Matthew Korn CFA, Investor Relations
James Foote President and Chief Executive Officer
Sean Pelkey Vice President and Acting Chief Financial Officer
Kevin Boone Executive Vice President of Sales and Marketing
Jamie Boychuk Executive Vice President of Operations
Brandon Oglenski Barclays
Brian Ossenbeck JPMorgan
Tom Wadewitz UBS
Christian Wetherbee Citigroup
Ken Hoexter Bank of America Merrill Lynch
Jonathan Chappell Evercore
Amit Mehrotra Deutsche Bank
Benjamin Nolan Stifel
Justin Long Stephens
Scott Group Wolfe Research
Bascome Majors Susquehanna
Jason Seidl Cowen
Jordan Alliger Goldman Sachs
Walter Spracklin RBC Capital Markets
David Vernon Bernstein
Cherilyn Radbourne TD Securities
Ravi Shanker Morgan Stanley
Call transcript
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Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2021 CSX Corporation Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-answer session. you. Thank Instructions] [Operator may conference. you begin Korn, your Matthew

Matthew Korn

Thank afternoon, everyone and welcome. you. Good

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

James Foote

Thank everyone for Matthew joining thank call. today's you, you and us to for

will to team new investment Matthew including and role many Bill background, I make I'm CSX and Finance Treasury. great customers wish his of welcome contributor to him and pleased and success a our research as believe his in coverage of First, our Head to of

every what we another CSX disruptions. in supply customers employee XXXX for chain operating to the our recognition deserves through pandemic impacts the has and As of enter ongoing their been year unbelievable dedication

challenges the these move steps into As freight new of more our necessary for customers. to to continue the year, we the continue take start

CSX committed efficiently of help are easing actions, and to to deliver this period disruptions with overcome and These we are the in reliably to challenges. customers' solutions. Throughout high to a customers chain our transportation resources We working meaningful our current combined quality with supply have growth. core service into putting true product hard operate rail principles, capacity positions a the and providing place additional to are safely, make day every part of remained for expected

fourth XXX presentation, by X, The basis increased We Operating per and operating Jamie increased a our XXX I'll increased for our carriers points details. to basis Sean revenue. income of which ratio points quarter earnings quality from basis start financial the the generated includes Kevin, XX% million higher and X.X now over points which share to billion. to approximately $X.XX results. XX XX% highlights to carloads and $X.X over in Slide in and to XX.X% let's billion Turning from moved prices, it nearly key impact with turn share. $X.XX fuel

Kevin Boone

Jim. you, Thank

Turning driver to prices chain disruptions domestic capacity. to X% by volumes lack and supply ongoing revenue from by growth demonstrate to increased Slide revenue lower XX% international with increased lower as X% equipment the business. revenue by X% growth declines revenue major of related X, continued was across shortages. shipments to through on flat the on volume. is Industrial increased a lines growth. revenue shortages other strongest driver year-over-year fourth underlying in important rising shortages, storage rail in markets. offset offset of for driven volume of and all impact the related Coal to was and domestic year-over-year quarter as was plastics continued XX% markets producer by Intermodal solid driven highlight show waste availability construction in revenue by chemical markets declines merchandise chemical, declines increased and higher the by end Merchandise growth usage growth. our across energy and it headwind than Even continued coal outages. primarily east in that automotive more from the largely semiconductor of related coast warehouse our on ongoing chassis equipment of partially growth impact benchmark into volumes, all increased XX% Increases to export offset volumes Other demand core driven ports markets and business, due resulting remain effect truck strong intermodal

omicron of exited have seen we and quarter, shortages we the As the where saw chain volumes year These customers their effects fourth impacted labor into have clearly supply new challenges by labor continued with face the disruptions. December in we operations.

we remain with supply as and would look to challenges demand. normalize volumes align we across more markets, coal strong expect chain As demand merchandise, signals intermodal

Finally, the I we by would business new customers highlight positive like with results development to have achieved on projects. working

requirements show the few of have mill. partnership electric last with to and the vehicle CSX operations Over new marketing sales steel and of effort up team seen creatively months solutions located three including These of that announcements meet are customers. significant team production two with plants on be a our facilities the we of and ability new to come and projects Railroad

these represent CSX. to Importantly, long-term significant projects value

greater million amount customers Now comes passenger the transportation most road, X let's By and metric most efficient the land-based to is vehicles Slide it to efficient the the XX off which our carbon all using discuss on CSX an Rail emissions, X operating avoided commitment our million as XXXX, and the progress Rail railroad, equivalent when of is in than the hybrid to fuel is Class X. electric tons CSX vehicles railroad. CSX sustainability form dioxide today. X.X Class is in U.S. summarized taking U.S. making of

and when Forbes, of prepared organizations to have not done. to continue evaluate We but continues date invest technologies we to are recognition to the so received emerging existing we for improvement available. by such benefits further to as proud we Dow we Jones, CSX technologies, are drive realize those CDP, efforts these in and certainly are

CSX that engagement from rail. switching increased excited accelerated Customer then provided double has to improving focus them on are footprint. our them to see carbon we tools savings usage have help emissions seen We their and on calculate ESG customers' their of

in now discuss we customers volume our emission truck be to also prioritizing carbon converting will by will Jaime on will traditional recognizing quarter savings for this to operations. rail. later it their to I see You efforts pass

Jamie Boychuk

and right, Kevin good All afternoon. thank you,

working overcome we the customers the provide Jim persistent to to very referenced, challenges. chain As hard capacity supply are help

T&E finish and more moving begin initiative, ongoing in have of freight. this our effort pay as to discussed beginning hiring One training the employees is we dividends areas

encouraged the levels. weekly maintaining while are see we hiring also a as to doubled of start strong additional employees the cases the the increased been ongoing cases in the employees by first active pipeline of hiring actions to quarter since almost in total, average Recently, is have to have and no to that November across of classes, in we qualifying That status to trainees momentum the year at of the several Average number training employees XX% roughly moving sequentially to are to XXX date number in by the the consistently candidates. approximately increased benefit XXX. of the daily quarter. to In offset active these rapid and we doubt there continue early double the prior COVID employees fourth said, rise allowed over network. We manage us XXX fill taken situation. the this have number current approaching Also, peak better expect And quarter.

We pockets have also concentrated supplemented help assets of case this to network hiring caused additional by by online counts. offset imbalance bringing

will asset maintain service. tactical as these We increases needed protect to

and provide expected work ongoing customers. move deliver our will employees volumes We to drive to necessary high utilization initiatives the the look return improve to increased and incremental operating resources hire and service our as quality efficiency for asset

supplemental terminals out the congestion, continuing alleviate approach additional and identified while by in move planning, have to capacity strategic overflow our the boxes network to all fluid capacity helping space also opportunities terminals, providing long and required that making terminals. infrastructure way long will labor take provide a the growth we also improves to intermodal by exciting years necessary to dwelling We're term continue [ph] to until keep long-term and supporting of Additionally, for to extension investments several come. will

hard put freight pre-pandemic of continued strong service Despite this for and steps to taking our the necessary metrics both prior execution will we train these with and on moving reliability for we always, towards metrics a pursue balanced to I quarter, focus the service while customers. As drive entire to operating they've work and XXXX. maintaining are and back hours for to initiatives quarter the levels consistent keep team over long want maximize course incremental the thank plan their the headwinds our these remained in customers. a

Turning to customers, we to work the safety remains employees, and for and which the highest operate. standard to do our hold we we and CSX in everything ourselves communities at fundamental Slide X,

hard positive combination train -- year. drive Our practice to our program. target in and work as XXXX, results, we continues to human CSX incidents this reductions across increased instill of by sharing, culture Heading a successful of drone safety to awareness, at best this through shown reduction accident regions, headcount the a our accident train in expanding into factor further collaboration continue rate

to CSX make our instill operations now engaging to I commitment hand new our safe with to railroad. the our our to We and financial are review safest results. also it Sean principles will emphasize of running hires

Sean Pelkey

and Jamie good you, Thank afternoon.

digits up million, $XXX As you've with across gains grew heard, double operating up revenue XX% major all markets. on income

the the and expense up primarily benefits taxes in higher on pretax adjustments. was recognized repurchase $XX year $XX million line, though reflecting this Over income were prior favorable, related million other interest expense. tax Income debt quarter, to we state

versus As year. of is the up a prior XX% $X.XX result, EPS

quarter, around into the $XXX a $XX driving year, increased largely a was remained in a take headwind of or was last the inflation though employees. addition versus on XX% just quarters number prices nearly costs line expense we million the versus costs quality last page million the year. million. increased carriers impact fuel prior consistent significant quarter. like million also expect and the and $XX in detail of million million to the to compensation $XXX approximately above we drove or turn labor higher Drilling X%, I'd fuel slide. a the more in to Quality few accelerated quarter. X%. up operating $XXX Now, about to as a Higher in next increase. were specific XXXX, Incentive about factor fringe items, XX% due minute for expected Non-locomotive through payouts walk certain the $XXX Total with to of expense

Jamie programs the over and XXX, continue these average quarters, quarter. targeting to our and slightly or We services XX% higher be efforts, T&E by As increased expected in on line retaining we prior employees. invested line million million hiring though discussed, in X% $XXX with new in increased XXXX. $XX workforce. with in train to Labor focus In and engine expense other is or sequentially. remained Purchase inflation headcount

we expense up, this terminal approximately reminder, fluidity million. chain you $XX this the where in is of on in of a shows that supply to as work costs about tirelessly and As line to Also, result light may we and saw challenges. most quality of network increased expense higher million in we recall expected investments $XXX drive fluidity unprecedented

supply up broader reflected the persist We slightly, Depreciation on real fuel. expect will of a asset trucking and price of was well impact a were as normalization until the estate of and The a inflation costs had of remaining we X% up as and see about chain. costs increase these items. we higher $XX on higher labor Fuel were number smaller both million gains. Rents higher up base.

modest focus estate towards leveraging gains, Going can you real in forward, growth we million to we support $XX recognized a the level similar real estate to of our XXXX the portfolio as initiatives. base expect shift

We a However, in the to impact in million with QX, $XXX cash final QX. million in QX. expected and receiving the million Virginia XXXX gain gain $XXX will continue transaction a results of in $XX anticipate

increased free flow cash dividends billion. to on cash a turning year basis XX. flow to before Now On full XX% Slide $X.X

of includes billion. proceeds property term As this a short XXX dispositions. year finished in from the million Virginia, total reminder, million at and over Cash from $XXX $X.X investments

down in shareholder year elevated, we balance billion. $X.X nevertheless exceeded this historical needs. to to our fully continue more liquidity line remains expect capital investments, this After levels work While funding with returns the

we returning We balanced With me to to for and in cash shareholders. our excess turn and his opportunistic buyback continue to will approach Jim back it be that, closing our remarks. let to committed remain

James Foote

Great, thanks, Sean.

year momentum recovery. remain the XX. to of are Let's Based and year, chain grow about plus supply we economic bottlenecks the expected strong conclude supply growth these ease. driven with as targeting We year by opportunity tailwinds, this Slide Volume combination chain on build sequentially for optimistic year. should the our a volume the outlook on GDP throughout underlying for

network be greater to for a the the in to environment a can than appropriately is As demand year our the result, provide reviewed of half will in the growth initiative This half. service be ensure growth expected to strong by Jamie product. current first we and supported second customers with consistently the resource

Full year billion. including forces benefit demand of transportation for market We are expenditures $X also from at capital expect a pricing approximately very combination to services. strong planned

and of The has capital as focus of top replace and the core work has network. will capital of efficiency on Our always excess and miles cost an XXXX, maintaining XXX the safety significant we we to the by of priority our In of rail our reliability been improving improvements offset continue been this programs. is in engineering infrastructure.

to discrete expect inflation further strategic our in impact reflects of of drive we While the XXXX, increased number and a opportunities. plan investment efficiencies

future ample share high in come capital to return we capacity but a continually after as shareholders to evaluate absorb remain have they growth. the will opportunities strategic network buybacks. finally, future through volume and We railroad dividends returning across combination along, projects, growth committed And our and excess still investing of to

facing are labor, entering ongoing and We the strong lack materials year but capacity and in challenges the shippers across are with the transportation. of demand economy,

by Our solutions our focus customers effective these to supporting overcome rail bottlenecks. providing remains persistent

by we supply encouraged are and year to expect I provide earlier, the it combined I'll steadily turn for you. Matthew will global As actions of growth. making our progress back Thank with And we questions. improving a said chain are we improving

Matthew Korn

Jim. Thanks,

question. I'd of to time, that please yourselves now will take that, one operator, Now, questions. we everyone with ask And in the interest limit


Brandon [Operator comes Your Oglenski Barclays. Instructions] from first question with

Your now open. line is

Brandon Oglenski

Hey, guys get profitability on or discussion lapping land you have carriers, congrats everyone didn't sale quality plus any good I I of lower and provide and forward it, margins you guess know, gains. you the afternoon, Matt.

the leverage core this how business for profitability in core year? you there guys can you growth the and to Are So I and plan opportunities guess, you to drive incremental network to talk higher? efficiencies

Sean Pelkey

this Brandon, thanks, Sean. is Yes,

a the of quality to as year outlined, just have so just So about you're together that clear XXXX, full full going impact. the point have real year going basis estate record, and is into impact to lower I we're XXX gains,

we at you're the on XX of year expectation a is So right? this pandemic chains starting nothing Fundamentally, like come has story, basis, to Our a changed as our like really for [indiscernible]. about supply for out normalize.

same How last you've some costs only come think couple in will of incremental we at that bit. margins this, I little with now us, incremental day, this year the that we're or at of the As that some story the of serve Obviously, that, order the second what's overcome of they year, we should the so quickly start there next do core as pace the in the of customers than end years seeing first seen better right the what been. over to added, stronger year, do down and half good environment. the the is get to in half growth -- a our normalization? see, the in be the out the do how it's we The unknown is of we've

Brandon Oglenski

you. Thank


comes J.P. question Your Morgan. Ossenbeck next of from the with line Brian

open. now is line Your

Brian Ossenbeck

puts markets? a opportunities outlook like there come little around those development and for just benefit early more some some Sean too but layer you dated, they do you if of the go sounds right All the some where and some evening. is end like the wins, that some bit maybe impact good ask maybe wanted bear might see you from be those? I of thanks, of and about chains, takes challenges, business talked of longer of you key it know to can could uncertainty it can the of just is some more see where new but in to then some you Kevin, I have through supply to feel the

Kevin Boone

every There's winds end Yes, we're that see. demand across there. we pretty currently, demand market optimistic robust thanks, so of tail a pretty Look there's Brian. much lot

I chain really for question of or us. starting kind Sean we timing more, the into auto, a story autos third than biggest the car come for really out really business, When that move look the of that as normalizing a probably half But those and know business pointed when You did supply side current merchandise, out there challenges is fourth fluidity think production when some does certainly of -- with more just the autos second, translate better it's metals quarter you drives the back story it's for to start start really to auto in back the at it's as as plastics such current volume estimates, really us well. online. the and on into loads

they all So Certainly not auto demand. the the is We've and to all local been know dealership be going important. very, any very have new cars. we do to

energy no so is What right business you the remains collapse wait to now, we're If really you've more and seeing very and very it. a strong. metals get to we out about touched Plastics all spreads and that then those the There and very, thing and probably benefit about if car those continue is in on again, that's get there. that's, want future. got watch the months, only is the positive Probably question weak little bit the I new is can demand we'll we'll XX so market see spreads a then strong.

the to disruption it of going far intermodal where we've have the time freight the this of and second the successful port benefit due see that's chassis no that. side, we now. really hard get still from waiting at I that to and international lot chassis half a to that's domestic continue in from story right up think and honest the seems as see very a to and having be we've probably production, on is be we've know to terms point. be I equipment the seen month. [indiscernible] slowdown side and side, in On moving seeing the we'll and as to the chassis benefitted The shortage, been every the I operations the a think continue really at problem we ships There's ramping a are to been driver we're in we largely suppliers market shortages that but

So, a we're the demand back half but the story good I we of the year. into and that's to there outstripping demand supply. is coal, And do positive think for us the moving underlying finally, the see then

benchmark look it time in you when an incredibly are net the exports see were markets today. right thermal strong all at You they highs and almost and the now, at prices,

opportunity some time struggled had And there. underinvested. so production. back up ramping a have are had The mines frankly. They had we They hard quite

with strikes. dealt have Some

dealt moving have and so hopefully us see problems We've seen a new so things the those, I as pick volumes other this long as come we line Some we and should also through with the those hopefully think prices year. But we would that. But parts due on up normalize the expect through should that benefit is export help and recently are to we get year. of Those of should biggest mine the the do markets. levels? how some to question the stay at move the

Brian Ossenbeck

can All the of you domestic some just quick supply restocking comment levels, coal ask and you some keep do on see a dynamics given utility right demand the specifically outstripping I Kevin. on for thanks, about inventory side? If with talked

Kevin Boone

utilities that's low, next. levels in the closely Yes, persist are particularly and working and needed. probably in expect really I so our that to would through there's our with coal customers We're this year restocking southern very

Brian Ossenbeck

very thanks Yes, much.


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

now is line Your open.

Tom Wadewitz

do the in about closely that and How right should growth I and nice own coming supply of ramp factors your that we And that. good of is like kind in It Yes, bit pipeline wanted or tie a tie the should the you to your your you a up afternoon. chain broader terms your classes. seems outside in think a capacity in volume nice capacity? about conductors in how closely you volume to we of it growth a out have to training ask ramp variable control way your think are that that bigger growth?

James Foote

Jim. it's Tom,

we of now, been we because clearly where train Just have is work. of starting get come have, the talking last generally, to any up And year had attempts fact very, as than to our people the able detail? months do been a to just have and up able Jamie, of said, short to why for add is work move industry the of And staffed about very our employees. positive appropriate CSX now we're operating at employees. amount we on it challenged we hard more when try to finding after And at been simple right could least number hiring Jamie freight. be do we've we've no have not now to been you employees, we service back That's ramp different to freight XX want growth engine move in and terms to levels. other been the of more we'll that, the number

Jamie Boychuk


one think of gone When pretty it. think the XX, move and about stuff side, you we seen. when effects. as COVID I come off are ever new the week Jim people feel XX time on much got on is T&E product off talking difficult Kevin customers. past nailed just your to much the we've And got there. through believe industry start the XX can And we growth me, can This in really years, customers, over the you've on tell and most of XXX and rail one the for with comes you variant I what but the have through, the of moving environments a all things COVID probably I you've product all our you my and out XX only as has about railroading, years we the opportunities else can that current our currently of not side you,

say, two would extremely have been the successful. I over, months of classes hiring probably our point, Jim's to So past

every we're that paying team a XXX-plus done our week Diana proud putting looking our four these I HR training going off. we say has or is new hold be work guess, to be and we're single look be center a And to in new months continue Sorfleet three we're going railroad And Atlanta from class. after. and is through when T&E, going well at conductors, opportunities where in to are Kevin going to through about the start different that We talking all in that to now, is I'm honestly, hard we opportunities

Tom Wadewitz

optimistic improvement improvement quarter for related second you capacity? that are or just in So quick to really on about Omicron a focus

James Foote

maybe Jim. it's thinking We're Tom, about getting epidemiologist staff. an Yes, on

if come So and can and start going step is you're to to not ready on, up this one, is be to in this months, it, you see tell over two another we're us, going tomorrow.

Tom Wadewitz

Sounds like second quarter. Thank you, Jim.

James Foote

You bet.


Your with next line Chris question the comes from of Wetherbee Citigroup.

Your line is now open.

Christian Wetherbee

thanks, Maybe to Yes, guys. I afternoon wanted pricing. on hey ask a good question

you maybe closer gotten with probably there, maybe Kevin, full opportunity just coal of uplift next maybe exports how renewals thermal how about the the for what of can XXXX, course maybe and think progressing XXXX? So month yields then maybe the to us I the on those so a when some are think renewal, we've know you about any first -- year market. help January a are more I some And side, is there little is stuff of but and you here? how to year over half set bit the the the through think as give the have of or

So would with those help points, be if you us could just great. that

Kevin Boone


transportation side. going first, The there's side clearly, the to from obviously, cover me the let we're get -- market supply the question. is So and tight chain this pricing from

them to this every most economical doing, with that competition, freight what for rail. and inflation the working over and them. on we're they to is more rail high in solution to are market, obviously, primary rates to also but that, we're they're almost convert truck up looking customers significantly, can their on ways for In time having our seen opportunities You've react for transportation save costs

happy talking And what every Jamie can those I'm do. accelerating to now really discussions, day so to are on say we and

really So that's positive for us. a real

seeing So They're world, the was understand the than same. customers. last I it. We're across say, out there cost market it pressures asking year. that their the would certainly, the customers They better working they're are with for is

seeing we're momentum that on So positive side. some

demand major the coal right coal new the that is reaccelerates it and as In who another and But mines mines as strike of so yields What down, that export what benchmarks mine remarks, shut tell through good But forward into is, perhaps somewhat much that serve mine of as your if of likely progress their will maybe is back one some economy mentioned their the those what that would assumption one could we it come highs. I and that half last some there's ramp production online up can are somewhat producers moderate prices as comes the is is post the But guess will I the mentioned opening we terms I that that's to coal, China we my assumed in we’ve resolve of impact at probably year. that knows coal offsetting volume year. expect continues our have the strong, completely. you the prices Omicron as then be now going of longer. will down

side. back So and hopefully, some those the of on us help volume online things come

Christian Wetherbee

intermodal, and year? of much come the of That's contracts how for merchandise renewal at up great. quickly, beginning the just the And

Kevin Boone

Yes, we call it, and first see about, XX% about in annually and of XX% XX% of the renewed fourth the to those quarters year.

Christian Wetherbee

you much. Thank very Great.

Kevin Boone



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

open. is Your line now

Ken Hoexter

morning Pacific talked for their this growing or Great. level faster Jim, Good than about about Union X.X% production afternoon. of carloads. industrial

services GDP. to your GDP I includes picked which understand target, in on to just parse want trying kind of growth your You outlook.

expected quality, that question. you in that contributions half from kind you with a are seeing talk overall Sean the about at maybe than can any you year more Thanks. target of And that's or So a this of point the now acquisition? then you're

James Foote

direct. enthusiasm out had in converting a talk Yes, good so are product far. type now A we with as lot the talk good. have truck I we're to ongoing expected. very of I'll about Ken about, quality about this customer to of we think mean, operation playing I conversations The transload marketplace Yes, it's comfortable versus that to you. the is

and even haven't from which some even we -- ISO more. -- the yet this to of help containers, So the here utilize will equipment conversion got

they're enthusiastic So this in, people, a so opportunity mean, smart I extremely all yes, far. and team, excited really about great

probably mediate between is Lance's better of mind. Sean think I to growth [ph] view in

Sean Pelkey

the of little to Kevin auto the markets the first I takes you I going on of that, half and side, continue of really challenged. the year think through or about at which of puts terms don't can just of there. But we're I I in first give went quarter, to the but and think least color, remain sort of know each already bit a kind

So and that's in our of trending. you can see terms in numbers weekly it how

and grow that's have count, T&E we've more as So we Kevin the in to talked going lot second the the recent above aren't that only of terms able to move growth about hope the mentioned within and And of the into employees fundamentally, the tools be the what year, there's get that also the the had in going on three part new successful, momentum to front sales demand we initiatives of growth. picture of that the capture continue marketing GDP on team that's assuming and of terms the some to the there, the of the retaining he our active railroad. hiring we kind three. drives half volume. a the continues, is we're Obviously, then be to using ability attracting out business we're

Ken Hoexter

Sean. Thanks, Jim. thanks Okay,


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

open. Your line now is

Jonathan Chappell

we not afternoon Thanks the of a and quarters ago Good the for a labor all supply know way the of your rears as network. could were congestion to just Jamie, a But lot on chain few out type impacting in you time we've well. everybody. spent field really can looking impacting customers you, kind got real it's obvious other back reasons, go bad before kind had issue, if you the into I of it make of improvements within for Emma.

the So chain organization, you a we right-sizing think about supply some “fluidity” seemed guys head getting as congestion here. through start the normalized have of to into

the opportunity for back you some you half front it's have network, cost you the basis? the runner of other a on So XXXX real that performance year being in or the a relative opportunities there into trip within of just a plan on think levers here, are whether

Jamie Boychuk

always railroad. are we Jon, analyzing the

time out week again going we're with plan some and railroad, on to our there doing the analyzing there. again out what we'll I'm spend next be So

as can course, spent our that factors better, Yes, change, there, we customers on and Carolinas. opportunities other We finished finding what out we service a the in this out past service some the there market as of just go to of right over But that to we've we there different analyze that I So customers ensure conditions out we particularly do. just require our lot assets quarter. order now. in provide time put mentioned,

see quarter those there with expenses we need it up those two able or some continued hiring from move pull to for along be, are we forward. where and/or to that. catches we'll use And to growth that a as assets So as assets go now our back we be

job who The And is execute. sure to railroad. opportunity the and are I do always we'll really is an to continue So our work that. folks working hard -- between there ground, there on there, to is folks the job analyze. of right out their centers make network decisions, making The the to job on we're is absolutely those

So is growth. yes, you now, but can right I tell opportunities, always our there's on focus

is sure along expenses those Our focus make balance we and continue service on to the is to our way. focus

to going be towards continue we XXXX. that's to push So in where

Jonathan Chappell

Great. Thanks, Jamie.


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

now is line open. Your

Amit Mehrotra

the year-over-year little going little a XX.X? Quality revenues headwind think to improve one Because the and hit of quick everyone. you be a Jim. about XXXX. kind margins the couple could this the Hi will bit. And that, broad Jim, of Sean, Carriers talk of and maybe SS wasn't had sure of when to one I Thanks. against for acquisition but And for answered one a you question a obviously I probably Are then But maybe box that, margins the relative XXXX just you just business out to did excluding OR and ex-Virginia, are Virginia, in understand timing bit about sorry, year-over-year the in XX.X all the to on the the earlier. are a expectations then basis of oil what I'm of I a that year-over-year? going on improve I that it questions related

a success succession a do very and your on that is for to get plan over you thought we you sure. internal I leading change great talk get lead get whole CSX years be team to you. lot willing just difficult thought it external? CSX process Because and it to question had or for many You've you well. What think circumstances the around you Can as I years planning? there and scope the the for under more last Do Thank about many are would or thoughts is many, some interesting it's or that? come

Sean Pelkey

Sean. to is I'll begin take first Amit, two this the with.

operating the Quality. full ratio on year of XX.X your impact got you've question, So

So was you what saying to XX. that of I takes kind a is

well that that costs going better elevated go Probably bit what an means of the think QX, have I your in are OR to income but our are and to do OR. drive is, see both as that chain factors perspective. with So question gotten availability to kind revenues of in a we're We profile. labor year And to our think as given going from of being we've give And today. that QX, in than largely I all -- you're going things for better a can not little through we volumes, said, the terms and not supply similar that operating guidance XXXX? walked cost growth, into that

issues of it the containers facing chain more is the trend same think and side market on think coal between it. coal There in factors does What the that As other that going very improve. well. to then we chassis if it revenue supply And that other revenue, you very, availability, we was with see about. driver facing that through volumes dwell we're And happens are along we so the the the are come intermodal think like then sets us export economy And up other to because and hit go on. causing pricing that are the year, largely Kevin in also other with the broadly availability talked with uncertainties. broader on piece the I we're we does, factors other that

I it's are the in so factors. normal next volumes, that it elevated expectation revenue back remain the quarter. starting here probably begins normalize by the so we're going of likely would half And which to quarter of the say other to sort year, means moving is then is second And and our to those more baseline first then hopefully

James Foote

since it's question here XXXX. On been the a beginning clearly, in starting the I got topic succession, of of

an no talent. has making you in that's procedure my there's to my that you recall, in and I succession working voices the significant makeup has Board, here been on may for you we planning follow new Board change the great and period. And from You available of because rock-solid diligent job, always that's think went are, over jobs. that the these four-year talk management have quite been it had the a always goal a make into always could that with call process different when so of been the sure tell of to job. diligence of an such the from goal we all And sure today heard executive exceptional the management place that doing and that I And qualified pipeline the

and people, been better think and I ride. right interesting done. Maybe when other go we that being can do be. they Jim step the we're both decide externally decide. Hopefully, a significant fill to qualified whenever have Our job can going people I job to job I that a but and whenever Board's that have to might disagree, hope in that I internally you job than shareholder, is make an when not But it's when it's decides sure

Amit Mehrotra

I you appreciate entertaining very Thank Yes, my much. you question. well


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

Your line is now open.

Benjamin Nolan

have quick can ones, two them in. I probably I if squeeze Yes,

specifically? first of there that the related? to you the we're one first I quarter out talked might CapEx, curious able And The how or when portion bit looking what should if growth is might -- at about it between be coal that just parse actually issue little outages an is, $X in a other billion think of the was you know we coal and about occurs, be

Sean Pelkey

is to would your Hi Ben, growth XXXX. that of about take CapEx $XXX up the related first this is CapEx million question investments. Sean. say half About is and I'll versus I around

the investments technology on which So making long-term incremental he'll sidings be that Jamie for the us capacity side. talked creating. already, the a up well about little set bit into the grow very to some We're

then quality the into of commercial ISO tanks in and Some that investments facilities. category fall the some

of high-return reliability. as core inflation the good the the The balance of safety well lots sort core infrastructure driven slight is of capital really So in investments. increase in spend as growth-oriented hardening increase infrastructure and in by for

Jamie Boychuk

at going It us, of other growth had there. and Alabama for stuff part I of where our CapEx some would on through down the that's of area on, that looking coming was the of the railroad L&M sidings. on that the side out just siding our part worked in Southwestern add the the extensions Southern, we're mostly but we property, smaller which need is

group of his this and to Curtis Bay, and locations, up money to, where to direct respect We that but yes, of we area to is to we're back couple we we're growth it that excited different the support are bringing. majority a couple were business. out are down CapEx With that's So redirect weeks, Kevin dumping. get but going in of that did back a a trains for doing in few

Benjamin Nolan

All right, thanks.


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

is Your line open. now

Justin Long

progress model XXXX some of you're out? expecting that as through try both help the circling for commentary, about through was in and we perspective I labor Quality to this you year? revenue Thanks expect from you us we could afternoon. impact from talk operating then think to can the change the as and you what good headcount the And back in wondering if expense sequential

Sean Pelkey

both Yes, Sean. I can of Justin, those. take it's

availability. revenue into QX impact happier the should pretty in it. about it that's in pretty drive a on The is impact the and of demand The kind Quality Quality will is and that how into terms half, both What good back of have XXXX, the the be to year, So are in into get saw you any but we do similar. run strong second this with to things expense really the going as would have straightforward. pretty side, QX would rate of probably very then is going think difference a I next half year driver and

little revenue a half the million $XXX $XXX probably So, around second rate million in a run of That's quarter. year. over a good of this

so headcount, from an saw terms of to quarter. sequential you In X% fourth quarter labor third increase the of the

here. good estimate in a the to probably you that's of I count what news are those as is, talked The head good over of we as report both training T&E think over half revenue includes the will modestly in well in who service. very which first a those employees as the little see of training marked about, quarters. mix The the up pretty that sequential change up couple we next Jamie might are course are and first over on the news. But year, between service couple is great of headcount that bit basis quarters the should a in go

Justin Long

Thank you. helpful. Okay,


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

is open. Your line

Scott Group

afternoon. Good thanks. Hey,

net per coal RPU year? one that on the and And second, prices quarter, services think in comp some sequential costs. then, should just Kevin, uptick accelerated highs two about pieces the we in big purchase Sean, we suggesting point I there's headwinds another about pretty in this XQ? How employee circling some have back including those think, coal for at So your from was

Sean Pelkey

the Scott, factors quarter, obviously right, here was so elevated in the piece. big you're employee, there one per comp and was the incentive comp was that it fourth of

normalize as into should XXXX. So that get we

favorable as includes have comp which good the to look we first of. and railroad a things going the higher overtime will cycling some also and incentive reduction get is for I mix that see better, the Quality payroll it, the be some this costs as that's tax That half network back you from as then to by and the off Hopefully, like year, the baseline inflation, that. labor there's think partially and in addition into the We're well year. excluding probably build year health unemployment. we if a of half of in offset later at

facilities, a there a employee, increase comp What as different versus tell then terms of will that moving So a see of pieces. you're I purchase can lot not significant. result they're normalized chain. inflation, in fluidity supply directly supplemental the offsite quarter the within first that like fourth do lot labor, going probably have of broader quarter. ties we and services, that. storage that in has But be to you that's to probably you saw intermodal with a to what but overall of And the And that something locomotives is in a the to but added line recently adding the not only modest things costs per network some our similar

So as with that gets come should commensurate that. down better, the costs services purchase

Kevin Boone

could the coal supply the longer way say and but that some quarter southern help side in would coal then could the it would at pull largely I quarter. today. issues first maybe haul expect flattish we flat Mix our should we prove see coal of is And RPU, the mine domestic later of in help, that here in see versus matters. the some terms mix always we Yes. fourth quarter something of the probably on

Scott Group

assessorial Sean, Okay. this like offset sounds just stuff. an clarify It if services can I one to the purchase headwind thing. is

the about that margin. lower, So accessorial accessorial so as think costs clear? Is the XXX% lower go goes the too, purchase services don't as

Sean Pelkey

that's Yes, correct.

think right. I that's --- right. That's it's

may -- will accessorial bit trend as just than together. purchase perspective, little down just services come a Now from faster probably but timing a they

Scott Group

Okay, thank you.


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

now is open. line Your

Bascome Majors

and approaching in? the been of about for my the years since faces updating management new an you've you pandemic. a for Day, through acquired talked in over having the faces bit other company. got you've been we've you a Investor businesses, it's question. lot taking Jim, investor global type thanks some non-rail potentially last with of in Yes, Can community the about I talk few you've little mean years, new

and Thank and share you. kind when think think where we're of midterm to get curious it vision might time you of of kind you Just how there? your going be you CSX to take

James Foote

at via really or of New personally I the doing or that -- if to another I else of kind planned about But every plans. kibosh along York not here something think I really least a something we've Zoom doing on comes year is, have don't time it and out whatever kind we teams getting useful talked felt have not puts and our Investor Day, it's on had via ago, or that probably longer.

pandemic out So team me we'll to you. then when Tom they're schedule love I'd Waterwood talk get of here show and and is end, to it the gets off, as all up going soon fantastic. and tells this to as

Bascome Majors

Yes, thanks for the color.


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

Your line open. now is

Jason Seidl

in Good Hey, I thank operational little wanted side. on the quarter talk about operator. performance gentlemen. a the afternoon, you, the to bit

was this the compliance think your above time trip plan XX%. I got division for the first carload

I to gap be out needs carload else wanted So there? of And close what was find done between what to going to on and Intermodal? to that sort try

Jamie Boychuk

to you've Thank the We're you, on comes really people. as probably hard working quarter-to-quarter, say, slow a down the of I'd Jason. followed availability climb. service It really is it product.

November, the of Our XXX maybe over we where year the and to end up COVID into XXX up towards had to XX, folks XX October, XX today, then maybe down to T&E or where are employees off. were we numbers well

a commit continue on to pipeline to us it now probably product as And down service year arriving get going. the where to we've saying over this as to even this we've people. for really for get comes we're been struggled to, we that hour, really So

pipeline. a we've got Now great

down about world an has that our the when and [ph] affects item might so or that pandemic to that as all whatever us should again classrooms what for product. I next turns it this the in down under to happens service but dial Jim our COVID Switzenberg Jim the be times, continues, about the trains, is in comes think with We mentioned absolute and our really think those producing or come we of respect of crewing up continue us number quarter amazing that It's team. job fill we and all Atlanta folks up, to conductors see couple are his doing and

Jason Seidl

to for So we'll while confirm both, just the steady job numbers for look good as improvement wait the and I of goes year appreciate a time. guess but more I on. end the we’ll the and

James Foote

number It slow. we're rate it's out is a we at we have sick. sitting the week. region, how every velocity proxy the whether trying we in compliance publish is, that a network we from of understanding service the standpoint, look you’re And as a terminal recruited speed, cost running lower on is to it's where he be for got slow. there because Well, terms get at we someplace fluid good publish; to trip it to having train that’s see nobody; we're an not it supposed how well and a of to the gets employee our you'll much perspective customer because locomotives where a don’t railroad and plan In of moving run that there extra or because

increases, numbers number our compliance goes the improve drone time. that just number as that trip so, is velocity And that our metrics plan or as down, will over customer result performance

Jason Seidl

on most appreciated always shippers I so my trip what this, I because Well, end. appreciate you the publish much compliance look at plan anyway, that is guys fact

Jason Seidl

Good, great.


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

Your line is now open.

Jordan Alliger

good Hi afternoon. Yes.

perspective, Just obviously total sort per some, talked two thoughts quarters, off coming some round from about carload, the have we strong first the a little company I on if recall, revenue year, talk one first quarter half do Thanks. account how think about want into it? the you through of about revenue half, taking moving to second carload as but you through mix, think you of per wherever

Kevin Boone

one. is this performance. Kevin. I'll we Hey, strong yes, had this take some Clearly,

merchandise the swing probably the you half swing and We and quarter item quite being the we've half a benchmark there. impact how year, impact. if side into That will be the just year obviously of business, back year. flow comparisons major reprice probably probably of prices matters. impact Some every less the more bit prices your our but And fuel export intermodal If first you'll talked through impact business so be will back the is a of start see larger the on, couple year to probably tougher face was in second into and business the moving always then a half the are XX% good we see your to the that of a There's across a obviously, outgrowing already talked about items the large coal of heavily that, always that's side about into and XX% to a start remain. due favorable as mix mix. obviously We've those parts of so to move negative that probably of surcharge. the and

So we would, is we has overall RPU. impact proven strong, have would the intermodal a a outgrowing to merchandise, can but but the remain be merchandise which negative years few over last to good expect on thing,

Jordan Alliger

Okay, thanks for the color.


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

now Your is line open.

Walter Spracklin

operator. very morning afternoon or good Good thanks Yes, everyone. much

opportunities right of environment Just kind we're in you employees. re-envision around how that creates now some contracts with to whether it practices, and for and historical that do, and the a particularly here different of question on is the with customers contracts you

have? allow duration not prefer, I'm up to to that if have little items people, well, not on on got the I'd aspects transportation that Jim, push a or -- love And a possibly one open a high color can't that the bigger this of been easier it's the that the So perhaps get two, longer you favor to perhaps shorter. stage through customer contract if like on you but you hear wondering workforce sure able Jamie got to demand automation thing does people? just can't short get I’m past, in on you sets for you restructure base, either to your which it given would if if do as customer you've those door you services, a you an might is you base secondly, same it's of any mentioned automation, might whether get the for

James Foote

maybe bad, we the -- happen, we customers, or and possible that has to everything happened. on yes, us the were -- for Well, have good rethink things have caused years thought to this never two last because

look we at I look differently. -- think at world So the we

customers big Our business. is business. relationships this a with -- a is our It's big

as not of as to with able to plan its capital and has run how couple a order these for to in But to in to are produce long long to huge a Our contracts. is going transportation -- making plants, we three-year have who them some reliability of customer have what duration relatively term, some is costs level be longer-term business. be on investments

change to is difficult. trying So that

think I again, every reasonable -- and customers people. are our

about the partnership for in So help our works dialogues both. these terms works what may e-commerce there's there's terms I In arrangement degree been a some always of what we it of circumstances, how modification. -- a there's in views certain think the There's marketplace. arena certainly in have accelerated who about change a been our to successful customers It's markets. buys a themselves in in be transportation

in worked to I that and the the it think will that -- and we something dealing with third And so, probably did past certain customers circumstances as directly in more evolve we're change. continue parties with that's in

how allow that us probably things heavily with should working for kiosks five not in and In challenge years work certainly from work out environment we in We we to terms is, differently? evolve things. conductor circumstances, industry and telling huge in there railroad and unionized not do worker opportunity address do this work most or is you fewer six how months regulated years times for on this work there's also this now, year of heavily How engineer. a we the what's do put that to we But is effectively, of we an wants more in to would with now. a also think again, how to how you with that do from at big easier people contract XX I an for do can't upfront who and now us employees. a us extremely And of extremely technology but a profile we from want to bent an better? the place with and would what us, the that interact for But how think really the do can individual, this very

of opened in our more be middle and handle transportation the we're eyes these the to through in always yes, about I business it's So in going everybody's what it's opened the types of the future. process and think need to we eyes, but do effective and issues

Walter Spracklin

that current unions enter Have has compared with you the previously? to been into in to the easier automation found question environment

James Foote


Walter Spracklin

I time, Jim. appreciate the Okay,

James Foote

You bet.


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

open. Your line is

David Vernon

where Thanks that we review Kind afternoon. to [ph] good guys, in the run? transaction. I'd to long time. what you the about of could think as some the taking and Jim, bit to CSX of you get the And and time think you had for implications from what time would perspective be little CPKC love ask expect be presumably do about you what XXXX frame? you about of Gas asset implications the me, a Hey, having for then, that talk Two think Norfo headcount that, of the Jamie, your sort exit

Jamie Boychuk

attrition per Just bit X% it. I But a year. look, think touching, Sean talk about to we have X% little

We remember have to that.

provide required to and have to going our after. are we his where attrition, the hire be we that cover number to to that to Ken need get be and group do able only to minds that's we've growth in the service got hire not So to

of at leave So this. kind it I'll leave it -- I'll

are We hiring. actively

we're We have folks we've as between qualified or round here at the conductor point right get some and engineers in locomotive within got continue the to conductors. next there over to out now trainees field a and stopping. two. Atlanta for XXX not of And what's We're year qualifying going out

service that to provide want we grow but make that sure company. this can -- we and So

James Foote

get their the requests the with but have that has its and surprised the transaction. just conversation are As railroads not customers their sure and relates make it impacts KCS railroad of CP some and what of other the the And are didn’t involved I'm primarily to other in railroads' -- franchises the in filings process the deal, at around just to protected. railroads, other all, weighed We're we each starting. in that unique own is that substantive requests

we You basically that have seen that information an to FTB we opinion. have took didn't enough may position the yet the formulate with

kind not and to ask It's ask the going that So that we I'm still going that we're filing we're for other made what other of what that any really comment until speak, of that sort looking thing? do going railroad is, specific to for what it have to does on and any people we're ask it what yet. -- for mean with to on and is record, it is so what at gone

David Vernon

bit. if you press or the that I fair. are Is scope expected? was as guess, kind to I of Gas could But little surprising That's you that just Norfo of -- a

James Foote

anything. I'm characterize not Again, going to

Jamie Boychuk

at No, point. no this comments

James Foote

in takes Like long or No. one look said, gather us and to formulate I everybody comment comment to to really what to way or the in other point a process be for. for figure be long, at we'll then for long, thing not is then what to what on -- about out would trying doing we'll that everything, or not a time, it's right asked think at better where time. aggressive aggressive position here it the that it's everybody we're think I thought and us probably And information, whatever I was is else do. a It's CSX for we

David Vernon

the Thanks time a fair. guys. lot That’s for


next question Radbourne Your of comes the Securities. line from TD Cherilyn with

Your line is now open.

Cherilyn Radbourne

you coming timing initially of impact the tonnage that in in you I'll Thanks Good can during and new mine? here of have terms to you new the little just when a a a and run experienced one mine help come online, case better terms the afternoon online wondering very much. just ask of frame quarter us long, the starting back that of the outages and if quick We're the in come could producer little it coal or so

Kevin Boone

particular on ball. telling crystal to they're a week. There's online, seems had and every I get us pushed back I out that to Yes. wish going one keeps that come it mine

I third, their good have they things. And we equipment confidence and have a that see lot that a some there. other so, more reinvest quarter news is we’ll to into visibility, The more no of pickup the cash probably have as business, I lot it's in second, whether don't get fourth

So dealing I get quite as things for that would think strike. one have a eventually things resolved Those continued benefits with but well. the of mentioned we'll those see some particular while, as well. I customer

other mainly The half would mine mentioned we and second will and into expect a that's be that export one, online, volumes in it coming I ramp-up, slow more market. the the that's the

we So we're more a positive coal availability market crude more second there. opportunities move going we're as half. supportive it's into look to We're get for the obviously, -- and to

Cherilyn Radbourne

for you Thank the time.


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

Your line is now open.

Ravi Shanker

you and The on bigger question one big picture big everyone. -- One domestic is Thank intermodal. question follow-up.

with trying on to take you kind have similar? resolve? renewals, push that on the kind truck shorter as on or service of or sense truck speed you you are with resets the contract significant more based going contracts the side are are to for it of kind mentioned clearing are a Just of longer congestion as more amount your frequent followup, of just seeing conversations Is a customers, on your that volumes to do issues what customers and simple for price And we it's third rail. the complex contract the to there cadence of your flexibility move side and shippers take just you. off anything of Kevin, Thank seeing and

Kevin Boone

and has and explain more customers rail go extremely out challenges our even volumes create really more and I to their helpful. nothing cadence they side, customers network That's with and ratability all changed. with Jamie to contract the we We're through system. the obviously working the they the On create can that create through work time, of

working so side, a them with a that there. the question? what opportunity on of was first so And lot that's And then the part big

Ravi Shanker

intermodal what Just takes to kind get…? it of and

Kevin Boone

yes. Okay,

next not having I one think recently other going On that day. think just consumer behavior the necessarily is you side, to spoken The many expectation is they something way. our I intermodal customers; actually of need the

to would resolve XX, hours, the drivers and just lot that it's truck drivers, say, it we over would the conversations available. on seeing orders But are more chassis, calls valuable. is option it don't been will challenge out we a are looking but is do speed very we're obviously think has and to side, terminal, volume get our if actually to spot. maybe domestic become a going know not day. get volume very, there going want emphasis you plays lot get then at think that's to night dealing prices. of the we The back doing side, a lack on there's of will a where It's market, around containers move so more the the It's a the on that not cost shorter come put other going lot XX-hour need to But drivers high offset I degree, going are can't the think We the way And effective, can and of don't So what that really XX to some But that long-haul to problem. itself. container And I to I They now. ordered with. us. been and the easier really the drivers and that short are more of resolve it's that out that our there, in obviously It's I get customers the demand. and truck home we've equipment. say, that's And a the every get sweet to haul, being itself. that truckers of be aren't there. into haul right they

we So half, of we'll help into us get growth. really second a will do as that tailwinds have the accelerate lot we think

Ravi Shanker

Great, thank you.


This conference. Thank attending. concludes you for today's

disconnect. may You