes minimized the all-time length

remain the to the the pleased to we've year, ahead expect benchmarks strong last over Looking in markets several and export international that are we weeks. seen the quarter of increases last with

XXXX side, On we by have normalize into should benefit The benchmark global and driven will be weather the winter stockpiles yields cold domestic seen our demand next increase needs. quarter. in and related prices demand

remind customers, and those Australia. of U.S.-based lag regions would coal in portfolio other met we that benchmarks a prices have we met spot So you diverse in have seen I and

XX. Slide on intermodal to Turning

business, revenue on that decreasing seeing by where X% we decline, improve a whole, for the and positive the by volume partially are early our continued to fuel RPU of impact declined Overall, price, XX% basis lower then. volume summer with As positive in the a with said, domestic challenged accounting trends X% the year-over-year, remained and encouraging turned has offset business by by surcharge since year-over-year declining total from and

a partnerships diverse domestic solutions with from transportation our we've results of major great strong mix and and offer our retailers. We intermodal, within relationships channel seen direct

the and Meanwhile, a weak. traffic plentiful market in in stabilized, testament remains truck service the International capacity, a successful converting facing which been has the but off highway market-leading team to has is intermodal activity product. team Our

destocking We imports. rates signs haven't though a increases positive and in clear haven't have Retailers or health we may seen this the slowed, concerned remain about seen inflection any into of the sustained yet. turn order of consumer

strong they For supported as the expect the quarter to our year, domestic over were team's the gradually third of with continue rest we strengthening largely efforts. trends by sales

our markets reported prepare international, turning slowed we volume which our benefit substantially, that for Recall current as While in back quarter. the fourth quarter growth will a we half saw the drop-off point intermodal XXXX the the meaningful of for rate in in for

trend a a remained push the has forward our past to bringing intermodal few beginning encouraging XXXX, share, railroad. improving seen to positive shown at stability in since, and On provides to traffic we're around year-over-year steadily across XXXX, Domestic team initiatives customers clear wallet lower the within the turning all seeing a business. XX months. favorable continues Slide converting volumes international illustration basis, compared of aimed midyear Intermodal trucking signs our since of businesses, new winning of we've across the Altogether, while and our multiple

the And quarter remain performance of have ahead. the and that to know deliver has growth the confident service that will potential excited provide win about environment I'm We opportunities we all this what place when we the inflects. our CSX collective accomplished business. and leading proud to I'm capacity team continue market resources to in

discuss Now I'll to financials. to turn Sean it over

Kevin, you, afternoon. and good Thank

fuel $X.X $XXX year-over-year storage million. items. agreement recovery, it XX% results nearly lower Third and the impact of operating adjustment. discrete partly peak these impacts intermodal $XX Suffice prices income should offset quarter year's favorability include of or say, benchmark quarter coal by of year-over-year million from revenue, related by lower export billion this These represent to $XXX was labor to million from last

X% Revenue fell many team in coal quarter markets the excluding to merchandise, pricing and meet a increased the with merchandise trends positive -- many and customer along volume mid-single recovery $XXX coal operating domestic million, as intermodal. fuel needs headwinds. worked despite Across excluding and by or as strong The merchandise of also well portfolio X% tirelessly X% across was RPU revenue impacts in deliver Intermodal, digits, up volume. increase the Coal across

tax to X%, other will lower more earnings Interest by the at line compared was and year. decreased Income items And lower in the a quarter's than $XX XX.X%. this million and the million higher year $XX expense more rate prior expense in impact of tax I as offset prior effective favorable on next item. were discuss pretax tax Expenses detail the state slide. came

As per discrete share previously mentioned nearly impact a $X.XX $X.XX, result, earnings of items. from including the fell by

quarter Lower to third were depreciation. take turn inflation of and at the expenses. the closer and Total next expense now look million. impacts prior by labor prices true-up mostly a Let's and higher cycling fuel decreased by year slide the $XX offset

year $X individual Turning cost inflation overtime services fringe Heightened increased to by employee higher Purchase items. as increased expense. was with union particularly million largely are and benefited in million running ratios lows. our associated adjustment line now labor multiyear mechanical expense the headcount. and offset Labor casualty attention decreased expense other overtime $XX workforce last the $XX and versus where prior million including to at year, per

PS&O a page, Turning and to in across our cost right-hand the in QX reduction versus departments. performance numerous sequential the performance control side on operating of initiatives quarter the drove $XX network million nearly

was well a result up asset larger last normal study equipment We Depreciation as seasonality. year's expect as quarter these million base. remain a $XX of the fourth to from in aside savings as

down X.X was $XX by consumption, was this Mike partially brought this the million, increased measure. lower gallon year, by periods. including gallons focus still prior and prior versus has recognized higher offset on This million Fuel fuel unfavorable critical mostly for from was Adjusting a cost approximately efficiency an driven price.

to expect get impact we will back QX, fuel efficiency fully seasonality trend. While in on

freight and markets. car were These $XX cycle driven automotive offset times by costs rents was higher million volumes. to partly by benefits all Equipment favorable, related faster across

the property were unfavorable gains in million quarter. Finally, $XX

minimal. prior to expect cycling and are in of $XX be gains As a reminder, this sales year we over year million QX

discussed strong, the Now Reflecting the from distributions and over investments. the well dividends. repurchases earlier, in also Robust XX. as network of to $XXX far and cash our returns increased down of $X.X factors supported in flow free in discrete $X.X but an as share I level year, is strategic investments on Slide year, shareholder billion prior flow supporting million billion high-return of flow has remains and cash turning reliability so this safety cash over including

lower again CSX is measured efficiency pipeline and intermodal to economic and high-return gains. about impacted as export is a on growth Nevertheless, profit, storage the helping million profit by Economic of pricing. earnings coal $XXX that will ongoing initiatives focus year-to-date, cash by deliver revenue incent

Now back turn with Joe remarks. that, closing his it let to me for

you, Thank right. All Sean.

on shown XX, updated as as finish Slide Now we with will some XXXX. we final comments outlook approach our the on of quarter

performance miles the by supported and coal. We areas. our merchandise for continue export consistent in single-digit to ton revenue important Automotive minerals growth year, expect and in remain low growth full

the Toy very obviously, [ ] So closely. with in watching EW X [ ] automakers we're developments

we in global and over mentioned, the also demand rebound remained coal substantial agg and coal. strong for business volumes As thermal U.S. fourth look Kevin stays for high food quarter. met a Export our as

slowdown we some we from For pleased continue benefited from the summer our which so anticipate hot domestic far levels. third coal, quarter, with quarter, Though weather. shipment to be this

as Intermodal, we gaining fourth quarter. in domestic modest the we activity For keep momentum to expect mentioned,

our rate now, stable. business reflect international growth for will largely our favorable looks comparisons. year-over-year intermodal volume While Overall, in

all trucking revenue are remains As this supportive, the that reached year, the slowdown the for intermodal we pricing have to said we've supplemental $XXX in with already year. we that environment course have now decline the been and we encouraged full XXXX. the expecting of year, over million seen by agreements we've storage by excluding for revenue, Note

term, cost and look also greater conditions as performance, not remains improve near our and but we efficiency market for keep we place demand service on to in in just commitment Our as capacity. the control rail eye to ahead

growth. and Finally, strong $X.X remains on along expenditures unchanged in billion estimate capital of innovation focus our our with

to what as year that team talked we team my accomplish about and CSX. our by so as finished first with spoke fall, as X great proud that belief by close better of accomplished you CSX could our to we've ONE of serve CSX working When much I'm last I I value create things all saying will together I customers. very

And We than appreciate do. keep -- moving and you. forward. have good can of I'm very about last all Thank company we enthusiastic our We even we us opportunities support so we All our progress. know as right. I more there made year. your in much all remains that more was keep

we're now for And Matthew, ready questions.

you, Thank Joe.

on session. that to move start We we're this opportunity. an now to process. [ to make please has yourselves of you In time our limit to question-and-answer to everyone call X question. Krista the will ready and interest We ask the sure ]

the [Operator from Instructions] Citigroup. question Chris from your comes first line of Wetherbee

Maybe, relative Mike, kind to I with Joe terms you and where wanted start services to environment. in of sense or are the volume of your of resources

resource base do that about, to So of give we or again, count staffing think a you're we relative the I need recovery head still moved current think you maybe do us And if volume how give a if take to to at phase? maybe more the in up bit where -- you you little like of can that have at you said, ability these the us Are levels? environment, levels? sense reasonable

that of of with the get train, that size enough Chris, But training have the But probably the I people spoke still earlier. of Look, improve trains, been overall, have I'm I've the going it's comfortable amount preface into of we a answers a to pipeline. Mike. we We month. that position -- and still than have. then less with every again, my people I'm velocity we need to we most have here to

goods. But of where the getting we're however, flow the on probably there are affected somewhat areas

and been really so I, the floor long. can the stretch we haven't do not really what And so there for here they not just but Kevin and We're that having it's of opportunities ground working together I get out teams yet. view our constant.

to be. say, question, So to your where I'd we answer need

to We And whatever have going retirement being remember, trained are attrition case. people it's be whether the that we you are that positioned. have or

we're with going to utilize better in assets. in to that. that's self-help good and we shape, filling lot have the of the get how we come people we're have, shape. So a And from And we

add a shape to little down in thing a handful. last few mentioned, Craig, key I'll Mike That's And hiring a in have, with is the the locations. we're spots. good as is, merchandise we're than more Yes, largely, still is volume hiring pretty attrition we still some we still replace our year. in we're most to up are this of because natural -- that And other

new volume. our self-help of manage about pretty can fresh still good we look to of challenged up crews set we some that. to even to at And efficient. do how team us Mike's we're free to So in But our the some come and growth more seeing really a feel help eyes some be new ability with

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

Mike welcome Congrats. industry. the back to

about Just for Kevin. the ask the side, wanted more to service on -- maybe

of have areas You're that seeing you some conversion truck excess mentioned capacity. off

so some comments fourth stickiness like, the give mix can you So service you before people And are It has is involved. to coming the was trying quite to so get a us convert this and a there? time, of always stuff back? looks just that to Just come if going been then, per employee cost that Or the for long There's for bit. stay trainees thought it's Sean, going lost and the and that? good quarter. on actually down sense you over of

color on helpful. any be that So would

given the is we are good early to willing this that, into would conversion where start have on news couldn't we were. truck have say Yes. a those really, I thing. year side, really frankly, to ago, quite we're conversations just customers The

I that's encouraging well. a and the out after become building a is, mixture an The we're of itself starting But as after opportunities to to in I think as I customers. of mixture. It's year. very going going growth, into build terms it's so exist And going new some think, collectively industry thing aligned as this of an expect next momentum. on after industry, there that great is

in in the wanting There's value this discussion. and things But out trucking market, to But Clearly, coming. on you next that have expect with up with is drive. of will as and are it that itself ESG lot now. we we're the still this customers years the trucking pointed not ahead, I market even can other and momentum accelerate right firms market very the that year a finding that supportive only see

around That's employee, been made did in that quarter. of Brian, the area waste third focused on on and the Mike's figure certain per lot in an work out question right cost we trying very we your the on overtime locations. progress to follow-up can ways the a from beginning, restructure eliminate front

say, So see that's will sequentially, normally fourth do. employee work we the I hit to fourth quarter. an like going driven accruals will still some help. though, the and in will quarter. seasonal QX that to labor have uptick over That's QX, some some will that also by we you probably in cost per to capital go vacation OE in

our would QX comp QX, you'll percent. probably say, few sequentially, employee up I of So to a see

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

growth, we U.S. I And just with to month so you, you ask the idea that ahead? market what can great I you But changes things roads seen at the to or your make this the long-term of have outgrow guess, will a back that and a CSX had can in you plan track Mike, first have been well. like historically as haven't that want or know CSX see organic looking Mike, welcome coal just And headwind. record like help

have that that on just it Well, dispatch terminals connection it this Brandon, see information. -- mentioned you. manage the we people manage road. of where remarks the thank the creates I people my And in visibility

got individually a whether then from then it's we because look with We the we management really business, to get service work sticky look, a opportunity you business that it is to from, is get have really I the that that can here. see is, keep came a the it you railway I we we're things being can team, went people to you people cutting in and here truck. X,XXX, from business again, perspective, back understand that but but of And more understanding and Kevin's we Kevin, doing manage what manage talking -- and capacity lots about all is And business these of we're do here, X,XXX miles, all perspective, it's then or crew the was -- do, there it's competitive, everywhere. all much not it's not there's together. And can see so it. The

Obviously, connect just I think to we and we're gives our what But it -- going here the market people. when the us. grow opportunity with I

service it, U.S. We X/X And are that's of everywhere. just We itself. in the what is market. opportunity the

So I see what your we're sure waste. We been is. it I'm again, ratable. but in month, going sure don't really if We grow to properly. I've to want a make we're question answering that our make want we want to position that's it. know here goal that, that I rid a be We for to And ourselves of

does So we're not getting come. it when rid of the assets need that we

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

I to well. brought up on former as build you role of your and kind that kind want Mike, of

a have that railroad as railroad. hoped. there you And You maybe transitioned from PSR would go didn't a smoothly growth to

upper the you're now ] two you're vastly over the improved not So pivoting have year and service growth. fixer joining here. a metrics last or [ CSX's

service So how of the some the from without the you've last to up of as are causing dangers the learned transition that issues. lessons to and you some what role that you're fill at trying network network and manage avoid? clogging the And capacity

just Thanks, it's Jonathan, of different. no the opened X wounds Look, up.

really to be We have aligned.

But just expand what the people came and obviously. the see on of us we market, commodities to same growth do we it First all, move that, where I being have our can from. is don't the for and assets our the understand as

to extremely I a the and Again, I'm way market, the so understand working to are the have principles long And look, it. to with understand But go hard Kevin same.

is the how them. service, keeping from the any goal our a service. for knowing disruptions deliver key to we we be sell recover provider a service to customer We fast is reliable And that

together in So I we history, don't this. at can we're really great anything And be And but continue again, all customer. there can there it to being go looking are, and the reliable And look don't stick see what know attack we we if do to be take close. changes and to I'm the any again a hockey my stay we forward. how ground and we floor the approach teams the view can up. surprises. as difference. going shouldn't again, I recovery resiliency for our And that so you that back and think from build

see had -- model in or the ratability. team the terms a It's his have here And big of service. sell service, before. what the I have we that really with don't we So is Kevin on of what we hard wherever working I -- difference that deliver had

there shouldn't be surprises. So

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

any Kevin, expect in of maybe for cost in Sean, then And a into maybe some but the much how on sounds fuel Maybe, should of like just coal headwind, QX the just It QX. some color pressures. help and some just just about QX? think an us takes we volume, less better continued yield maybe uptick puts uplift, net of and

Any think better together, us? it put all -- does you or worse ratio directional you color gets want QX? give operating you So from to

good for the so would RPU haul, digits, we've longer coal I it some bit about as our in be on a length When a RPU Scott, issues It depending single of But on average given coal, Northern you something mix. that of think maybe digits business. higher lot can little very versus strength Southern Utilities lower shorter sometimes can within of mid-single look the be haul, benchmark export very, low seen, can Yes. well. utilities, there a mix be business.

a start of a QX, the and And in our to good factors summarizing job factors. of most We're earnings. I volume, only off kind Scott, on in around growing stable important seeing OR good improve, your question the did X terms obviously stay importantly, of also, of that's but the you think of not terms more to

what in prices As in we QX expect see little million a direction than see was you QX, mentioned, terms fuel of a in do don't a it we less QX fuel QX. the than to the repeat the be in is, costs third and that but in should cost here quarter had seasonally, negative we'll bit lag we of higher typically then $XX of

X were has operating income the to been sequentially QX you than COVID XXXX, worse those QX years, if the in years, look every and third each has down except the been OR of X everything and from quarter. the over year So last for

said, to we're Now control like I waste and a we good eliminate places on start, eyes our off costs. that got and can we've fixed

So than good little seasonal bit a got that doing I bucking of trend better think shot we've that. and a

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

to market And into truck on both opportunity most on you've sounds share that where commodity recently the it see a front? expand move most But rail. meaningful going? the momentum as bit gains, some where could Kevin, more little and we with that early success you're keep the you you tailwinds like had groups seeing XXXX,

Yes.

us. and and it, to that And a I good customers looking team strength think back we've that really the broad-based. it's the portfolio, our service been metals really and year-to-date the incredibly highlighted, all from stand selling it's in which helpful been Automotive market, that's has different board of side the think within on the for are it's of merchandise been and for here service I the differentiated customer. There's across side. has our on out I on our business, reliable capitalize able initiatives and we've The it's with in been been market

to the goes I getting there. that benefits our side, won't they're start layer plants deliver railroad. locating got the going momentum in of new to late confidence product in see industries service the it and you'll say lot some able been these to as see development 'XX, to a back 'XX, to we're of the probably start more on that that industrial and we've but And build 'XX again,

And optimistic where So That's almost the I map industrial That's after throughout projects actually just this East. in in. the side. you sat very, through going happening a railroad. our with look afternoon, team taking that's going U.S., our Christina operate it all holistically we place on have that really where on today, interesting, the is it's that and it's been I'm and focused and down what's we're very U.S. the And at throughout

into optimistic created but lean occurring little mixed very across industries. bit opportunities industry but those different different, year, is So every A able quite lot being And to different here. of we a what are last than was they're conversations environment

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

to that obviously, around environment. to from a -- mean, we're Sean, XQ moving wanted I we're to follow-up inflationary a on environment less inflationary XXXX. so it as -- question it just maybe a ask XQ, but relates very I to

of uptick more of bit big cost little of several at years get on obviously I as low But another especially PS&O XX% that as ago to revenue. structure, then got like also that PS&O But labor the leverage the You've look in some in revenue item. of next XX%, a labor, was year. middle there's opportunity XX%

So parts know obviously, the like inflationary of if enter maybe 'XX these what you and cost bit leverage still idiosyncratic kind a in we're structure kind is still you the look of got I some an us in of your because don't little cost opportunities to help structure. can brain environment, think but tunky

Amit, planning in for still phases we're obviously, XXXX. Yes, the

to want don't far to set, But you get I labor we're increase have a a and understands with ourselves X.X% going it's the ahead the union year. of this last sure of up step X% That's had contract the the and year. we That's year wage level make just So midyear too here. next from the story on to that employees. everybody midyear increase know

this side, fair inflationary In least PS&O, pressures say of it's to on from but the inflationary think at that year. terms start the see normalization it's we'll some early, of to I

average those be X-year little But that mid-single-digit some as It probably contracts this had than labor on of will reset. are to indicators higher we than lagging indices bit or year. a inflation service outside based certainly that. the So going less are

to sets are opportunities, well. really year stems suffice importantly, That's really some service we building the next going that than overall and more and I of serving really from I and but got inefficiency working year, going what's as year of So, growth going Kevin beyond. we well last cost think next we've this got nice fewer say, pipeline into did us up headwinds We've it that year team a into think do and the drive as level we've been been that growth customer team on. as to over initiatives the the that way the has sustained get the into

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

the Yes. in same think performed, terms XXXX, it's there see a the that OR and multiyear sometimes OR of to But growth? that I see perspective, a if is pricing delay on think that, there volume to on I you don't you catch And a time kind that up do wanted is to volume staying you and be with on topic, if Sean. inflation. I of of sensitivity the how there might people see from about think think pricing in pricing perhaps related guess -- chance contracts, could you related the improvement some

So just I X things volume it's pricing. kind up OR of guess also potential on catch that, to within and sensitivity

Tom. Yes,

plan we're that's economy. of going grow So volume what I mean, to our plan what ahead the going to for That's to for. is to be and shoot we're going

improve that continued I think tough if were year, we seeing. be the inflationary think the to I with would next it pressures to growth have we're OR So no

insurance that settlement had the We in earlier cycling. You're year.

So up, a go to will things continue like there. Depreciation there's that. things few

need building want price Kevin, know plan. I piece? you to don't the the and growth. we requires, That's what model So into we're that's what the address if

Yes.

our of On XX% we've year. of touched the kind of already carryover every that of reprices XX% roughly and is business this what pricing, year,

the to up. levels is service helps we'll environment our and supportive. to vastly the improved, the still we'll half and going year. into So touch service is other And certainly are when product it next And price continue those

expect. a customers conversation that And so it's

is don't not unexpected labor They Our discussions. -- the those from and the have visible we they're world, to customer. very inflation

comes Allison Your Fargo. Poliniak from Wells next from question of the line

to back want intermodal side. Just to the go domestic

point? past simply some here. had at product something to trust -- from you're reliability over to When starting that you customers, Just that talking Or starting just guys service you see the in to building that the You're months? what's back any conversion thoughts evolve? few this holding the from have is them have there converting it truck really with Is there?

and domestic the was the in reflect of a limitations intermodal To the What lot was in minimized very, on really franchise performed equipment well. the of our Yes. opportunity very existed. that intermodal industry ways. growth outside chassis It and the really pandemic our some

So world very, Obviously, we're a in different very today.

that with chart and in when the strength really we leading the coming able together, all that product the basis then what we in and a see on the we're -- capitalize coming is you to of with our product. I talked is service on And our service us so year-over-year those think exist and are through limitations don't previously our grow about seeing East really team service allowing things customers mentioned those to

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

And know obviously, just operations. have I been pretty sounds and I it's you're just see if side opportunity? you right, fruit but about there well -- need you've saying month, do how see is solid, or operating? that happy you of like talk for operations welcome that to the Sean's terms Mike, the here. And do a what back on you cost Joe Mike, there still the saying are or guess, to maybe, Kevin I -- to in leverage, opportunities don't what can that in sector seem you improve? Mike, from leverage low-hanging operating to get It aid but order what volumes know things or on can you you want

learn try that waste really so teach and Ken, and to is it what I of it's teach. and what visibility can information learn, -- and Yes. Look, That's collating that getting I about. I do thanks.

of of they're them have younger we in. good a positions group haven't in been Many So people. experienced the

to all, them at start we day a I've been we to that do report. of getting like team, big with but something on get go how And network not I'm it's temperature waste. a it's read, in really that's this. easy really share but a as that first looking not And will at focusing, where the So next a about

away their they see visible it want actions. so right I

first They're And that. we'll in to in exercise and to than point, They're through all hungry at we'll how it there. do the there. them to it's But service Kevin's that's and out to into and to better great have get. it. get I confidence motivated, up see the opportunity then you teach to just I and allow so network divide the even waste starts and where them see get help more to to businesses And me get keep world the get the understanding

little a Yes, Ken, thing. to add want just I

Mike the of taking things made lot with across metrics advantage and of of that timing employees have the as joining operating progress, we have, you've close our metrics us on think we've the do service and around tremendous CSX. I side. model ONE operating board a industry-leading especially had engaging because seen, year We of the culture the we is perfect a to on

far, back of and Now we say, can proud set great with in now Mike us his best experience, opportunities okay, have come that of the step to work. the this team's coming work, and eyes all allow we've

here's Now further. we even have the opportunity to that advance

so timing works out think, very for nicely. perfect, And the I us, is

excited is and motivated. team Our

and customers times comments months that regarding the that get acknowledge service the acknowledged time, now with to all opportunity we've repeatedly the the as me efficient his and in better. they and tonight, sustained You've have seen more even Kevin to many get and XX levels now, we reliably almost has have highlighted for now

can has attitude to service still what takes young Mike is next and level forward. we relatively focus, our our it a next about the team, of it now with also come teaching but step to in how the on a excited great take understand And take team course, to improving metrics which and

excited to to excited metrics. comes it. think And it I when efficiency on our outpace the it. can continue we're progress about industry we about So I'm

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

bit -- that on you giving a roll follow that out further not but you've just question, To little your the been service Mike, up side, on from in last the versus see of role to culture. earlier from can to over seen on the to different X what X the X. with CSX integration would Kevin's next yours, years over the we X what department focus Sales, we've mandate

that's the into And want so feel idea. want come they Bascome. with That's to we'll they're in that forward #X. a trying do I Still an And share But because they have can't I X see tough that or to the going experience -- to block I'm still don't to them improvements incorporating forward, there important That's anybody make to out me me, metrics. I all things today. our learn.

but cars say on close. in A don't to We and really is focus time when and Everything I'm velocity, fluidity talking bigger I condensed both -- have, recover. we many cases, network a trains run a pretty here. of lot

into plan we it's the executing discipline effect put the So it. and about

couple I'm And last time. so to extremely the can I maybe, so where I'm something nicely. with know they're And but be, show know the point, tough availability over you them And had add? can that years. a be, they of to Joe's through see level next gone here that of here to trying And they hasn't is way. self-sufficient. what Kevin, this to have the if is I rebounded them period pretty they get and to share They've enough they've -- data to don't to how They've It it. use

from other. each sales team, Yes. my -- perspective. team It's They're just they would Mike's the I that ever highlight they coordinate team's and to would a marketing than I daily. better -- speaking and important have

a You communicate demand? surge to that it's time. up volume talked us real to we handle Well, can about in

in the So customer sure we're the discussions think make ratable that it. we're to have and prepared we having with a can communicate right for And I around that of work and it's lot make now the the volume, handle that. people team place are -- sure

see they next this it What very, I ever for could very years? we weeks, are X how market do in And to through see next things than conversations market. And around where are to that? think And over figure for science to together network. creating What of been. year? it's those we discussions get in better teams our do again the prepare it's go And rocket by don't have those going having we going couple we're a back we're -- out come And quickly. resiliency

doing to locations, Yes. and Bascome really from customer. but focus everywhere, more and pretty play has the engineering, I'll They respond the Curtis marketing lot -- up exactly like been, -- can they just run And everybody team in they I advocates. role know his know They it that Because to see I to offer. was up when of they bringing faster. role I've everybody has Bay. our Kevin and exactly that mechanical, than said, the finish Yes. in actions it together. had actually customer much I plant well, customer to know pretty a can on everybody they their the much not people I much Baltimore a like servicing facilities what to a become

marketing. how X for CSX. drive better it the customer. And years. so keep going and we this we forward, operations and in business This what this even to is X build That's This No, is and this. not is I how is it the approach see

all different safety it's all we growth about. out That's in that enough on, And incremental business. guys in live talked take Mike it, that's customers, that margins and to ONE You are But CSX focused can't about people scientist this on, provide entity, not business and functions what talking in silos a bunch doesn't seamless which course, that potential communities we employees here. our as the of And this the serve. of our the of has shirt what the teams we're with our vision come to and figure rocket service ultimately, X CSX. a leads growth first see the we've but see

ONE potential -- experience the looking be team, every profitable, as as focus how ONE CSX, sure to a and let's training CSX be and That's find part what and will excited sales and with of that now, is a able when the realize to team and on Mike it's work here employees of teaching year-plus by And find both we're by opportunity we is marketing customer customer. talking about. way that -- get we serve and from have proud X how that operations it to service that's of our together do to a do and described a everyone together but at the do, of spirit we my opportunity most in on efficiently let's in the Kevin way to make can way it

Your next Jason Siedl of TD Cowen. line from from question comes the

service Joe numbers. in operator. you, showing and Thank good -- welcome be the exciting team, back. a afternoon, ground Mike, It must pretty railroad coming hitting running improving

look forward to you had said we My optimistic. some be be comments Kevin. you you can So that XXXX. actually to is to many in you reasons what going question Kevin, many, do had to seeing

many's I noted there. X So the

us bit some numbers a development like You give to what some total commentaries. ago And those seeing project industrial some you're had maybe on you domestic in a projects pre-pandemic? sort on bone get I'd maybe touched of improving on year meat Christina. of you what and with there you plastics the and terms then talked with Can little now about

cyclical we the Looming is opinion, a Yes. of in lows. been businesses. And and we are for maybe last destocking And the cyclical went we're many recession -- that with a We're touch and talking talking well, beyond exposed everybody lot my occurred. about year that have the lot about at in recession, to a of of them businesses

plastics for there's headwinds products X, talk forest some about dealing we past the So of that of these significant and some quarters. with destocking markets, we when in the about talk been other we've X

we based obviously, just XXXX. the on get into from look comparisons easier that, here as so And much

world snap hopefully, economy some stable, beyond a is the a bit And back just in having that hopefully, where growth would here. demand imply, relatively

I've doing bit little only never before, a little talking Mexico here doing, that other about with -- years, the on lot industrial Class a going been in side, bigger been now, of don't as right X, me after is mentioned X things we can colleagues an bullish. Xs gives longer, been the it the think that for control, we things Class make optimism. yes, So But the that. have -- Western you a things I that we're can turn bit has around pipeline that development working the we're -- hesitant to can Obviously, things be if the business, my to that TV you participate Xs but from I

where all quite frankly, work volume, on railroad been collectively momentum together just off a lot the a to opportunities create happy that ourselves for change we're really going think for things, We're lot of all work second of trend. us I really I with them. decades, There's truck. working we've And the that to -- now of forget to that's question. to pushing And exciting. part the around

The projects, did number industrial we of highlight those. a

basically, more kind sites And we'll And quickly pull we're like needs. look put tomorrow, end is got their we've inventory the want of tremendous. next just development, go around create slowdown. a of we'll and then that, biggest come the I shovel-ready back be levels said companies, into are we're onshoring, ready at as but the they -- any more available and the we to are as activity we to readily think industrial industrial numbers to challenge seeing seen as seeing more fighter before, haven't probably I serve year that these to of

a create there. our to got can has it react throughout service of But reach a put and numbers they we've more opportunities develop it, So more job, focus they go momentum how team that's but as the is network team to create of a the we'll around where that customers. to we need done and their so some lot can this great

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

Obviously, wondering versus a do it's how carloads. out impact an to this been long that's much stoppages inventory drags really it strength, auto could was strikes, you starts cushion thoughts on you lot I going the are around have the before the some maybe to guys of area relative give How on. work there or of sector. if color

quick a quicker, want we obviously, mean, the I resolution, Yes. the better.

As you're a the been industry as of, on aware short supply. whole has probably car

cars the certainly degree, some industry certain in us. a we probably impacts other demand us to strong to degree. seen that's some portfolio, some to some have those of supply a seeing to There's we're probably more here have So diverting those impact. wanting been areas. and that so as more cars helping or We're helping diverse able customers to Where we've recently

on what knows every him thoughts I manage we'll day asking more my through But else, his it. than anybody that are. But keep here and industry boss

more -- think this revenue, out I the still think is deferred there. and we demand remains

So demand as the we move all into capture exists. expect we that next year, to

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

stuff big that about about bit channel it's and from sort the Kevin, that So driver been doing should INCs of got straightened domestic single divergence with? ask intermodal looking you're intermodal? drivers Is parcel to of that a any more week it retailer company through you've I industry or a a traditional in this intermodal like Is wanted X of numbers pretty be up there perspective. direct right. getting The growth in that's Is a is pretty little a the over we relationship turned a domestic what's the just rails? thinking to you around there from it performance general XX,

quickly quickly partners go their it it's Well, operations able in have after adapt on it's lean and and team things there sales their opportunity the to I other side. our there. right is. for creativity, identifying ability and and and things single really we're lanes, together after to teams the on the and -- not the operating going -- I think that and profitable, react whether with and market now going after to not there's -- And X work really are there out every driver. It's being side working marketing the demand to new They're commend

So what of we and truck really accelerate momentum got around the weak the it have truck that next proud been once still But they've a in able will and it. really, a value to significant lot as year. even today, the here of is with little a firms we've up proposition, as only accomplish, bit

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

and James U.S. U.S. is West years. today. Coast on away shift Walter This towards I McGarragle, on for number a question share from to East the the I'm port wanted the ask U.S. Coast past of over

share on You've from Coast? West towards indication unions given Do on shift with to the you and the capitalize term? -- to Coast longer conversations strategy the to agreements expect your shipping early you with your the trends East this to these lines trend can the any continue? share And

in I again, West think add heard over terms are you've of to over and the challenged being it capacity. able Coast

Coast to on East and the with to of that. East we'll the expect we're ports continue been so our continue forward. so tremendous Coast investments that continue made work And be to beneficiary that trend and -- going there's And

more also You other a East maybe West migration than go of what are of markets, Coast the in out the can off to that that's and to imports likely go Coast previously. China seeing locations terms and the helpful also that see we're coming for new from

I reason of of made. that the forward. make don't momentum, being making investments a continue but investments great lot of any a been for good growth, sure going lot see significant that, to we're alongside a prepared won't We're story. them. So it's

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

here. couple a questions of follow-up. Just One

little good it pretty inorganic the Sorry final come lines, you to if was I that's surprised pivot get are on headwind are handle think had has you guys and opportunities, to which picture, now sounded just Like also Can on heavily bigger short I worse of and guys number kind growth of the trying rails What looking because Joe, at do little missed been maybe for is historically potential a that that. you see if maybe accessorials trucking? I like all a very to this, as growth, but maybe by. bit challenging that towards about know you kind the a a us something well? for unpack

around Ravi, the with I'll this is question Sean. the start accessorials.

So There down we it's It's storage. in all than There's to year other it been more revenue components sequential little other expected, revenue were bit things lot say there I of down were kind step of of charges but to trending a wasn't QX to lots we different slightly. took of from some long. a different intermodal that from factors. our last switching down QX. would just subsidiary

is impacted It is a degree. forward. good by to this also rate probably a So volume run going to use

kind But line. make it we So to intermodal is for a the bit headed when sure right and likely. do to quarter the bottom, were that will why fourth trend that's where now, wanted we're level of we everybody volumes on higher at we recover think little understood the that just the

second the very from. a level, wouldn't chemical that's to comments a far I of is I of was I But very the areas couple growth been Sean wouldn't highlight part sort be We'll your progressed to say just growth. and see so customers always couple very a business of trucking where would franchise just where where highest Ravi, that comes proud of question, at important us. specialized our of strong haven't how opportunistic. with and that we tonight. your quality highlighted But trucking that the and of Thanks think is other CSX, carriers us mean, acquisition We're we that at from but

fact sense best from way that when you and the gives that First to with industry-leading and more start it continue do opportunities the our win firmly customers. team for to service I growth to foremost, class believe with provide we this the opportunity I'll is think to to -- get customers. best provide more that, us that And business we

have England We're is the We're that's excited have that. wood, the about growth. And going it, but Myrtle region, growth. for referenced opportunity. very the been in Pan opportunity with an CPKC Kevin Alabama. about be that start excited I to new a We're point going to Am interchange purchased, of But we is and which we've you see that we network that in New investing remember, to So where foundation conversations old how we and do to we're to serve in Class we want work have railroads the to growth, how better customers to to new serve opportunity. highlight about those do it, this get differently about see we to to and other I order better to significant be and industry of customer talk excited starting that good some be motivated and in able together for ways with think

can getting But continue to high going of a percent nature business, Sean to things starts reliably, business number and market the some XXs are there that business some should get and more there. 'XX and as all work to in [ our be and they mentioned. our ] the XX-plus better some get intermodal better be continues will more and So indiscernible to the into cynical truck and of to are and then competitive off the continue compliance road We there. be rebound which were get even some we that areas as beyond the product as as doing truck can costs incremental us take increase and both those the the to steps repeatedly versus have just we help Kevin grow -- we incremental opportunities

So lots for of us. opportunity

context side continue exciting on provide that are going We the path works the and to in of that, there's more But earlier, development developments have that referenced in to in there information that. but projects more reliable guidance in information hundreds addition the industrial down all on projects space. some that that -- the provide service, Kevin going to of of maybe on on some on as continuing hundreds not but will we're are

about and our network really lot advantage excited of to to take excited that. a capability the about be So of

conference today's call. Thank for may concludes disconnect. and This you you your participation, now