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CSX (CSX)

Participants
Bill Slater Head, Investor Relations
Jim Foote President and Chief Executive Officer
Kevin Boone Chief Financial Officer
Mark Wallace Executive Vice President, Sales and Marketing
Jamie Boychuk Executive Vice President, Operations
Amit Mehrotra Deutsche Bank
Brandon Oglenski Barclays
Allison Landry Credit Suisse
Tom Wadewitz UBS
Brian Ossenbeck JPMorgan
Ken Hoexter Bank of America
Chris Wetherbee Citi
Scott Group Wolfe Research
David Ross Stifel
Jordan Alliger Goldman Sachs
Justin Long Stephens
David Vernon Bernstein
Walter Spracklin RBC Capital Markets
Jason Seidl Cowen
Jon Chappell Evercore ISI
Cherilyn Radbourne TD Securities
Ravi Shanker Morgan Stanley
Call transcript
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Operator

Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation Q1 2020 Earnings Call.

As a reminder, today’s call is being recorded.

During this call, all participants will be in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]

introduction, Mr. like and call turn remarks to over opening I to would the For Head Investor Slater, Bill of Corporation. Relations for CSX

Bill Slater

Thank everyone. good and you, afternoon,

and Executive Wallace, on Executive Boone, Sales Chief me today’s and are of Kevin Foote, Joining Jamie Operations. Officer; Boychuk, call and Marketing; Officer; President Vice Executive President Mark Financial President Vice of Jim Chief

followed On Slide disclosure on non-GAAP X is by our Slide our forward-looking disclosure, X.

Jim pleasure to introduce and Foote. it that, Officer, is my With Chief President Executive

Jim Foote

for joining all call Bill, today. you Thanks, and our thank

Before are see I be respond to details would is ever the people everywhere by of the uplifting. to say one first want to we get into who dealing affected quarter, with that with been No challenge that I our the have anything virus. thoughts like the imagined but those this,

With a the we ago, CSX, beginning to of operate. which transformation of few just years a the few by tenets adopted

The on never safe. be be should while injured employee First, job. the

mind. we to respond now core to providing service. this things, would But we customers We a We change we pandemic not the rewarded. and of position three possible and be environment. those Second, efficiently in did best operate company and did much of a operate resilient great adoption knew how stronger beliefs, the that with intense with a because clearly is possible. in those CSX company And them successful would help uncertain as as be third, and unprecedented if our by shareholders good be

expect CSX running critical of moving supply once customers railroaders come Thousands trust best-in-class the the degree keeping it proud one committed they has working that ever women at disruption. front They is Americans. millions say best have am peak maintain now their again proud products of am chain have is of some the to are. condition, and us. incredibly freight service of CSX on experiencing I been. and are from of outstanding of to we CSX delivering men what to they showed every and to are service right is the them And I lines. the deeply nation’s currently who with

of Now financial quarter the first for Slide of the X highlights to let’s presentation performance. go

EPS quarter declined X% First to $X.

operating While quarter XX.X%, new basis the points by first improved Class a ratio XX to railroad record. I

Given export coal other are non-core the the this results the from as the impact of these weeks combination items in well the known of the from quarter, year headwinds initial pandemic as final impressive. and

and more declined declines growth Moving volume offset in was X%, to by than revenues volumes higher was declines automotive offset partially increased markets across growth as on in Merchandise Slide first revenue broad-based X, merchandise as fertilizers. quarter X% coal other X% and by revenue.

X% automotive, X% Excluding volume up were revenue and respectively. and merchandise

was flat on domestic X% business. decline revenue growth volume Intermodal than revenue volumes offset in and more by declines as international the

impact have COVID-XX the the volume the as weeks final of international from been Excluding positive well. quarter, would

revenues. prices. continue year Other and contract impacted headwind XX% Coal due intermodal total lower gas customer settlement prices, benchmark XX%, by and X% demand export be a storage lapping Both XX% weak domestic natural to a favorable to revenue markets on and export revenues last decreased lower negatively and to the declined representing demurrage volumes. revenue,

to Turning Slide our showed X we and improvement. performance where safety again

rate records. injury XX% company all-time safest both figures rate train of the was with quarter in history. accident declined the XX% one declined and CSX’s This The personal approaching

day. car high at velocity, X dwell an what review extremely Let’s quarter operating level continued the now difficult seasonally our for setting CSX turn per to miles to first Slide most is operate typically and and during quarter, performance. records

priority for Improving Class I per miles. X,XXX of fuel X a and at gallon are team gross of operating in continues CSX the railroads lead top efficiency, we ton Additionally, to fuel our U.S. efficiency proud fuel success. is

Fuel became even we gallons. be acres this U.S. first I X Reducing long-term have emissions by challenging Science-Based million ourselves the approximately better. efficiency approved reduced XX reduction each to the year, customers to of goal have CSX diesel intensity and our Target years to planting recently important of Class consumption from forest we’re its last the railroad almost the reduction Initiative. avoided is million emissions several by are and The annual over emission communities us, serve. initiatives the equivalent

XX% Slide hourly continues ever service on far. so currently and has design merchandise XX% the containers to with Trip shown best-in-class weeks performance been and performance as of service network lower best for drive X, includes changes customers. Critically operating our performance it and reliability volumes. the our of carloads adjust recent April of their intermodal in to the our meeting This plan trip implementation to plans response current substantial is in

turn me detail to Let it for over quarter. now Kevin on the more

Kevin Boone

everyone. Jim, you, good Thank afternoon, and

review headwinds once my in quarter was operating significant see the financial quality described. line able drive Jim will another CSX results, again yet to gains, record by hosting top efficiency the first you of ratio As

been marks unique to this uncertainty while a to around transformation stronger pandemic, remains impact and severity years three in take there the quarter the challenge. considerable the duration economic of related since This of position and CSX has the CSX, never

at consider with the strong represents $X.X liquidity This short-term and billion levels. what of targeted of cash normal investments multiples Our March. end cash we is the nearly position of extremely would

the we and we’ve the have model also past position few this weeks. substantial a subsequent in several quite imagine liquidity scenarios Every run recovery. stronger has over this emerging a run downturn can leveraging You from

scenarios to these begun environment. adapt to adjust of changing already to quickly have we the will conditions, our business current and All and react soon

perspective, to a position downturn. financial economic have the many steps we proactive to the taken endure company From

position liquid majority First, time of to we being. funds shifting government have safer for ensured the cash our cash and our is investment available, the

are until conditions normalized. would we position cash on our be to have very we While comfortable, like a taken have conservative more earning we

which are $XXX million an debt also taking cash through of out could We $X I be low funded maturities, annual rates. interest over than But what we easily have look months; next advantage XX flow. raised free billion incremental the debt, historically of our in less

continue significant closely to change any and profile. aging I’m balance to our receivable our not monitor We seeing

transportation generate ability Our cash flow. and remain their customers critical to services to our

current Finally, we is durable do savings and backdrop that opportunity expect evaluate and opportunities to These when while are way cost we growth. I the environments to every realizing able the we leverage things, challenge the returns. when challenging, be to to and will growth provide be an efficiencies return we

Slide through Now you I’ll turning XX. summary of highlights walk the attention the to income my statement.

decline the and revenue A than merchandise down lower significant benefits was mix other first of quarter. gains. in in coal, revenue total mentioned, Jim As unfavorable more the X% offset

driven Moving was quarter, lower X% efficiency almost to XXXX, by to gains was versus expenses, in than employee average operating X,XXX we Notably, first and entirely count lower were once total find quarter, the with plan. as continued strong of the expense to again XX% X%. delivered. we quarter operating expenses fringe the even tighten flat the first train opportunities the directly down volume or in first Labor year-over-year

the on reduce the to-date, average reflects Q&A. we Jamie and through the XX% efficiency train will of I’m were is gains made touch last in environment Starting starts March volume over prior XX year-over-year second a this sure to down have This crew to the and the starts. have and months. in reacted half for year. versus quarter the April quarter aggressively declining we continued First

volume overtime With talked have XX% current focus saw we about I to reduction to and significant year-over-year. our few also a spend. quarters, the last and lot continue drive expect headwinds, improvement a overtime on again, significant once we

addition gains In and employee quarter. to the of $XX in comp efficiency, we million incentive also expense lower these had

the the retirement prior driven tax increases year. refunds Finally, in were of $XX labor million railroad cycling other of cost primarily by the

MS&O X% year. versus expense the improved prior

and engineering, efficiency across terminal including Continued reduction crew significant spend, in million MS&O. reductions $XX support travel, year-over-year operating a in departments, improvements contracted drove expense the

is to traditionally of and across item. began the this eliminate most freight expect volume MS&O and and a work savings, Reductions well. to costs adjust show outsourced down up cars discretionary in to ago, drive company, will While line terminal also variables what as locomotives spending active month we we will labor costs; less MS&O on

down costs are volume that this not within bucket are less MS&O we While variable. on be volume, with focused will clearly traditionally one-for-one

or year in the pipeline of the and of closed to economic a line and of the be quarter lower million given likely gains first activity over with have these relatively there be second estate balance Real million the in one to gains we flat $XX $X opportunities; That is in said, transaction already quarter. lower expect current the April sale conditions. to sales quarter, continued while be

efficiency significant XX% Fuel well per improvement improvement expense year-over-year XX% volume. gallon price lower decrease driven was a $XX the as as favorable, million by in in an

train distributed handling efficiency. focus software continued and the energy of fuel management with rules Our for compliance quarter first power on utilization of combined record

increased depreciation $XX the for X% million. expenses, $XX depreciation depreciation next full-year to quarters. or other year-over-year to at a $XX depreciation which will impact quarter, in two study, still up XXXX fourth million $XX expense the Looking which quarter We impact reflects expect be in million million continue the to

measured enabled rent payable cycle with XX% Equipment, times majority and respectively. X% which the load, lower network and faster intermodal performance rents. savings X%. This car by volumes has include Improved per combined as days the with decreased of expense, and equipment merchandise

related reductions expense. rent and Going forward, we volume will equipment see

car lower So, these partially will by utilization. offset be

we lower earnings which equity expect show up rents. also addition, In equipment affiliate, TTX in our from

to primarily out expense offset The a year Interest million the to effective partially other unique expense prior increased awards. pre-tax the Closing we more benefits rate below balances, approximately due quarters. $XX by of were tax debt coupon. equity than increased future investing exercises P&L. lower for earnings Turning income continue lower Absent an items, higher line. all-in XX.X% option as tax by related to expect with offset

an income basis while highlighted year-over-year, his operating improvement. of declined XX.X remarks, first CSX As X% Jim ratio representing in operating XX point quarter opening the

up on the of to was the Turning XX. XXXX, equation quarter side In the capital investment cash year-over-year. Slide of slightly first

safe core we and will operations, are infrastructure this evaluating our safety that change. but capitals signal infrastructure and total to downturn invest to core continue we in reliable not to in even volumes, in track, of train We our bridge continue our the investments prioritize during invest and our commitment provide and

lower proceeds flow free a key The flow quarter, including saw exceed company focus the Free property flow slightly this to first million, In has shareholder continues from a dividend to disposition. and conversion expenditures demonstrate distribution before cash down payments. capital be and team cash continued dividends, to reflecting for free higher we commitment that’s XXX%. cash $XXX

that opportunities mentioned nearly not to can we of position only for present I entering is confidence balance previously, front value short-term our may $X.X us the efficiency Importantly, shareholders. weather us, second advantage quarter gives billion. in initiatives; with This that but take cash long-term investment of themselves create in combined storm

With me it that, for back Jim let turn remarks. to closing his

Jim Foote

economic anyone, the Thank Concluding The the of as shape XX, be should this outcomes well you, surprise production time. potential predict on recovery withdrawing the are as Kevin. Great. both we our are demand, too the slide guidance environment, at this year. for of to uncertain for wide range no and and of to due potential to

like assessing current, our are get We backwards. importantly, situation service to eye costs, too appropriate right this worked steps have with customers, maintaining to vigilant but hard respond do toward we always by but for constantly economic control go to an the we ever taking most and long-term we’ll

capital outlook year. We evaluating also our are for expenditure the

our be will railroad. the Our reliability and always first of integrity priority and is

We reduce or that will impacts any not defer spend safety.

more than for about and last. this his will same materials And team We and of balance the Kevin looking buying rail amount are install opportunities. year

$X.X $X.X opportunities potential currently, to within of non-essential at expenditures identifying capital efficiency end be billion fine however range. and spend. the will defer areas a the to the our our progresses, of initial capital but are as low The We some year plan expect plan billion

CSX period company’s into different in cash flow with point a at this entered history. Importantly, profile the any than dramatically

untapped Over the quarter of cash $X.X revolver. short-term have an with more investments in the conversion billion course of our flow almost and free ended than cash CSX’s doubled transformation, we and

sure, unsettling to been ensure are sufficient nothing career Great events, lot a through this. will Recession but the can Black even make hope Monday lot a necessary normal. pet they passes take stronger. situation say liquidity. and my companies is and get the like yet for into CSX. We they I’ve from the adapt, I for come to we with other unprecedented times. But settle the and situation of steps Bill? soon current certainty, These I long in is best this But new changes to

Bill Slater

to themselves presented time, from I the you, different call please question. everyone one to us to Thank challenges as everyone work locations. bear interest the would we logistical of by joining In ask through please Also, Jim. limit today’s ask we with

With questions. that, we will now take

Operator

you. Thank

will be We now session. a question-and-answer conducting

from question Our Bank. first from Deutsche go line Amit Mehrotra Please comes of ahead.

Amit Mehrotra

my be the some really thanks, pretty help operator. congrats the second cost decremental impressive. thanks think everybody we I think questions performance on Kevin, would for just quarter. taking in quarter the helpful in how and on it margins to can get is about

We’re to decremental as declines, get second XX%, first the XX% than you a quarter. was benign facing maybe, obviously achieved facing XX% what great, volume but the plus volume in obviously, we’re the in going guys quarter more environment

a the if how Thanks get of So, think I the just since to also environment if all, volume way evolved, in one the can only question, pricing about lot. declines? has any and on comment that context you just at

Kevin Boone

Amit. Yes,

the it you but I’ll we I your you come know that had look, I decremental a emerging this margin I today. give assumption let better lot and happen. the position that decremental taking out I don’t other frankly, we’re and maybe think and here, would that talked framework, and we focused side scenarios in margin and knew as structural margins the you lay have think going occur. quite the can on to this different pass, out decremental one really, your about a not could to we’re plug qualifies environment to What lot want a given be, certain there’s costs would a question models, give really I going of into what a me is a because this on necessarily do really call two, of first up this could on

through difficult So, after. but a more is and something P&L go here, the is near-term obviously, that the more the cost going in just depreciation medium-term to that’s

part job that with When great headcount great on move. at things, Jamie its that’s becoming I lower our the come we work labor look we significantly as a depreciation the the through will of and efficient work, in starts out the over near-term capital done, But seeing. done obviously something We’ve time. more way that’s script, costs, obviously, we’re we’re labor the have pretty other train seeing team environment that and in eliminating with reduced and volume that his described

at – of XX%, XX% traditionally, how and will generally experience I different it is it’s highly When you, and across it a rest less look tell have internally, variable. MS&O about then we’ve variable, we’ve includes as items. lot MS&O less your we the structurally said look you it, of said

are But those go we after. in really to have things environment this to the that at look

that challenge related we terms upside volume, car see. TTX less And on the but offsetting perspective creates where the of then a we are expense we’re there as so somewhat that’s earn to to the hire where relationship rents. ourselves. volume relationships from And will Clearly rent shouldn’t a want move in obviously fleet, some going our traditionally much of

in margins review you sand is So of the we’re on have can tell we pieces, are. draw everything. I to line the decremental of what done not the lot there’s taking we’re going a a what

to us. is introducing reevaluate variabilize here for I working more working home challenge every and opportunities and we all today, it cost Our the efficiency are from of conditions think those, for can,

quarter that next a I So the will or as additional over here volume we’re out those, driving react think plays will you’ll see opportunities And two. drive.

Mark Wallace

second first Maybe I’ll part take that the question. of

think going be story that the be pricing afternoon cheap throughout continues to here. a The very reoccurring was probably strong. theme I to but

look it’s pricing I’ll is you repeat again, – story. the not not mixed RPU at a RPU if think a I and the results, story,

sequentially good exceeded our good. are sales and Same-store pricing. in contracts same-store very negotiated year-over-year very very, Pricing continues our to sales be

we an So outstanding. the our exceptional Jim value team and said in delivering is extract to is to continues both for doing good that and be the job these circumstances to customers, product transportation which Kevin are

done the pricing a very results pleased delivered side. job very, has has the and on So I’m team great phenomenal

Operator

Brandon comes Please Barclays. question from go line next from of ahead. Your Oglenski

Brandon Oglenski

and quarter. Congrats Hey, good my the on question. afternoon thanks everyone taking for

on Do from so far April. not I any shipping is when reopen bottom XX% speak customers potentially or think rate to yet? they mean, have sites decline show in your we maybe go higher you we to going Although, the here Mark, the back about I’m seeing you levels quarter. it down I if of of volume the that indications we’re have plan even felt to question can And of second that, in focus to or the

Mark Wallace

a uncertain their and Brandon, weekly affects this trying we’re them stay basis to say react. do I seeing is we the can we’re very, the sort to business, ball as customers. that while is I out what on close What continuing to fluid. customers What know close would the as times team very are business, is good our to for say, a are these In to is are reaching customers, that their I doing very yours. staying feel would remotely and things to things my environment same the so crystal get to uncertain are. impact supply probably very we how of chain, working

and So watching continuing possible customers very we’re the with closely. service volumes what provide that’s and the we control our best to doing can

to there exceptional be come they them when we’re reopen and get normal, be customers once for and things, exceptional of on an Jamie day and our job as tell well. sometimes we’re more and I provide to I there things back. top talk staying every and our back of teams way them but speak once so for service than And going doing you, can to do to

So lot a there’s of uncertainty.

May, public facilities, those will plants guys May We X. clearly open said, early the automotive hear reports I those the sometime in be down. around are that As

push week of plants said may some But them. to staying we’re today, think they back those or I GM very two. very, a close

automotive calls seeing We watching just it our what and with have all happens. and weekly and especially the we’re customers guys

Brandon Oglenski

Thank you.

Operator

Your Credit next Landry Suisse. question comes from Allison from line Please go of ahead.

Allison Landry

Good Thanks. afternoon.

So cost implementation. ongoing PSR still pull levers said in of many you’ve had that to you part as past,

you cost a might does remaining the acceleration some the benefit potentially be that, those better could to to you you also So you. put sooner volumes any recovery network than in pull current in guys from you otherwise? an of position have up opportunity changes would speak that and Thank in even forward if provided of initiatives? an So to able might downturn to other speed takeouts

Jim Foote

that Thanks decline did the the industrial associated Allison. last I’ve about last let’s responding why Jamie, that amazing. start guys to a quick but of period took? in counting the you can essence, the four XX basis the are the over talked many international the weeks respond intermodal, about a over bit And the with you to times associated in economy. team of we And this difficulties don’t that a all steps was on short with a XX the nothing time there gradual quicker, of when that downturn little not last, responding earlier, months over short job downturns. stagnant talk

Jamie Boychuk

Sure, over that started and sits. current really – way – absolutely. environment network demand to we’re obviously to weeks past we’ve a few adjust what seeing the current our as We here, the the

the we’ve number So last total weeks, started road three when We we’ve stored in we railroading scheduled really XX% X,XXX had in lot locomotives. But driving since of couple perspective, To assets. under count of by against we’ve put reduced that locomotives locomotive XXX our over where the XX% out March reduced CSX, our year-over-year we made a X,XXX. decline end active ago at a of over starts over years there volume. of changes our the

our plan, been - XX% which is XX merchandise daily held more to We link from plan, merchandise eliminate our than our daily consistent, train merchandise yet trains more has able XXX a than trains over we’ve also XX% a sorry, reduction. from which

we’ve over by that, train able to been all our delays doing been reduce XX%. we’ve While

while growth, changes So start, I not really off are and customers. they that ready Mark working for his team with these started, we important were to driving just the related that think it’s know with really right volume

really go environment use opportunities in to we’re starting structural Now, current the pivot operation. and to after our

volume We but as network demand will close our and continue the This team, to future. and also going we marketing volumes forward, come and where need are changes a us when in an leave at behind. day. continue we returns same to with making is every work to the really time, assets are to volume go exercise not dictates to back our adjust But our will network that ready carload not for each after adjust

Allison Landry

guys. you, Thank

Operator

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

Tom Wadewitz

so of I we’ll and got quickly story, – mean, much, do Yes, costs and thoughts, think cutting do that hold terms mean, it’s way a put you that how that very before. with irrelevant. But in that’s side, so macro kind the afternoon. cost you’ve year? of driven. obvious very impressive of – is in you cut success in like on service it kind good the just that say, kind guess, Wanted to and you question to does you of manage versus incremental markets still get something how share responded. from costs you your Or on kind you’ve when dialogue it But have terms interact gauge gain an big, the or lot it the in you can to I customers in it’s Remarkable revisit maybe cut of Jim, kind the seems moved the relative another of the way a of, truck is you job about of Mark how how market something I costs?

Jim Foote

remarks, these from to said dogs in to up this worked credibility have like service my back they belong win customers. get railroad of our levels Tom, where and as we I opening to

that we each impacts service can be. Jamie constant are what follow need other we so aware our to customers make sure what first on said, of may Jamie, and to the as and making are And Mark Mark our customers changes this, all with and of communication are – and up in but

are reason is we And and customers fact honest dialog we’re do reducing circumstances, we to reason about the serve their because to that in the the our think again, have we is down with volumes many – need don’t train all starts that an can week, And about sure, do, his three. are, with make let necessary he Mark where don’t me as and you customers appropriate. how they a said days up? about the go, Mark, communicating the it follow that. adjustments, team is why five them constantly But

Mark Wallace

Yes, sure. Jim is exactly right.

We’re volume customers, opportunity maybe they’re and clearly talking their softer. whatever. own are our have with we where businesses of service seeing their take declined out businesses to day because And the an or a

those we’re those making having to We’re changes. our safe is and and to around important. here our close commitment staying is Service and customers conversations Jamie

from very, really, importantly. in really Jim take hard that customers years of responsibility And the us. the as service we’ve last worked expect consistency three very over And we the that and said, reliability to put

that. doing We’re

declining, not and we’re are continue that to because that we’re – going do to strategy. not walk to from going We just volumes away

They’re And so talked get have continuing repositioned weekly placing times, really with I service listen, continue I’m many are home that, marketing for being a volumes marketing just to real sending because doing and teams really them that, And from And not carloads just people we – going for opportunities I down. to the looking gain showing transportation. going share our to other us think as to understanding our away I’ve modes year their are from to and and everybody. work they’re we’re continue work. we with to for of better work to mean,

marketplace. We’re winning the in

seeing products transportation, with share service better to modes in I from of carload. the and think you’re other We’re uncovering win opportunities our it

having So that there success tremendous and going continue. to we’re work’s

Tom Wadewitz

Thank great. you. Okay,

Operator

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

Brian Ossenbeck

afternoon. good the taking for Thanks question. Hey,

fuel You back circle I on efficiency. wanted few a had that. comments to to

thought Day, early about going X.XX%. think the you didn’t outlook. target to only I XXXX from was the the It’s probably that Investor hit

that still number? like of sounds can you’re wanted lot I hear, necessarily It to you gains a volume to aren’t So making just now efficiency dependent. get

the to on goal factors table? that main drive the if that was wanted So just see were what still potentially to

Jim Foote

that? take to want you Jamie,

Jamie Boychuk

at Yes, are absolutely. about And Look, here operating everyone on team, the fuel is targets respect clearly where knows consistently we CSX. and talk our to on that. something goals team our with our that

new we using feel are targets we that will through as to improvement records that past in show each move those have that the and to make to technology constantly every that to We continue we’ll forward. quarter We we confident sure forward. we hit continue move as continue break we the and

as fill operating with that consolidate bigger trains before team pulling important make this. – more our is volume and when growth I’ve an as key we out continue got we our our who move efficiency, than trains, some in longer they Definitely an as helps forward we we conditions on and were two working the freight where trains point unbelievable into locomotives are as at to it’s time the market change. factor. yes, But,

to those driving doing on to solely our we’re people they’re have seeing who do individuals concentrating own of We small where metrics few them. what the fuel are and created a department and will efficiency continue

Jim Foote

I A our one categories. an we’ll of one – minus take guess on of the

Brian Ossenbeck

All Jamie. right, thanks,

Operator

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

Ken Hoexter

Great. Good more kind just of Maybe insight And quick the given afternoon. talk and Hope cutting Jim, is costs anticipate you around provided with outlook. the compared good the running some furloughing all near more a to And bounce back higher well always volume with bit term. a ability back, calling keeping the guess I’m about about in you’ve think costs the employees if and safe. I into additional up to the the of to specifically speed employees referring suffering decline and them get or you about, quickly. how

Jim Foote

month sure has to Well, been that we’ve the the business the making sure of with one tragic fallout the humanitarian we turns circumstances and the last trying way deal at have make were same we of sure economic disease only the is in for that as not to area make both things. this ready, Ken, employees the very me that but the with approached to number when around, concentration willing for able and because time

come working long from some fact day last. and the have recognizing one this of We to how diligently is in with clearly address been that up future labor have the the with is going unknown terms to unions those unique concerns arrangements

we’ve really in adjust we a employees interesting lot when days of labor, to so and things to with but have sure began then in things back. volumes in to able to make decline, be turn the employees to done unique And to a working especially to keep pivot, those access early and when the manner conjunction

have been and future up the I a of could ideas thinking that. ball outside be So circumstance. And that right volumes, have now box I position wherever crystal now had as with a we’re I one can. feel wish good in we come in way but in just we don’t to right we as try terms

Ken Hoexter

I just to guess So, clarify…

Jamie Boychuk

go board a the it’s or to large of reserve of of on T&E that employees up instead Just call groups that was that a will employees, them It’s furlough of set their sorry, choice union go we on points number not. our get we agreements some board. retention have with to of to on decided side. have on that the to Jim allow board. a some choice out Most put – our kind we there have It’s – their our on board, what taking

the cases, to tough carrying downturn but employees for these recall along it making we us, for but period the and are normal come and a cost this control on have us, costs, most we’re work as medical to the continue a a XX-hour our volume starts less don’t benefits gives benefits which That is And for the that decisions course us, allows have to the wait benefits and in is benefits the XX-day recall to back, way. we cycle. when other around of

jump on Mark his conditions to able We’re change. economic as as on the team work and volumes

Ken Hoexter

the Thanks, insight. Jamie. Jim. Thanks, Appreciate

Operator

from ahead. from Citi. comes the question go Wetherbee line next Your Please of Chris

Chris Wetherbee

what to side, sense and the about of of in businesses that are maybe two of Hey, to be maybe us kind what that is it. floor first, a guys can on consumer and intermodal both essential mix I that? what and domestic is pieces sort any you the thanks. could on question you like Maybe operating guess sort when you be Good of I international more afternoon, guys. type give there might think the moving guess, and sort the customer

terms And it’s then, how sort you disruption spot tell Obviously, down like share contractual. think bit that do isn’t truck and between truck that to quite in about to typically here, occur? have see gone shift of to times secondarily, a guys you in to the of this, modal tend more of us rail, but measure look rates

state So sense just we’re a plays disrupted in you’re want to when in very of out get maybe like of kind now. that a how right

Jim Foote

Mark?

Mark Wallace

Sure. Thanks.

some quite of the of actually We outbreak So doing then time. quarter, doing was front in significantly. modal New international where we when And traditional quite Chinese the were well. the we because the was the well. COVID-XX, had Meanwhile, with China, international side, pause on the side started off of the shutdowns, the for pretty on Year a reduced business extended volumes domestic saw sort

saw in people as saw of to being moved what happening, and the so of demand warehouses we stores was that volumes the down lot think here later the the positioned anticipation dynamic. saw then international increased a I come of China was then and out was little business of a inventory domestic meanwhile, and in, opened some the considerably. And slowing side bit in up quarter. We

reports lot out, a are a we a businesses about lot So and not the the the right retail there shutdowns, there’s for look of demand of with clearly equation closed, things. as out demand lot now, of

ceiling that front expect we our slowing the is slow And will the intermodal price and international domestic considerably down down foreseeable on so and business future. of and a lot now with considerably for

those been that on. have So the shifts sort are of dynamic going

tremendous. is Service

on-time is XXs; XX%, the Our in XX%. high performance

then it seeing to We’re pertains now. trucking was and environment – loosened truck, it’s the and quite as significantly pretty so it tight fluid up

out of doing doing, continue service competition a compete and business, now. of providing but that’s we’re great to win trucks. some the have what going harder we the to try lot right kind from Clearly, environment there to customers. we’re So trucks to and our There’s

Chris Wetherbee

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

Operator

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

Scott Group

Hey, thanks. guys. Afternoon,

Jim Foote

Hey, Scott.

Scott Group

some talked headwinds. you last specific Kevin, about quarter So

railway so don’t gains, I the on. think it by million other $XX million $XX if what’s in was million impacted so $XXX or I in lower revenue. revenue, going those know coal are

you of or of seen to more impact the there one benchmarks comment a we any come coal then, Mark, just for down in changed. is maybe the think RPU leg if So And those have materially here? just full have you quickly,

Kevin Boone

a cover few those of headwinds. I’ll Yes,

mentioned will bit sequentially right that that with $XX year this sales, depending on probably today. is was is I a be of $XXX the year fluid million. marketing We for quarter. quarter We’ve estate about full little south probably million. we’ll Based first see line The more now. in my number guided think previous exists little million. feel on condition the the obviously $XX the Fourth real comments of I call on something bit a market uncertain last

have going anything we we’re cash or We’re course. going of value, and to buy certainly sell of plenty not to maximize and

little about Mark changed let aggregate is on to talk primarily I more touch that but Mark then related don’t $XX the headwind I’ll on and probably obviously a in that. I’ll described, impacting side. cycle, that life but but has that, non-cash, the depreciation the the let From a statement it’s million income that study. culture I group million market And $XX There think is similar, headwind to as bit on somewhat

Mark Wallace

know. Scott, I don’t Kevin. would thanks, of No, over say yes, would the I the benchmarks Yes. are I say, all place. sort

sort weakness in benchmark to factor thing January, I still bit you of less bit going down because on lot thermal to anybody’s that coals, Europe. a India the is is India. our for coal a of reopens, of especially to side, going of When now we’re told we thinking – API a little lot guess. perspective, little is a a quarterly, on But prices, what the think month. QX coal from think of closed from most same a of in our I

is India to going no So, right now. coal

a are quarterly. So, dynamics benchmark net up those happening. came little are re-priced those The bit,

So, have changed clearly talking dynamics, some when were said, dramatically. the coals you coal foresee have headwinds. didn’t to January, his we markets Jim of opening, in these any as in We

driving clearly the but are some there’s headwinds is one, So, there force here. benchmarks out the clearly, and demand

Scott Group

Okay. Thank you, guys.

Operator

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

David Ross

good afternoon, maybe, gentlemen. Jamie. And this Yes. is a question for

commodity example, to are any some network the or good is is you commodity auto sort reason? talked You harder other help type or be specifically, or that about thing either for that mix efficiency? not limit that around, types might overall is network of network there hurt if any For handle productivity that that hauled a might there

Jamie Boychuk

end types – of at things, really of different got Look only on the course, three we’ve operating of Yes. commodity.

I trains, type of would we Our say. guess

bulk a our is usually easier, And in throughout most to got our in online you’ve circumstances So, gets merchandise, is lower which costs handled it time, multiple service, customer the have by cases. then from which from times network, or customer. we

the with of very business, to to it’s is respect side It’s loading heavily – and I network. facilities lot facilities. the it that customer-based respect auto With work at a our done say of would unloading the on

dedicated have number So, there parts run some that auto of of network. and the certain do locals, trains yards are and in we a

we network costs to that it comes for can a auto way though out respect did. shuts cutting a revenue it to There’s, it’s lot when us. and to when the even revenue good pull with don’t auto, off want auto it’s a you the lose down So, of

David Ross

you. Thank

Operator

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

Jordan Alliger

Yes, volume grand Thanks. pretty something Obviously, the things? agricultural of actually not look tough most just from some as right question. comes might that that agriculture, now, in bad a environment’s buffer that products, is of but quick scheme the

Jim Foote

cycle to freight commodities certainly, it’s Well, got it. a different little

buckets, example, fertilizer to do year. to them, its of said, think at, And based crop auto time a still again, because the as has that’s the reasonably I now, good all commodity. a an not looking movement the It’s you an planting planning in agricultural, its on then upon a example. year as And cycle various as we’re think own this production I of lot that. of tied it everybody’s

Jordan Alliger

could industrial, be as said, you So than there hope different of product? on so maybe, there the that some cycle is, volume the a rest

Jim Foote

wheat, elements. there’s different segment. are drivers said, fertilizer’s whether certainly, grains that the another as own And one grains going certain has industrial relied move, keep auto corn, on to Yes, some going, impacts – been one groups mean always lot We’ve there’s to to or a be merchandise example so each and to – its a the but or get going is thing yes, still yes. that And coal element Like going within is I to railroads shape beer. straight I Certainly move. has it’s speak. an of harvested. in there

Jordan Alliger

you. Thank Great.

Operator

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

Justin Long

afternoon. Thanks and good

So, eastern of competitor. one volumes trends the rail noticeable your has outperformance of year-to-date versus the been your

you that impact I on well. as that So, of market how gains about modal from could as truck answer and that from coming maybe, environment opinion is fuel function rail you’re market how mix. lower outperformance of a and share gains was Thanks. share going price thinking question, forward your address wondering And comment in that share as if you could also much the the from you competitor,

Jim Foote

Mark?

Mark Wallace

something doing was I else, apologize. Sorry, I

product share a across was this put seeing started are strategy gains our when good we share, portfolio. we place What’s We could. to the that in service the thing best

We’re that. continue doing do we that to

Next, because Number use. to focused of we are have sales things. organization on focused expand superior the amount rail with on really and marketing the our we working they is three the service existing that of one, customers

various gone last with CSX, but years, have might freight couple use over have have to for reasons move with work pursued away. two, used – customers to Number some the reason to

but and to never would used were at it easier those identifying say. to We’re is enabled never being at and traditionally rail rail working those there. with have as bring business wanted doing of do easier team do and go consider profile, the who the to to shippers, that have is back may really to looked share to our we’re into hard with able with now always past, work able an And looking I our working story because that the cost business with, option, trucking we’re some customers because markets win that in strategy marketing home third of to of make

by Aggregates we’ve that that strong segment of on one to good been lot coming in Florida. less middle because doing return had And good. commodity the of road to about on. we’re the of very days. a we in be so. the construction make XXX continue play aggregates. able these had truck, business a service, contribution instance, from projects of like very Georgia by into is are move us miles a the that successful and There’s lot those For used Traditionally, very capacity, in to very going And of we because out than for a markets

in – teams a very opportunities. we’re said question, being at buckets see on as it very looking So, so, are these think in of weekly you can And the your you we’re The all aggressive. results see I basis. you different

Jim Foote

more more rail lower the is still fuel between truck Where’s truck? might impact ask versus you on Well, the compelling Is fantastic, in what there extremely with not shipping XX%, I that been But we with same comment be it have is highway. in But to to continue XX%, reliable? the think the XX% XX%. still the about Justin, stay cheaper rail like one work dynamics why out there hard that – value at of little have. your so independent still is yes. service are that’s a recent – they where fuel efficiency than that it’s to the about versus you’re negative probably Or the marketplace. our the planning maybe truck oil reasons the when like prices leadership reduce bit we a transportation. yes. in rail is, It��s you do there was customers past? competitive of surveys they right we so number now, sure a make can

Justin Long

helpful. the Great. Appreciate That’s responses.

Jim Foote

Justin. Right,

Operator

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

David Vernon

Kevin, emphasizing or that cash, changing back obviously, that some the good capital to capital buyback to about got return position are to thoughts going going on good. you a in get dividend be billion returning changing of return the side, way cash you’re balance a of the more any is afternoon. thinking about liquidity, of and business to on the capital Hey, $X forward? Are you sheet going and investors question for the ample you through flow profile you’ve aggressive guys more

Kevin Boone

– a dynamic it’s Yes, it’s market clearly, right a now.

balance billion was sheet flows. We’re positive very happy every and and cash to cash day, $X.X I of growing and have generating still free

cash next when that year. a still the the So we’re we forward this returns recently that’s you for mentioned feel dividend. we’ll the remarks I the our committed still not And increased sheet. few and year this over going that our over that. buybacks that core balance even medium balance term We long-term, look we just every need clearly, we would distributing component that re-evaluate to months. prioritize we to for But I something continue to our cash that of a on going that’s are It’s shareholders. shareholders to the at to discuss be something will opening on that expect to that some is point

free flow these in cover significant and can conditions we’ll generating we to next to year. the that even what returns. as cash be marketing again, do so committed we we’re And see but dividend we shareholder continue

David Vernon

impact the that on obviously, anything CSX? that like side an policy that coming I if infrastructure would spending anything would you’re right. Maybe, outside keeping is restarting, economy stuff of or one beneficial on the Thank beyond that there at should game-changing quick we can tweak in you. All DC or follow-up an or be Jim, have in. out be on just looking eye

Jim Foote

Nothing that changing. game is

of operate was to especially in to and the financial because nature flexibility would requirements, of a interested of the rail clearly be that in no, involve cause to this industry, any that the to in be providing way safety some of the stimulus terms so far us. to-date, ad We’re States. benefit infrastructure, with would of able the maintain government But implemented the hoc all

us. implemented very the We have and with been impacted cooperative not really government’s been –

David Vernon

a thanks All right. lot, guys.

Operator

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

Walter Spracklin

guess, lower some it’s CSX world for particular before? we develop a the from – the that there’s that I is And thanks the and e-commerce anything a When retail that look Jim. e-commerce contained different to capitalize normal, if can just normal a a is higher COVID-XX, on things if how there that operated are e-commerce beyond costs The going somehow might strategy. way everyone. that Can Yes, the much. is strategy I emerge witness you a do on be didn’t that the that post is out in the going different, could benefit there before? in new understanding to could new in focus can to retailers in in look a way new Good we’re you opportunities how structurally or of option? to at the you cost you COVID-XX in rail back and also that railroad that not a be world because that second. looking role and lead the future very with either, in Or e-commerce not afternoon you didn’t, were normal are chain offset play that to

Jim Foote

There are two well, are opportunities may word Well, shouldn’t benefits there. two that that benefits, not call things us use as for there I arise – it yes. evolve.

just my personal think and First I is this own is, thoughts.

railroad. like and that. be will good activity place of business more the takes in kind that It’s there that country manufacturing this think I for any

large they fit our shippers more we a the with quantity truck service. markets Secondly, and that because well compete rail can dynamics, the become of now in more into as

and the was compete way So, product before it in we product moved, of service e-commerce for difficult because to that disparate with the had railroads our network the arena.

a forward, I as for will go us. big we think opportunity that be that

Walter Spracklin

time. Okay. I appreciate the

Operator

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

open. please Your line is yourself. admit is open. Jason, your line

Jason Seidl

and hope are to we’re on you Thank be Hey, basis. you, seems well. this guys state-by-state doing pandemic Jim a going coming of out It team, operator. like

of and So, it’s kind going to to to present be What challenges a little and disparate. is network? going bit choppy the that CSX

Jim Foote

than talked the shut adjust challenges off. harder a manage It Probably, in industry is slow won’t just when we as completely week. start decline in auto a up auto to complete week. down the the I experienced was about to is in us the guess completely same shut for described we easier past a kind as My that of when industry a

be same. the chain challenged traditional will is And the as we not logistics so

so country And two based online challenge a of our come will don’t on the to us. that as with come that present to back. will across weeks evolve, before we’ll of state areas somebody comfort customers before Pennsylvania industry to we’ll certain else have the of work does. Texas see starting the have back in States level fact start more out I it the have we’ll and for might – deal. population is not a It’s up big that the the one

Jason Seidl

going sense. really with is Yes. And this into is out? help your that of where makes sort to and you flexibility headcount come that play

Jim Foote

respond. norms, new et we be cetera, are do, happen again, to about about what planning, people to – to Yes. lot continue position anticipate what could spend times lot that’s listen, modeling, be why, we’re have in a going talking how spent trying brainstorming a thinking, to spent of may you of we do heard and and we a

Jason Seidl

good. everyone, safe Listen, there. Sounds be out

Jim Foote

you. Thank

Operator

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

Jon Chappell

What former the closing to comments, that’ll best closest obviously, to some Thank you’re different. all you. lessons But Jamie of performance employer, you Mark, or back right-sized this XXXX, prior and you’ve had bring some Jim, of the system XXXX to now been you environment through probably arguably in get mentioned the similarities and thing dealing XXXX. without what from during that can you, out disrupting both are with in the of XXXX that or destruction service? and still we’re that to get financially your periods some operationally period you help you to each proactively that the see the one’s and

Jim Foote

were. and I Well, XXXX-XXXX not a this result, understand here we declines to a yes, those were, CSX I back see goes was what the for traffic wasn’t to when weeks. to we we business in none shutdown. and what again, it saw were what to of saw but us declines and traffic as looked pattern it’s sudden helpful days because us XX% try the see much pretty shutdown, away two to And at of – your dramatic like think clearly, And

I yes, things, a most those lessons about So, I to plus, I’ve is from of learned all in clearly this just myself, hate but like career, but those one been all challenging. the modern every through my day calamity age said, financial

Jon Chappell

a Are of completely the you operational XX given Or years you border implementing thing network it similar like did north that response and the geographic exposure? ago? different is

Jim Foote

the No, is it’s while nimble people the a being magic to the again, same. getting of and And people. there’s tunnel there’s and no mindset the quick, of not making geography, to in here being magic all forward decisions, getting done looking things vision terms

what recognizes we get We have and execute. a phenomenal done work to together we team and that needs

was, mean, did Just before. the too. I it it people was just way we there that good

Jon Chappell

you. Thank

Operator

the go of Please comes TD line next ahead. question from from Radbourne Securities. Your Cherilyn

Cherilyn Radbourne

much and afternoon. good very Thanks

how a you but to a about territory and uncharted downturn about to So with we’re various wonder how partners scenarios? your bit customers, staying clearly, lot you’ve for I interchange you’re just close if could talk collaborating in recovery and talked here your you’re prepare

Jim Foote

various network fleet open they it a it’s down work shutdown across a that of together all the happens business. just on And think us coordination, plant the of country. basis to all years, happens now network, that moves railroad on shut know, across us. could stuck in CSX; communication, of begin It wasn’t of as alike. operating you auto the the managing network. of What good heard of to say at you’ve the the that We lines think constant Well, most slow one one last a to over get many equipment couple people I is terminal making the sure don’t lot that we of the the down us

page and has We’re been of coordination and off that’s network extremely of all in the to same the of extremely level the maximum terms and assets understanding working helpful, been moving running kind the efficiency helpful.

Cherilyn Radbourne

Thank one. you. That’s my

Jim Foote

right. All

Operator

from ahead. Your Morgan Ravi go the Shanker from of last question Please comes line Stanley.

Ravi Shanker

Jim understandable two scenarios sure three last response, for in or your the out of follow-up you Thanks, you kind variety completely the have pull the play multiple obviously, can I’m that But quarters. planned out spread Kevin, in given that guys just can or uncertainty the of of if there. guidance next I

share kind our as of So, kind can you XQ, what XQ, of look planning and scenario bull-bear part of of of like some volumes open like XQ, case the, the samples? base

Jim Foote

certainly – certainly V, and volumes of looked of the scenarios. alphabets in recovery all one U, And the we’ve we’ve different. what yes, as at significantly that the numbers Well, those possible is the obviously, I L, the W use each

result, try at startup at have days, such guess this exercise the that’s on with want So, as give auto what’s and because X, that, with Z. point than is, to that’s time. why just plan for between better a to we this Other another in the why going we’ll to steel, hypothetical vision and on what’s difference didn’t going a as XX there is Y, real that, a it’s maybe, point me huge time, in a what

so you just some numbers And to but give we’re that. like I kind going not apologize, of

Ravi Shanker

Thanks. Okay.

Jim Foote

Ravi. Yes,

Operator

you your This participation concludes for teleconference. call. in today’s today’s Thank

may You disconnect. now