CSX (CSX) 5 Aug 242024 Q2 Earnings call transcript

Thank you for standing by. My name is Jale, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2024 CSX Corporation Earnings Conference Call [Operator Instructions].

I would now like to turn the conference over to Matthew Korn, Head of Investor Relations and Strategy.

begin. may You

Hello, second Jale. good Welcome afternoon. Thank earnings everyone, call. our quarter to you, and

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

our call, non-GAAP XX-Q with our please and our disclosures In is your our slides note been available the forward-looking website. has find that presentation filed and you will accompanying Also, for this review. on disclosures

to With Mr. that, it is now Hinrichs. my pleasure introduce Joe

All quarter everyone. call hello, right. Thank second joining our Matthew, Thank today. you, you and for

acknowledge the we Hurricane United the our appreciate Southeast all who weather Debbie. as working Before to CSX deal we effects throughout I States start, from with and are want employees out there

our safety our prioritizing of in are employees We we everything and do. the communities

quarter our as momentum I how Now CSX. am in before. our a was teams One all CSX that effective a we strong that proud team. more working than And ways across pleased to this better together are I'm ever the see for are reflect railroad results and building

go to convert partnerships CSX organization marketing to and to create is creating us new, scheduled developing commercially, while and Operationally, market, sales take we customer safer, Rail. And demands. to methods use our and growing base the railroading initiatives model flexibility it value on an consistency more targeted are our more and customers make excellent providing proposition and leading effective to leaner cost that our for

keep the this rest maintain eager our build is momentum entire over team. We much CSX and far of year, we and are we reminding One to There accomplished have on the year. the so

we other aligned each achieve. is team, one there work are really we when So as cannot together nothing and with

service in controlling the Our how seeing and could capacity in we employees, growing leading our and customers network costs are leveraging ways never customer our business, our we shareholders are before.

building CSX delivering are successful at is business we outcomes. positive A culture

go we over highlights. can the Now some of

to past Slide the some Sean provide go labor on in review from our key to results periods. X, certain the show more that Let's detail and we call, engineering second support Later for the On described engineering quarter results revised will of this financial accounting our on of X. compared as report. from scrap Slide treatment

intermodal with achieve unit of Total volume And versus last shipments. the grew even proud impacted with of are the our at this growth our result the constraints to coal franchise, by X% leading X% that Port year. again, we Baltimore

to Our excellent job to did ways creative deliver bridge an customers. our coal collapse respond key finding and team the for

$X.X our the Our over in year of as prices X% last improvement. over earnings than efforts growth helped year and volume per was X% to operating margin by up quarter other revenue. as lower pricing sequentially expense, our XX.X%, income were represents sequential decline just Operating last and point was a and but last of reduce compared quarter. X% coal Revenue strong versus share sequentially. and offset XXXX second flat and efficiency by up flat basis reached XXX lower which billion, up modestly merchandise

higher our we have was that faced not expectations. line been this in Overall, our would right year-over-year. incident operating Have a income good quarter Baltimore, with the was in

do. moving our as by they as is forward focusing always events Our execution fluctuate challenge to now even unexpected and markets keep occur on

to to over the turn discuss performance. our I'll Now Mike call operational Cory

you, And joining Thank thanks today. Joe. all to us you for of

day extend just their the before for ONE I out. operations in sincere activities in that, do effort rundown a to and like team CSX their is and the to Here operating my But I'd of thanks our contribution quarter. day

here We efforts. truly and appreciate everyone's all teamwork

So accidents, and reduction positive quarter and was saw The for factor. trends let's on engineering human the for driven train reduction Slide On highest and although our saw highest first in to accidents We both transportation related in remain derailments X, mechanical slips, an the failure rated a incidents, year-over-year. increase we causation safety. employee on mainly slide human falls the injuries, remains and go injury. by fewer trips cause failure

on to area an risk for of heightened tremendous to and personal potential injury employees our increased occurrence. focus of is highest This Much have who reduce has less-experienced awareness attention accident our is risk of the injury. the rate where development

we take improvements transformation transformation. with will I every extend colleagues, safety how our help this safe employees we to We've embarked cultural through union way also go, in have collaboration, throughout to we all-inclusive Though, operations starts hazards. our able on at-risk By long situations working are and becoming CSX. learn place. believe team an at better with will identify to a to leadership and my This leader and

align the have strengthening ever extensive engagement leadership will is skills leadership program of safety to embarked initiative X-year and to This the organization initiative our they strong employees. this while values valued, CSX. effort principles. the with where and be on will most are respected risk a appreciated, Once an cultural phase everyone of first included. building we've We'll extension of and culture a ONE our next was our knows This support care safety awareness CSX focus

our risks our which We'll stakeholders. benefits identifying unacceptable in eliminating be operations, and aggressively all

fluidity to consistent. over our next metrics pretty Overall, going have So remained slide. the

is combination level of metric found Our And train improved, some local to into size line and of customers reflects our we our while we've service cases necessarily dug our when service the a not maintaining focusing and has variability required. team tightly some require. train speed We money service. as keeping the have in we but seen where costs spending dwell. were on customer deeply switch a Effectively, dwell

customer overall We're well these eliminating the wasn't impacting even experience handlings reducing will result some unproductive was cases, overall it dwell. and wasted engine though higher as the and This train positively a costs. as but in in precious dwell resources metric

infrastructure of will certain considerable increase and evaluating flip forward. to amount side, yards of network that going our On we're time reduce efficiency the dwell opportunities a spending identify the

some evaluation proper exercises aim place workload entail locations to switching increase self-funded This other miles route at analyzing reduce standards simple eliminate the are against our level by both infrastructure handlings standards yards car demand, to we of present start that of possible. being miles. in route handlings production Then ensuring those and and These reduction in are when a met. and of improvements at the and can

service resulting asset it speed, where in improved and sense, reliability. mass more creating we're Effectively, makes

identify infrastructure, supervisors work we the process. physical to with improvements As our that we to lead

to in the understand to has been also better major continue of reduction been they This So a extract as work service to how utilization value strive productive opportunities experience both for by or growth initial for teaches supported and them costs and our well. more. potential. exercise intended gains This through engineering

greater exercises, indicators, them operations their these engagement of we're charge. with are a the team. bench improvement activities areas as understanding and focus identify of better. they operational to senior of gain largest develop of overall increasing of us variety all leading for data we're the their to to which the of we that the area far supporting leadership include ensure And focus of utilize how within through methods strength understand cost overall a is overall continue Through A them supervisors CSX daily they and the and and operations, their then get position to teaching visibility to customer deeper them on lot a

I'm forward through weigh we're We the expect to go right Overall, continue and customer the required will we do as on trajectory. supervisors, to actions improving we the so. our of these metrics cost need satisfied always

and sight well for leaders and infrastructure opportunities ability in have to We plans network our operations improve. our as

slide. Turning over the to next

sales operations the strive this how and continue work and needs team customers. cost We of always with forefront. are marketing and Kevin understand at align to We the service to our and with with exactly to Preferred service. allows our their discipline the very provide work of stressing of us. from to customers they field-level what us and connectivity high customers in mile last the and our need supervisors hand first Having level information a

metric improve delivering a focus areas mile We've cost performance, the continuous metrics opportunity on customer and need. we along like plan dwell service. with but identified rely from are and reflects engagement to and last more first on ensure trip Our same of effect customer mile feedback the the specific to needed

our of In see level always our engagement You made tasks the X the visibility. team our that really been to has have the place. closing, to leadership to importance that clarify much taking of strong our I excited as our we together can months. work increase service and see numbers I'm said, now will. are being improvement can information for in CSD With do that close and to customer we operations

on the learning improvement to also fully plan levels. of one see as a You many deliver railroad balanced deep This for every all our most our supervisors is going them. team And approach to safe, efficient for believes important the our is me, can factor probably to this, and at customer-focused opportunities from ahead, test forward. all and

With that, over you, Kevin. to

Thank you, Mike.

our a operational Highlighting and As collaborating opportunities momentum, and teams are discuss while efficiencies the delivering we these sales of collaborate operations. evaluate profitable seeing on to Joe together lot to initiatives are around solutions positive business. where with reviews and marketing, referenced, target to really particularly come new market

competitive a for us efficiency expand to deliver network and more product growth. Driving service allows opportunity the

creative a want growing truck of their very We conversions, be in are our forward use continuing to development CSX shippers with and pushing number solutions on industrial to new maximize of projects rail. aggressive who

weeks, for from accumulating remains over fluctuating heard of sluggish prices move a industrial and the second the markets market across housing mixed market as we creates peers effects of interest you've these rates, markets half some past competitors year, headwinds commodity of of the the are including transportation a As we and serve. industry into and trucking the our challenged number

continue volatile addressable modal and expand a but share CSX's we initiatives to drive to accelerate It's environment, market.

a as reflect performed has industrial results in X by was with that our X% to we team service well year-over-year turn pricing momentum surcharge We chemicals, Let's Slide revenues markets. a on quarter, at franchise persisted the performance. second had increase plastics, volume. lower and Chemicals with our as to higher X% the energy has waste RPU fuel result up very delivering. strong continue look Throughout even get great the in merchandise X%, that and is

markets, revenues by Minerals where saw for path Southeast also network unique development we growth. glide industrial results into Florida, the multiyear including see our a access positive driven wins and

began network. Northeast portion demand the recent in by business Forest our accelerate, driven in Our of wins Products to and board pulp

our that puts We've been promising position has in this a very partnerships available, more market rebounds. in strategic as to capacity which take some gain good housing advantage to truck the network market share developing the of us

to our Our saw revenue growth, win product customer. automotive key business a leveraging strong a competitive with a deliver X% service

Less metals by near-term phosphate most This uncertainty favorable we high this issues production quarter scrap and here market and in the Fertilizer coil recovery. Florida. steel was of expectations prices the weaker in prices volumes is weighed plate a trends probably continue on with to volumes. as hurt watch inventories for where be

remained As of the quarters, haul and dynamics. RPU. supply on food total of on mix lower crop unfavorable soft past regional And in effect short this volumes ag fertilizer

to So incremental year, where fundamentals a see by the into half back of the leading growth. southeastern we weaker very we encouraged opportunities for the crop are

year, the we and best-in-class a weak of our growth. expect trucking remainder the sluggish to For capitalize market, deliver on service to despite persistently economy

remain waste should strong, plastics Chemicals healthy supported study wins, business and moves. by

in which differentiating in Food us from Midwest. segment, Forest market. feed supported demand opportunities with Products hog which much will -- the second see feed operational will We're for a in our better focus Southeast, by chicken where Ag and herds we and also half larger also We the our supplies anticipating need business. see grain the

X Slide the business. coal Turning to in

call. First, I want to beginning the of from reiterate the Joe's comments

Baltimore creative solutions did the a coal team fantastic finding move collapse. after of Bridge in Key to job Our

reducing in serve. incident the CSX customers Their impact we had that efforts this and the made negative difference huge a on

of a at highlighted projections. we ahead this weeks Curtis in original spring, end up our May, and running As at Bay conference earlier operations the were of several

have the For the X%. the revenues more XX%. collapse, estimate without of been decline We Bridge were the down in would that range Key year-over-year quarter,

by is that down was the utilities. largely which was decline able volume with X% by extraordinary driven Volume domestic to X% is shipments, here team by year-over-year, an grow export only Key in and year-over-year lower result our to benchmark line export with sequentially, and utility given was the mix. port Baltimore. X% our the expectations closure of driven RPU X% unfavorable prices of lower and and

key $XXX remains benchmark Australian high-quality the above for metric per coal ahead, ton. Looking

a high volumes third as temporary coal mine single-digit little in all-in we Given production our for a export have mines. sequential mid- other expect export offsets our decline quarter. opened the RPU export contracts, the network of The we should lag recently impact strong our see CSX-served in on at coal to on idling

Just already see some other last finding pivot as creative to the where strong terminal. we the Curtis this in towards team demand at our capacity Bay we export opportunities did for is quarter, marketplace ways

to maximizing On the demand. service we've prices strong seen with response signs domestic the very continue good several region, side, gas coal in but our summer from low volumes, to some natural utilities in hot impact units their

in earlier also seen levels moderate the year. We've inventory the highs seen from

we on X% and negative growth. the of effects mix. RPU as lower on to fuel X% X% turning volume Finally, Slide declined surcharge increased Revenue revenue felt X. intermodal

international activity alignment East growth line our this volume steamship higher Coast favorable quarter partners. by and drove our supported Our business with import

CSX. the This muted and through coming gain the our a continued momentum domestic been hard pleased tough remains trucking pushing in business persist. team throughout year, win see weak to capitalizing the for to in has but trucking the meantime, in than In as has share remain conditions been trend on keep solid together far what was has business quarter. and The customer opportunities weak we'll our in so the environment, expected third with best-in-class contrast, working in, leading we've All the year, activity been service. collective intermodal longer into much market year, the

With demonstrating creativity, apart able service customers while stands across CSX capacity. profitable markets, X% we've efficiency to our volume our setting up year-to-date for by mixed to over term end conditions been grow more total the ourselves growth by for that and longer

me over turn it Sean. let Now to

Kevin, you, Thank good afternoon. and

efficiency ourselves As service, costs Mike revenue the and wins. in operations gains with challenging new strong to grow and team and line support drive hold we're pricing continue through business to

over as discrete several results the of cycle the items momentum of year-over-year built ahead in we've the strong quarters, to second we noted, the our that prior Joe in we're finally half As last some looking and years. growth year helped

year of bridge benchmark and Revenue related Expenses was the will the partially about down ex to drove results. coal second and was next revenue pricing X%, in slide. and trucking while declines Francis was of Scott and when quarter, higher, intermodal recovery revenue operating revised flat were million headwind line Merchandise was in on the fuel lower more X% items Key discuss collapse, in by income $XXX the to impacts up $XX million. export other and revenue, additional X% fuel nearly compared prior unfavorable an detail I offset

and $X million Interest year, $XX by to compared prior other was fell expense expense the income million. higher tax while

year-over-year As share a sequentially $X.XX. and up result, stable earnings X% per was at

a closer and slide next the look to take at turn now Let's expenses.

quarterly and a labor engineering accounting immaterial scrap adjustments reported certain review of As statements. noted financial report, to support treatment for financial the engineering previously in drove the

Second revised was $XX million. quarter expense up by XXXX

between similar increased And cash impact will labor going second result expense and did portion scrap labor in by million. the quarterly a forward, lower adjustments labor capital Total $XX for expense impact PS&O. not and we and engineering quarter expenditures flow. expect split The

items. line individual the to Turning

stable partly remain slightly first up $XX compensation head and by remainder the the was from to inflation fringe through Headcount the incentive relatively and costs other Labor count offset quarter of is million increased and items. from were as expected and lower year. declined

reflected attrition the wage second and continuing our higher Also, reminder, deliver effective ensure is to a per employee. to pipeline July future that to gains X.X% a support are as in labor and a growth. stable be while cost X, union sequential expect training receiving the half efficiency employees offset We on increase in will

Fuel lower mostly favorable million a items. offset and and and $X services in was insurance Purchased a quarter cost a other due fuel-saving inflation, years. last higher of was costs the quarter down up by write-off increased a to gallon recovery efficiency, offset volume. the Through operating of and and improved effectively driven asset of fuel Depreciation we matched technologies, larger efficiency combination $XX million, savings by to leveraging best X our broad-based efficiency related price $X million other partly initiatives base. expense inventory costs a from over as calendar

$X equipment million. million, were and $X property gains Finally, unfavorable rents by decreased by while

flow distributions to Free is Slide XX. turning cash $X.XX and on billion. Now cash flow year-to-date

This reflects back year this prior payouts. offset the and partially of lower net payments deferred made impact by earnings wage year, tax

we expenditures and capital growth to distributed to the year-over-year for long-term our excess funding also billion fully $X.X opportunistic are and we as expected, balanced we of to reliability committed railroad. our remain approach these investments year-to-date. cash. higher After to And continue safety, nearly As shareholders prioritize investments, returning

Our interest long-term our aligns further focus on economic shareholders. with profit our

year-to-date we over comparisons, on profit economic is While this year lower cycle growing the team focused strategically is time. measure prior as

economic profitable half and his Joe to prior disciplined We on remarks. up as utilization capital is turn versus returns asset be attractive to that, expect closing our investments. back With with profit year second for let the it me paired growth

All right. Thank Sean. you,

growth our remarks look we first guidance slightly we few more expect full does months a up half at lower XXXX. half Slide of to it was Now fuel below and the mid-single-digit little reviewing The range did the year we the XX, a will second to ago. in by volume appear prices. expectations, macroeconomic total If for due the for original environment our Total revenue year. largely than total our revenue low wind prepared uncertain

Forest and wins. growing and activity, minerals portfolio increasing in markets, described, customer by ramp-up across we of ag new business of merchandise, Products, food chemicals, a Kevin and supported projects, the as said, That promise see

metals lagged fertilizers hand, the other appear the have to remain likely softer the of through and year. On and end both

should strong expect service partners. even drive strength in returned modal domestic to us while the half the Baltimore, to Curtis allowing and the a of is The reopening modest coal truck ways of conversions of performance, at our build gradually market port This remains We in Bay to the momentum meaningful which activity intermodal, supported working but operations by shipments to with and an new demand second to consistent full together still facilitating small channel the our soft. port pickup of year. is lead

to service, forward together our efficiency and a as our team continue leading work ONE price to We CSX initiatives. better according push on

we to As on a operating expansion strong revenues. expect incremental result, supported year-over-year in the deliver second by our margin a a meaningful margin basis very on half,

of CapEx Our as $X.X is forecast approach is balanced returns. capital opportunistic approximately unchanged, billion to our

We the over are of year. the our accomplishments by encouraged half first

are rest our of on we ourselves growth over the we very XXXX term. plan Now as profitable sustained the focused position for over long executing

the North sharing November. capacity, culture the operating have ensure about we team run in leadership railroad we the are Investor that model, our our America. more We strategy details look the need We upcoming forward Day to best at and to in

company. for we're ready interest take in Matthew, your to Thanks our questions.

[Operator Instructions] Jale, start we're ready process. the to

[Operator comes JPMorgan. of first Instructions] question of the Ossenbeck line Your Brian from

we've East maybe customers. from So you're there's to see if impact in labor the particular anything seeing that that or just feeling if wanted point, impact to a any seen lot sound the disruption with you're like that's doesn't international And of case, potential maybe wanted see any to I volume. Kevin, Gulf but I Coast hearing and from

into some You spill but over would you start domestic to gave side? think that when that, the reasons do for the of

business. on given right? or on we've of market magic the a recover, Yes. domestic question, I guess import One that's seen the side the what export the of

into major especially in that trucks. I network east I some of opportunities hearing a business think our things shift it not don't from If part than think still our that's more west. maybe -- from their to risks the occur, eastern were to today, where presents to want customers activity the I move the we're further probably for if

well will right. we We'll think be customers their some uplift a us. a the think bit calls. to but earnings this on team recovery, all import listen all And better see for earnings his been as on shift, will come, more we into lot to item on capitalize be which that I it if the and a I ahead We yet optimistic with came prepared and on sure. watch the customers not from side. to to our That's a of close little you on. it's to the capitalize side, but it's precursor hopefully, domestic that Mike calls days So year is heard the pushed team business our we're from the able a the for domestic necessarily, seeing on And

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

think in the I what the puts meaningful the and you sequential Sean, like some half every quarters in you that? just So coming on back Do earnings, continues X any comments that good And give of quarter directional about improvement color and a know thoughts margins down? means? fuel stuff margin us it's row for with that caustic sort takes

side. what's Yes, not that's year. that, is setup half on half momentum the margins the Sure, some I of exciting but that give to comparison core of starts dust continue a for estimate build we the would the about to cost on we see second second And feel the year of you'll the think in obviously, done clear going both been Scott. year-over-year we the the and of improvement pinpoint good sort year, in of the have mean, in meaningful we're or terms in I to

wage for $XX will drop that But be a down that us, worth will we're Kevin's be that couple coal are second about supportive the of is -- fuel. the service incremental be a you guidance business. mid- got Sequentially, probably third the step remembering. also million of which That We on attractive quarter, at will will high the action the digits. reflective through to delivering very up margins. the seeing big the service as that things RPU, One to pricing as the we're going in well on impact. single That growth of got

the had We lag second quarter. positive in

That that where control on headwind be the wage obviously, control, said, depending on that we things a or holding outside at fuel quarter of line But growth well. increase we're growing strong expenses. the So of prices we is about terms prices. we incrementals. as in expenses. good we're second our can't go, The for year-over-year could rate that that, that run And feel can as delivering the focus on and

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

Kevin, and maybe looping Mike in on here the as well. opportunities. Back

think could East hit lot relates mentioned, with are as I as a directly. probably there's et There's of of cetera. that it around perception kind probably rails long more ports. happen intermodal, to haul the uncertainty what a Coast you there's the more But

you of opportunities the gets this network just as us and risks you far resources what and it it about does tell how in keeping think the as balance of to closer the kind Can and required Coast to as East focus did ports. have were you stoppage to more be are some shift there of a if and Chicago to the opposed as that

I'll Mike up. really But standpoint, capacity team. a close working our we're follow with from Yes. let

since we're there's opportunities on well the move probably like Coast local. some East when east some should more these we disruption volumes but traditionally you I we that a happen think would see as longer to positioned in have the haul business temporarily, events for past mentioned, adjust

of it locally all that an that. for to more are capacity. and have Coast, through that's us to West opportunity markets over I'll participate, Think maybe about of we'll markets Southeastern to ready that the would be But to hand trucked than do to Mike about New talk the the York move and some

capacity, John, Thanks, John. of Sure. lots Kevin.

But a part, let's can rate in for of terms that's us train work We of higher brings whatever our network have say, our withstand most Kevin the lot at done using a at We've the intermodal. terminals. capacity. pair, of

the that for deep really capacity of the mile the the months terms and there provide X over first customer. in it's has last over us the last to X business. to team great for get dug intermodal Our in But network, to the here

question from next of Your line Fargo. of Chris comes the Wetherbee Wells

don't for gave Could it, do if I There's XQ? change I the volume into side. products you the quick, the of quarter, repricing forward? contracts are about guess And it. us I on are on how accounting about, see for was apologize number XQ? able real guess you you to going to I think service if give I terms of know acceleration As growth you being be missed the the probably then year-over-year new pricing very curious sort you I of you I most seeing of through and on do signed XQ the year-end. as continue they you're solid. know opportunities the some But any capture that in impact

the Chris, it's restatement Sean. I'll take first.

pretty of QX, mentioned similar this prior and we're as we QX first was Kevin $XX obviously, I in in that reporting between second to a was pricing. impact for the similar what and though million results expect on a for year I'll time, what the impact well. So year restatement split labor PS&O even turn it there basis quarter, the over for to that's because go-forward no was

Yes.

truck a do you're when convert to going market a backdrop lot question, success. to market build is On see to not the truck but as facing back. the ideal of most had we've And that clearly, that you're momentum trying comes success second really that,

a strong we've side, of the environment, transparent which So pricing -- as about. and not pretty on intermodal been

the there. you're year our of and right, having a side, repricing the year. providing around efficiencies we're discussions we're the them, part given of every On lot And for given first the year customers good given the value end really driving that to comes merchandise of the we're service, out at next

be factors those see and deliver obviously from value and covering still -- really every the with down, have the changed year. the We that to those will customers inflation want giving and nothing cost price value in the go along business more things, coming we they absorb will to so inflation our strategy with has us But we to after volume well, as there. our but

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

offer could you think the thoughts some if Mike, see, how is network to running. Wanted you on

some think case a why on-time would metrics like compliance. be and XQ? you whether into show as bit if the I and those you of think terms look that of or you the to in rivals rebound deterioration I you XQ think carloads little of would expect metrics wonder

focused we Thanks in whatever -- the have Tom. though that. tell not really here the assets caused safety being down first, Look, made which as are But last do sure changes on to to some service, most things. right pushed. plan, question, have making a trains the terms in we X make X we to in the Sure. by that Well, lot we on our we of that for cases you whether of there operating months, can't changes metrics has out run as on time,

So And stored. in railway. to some being doing metrics. just there's We're right test now yes, things been of drop the locomotives the some

yes, properly first them will how a as people and do partake group here, it. of for go to And learn very all, second in improve this to they opportunities But forward. of we to have we with young

perspective what we're effect yes, maintain they're having on that But service, effects, powerful. So our some and material, of from the able changes nothing some to is do we're a lagging cost making, indicators. but still some

their And benefits between more really people starting to even up. the connectivity and on our field by focusing we're customers, see come

running for that's service, our not So get for We're the running return, we're a metrics back. running and yes, we're a at But very same metric. we'll important. for time, and

a those good concerned. me, here And go, July I through now. the I'm so as go Trust just storm regards. to I've months me, we prior XX had going, we learning as been focus for metrics. we a in it's pretty those And improve had to not overly Tom,

improve, out the cost service safety, and and So focus metrics and figure there. metrics but is we'll will on right from

Your line Ben next from Nolan comes question the of of Stifel.

side I would I Or be bit fundamentally, going was just pretty talk would be you this maybe business think maybe -- the on to you on working a ask that the a of the to been the chemicals for well that side you chemical can was you how gains or more to do lot helpful. chemical relative there's has any to curious is competitors, it's little side trucking moved? framing guys. just share

first got to I side that backdrop difficult Yes. we but industrial Obviously, on really I market, there. for help year. chemical last that mean, have us our are some the a think to seen start starting with development you was wins

been that's positive in plastics market. the So

we've capitalized on So opportunities. those really

think I customers. And with that you we has a it's conversations in the our above helped that obviously alignment understanding carriers quality them, the all market and of with of that mentioned, us have

to total it in where over kind us that time. opportunity In of really fact, a more network us there's rail that together recent a customer we session and together, at look bundling we're for work and can whiteboarding centric their to allows how make

been the are were and things, time customers X able our momentum, up for really leading exciting and It some really the we're So us we've the than of have picking that ago. really that things a but that to those the a it's are we that with working or of long really East, above. a on different delivering conversation starts all on service in year allows to with

line of Morgan Barclays. from Eric comes the question of next Your

ask industrial to development. wanted I on

contribution last wondering those called think Just you on some X% update out quarter. if that of don't merchandise slide you could called volumes out I any the to offer merchandise projects.

the since might or wondering think, 'XX then for, tracking X% just you've incremental if last or So any the And end to of I quarter. that about Anything progress just X% made have that high that's range talked to still low curious closer be target. you've 'XX? other

to are Joe bow story on Investor Yes. all a acceleration more that and at and Day mentioned. put we I in we're in year-over-year I details But going open more that you. lot of year, that range And kind of mean the the up share probably a certainly full seeing and with look this mentioned November, run of rate. you of when at

things up you will and following some anticipate that take And can place terms year of and put seeing or certainly to get X of that year full a the next in year but rate projects, this volume, we're year. has we accelerate this year, pickup these accelerated to really then in run the

to means of really growth those as projects come rate that full years production. So several up

of are a projects these million. average, $X lot On

the that merchandise small projects, diverse projects add opportunities to a larger as up our We of lot of have it's that well, in across of fairly do large are So a number. coming a a things set it's very online there number but segments.

We out the there. it's So see momentum still exciting.

it's going you. I details think in November talk to be about with it fun to and more those share of

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

in when -- didn't say to clarify can Or it? going improvement do if I you're improvement sequentially. kind to there? you level can you progress you decline, wanted meaningful cost labor going if is opportunities on answering question, see And I to Sean, cut then were suggesting just improvement of you expect that? Or you were we this sequential clarify can refined guess, run to see you the but Scott's mentioned just you still say you or see see when to flattish, you

We're guide did that I'll to there Ken, specifically trend expenses, That of being we of to to the the step RPU. wage XQ core coal terms not out and said, the up, in from will should factors Yes, pretty be the net take a first. similarly QX. sequential lay I part XQ going the to somewhat couple fuel sequential. challenging

happens the and about in good And we'll of demand then seeing feel on terms we're opportunities see the what always in there's labor. of is momentum And think many out But mid-single-digit Mike overtime of year-over-year to I efficiencies the focused across labor second continued the half. to clearly opportunities, of equation. the crafts. drive reductions growth side terms on there, low in volume again, revenue

closely from particular. and the looking at those just also an cost retention in is efficiency T&E retention not got do important, workforce costs across There's very from standpoint. team how significant standpoint, we employees extraordinarily a craft also in training He's and but increase operating a

think where efficiencies, going labor do than will we expect side, headcount half. it's in So improvements headcount in headcount, on we not more be if and the year-over-year forward second definitely even drive will the pretty stable, headcount I opportunities grow volume to

question comes of from Your Daniel Imbro of Stephens. next line the

This to ask, balance anecdotes last showing signs some truck back pick you some Brady it anecdotes up are couple could wanted ask, picking have seen from the than rail little up wanted on the half? seasonality maybe the to or again, heard customers or through even heard to been any and of to as I market, sequentially conversions in gone a over maybe for suggest to season, of closer has is I we've years about Daniel. earnings moving we've truck

the you call as did. to listened I Yes. same

they're think lot I closer it a basis day-to-day to are. obviously we on a than

environment just up And longer we're what think I than than the for has expected lot persisted ourselves the recovery. setting we quite a expected, anyone frankly.

set I to think don't heard. than we're further But anecdotes And that have well I'm there. this we've we're better along our ops capacity have up as what positioned not. I ever to And think additional Mike hopeful standpoint, we're add positioned bring all I we're volume. cycle on any in intermodal a we with for -- on side from than mentioned to the

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

you little made. a to to deeper, I dig bit a wanted Joe, comment

it you just again? ago. color of the this I PMI with customers, You past quarter last could comment customers negative on appears what give more was week? be Was saw about And little number that we what over we've talked sort Or now. to seen you? from it elaborate the bit that. weeks more the being your X to job uncertainty telling might from maybe guess, is than that more a related us And a be, there if

Thanks, Jason. Yes.

has the the seen performance down you've out while think we think the little weeks about shutdown I been of in few area the had talk period. half a first number a areas. of I coming Kevin last a their didn't highlighted was And over bit have we strong automotive. the One year, of shipments

So carefully side sensitivity. rate of that's consumer interest from very we things, one watch the

If business think market housing are about our that big you too are auto it, in market, very sensitive. areas rate

watching so comment comment addition carefully. the all we're was was it in stuff I So earlier. my But in that Kevin my that's talked -- general, But more about very to uncertainty today's little just a thinking were we the more call, economy is the mean, marketplace, this about events I there's before where think I this really about think is. in even

that excited watching we're for a watching Fed. about see happens happens We're the in the number half of But the We economy. year. second with what general what clearly, of we're areas the

we're ago, pick very carefully. watching it bit if it the that can could you months where to X say optimistic up, so I a And economy but we're we seems think versus are and be fragile, itself today little more

Your Jefferies. of the next from question Stephanie Moore comes line of

that we've hear some commentary the same you're acceleration maybe and the kind that the industrial the picked kind Maybe thing, on seeing seen to kind love that or activity that color forward? general some of from of Any but a look we thoughts slowdown suggest as Southeast. infrastructure, maybe across continuing investments would like in maybe up there, of

and is that have EV there much Not diverse portfolio last a was really just pushed larger right, a much, focus we on slide be I the of any EV slowdown. very, to portfolio, certainly, but the presented time very a market, segment. we the lot we've our that And and some do think of seen than

continue we areas obviously line But of we'll other clear to have period is have a over ramp-up stay a and underway. pace, pretty a on already construction of time. lot So on sight, trend

to So a finished. some of these be lot there out capital with needing projects

good will even pretty us and half the that year the weaker these in feel seen macro we a following maybe next in despite factor if year. bit back the on that and a the part continue in little So back into positive large projects be the half and is for

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

XX of were more peers on Sean able past. for the if know -- But don't OR OR least where I a at in -- a is number I question this inflation, wondering now could with with OR Mike that work for go? rules. a cost was new long-term, quarterly achieve and regard a your to or I you to your basis know

environment, you safety. real and if else? the rules other if talk a just here current do efforts. we to in you've something efforts or play target And conversation. run XX exclude new but really you translate were If rate making about still rail service XX on the cost your the I'm to not come little if again? inflation, your Or much on trucking Mike, itself, you cost great the Can look the And we mentioned operation and is bit factors into impediments from are efficiency, have in these that maybe on past? they this new so achieving see talking conceptually you're the at your And XX you to work the had

the on that's not it I'll Well, time, off, start Walter, in what again, than aiming just activities able We're opportunity to as and see here no to different a terms in people Look, And my be supervisors happening financial to here. them speak. it them efficiencies. tools time, the my friend we're call. hear of it's to going relate career. do turn see the and the focus, you're our to get for. better. of pipeline And And we this see We to developing you. saw to lot we giving things, is I other that I'll a I over and margin things nice any these Good is There's to waste. take rid previous of that's where connect but

that's industry, it No. of Thanks, how helps I further think Clearly, railroad. technology our understand we're running investments, I the financial efficient gains, railroad. the Mike. drive mean the is in That's as our margin, look us projects agree. capacity for obviously, an be margin. And that value disciplined invest indicator that's and goal to growth-oriented a and the the to we're to the grow grow those we the across projects grow at help as spend grow capital return, focus. business to incrementals, really high do the things profit that earnings, that have are to to that going We surest efficiency isn't economic investments in primary the strong to able way of or around is quickest to help us company. way destination. The health. But opportunities well margin the whether

now the versus changing rail a can't continue point in don't operating improvement That previously, as metric see things inflation to right our be expect over we got on ratio, equation. the continue, I able the the to that make equation us being we of and able have of we've time. good other I of reason terms you any in many why to in terms formula said, of that think And impact we'll see is operating If financial metrics for in confidence margin that. performance going that do across we

part Yes. This of that. appreciate margins. I our is Joe. as comes you recognizing add to Last when comment quality carriers to equation to it

and now had at look you corporate our looking the down, even quarter being we XX% performance, over scrap to for second with If our fuel in labor accounting at according our policies, results. margin even

the effect But if as on we've margin. our the about you point total -- basis at look in said a effective XXX past, is carriers quality

had those or that you're had things in export even had quarter. or surcharge rail had a second a storage of charges quarters things clean lot coal or In lot the that of a math, XX% operations, like quarter going you prices past that. over high our with of like on a in and a margin lot just exceptional do then not other So if simple the demurrage referencing record fuel or

how recognizing the and about operating to performance. And service hand this in potential excited run as kind stable margin a years, of we've that of and operations, at we had capable with We're that this pretty with We're very the quarter our the business And forward. we've of about efficiency collapse. rail noted, go inflation over of our even the that even Baltimore with hand. continue bridge delivering last couple optimistic

a have And we lower is XX-plus pursuit just this percent I quarter has past. that. don't of margin optimize has company and Having potential where of only think our to it rail business, the that a of operating most opportunity margin. lot a margin itself, XX% even We mean, if turn business number, the the in industry margin And all cost it this capital than away I the kind present to last said businesses down. had that, is or good for turn our

good but incrementally It a still the would the of business. business, deteriorate be margin average could

point in it. We're can look return business the cash no growth. And we grow matters. we to shareholders question is and it. way There's valid. the And so to that's Sean's where of that that's about very Efficiency going kind reinvest at so profitable grow earnings, for

So the about. growth what the strong opportunity But margins. margins we're these profitable the has growth, safety, That's so big excited create at service. which is to incremental

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

incremental I a differently. ask Sean, little operating of bit to sort wanted question average the

if profit what's in think of the half to is the If to what's year, volumes line in operating of there. the half first leverage are you up equation volume, year? I X%, bridge operating look about to X%. change is in down going the drop down know second But been you on the that the for at bottom the missing

Yes. question, David. No, good

look first year-over-year half, at coal pricing of kind you net revenue, I in other $XXX Baltimore the of decline the that's million mean, get challenges If I unique export to million. about fuel, between the collapse, $XXX lower

to not near significant. is half be anywhere that going Second

coal We will have headwinds, pricing rest pretty but clean. is the

course other over we cycling that's the the labor of last in we the half some year, -- thing of the additions of that were And on first then still year. are came the different,

headcount flat volume turn right So year positive going our in That's productivity the was and keeping half where the essentially first half now. from second are our we of labor of to negative in the the year. on growth

are those the So factors there. X big

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

appears leverage little a sentiment a that is the the cycle guys piggybacking inflection bit, from seems of pushed on on you kind of little is operating it also of say message on one to it more out just the a I mixed fragile. bit like you and economy a that bit did kind kind of and summarize little call question. the hand, Maybe little mean the a

hand, pretty half the are leverage of guiding the the strong operating back in some to On you other year.

price of that a operating may driven market kind puts of general how takes you and little hard visibility lot as by leverage the get in a markets on to and that of come be Just some the to given a much end fragile because a trying have especially volume by sense indicated there. and on that that's comments

Just that leverage trying to of have in and confidence get you visibility the a sense on operating much back half? how

but year-to-date right a much Sean, on terms been plan great. lot had takes. is both which of volume We in on of a There's in and a across total the place is we're our puts teams. pretty This plan and stretch basis, revenue,

we've And offset we'll done a be I out think as in to figure of goes good that ways think good a we that Baltimore Key what been of have able about and the forward. continue when number And challenges with there. opportunities. Bridge adjust there them. job And Kevin also we to year describing did outage job talked did the a to we do to the

between the ag and and actually are as and got uncertainties quite some strength the chemicals us food well markets and a that we've but not up for are year. There setting continuing are headwinds the until of show in there minerals It's of some some of nice half second guaranteed year-over-year we There couple areas growth. move well. to out freight,

We're is need to we're nothing that not the also only focused the in marketplace. on getting but growing given, ever focused we a price get volumes. the on So

significant that confidence that second there of we're give base. already pretty price the year seen hold where improvements half. exiting entered and A the half efficiency to has and in year year the lot driving we us the locked from the cost of then able we'll for this first line be been And already where we've to into the

growth is expect, Yes, macro improvement? supportive maybe as we we the we will. deliver as and margin to able see we if as much So I not still be think will don't

of Research. And from the comes Jeff of your Vertical question line Kauffman last

question. quick a just Mike,

been You actually, talked might mentioned Kevin it capacity, that have about excess that.

that We have I line. the plenty of little a capacity up noticed on dwell bit. And was

you the are to run said is, question with on seeing testing locomotives railroad efficiency and what opportunities here or my there help cars side. it can asset drive -- maybe fewer you're technology can fewer the or you guess there I do So

about about cars you just mentioned utilization I people of for not side the on cars I'm not. the X,XXX so see opportunities that wondering sequentially. were earlier, because much because was But if improved I kind here online what know do or seasonal talking up asset kind of was that don't rail? you but

Thanks, Jeff.

an were we -- I speaking what what clarify, about shift. intermodal was before to Just

we But trains talked have So I was and is capacity the intermodal answer the our speaking specifically that in that yes. about about, network. you everything

day-to-day is want Do we're be fewer enhances there that infrastructure we now corners, have. locomotives, to The is are focused run we on the about thing sure sweeping it outside them. understand what the biggest what the the goal with doing? looking achieving we're people right technology will standards at making Absolutely. that We're and of for

you everywhere lot And opportunities traffic, it we so runs. some of and miles, reduce railroad where it create switch This you to it has versus it have your today. reduce essentially don't can where accumulate there's all handling, linear, being of mass can customers out a route out

going to going try. to we're So

can in block areas we origin road the trains network at We do all to swapping eliminate and bring see lot with don't those we of have and a because we create where online places are just mass looking We and touches at terminal. work certain do. mass that our the

in we're our there's about show there. me out or Investor talking together, We'll lay we'll you talking there more what than just far So it. about Day get when opportunities we

questions, and further call. Q&A session no With concludes this conference the our

may You disconnect. now