Norfolk Southern (NSC) 22 Oct 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Norfolk Southern Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

This call is being recorded on Tuesday, October 22, 2024. I would now like to turn the conference over to Luke Nichols. Please go ahead.

everyone. morning, Good during statements that provision we make of will the Please the today's meaning forward-looking XXXX. Act Reform within Securities harbor of certain Private note Litigation call, the of safe events future are materially which risks from to relate results. to statements or performance Southern subject may of and uncertainties future and actual Corporation, Norfolk differ These risks Please most a full for refer the with SEC as our to view of annual and those filed important. we and quarterly reports uncertainties disclosure

at norfolksouthern.com our note available or basis. adjusted the being Investors non-GAAP Our used prospective with are presentation ratio. the that adjusted in section, along to are our provided measures operating reconciliation measures on Please slides references non-GAAP operating including any ratio an of all call comparable during today to GAAP today's

X. It's Mark Officer, my now Chief introduce pleasure George. and President Norfolk to Turning Slide Southern's Executive to

and everyone, morning, us. Good for thanks joining

our Chief X-year our incredible executive Officer; Chief of and with Norfolk John experience Operating had the my with Ed me working Zante, he and Southern, our Jason at Chief talent, leadership and privilege closely our team. Orr, Jason Elkins, recently Officer. to Officer; I've during are today tenure Financial Here brings appointed Marketing

labor weeks, energizing it's Over railroaders the last few customers to leaders, connect and the Southern been network. with Norfolk regulators, across fellow my

and employees We our have for skilled to partners are who a and our delivering as strong colleagues franchise well committed strategy with executing diversified and markets, high-quality shareholders, as customers communities. successfully customers, on

overcoming devastation within serve Helene across a the was for tremendous amazing that of able us communities, colleagues It being days. to railroaders and we've our among deliver more that skill compared year sequential made year-over-year to actions improvement the higher adjusted Hurricane their was history. company's and work landscape. It's recover third our and challenging who year. last effective of us achieved grew We planned caused quarter and the progress. but Together, responded do, prior routers to best I share earnings the and dedication team XX% productivity, third we network. higher fast notable enabled per revenue in There's enormous are the margin want resulted quarter of and while that delivered lot have and drove than results thank to a our to our valiantly Speaking X% the in to and that communities volumes

Importantly, improvement margin to we XX.X%, delivered basis ratio continuing the bringing down adjusted OR close peers. XXX with points to of that gap

John sustainable operations from driving work and team well weather Coast significant the East challenges helping a in as overcoming more is build us about incredible efficient is You'll the network. of Their stronger, commitment multiple hear to an excellence disruption. that and today improvements port as resilience

John to on quarter. in progress. of components, Jason provide and provide volumes a the it project Ed over start now terms also the as color in We I'll sales and greater our And finally, for as an drivers rationalization. outlook accelerated of the number will detail to line notable turn operational well will achievements of overview our productivity with to markets. John?

I and sustainable and service our as points. transformation share Mark, how is productivity our focus team am demonstrating agenda on you, that improvements serving to Thank are our protecting morning, foundation for QX, drove proof the delighted everyone. In system-wide good people safety organization our and our improvements. while

very on with Overall, guiding value progress Our safety. is safety. encouraged I'm our

accidents significantly, respectively. total our increased, serious injuries personal injury XX%, declined and have While XX% has FRA and rate

X next frontline drives and multiyear the builds of we railway over operations in Our business first work investing XXX are commitment curriculum that trust quarter, top-level environment blueprint the people. new the officers our organizational our Thoroughbred will core In and the starts and X,XXX completed Through performance. They months, for curriculums. with safety operating over creators. participate value skills. Academy, a in are leaders And

accelerate designing higher in service. a schedules, Star. by QX dwell. is and speed Turning allowing and safety train is a North to velocity extending year-over-year, handlings performance are productivity in The speed car reductions us our With in out which XX% as is create X% improvements for and producing driven guiding growth. gains platform value, competitive more increase train and progressive team terminal also service driving The reduction Service consistency. to was cost our

initiatives XX% elimination per of been we cost an robust. overtime Year-to-date, other with attendance starts X% including over day. flywheel Our reduction takeout in of a unproductive and reduction cost start, per in has reduced XXX the crew and incentives.

we've cars standards, moved helping front, and and This HPT Intermodal us allowed to train, train to productive industry reduce from We've schedules us is in engines. in stored us assumptions. improved power over capital stock revenue visibility, relaying a both train challenge intermodal develop accountability the quarter Precision rigor. new Locomotive allowing new more XXX the X,XXX-plus proposition XX% value the management fleet adding are since have longer. extended productivity system energy in for by and off-line reservation locomotives program, capital year-over-year, the requirements rolling terminal and optimized to our March. spending unique On previous has our service keeping Through assets and

are efficiencies result, levels. a fuel at record As

are Our and pipeline gap and we've efficiencies cost materials and few commitments. and extolling close strategy surface cost the targeted confidently competitive reduction productive a and crew ranging helping in tactical procurement, strategic, consumption, across track structural improvements service that our us within scratched initiatives just purchase enhancements broad, to of the both optimization, the our is management, that in are

how and slide, want engineering to I a to and protected I to take employees, moment communities They Hurricanes As we proud the assets. of teams. move response state Milton, am our our to to next especially our proactively Helen

including outages, locations they where multiple civilian and led the demonstrates Responders responders and cleared of repaired power X scour and over washouts rescues. trees, instances over with recovery life-saving grit managed locations Our capability team. our supported local XX,XXX X,XXX

This committed and team. without resilience and this from preparedness recover None highlights swiftly is of an natural ability inspired to our disasters. possible

culture by We blending ownership leaders field-first is are deepening management accountability. and a a team enriching talent with that in legacy and accelerating external solutions strong

Our agreements workforce. us our to new labor innovate across entire enable

a I'll we the Ed. it a breeds a and see So that and new our is more have standards they more we baseline assets, QX. quality to next-level what field-centric resilient of are established providing and operation perspectives you heading turn Working success. you, and efficient are unlock. their into utilization These Thank team, success building safer, as service

fluid prior up fell $X.XX third higher volume start lower quarter in on surcharge all the year-over-year review billion outpaced of were work a quarter John, commercial XX I'll see X% fuel and for revenue service price the prices thank year moved and gains into with as creating coal the gains year-over-year of revenue volume that and results Well, than on the X you, mix. with Slide while to impacts from X% good unfavorable putting morning and delivered the intermodal contributing dependable quarter, our our ARPU by third for everyone growth. you'll segments X% network a was the and Overall we're call. where revenue lower

previous You've these quarters. in factors heard me all discuss

a count growth, produced XX heard prior me marks our increased quarters out backed can business the the service to to able And The all grew by deliver XXth of year-over-year where is product was long by that evident markets volume merchandise grain merchandise NS of our this year day. RPU segments on this and our on our fuel our talk our growth about business. customers you've led segment the and merchandise every less focus customers Chemicals value year-over-year. as

X% expect gradually normalize but as time. this affected recover impacted Now the segments in to customers' over Helene business RPU. certain in X% revenue volumes our decline Intermodal Hurricane quarter X% as was offset merchandise operations a growth of volume by grew our year-over-year Southeast, of we

Signet up continue X% volumes expect outpacing our with our negatively international market the the rates the to recovered intermodal domestic gains quarter. be international revenue declined in Finishing here The months with ILA majority and volumes, strong trends volume premium intermodal. truck impacted for ahead. this unfavorable in coal, we domestic but and in continue of prices mix third pressure will strike

up and within but The easing high the declining include and prices export pushed utility export stockpiles XX%. prices to volumes prices, low headwinds RPU unfavorable coal mix and down XX% challenged finished factors demand and in by portfolio year-over-year burning regions. segment coal from Our business gas reduced natural saw

slide. to the Turning next

we expect remainder that the sectors. on headwinds all XXXX Let's and the talk growth, very revenue we remain face, fuel important It's been price of has the markets single tempered outlook of this historic normalization some to discrete for the albeit year note will to largest Overall, headwind certain the mix that impacts with trajectory from experience our from market our and long. highs true impact year. through

continued merchandise our rates by business today easing interest supported expect and infrastructure projects. We ongoing see to growth but

awards Although the our the headwinds product by that on prepared and dependable demand new that in service see challenges. handle strike automotive in export ILA sectors to ended interruption. sector-specific import were October X. markets, will despite delayed that strong driven by metals We're our demand and various Intermodal will shipments by interruptions pose international bid during caused

for as trending really coal seaborne downward. coal bag outlook is for met mixed pricing a Our is

our caused that, finally, to momentum And export Zampi products financial the positive I'll -- seeing the with always, help call to of end to And of to the thermal wake support. their thanks you. welcome for affected needed and destruction we goods our we're Thank their regions hand, by our rebuild. the about Hurricane other and handle Helane, and talk a the customers partnership On in ready I Jason stand the With results. support will the as to in markets. word customers

X in I'll quarter. Slide Ed. GAAP start a here results with I our on of out call XX, items wanted reconciliation Thanks, to and the

highlight for the to in That they been recoveries the incident several of the Ohio are a I'd cumulative incremental the row. over that quarter of insurance last insurance brings our for second First, $XXX Eastern million. the the from cost amount quarters. itemized outpaced incident as total have recoveries the impacts

items the X and objectives of other utilization. to specific further The executed unrealistic strategic our result we are asset an on focus actions productivity including

resulted completed These $XXX an gains sales, and previewed of line million sales significant of network almost in cash million last simplify of generate cash. the and flows. continuing X quarter, we we to generated X example $XXX As us

has total relentless quarter, focus these Triple a under that in safe, all That, with while EPS discontinuance generating totaled ROI point rationalized and roadrailer we the and the for million of Bot, new was our Adjusting costs. That's generating our our of were assets leadership OR Anil restructuring delivery and first in improvement to combined since items, technology benefits. adjusted product projects $X.XX. generation, $XX OR certain productivity IT Additionally, service coupled a the $XX.X basis the a growing Crown desired quarter resilient CIO, providing on who million the the reliable, for XXX not business.

Looking at due million that million OR to perspective, compared improvement. From volume RPU last these these results and productivity. was pressures. revenue down were flat. combined, by expenses prices Slide adjusted relatively quarter last XX, $XX basis on primarily $XXX offset drove a the and partially year-over-year fuel sequential and you'll up is note All strong of due XXX revenue growth, year to Operating to points

variances Drilling our have off million OR. reduction the basis XXX initiatives into and with expenses a these we continued productivity momentum Slide strong improvement $XX However, with point down sequential cost revenue in on XX. from to starting and build

volumes drove the leading to flat an the quarter. quarter. that overall lower in coal ARPU within the note unfavorable over pricing overall essentially X% market intermodal volume last revenue was revenues coal export second that and increase particularly drove pressures, lower, fuel surcharge and You'll strength with mix,

due benefiting Slide decreases his million with labor the actions and in and P&L. see that you'll X% productivity delivered in volume count down XX transformative expenses. by are through better record to And fluidity. rents network fuel improvement sequential our T&E breaks The John on strong more down efficiency, $XX team X%

achieve hold, taking out While last the to strong quarter costs move full purchase a the we we and also top called operational uptick Helene's third initiatives down line, second quarter. us and to position drive offsetting results expecting are to more momentum our also the normal do that services we wage than all These inflation Hurricane year quarter targets. headwind results well of on that our our from the in aftermath. as We including half seasonality, fourth cleanup expect due additional but headwinds OR into sequential are from

million will help along that goal improve are as the with repair. you. balance reducing with we much Going to forward, needed in line into value. we ability move sales hand $XXX in And margins cash to XXXX it generated I'll confident will sheet generate continue CapEx the of our our Mark, back shareholder to from

Jason. Thanks,

of results are We our proud in quarter. the

some summarize just of heard. me Let you what

the First, significant safety in improvements and the quarter we drove despite increases in weather volume events.

Second, gains while robust the handling quarter growth not compromising in volume service. we while in leveraged attrition productivity resulting

strong numerous with we recovering being Third, delivered service Helen resiliency following operational severe. disruptive most events weather quickly the

upon cash signaled proceeds quarter we that line accelerate meaningful we repair. major sales executed help balance sheet Fourth, that last will providing us

be of Finally, financial in the which roughly even track of quarter, if and a guidance, the half days we third up for September OR X the our even full to results we second commitments, pressures and revenue year little delivered is are short full strong in the falls our last volume X%. with on year

up let's with open it questions. So to that,

[Operator Instructions]

from Fargo, Wetherbee ahead. Chris go please Wells

sort Maybe left term short off. with you where the we could the of start

fourth to about talked made wanted how that can maybe a you deeper the progress sense on into about to half I ratio. that the give -- a them the carry how maybe quarter? and Just how of that you get a around bit I know the you guide second think fourth drill little maybe you've the down impacts specifically little bit operating want in quarter.

is talk right This a that momentum Yes, John Thanks, got Mark. Chris. side. the really cost in now we've great second. on about can

we can were things now, bit we control we a and good auto right and starting about getting that's about Laguna, concerned we out that really play the way talked little think in about I steel to markets as really Yes, feel we those previewed. the

generally on. definitely to is we to intermodal But season. eye should Intermodal that's going So good. expect we be our something keep be speaking, peak

feel port side manifest quarter. don't revenue. quarter. on really the and the a don't bit the when good cost more volumes know talk But really, and about fourth will add the disruptions Obviously, fourth we way got in we John, the we've little we bit little on exactly why then the how here in a momentum about the generally, you the go

from We we're I great know, in the we're foremost, safety. dwell the quarter that's seeing schedules get cars things continuing trains. through when exited railway QX rhythm accelerating Chris, a question. way handlings at And are only being the on say, finished pleased we and achieved to. in terminals. perspective, environment and itself. our And million looking really in momentum. a lot as you at by safety And the of that in you of Yes. would working they're terminals at the And through into But how is and terminal terminal extending we're and precision QX I'm to and improve, reduction $X.X X.XX a supposed first not

reductions, in that some things purchase that improving. we're change vendor while able taxi we're and of cetera. et playing discipline So around lot to put increasing. services out out the the that's that's a now is negotiate work our complexity of structurally down playing of a agreements in more coming how those as capability result and And fuel, is And

would say permits. to of spot those also So puts are increase then cost I as to markets our and for use create able opportunities our into Ed some even the resources more the and better sell we we're are

that? on color So any Ed,

intermodal we day with our the international In We product. on confirmed to partners every side, same see we've Yes. strong key that expect seeing in Sure. also side. certainly they're both fourth the the and demand continued but some talk single quarter, the there, domestic to that of thing. out growth we that see the on

quarter going that, there a only for of in is looking particular robust pretty to headwind those premium The fourth challenges be So from facing. and well-known intermodal. market that headwinds are we're terms the is

of there's a see we on prices met of drag. continuing let's side, the clear, a to coal a export the be And seaborne thermal. be lot On on domestic lot for side. demand build are stockpile But

be feel and about get single we keeping But automotive headwinds, puts eye We're of. capture -- about able front some good an takes. those. very and opportunity already So some ability or we're to that excuse our Mark's steel. every on to there'll me, talked in

you the quarter, when you think though, that you XX% the operating Do the gets fourth range think XX%, into for ratio? about

Jason?

Yes.

in great the we We're So quarter. earlier. really XX% we confident had for meeting a of XX% operating the guidance to year second about half that the talked

a expecting As OR fourth remember. things a the in we sequential to and into quarter, of move we just are the couple uptick

First, we same is great a fourth put disciplined quarter. outcome -- the recovery railroad that that's in running But really to the in We processes place. that that tight called don't recoveries the of those has into expect to recur out magnitude. fuel a this John

that's outcome So a great there.

around to Ed due Second, move call I'd basis normal a land to a headwind you we're points million are revenue fourth as second the talked is more we're third lot of and to those to predict. that's of been we've both sales say seasonality. about able as Historically, expecting third that close and headwinds $XX on about. of XXX from in out, difficult And I'd that talked also the about, quarter, quarters.

as to cleanup. the sequential we deal could from additional also that some then costs to provide have with some called out, And So headwind. going finally, we're hurricane

a that's productivity the a good So around that just $XX front. great and side, here job the -- just momentum that, the of operational on doing offsetting got million. we've all lot on side, expense But on really

guidance. to that's gives us half confidence reaffirm So what that second

Ossenbeck, from JPMorgan. Your next question comes Brian

at going other into forward, an do can How you projects cars as the see you're business for increasing with rationalize maybe locomotives about some IT that talk capital well. rate Jason, you the offline intensity forward? going storage? of well and as Mark just going So off-line If

in bit buying the market see little you able So shares? into years? tie to And expectation of a capital intensity back to lower next are back your does couple how over be that the

question, Brian. Great Yes.

really nailed strategy the You here.

projects I off-line, degree. to XXX projects think work are that capital can to really pipeline, IT run that the projects actually more we're a high yield been organization, with the on focus returns. in that in to the and fastest John and to returns, all of taking nil we locomotives capital concentrated brought reprioritizing a portfolio constrain reevaluating large elsewhere and going generate really than And the possible start deploy allows high we us to more to we've we and going on our to have a

expect fully And back that cash we line expect sales for be with we So repurchasing buildup level that and expect to year market year. year we CapEx end obviously, some of the come next down. we next shares have the toward will year, fully modest to question. the the the to have the this in Thanks

Yes, if just Mark, add. could I

we're looking concerned, As far at as as as pushing back we locomotives can. are far

Our that BX to in the you're really and a service warrior might of value capital like And and and that niche those things converting more Ed for achieve redo coal us create area faster, business things resilience us our really the new capital either help right, commitments or online resources look all call. delivery to that we've against investments locomotives. a railroading that approach bring allows for disciplined precise got other to

really projects ability. team her we've at resource really driving with that consumption that the Mina look But at Aneel, closely taking IT working looking we're got and hard are a the

just -- that it's it's most it's -- attacking capital here. both OpEx So and we're

question comes Ken America. Your Hoexter, next of Bank from

the and jobs. And congrats on Jason, Mark new

looks are in like starting So down Ed, it off, about carloads. volumes X.X%

Are level Is pricing pricing about with not XXX where down you over in coal to we or at today think or we guess up. of growth? , catching out you positive digits of can down level and then terms there you pricing could we think looking terms again? double see you benchmark quite to are expect I just there said in at should that a And throw you would talking I rebound. would getting be

Ken, first. the with last I'll question start

confident. taking I to and think it I up continue we've prices but really in areas no the whether in Helen from nice but a to have hard from, get I see it's And on don't think approach overall that thing confident we where we continued quarter, lower. of double the wake flowing from our volumes volume the that we're a digit, matter then of comes think very one more we'll Coast seen conservative here. port after strike. strike recovered West it and Coast East the and a going drift the is see. to the call, or disruption this across imports already. to catch question ability We're coal feel on to it's fourth the in feel through And very very recapture

to would what some What may we're with So on the and can opportunistic closely quarter agile. fourth merchandise a is we've John put the network is the us you really his doing continue third right that to of I with really spot now, side. able deploy up working been capacity we very in that together that call that are in lot pick really moves team be the and manufacturing

So And the about strike. Coast run-up rapid now imports you think more Coast before in fluid on the much increase through. coming we're East West the

handle. we're to fully going market to whatever presents, that I be able expect the So

comes from Your Group, question Scott next Research. Wolfe

get down some volume John, out here? next the we with productivity tougher? Is to this opportunity So strong what's look point, X%, up X runway does labor an incremental this Or as some headcount at year?

not would work in And They on you head started our glad and increase not count, elongating designing of train getting just allows that leadership are style. resources TAs having where that all I'm like deployed that's our locomotives. only productivity, is embracing are our stops say structures we've at the to including our -- train out a approach Scott, but operations also Well, but just really -- us reflected our to how we're team labor. the we the against. some the management of our how recognize I handlings, disciplined labor and doing, CBAs people the we're of that schedules out productivity there people our looking got the craft designing and

talking coming including starting presidents think They governing really get national being challenging of of collaborative of to power forward. were to on really stakeholder so and traction a about of power leaders, issues traction. philosophy and But to leadership our what you you perspective really on we I can't some and really think gains understanding our questions. Atlanta the as view. get out some they're bodies our Last they're And continue they'll the the and need through labor that railroading. and I underestimate to team. major really and in X.X what had they work very And had we're see go cohesive labor PSR doing engagement a XX had with different embracing we and application. month, points over look, And we things able with come to those these

want don't to particular the burden say shoulders to I any on group would that put bear. I So

lot bearing fulfilled environment could and feel XX/X. way fulfilled the the we're XXX, they creating when who who contributing I've work U.S. commitment we're feel where railroading discipline think they and more is be the people reflected to of that's men us. and team, I women as a for tough business. said, a the in a of change what contributing and they're And as change to do we that economy do. a And the and It's than and

written. I to is think just starting be story So the

from Next UBS. Wadewitz, question Tom comes

you're on railroad. say wanted the on also And new I congratulations effect looks the roles. a great John, having to Jason, like really

you So lack better, improvement getting XXXX. But see that's congratulations in about kind and could of and see on wanted how aren't you you I if think the I tough markets It little metals. pricing. I and to industrial worse of of know you markets markets, if as don't a everything and bit seems probably that maybe like ask do frame automotive about given well. highlight 'XX for a getting right? visibility the in some

you improve that productivity margin reasonable, enough level you is the do. some that tough So is of -- growth Or So momentum? in to commentary don't volume XXXX? is there markets, high given in and and see if obviously, pickup John's that kind

Just you of -- wanted network that on see if those about kind markets to together? how two versus kind idiosyncratic high-level two those of offer how improvement, to could think thoughts any

you, Thank Tom. Great question.

is just cost, say path. that we've got and things we which bifurcate the a for control, Let's can

had that committed $XXX will recall reduction You million of year. cost this to we

on We hit year. next We track another to number. are to that committed million $XXX

So XXXX regardless of to we John And in $XXX economic to [ going year a talking this. have the spent another I committed beat and environment, time we're of about ] that. lot million next

I think forward real cost there's a opportunity reduction XXXX. into XXXX some from to fast

can't feel except opportunity economic top is and really, we line We environment, So really confident the that to there. the say there control share recapture out there.

share market, idiosyncratic pressure that opportunities any mitigate some we to to help So even there. might still some recapture softer you have a be have if

feel to our customer there can more and do we with the year? want given a in that out traction given are John, have putting about you the we So talk product for you and John limit our good any the team get momentum his really, really obviously, any much But in there's confidence to how cost base. year. about next reduction service,

year, that's of really X.XX, We're we change PSR the how I promoting balance the would we're back I the say we're doing XXXXs the culture early that on on Camp Hunter to to of to people confidence for educating day look through Hunter team. And how in comes experience and the us and organic to of my encourage what And day. engagements teaching the through And removing and in our to jobs them own really say. investment wins the are really believing their X,XXX to as almost army add And up in finding mud the who in work then small improvement wins we're small would lot. people ability the of the providing people by specifics continuous the it. me Hunter apply a power and as through improvements. of contribute find we're people an the X,XXX to

to got able value now of And those of our and our beauty they to we're our we've going thinking where X secondary Detroit the work. use strategy then and and learnings then ideas our them and [indiscernible] rethinking moving real assignments, those Detroit example we're car yard the -- Chattanooga stopping of that's to fleet terminals field understanding to And is utility. power repurpose multiply And force management And how starting how in network. really in requirements. And Elkhart unlocking we to a asset Elkhart, great out removing from of we're cars net right how the that And of coming from the and Conway some we're with and instead able locomotive Bellevue we're go them pool distributions reducing Toledo, asset days, our are moving engage over up. and A assets. we the see removing right now and like

the I people, lot -- reflecting so for as engage the And change in there. it's in There's And mud we hold -- story we be really a is is unfolding long to and invest taking organizational is clearing fixed think still as we're here. to And answer just out a case say here. the

Tom, those targets out, targets. they when were we put

specific a more as of little because a filling actions, we're that real actions the that saw our number. we the realizing modest with outline now in maybe putting targets us we're were we're in bit together front Now that and tallied XXXX in we little

feels it good. So

'XX you Ed, any outlook? on do thoughts have Now

to not we're consider every clear a very forward well hands. there's working to out from in counts. clearly proposition lot some to that's be one trust be real what as we're but what service thing at around as And And just of not We're working with. My technology XXXX. service to can about technology together would going waiting That's customers still to But do as does differentiator team level on there. build on of that, I it a a that build right as looks a people business that moving day. lot augmentation, happen. the because Absolutely. are product see of we're working John's what's it's like let's that sitting of count our easy you on parts We're well to be top 'XX delivered make single that both to look We this. the value can change the now process customer you think and by produced deploying to on our unique going a response to I on

Next from question Brandon from Barclays. comes Oglenski

me. Mark, seat a on I So here. X-part question top the guess congrats for But

the the OR, way looking structurally with earlier you'd First, at this Norfolk, this company? that different to forth contest. there proxy like then on and is see maybe organizationally lot up was year at on discussion at And there any you're of following guidance XXXX from that a back

the question? within I improvement right few of had So last contributed. basis XXX think the X to points years, annual for you answer X guys especially that then of to maybe to the sub-XX volume of context XXX framework, that the also said next committed to still years but a Is and

Yes.

cost starting one, the We're components, based modest of think remember And really middling us on X- X-year X% top had with of the to X% there. to a to was more recovery, on absolutely. the the But line I of second more growth. window. traditional that. to for reduction track still kind of time top in by were then top that X sub-XX% line a components there XXX would you million we if a And line your type outlook get

indicators. guidance those by stand we So

to different. regard with anything Now structurally

I would execution about the will what tell sound momentum. really track. is now. stick that exactly to really And are enable product, service that we're right to gets you executing this great going upon team growth. for at on we operating to strategy a strategy got core is to. And great I what its We've great really that The with think fluidity product. is network create will always we allow And it have as we a said, service some

it. We've again now this see idiosyncratic and play capturing and some quarter quarter. grow, to started his got You last team opportunities and been have that out on Ed to

play So had of with the were back some XXX thanks even kind real this third balance get the also saw productivity in OR third and that We you that our the balance, accelerant. to And But that is in very a fallen we basis a that is well strategy honestly, told sprinkling worked, going you productivity. told quarter, of out strategy. leg doing quarter. we're improvement, points to out we you of in on of was We that of volume on and way with improvement to here sequential it the encouraging.

excellence good talk coming and I to it type I believe And in a background kind Laguna little is really Sigma, is you call key. operational like a that I a And call bit I touched call on my and we any strongly Six lot, mile at a used execution competitive of embrace mindset what's achieving can John system, it from industrial it it which products. company, needs that an operation you about So can ACE excellence. quality

on got you've solid standard best processes to way, have really that Either practices. based are

proof and ourselves you systematized the And those team, you relentless what have do then operator so real forward. the beauty standard a to so and the where process, fix get that like to And have processes are root hear identify is, breakdowns cause resemblance get John's we virtuous you this it. in you to the an mistake got when what cycle describing. problems John there's that about when going You've analysis everybody can That's I'm -- follows to into.

They analysis. cause the work are? out what they on cause about what it. room an the John the root Every time when is, relentless issue, Those think you rooms, figure rooms gets talks fact, war In are the it. they do war root fix to have war

I'm really, to this we of. and And other obviously, have lockstep from team also driving culturally, that's base, culture operations like to the I that. not continue then So marketing think described, are John up, best down. railroad come also a comfortable our the are X-way of ideas just as minutes speak ideas lot that's the upon just information but but of with that that couple a organization, where culture, ago that X-way touched concerns ground, that who just And not are John A about customer the happening in really want thing the people a whether whether in what's with on inside I excited in flows improvement, well, are advance to have. real it's might it's not the people process safety stuff. create environment is, just we but on communication they our It's where for that first, to communication.

really share working have I gains to closer So a better then creating to fostering we're and communication. culture for a with base exactly X-way customer Ed finally, share accelerate going a them conversations working lot be how we on the figure there. to been would opportunities about I having out say, And of and that are better our really serve can and out the recapture lot

I'd focus So that's And be the structurally Brandon. thanks for where going the it. Appreciate lot a say will forward. question,

The next question is from Jonathan Chappell, Evercore.

in answers, incremental maybe the outlook, market market -- wins. your there and red headwinds is And there's there you've mentioned spot than talked on more more some you've also of Ed, some yellow a these green. lot prior some about of and

more What's growth. the realistic quantitative is? you? little look network can to you're bit the production as Norfolk a growth is just that's we So Southern how that giving put maybe winning, more where winning macro you're industrial economy than If on at you much maybe volume a the

it's of we to We're as point Yes. those in it's this the executed third we're of to the some, pretty have whether what would market simply easy. take would would some point advantage well say, -- able dislocations offset we've as grain, right advantage all -- much weakness soybeans, some quarter, that moves, where we take ag but But corn, our very market that don't I quarter, fulfilling markets. I number were our of couldn't that helped other some call, a additional have do nor the would have to capacity a whether we way it's quarters, true could the spot operational need of in that in never to I the have, that markets, successfully last in seen the I opportunities customers frankly, really they respond needs whether addressed because that we industrial agility generate have, the of. it's now. capacity prior that

I about would on markets. and with I the the phenomenon toward quality intermodal there's specific whether domestic only day, going idiosyncratic side getting help we that think reservation advantage outages. plant feedback regard our of point and comment about the growth solid really also time, here, that from those that or intermodal innings but been more want the us not I opportunities not system international think not that be on the that over ongoing time, in spot would very but on important they've it's attribute our John us specific to them agility part improvement may and look we're has more to to that of plan produce a in in going of auto holds that, some on you that both And But to ride and are, only got take of had And efficient decisions to our customers. and allows their a over some would talking to operational some we're help know the ability prior very customers to which I'm on to plan is have absorb on there quarters. our a the at growth, allows our side, our which network deceleration them But for and but it. train wins again, really and reliable make it's early able customers

through confident discipline it's agree. and days create our and the this, our year we XXX, low rest bringing going of I that next true long as early to we to of really the our existing that XXX, the as into the enjoy capacity what think been year trains we're our in to are on they've its or hitting on through able I'm development. the of discipline that out the I very brings growth is our to trains incremental our is as network really business to as X,XXX opportunity new And intermodal I'm and the on XXX, trains work at costs. while really of a reservation Yes. project part customers what far stroke system, cusp would terminals about add because just then feet excited being And because XXX, And smoothing

Research from next Kauffman, Vertical comes Jeff Partners. Your question

these what you Mark to to there's direction. with agreements. you're talk talk about know want I going so with for some probably John, you in what's Jason. just Congratulations the important also you ratification, labor discuss I of achieve labor to and new targets things. deals? agreements kind make trying fairly can run talk reached about these a about can't you what to for different difference is go your hit want But for may not labor to But that some to a were just out things

the on that you coming like. in both future the I for really what structures really And and is And discipline from question. thank as looks it CBA and from organized career, far good labor the days Yes, clarity as my question. appreciate a having around the the craft my of early payment

own So complementary value how already. work us effort the inclusive own great schedules that who being going very the And one that employees skills customers. predictability and trade delivering households then disciplined really of to I from our well, cascades of unlock workforce and we can their a our allowing new need network, the along. leadership really model work that and our to the our for value And a move the as product really us that from discretionary important. we're And creating network contribute and a our every and to achieve and and and so with confidence our that that us our and operating bigger able they allows into X.X. crews value we're capabilities is the is of really it's to, predictability just pricing think blueprint think to that budget I further enhance -- customers. XX,XXX and then to in here And that we getting create I rocks, service developing that's rent think from to team, extending to a and their the first, people that's that And is optimize that team third, build PSR safety to to a what help really trying we're

And win-win. nothing know there's that experience, can I from a you it's price effort. put a my on discretionary tag So

question next Goldman Your from is Alliger, Jordan Sachs.

just I network I could. want if resiliency, to talk about

pretty some third volumes strong You in quarter. the had

what I'm curious so needs foreseeable the on really sort just to like just of share sense you're about So you future, done talking what's the needs well improve working the to for cetera. run still to highway, get what network taking could fluidly et a resiliency, to off be do can ensure things the

completely network I get really and say gives business. a we back drive around Well, be think I would And improve and tighten to metrics are to an on, just our numerous efforts perspective. from so to there efficiencies we continue to that guiding up, roaring going have reservation unlock engineer Ed's discipline that. are to that to the customer-facing health the intermodal And of capabilities able those do ability level. in a up I and a our as asset our bring times. to would use talked metrics in that we're to as to our discipline, we'll the the optimization, to the and that going us our another X as lot we're comes out and order would pricing market area of leverage hood, things the system inefficiencies back under around going U.S. about more say, that again, things like we and engineer such things to our to in the advantage growth And discipline But that, to put better I the much are as just every trying have be economy do better trucks things in focus terminals

networks, bumps recovery. the you to goes John the long less network. And down add to over laying locomotives has terminals what you improving mean in lot decongesting more from since you road, you XXX resiliency. it the when a a hold back and fluidity Jordan, way in I congestion little I QX. think create done have And X,XXX cars

So we that that, following and quarter quarter key the tell I and third record it out But wells. think, the probably at we would of you a year in have storms. X here in would events play you I back load some speeds months. actually week And a now and saw the back critical. these ago, were okay? we're saw set within us network

to So remarkable. that is about I refute really And actually notion do costs. just resiliency retaining want the it's

quarter while fact, achieved we've costs. In this lowering resiliency

We Jordan. So good place story. to good for it's in a here. the Thanks question, news a seem model have

comes Ravi next from Your question Morgan Shanker, Stanley.

But actions. to color through the for how bottom to much the Thanks drop for that XX counter pricing the with inflation on to general do you productivity line, on next need year?

in the very as way. that increasing that on. a goes the all And the service going we're of We believe strong to to continue in markets. our to position. very going price inflation by that -- we're [indiscernible] year We've we year confident thank value our of Ravi, successful is we're of a you, had year and in major able to far finish the so value terms outpace up being to

the how at we're be value it's of and core a you the But 'XX. We'll like are in evolves time. about our seaborne think customers prices same that that product service commodity increasing probably our offering, saving and coal headwind. money Now see when the

a it's combination. So powerful

Merchandise, You it, feel good about just can't backdrop the I helps one it those about when good, Ravi, as topic, you inflation. there said, you as we talk have service of pricing, a as really to talk strong as in elements think right? really

the intact. So is model

think have somewhat the bottom. here. off start groups Clearly, with the we to have what found don't dependent it on a we I that question obviously, is going And being big happens control, indices truck spot in be coming pricing. intermodal that follow does seaborne The yes, is floor commodity to seem we one. when other met

feel we Appreciate XXXX, for think Thank the merchandise So particularly -- areas, really question. you. in intact, I but good. models like those

get Let's try another couple to in.

David question Your from Vernon, Bernstein. next comes

the new roles. to Congrats

market worried you're time. on understand And that manifest do you a markets of we into the could off kind seaborne slightly next just long us business price Norfolk price terms whether worried around the the just Are So [ export a Ed, that help export about like around shape of building might -- XXXX. of for maybe market for maybe kind year? question you of you volume kind met headwind sort U.S.'s lower see XXXX? correction. a also think overall this the role in markets in on demand if ] then been the weaker What about aggregate of you've

the than over dimension. a into has view our -- lot little that readier of remarkably we're will still you I time. a bit get tell because competitive 'XX I'm particular to But building U.S. remained

demand. of I to I export expect demand. that, terms to with thermals, we're continue. we've There's I on a prices, capable in going are driving we're that's our fully delivering uncertainty tremendous got around think energy determine amount what need. lot and very our export on weather that particularly we to globe eye But And it, going continue of tonnage about generally prepared good lot customers the met driving happens to China of about when in do of prices. a geopolitical spot of the think lot a commodity is of a a and

next Stifel. Your question Nolan, from comes Ben

that market still Or ask, Are and on yet the feels it's bit just little at the are? is see guys. you to around green you to trucking talked that starting any I really bottoming. intermodal side like all? was going -- we maybe it intermodal a I on appreciating appreciate the place is where you challenged. the specifically that premium shoots And not

emanating On the of premium headwinds side, there's out generally. highway there lot a from still the

we're you it. going the to I think think a above average it and are trend head we're truck substantial XX-year but I are We utilization up. seeing to we look now, got mean, to close fairly distance, from I And seeing -- at

carriers it's expect partners that Hunt declining J.B. those total along a You where motor to getting are I are there, pricing is out at point slowly. fully we're our and that But eventually inflect. we're Group reaching look number things, the that like from key us with telling that feedback going Hub of both

have is that confident the focused What Phil needs. now, table that sure We'll I we're do on that knocking evolves. here a delivering true. and bottom how think we're Premium we is particular around somewhat that's segment product different exactly are I least making at that that, story. the the on see

for your brings to we questions, to everyone end. want the That Look, day. and a to the look forward us Thank talking I quarter. you you. to all thank throughout great Have