Matthew Korn Head of Investor Relations
Jim Foote President and CEO
Kevin Boone Executive Vice President, Sales and Marketing
Jamie Boychuk Executive Vice President, Operations
Sean Pelkey Executive Vice President and CFO
Jon Chappell Evercore
Brandon Oglenski Barclays
Justin Long Stephens
Chris Wetherbee Citigroup
Scott Group Wolfe Research
Brian Ossenbeck JPMorgan Chase
Ken Hoexter Bank of America
Walter Spracklin RBC Capital Markets
Fadi Chamoun BMO Capital Markets
David Vernon Bernstein
Cherilyn Radbourne TD Securities
Jordan Alliger Goldman Sachs
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 Q1 2022 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 Head Relations. CSX of Korn, Investor Matthew

You your conference. may begin

Matthew Korn

Good Thank welcome. afternoon, Emma. and everyone you,

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

Jim Foote

today created growth President across helpful thanks role Great. in to will to and as us harnessing to customers us of Thank a call I’d begin effectively enable focus transformative His further efforts efficiency today. business. very in technology in you leading and a experience to at Matthew, global newly technologies Technology my CSX also safely. like industrial thank will tremendous Steve on continued our in who’s on the all who CSX. employees, today, Vice Chief everyone Digital to to and serves the for put Executive to Jacksonville. organizations be transform here and of Officer, continue our will and and Steve again serve with company I all Fortune, continue joining expressing welcome room above you, by we

The indications satisfied quarter, into much began severe start led we quarter, with we that to the of this and year. continuing. operating is see service pleased and a to conditions network this March, performance. weather though the of we as COVID to Now our not we with are do improve clearly effects momentum our tough across But moving gradually moved yet results our are to

moved our pleased say rebuilding well active to levels to you service there engine am and global progressing to efficient have efforts hire T&E are an is to our customers. will that reliable, and supply people service today The For we more the has to key despite year, communicated expanding remains across this steadily that CSX, resources place we The in us chains. our provide count number putting very I to trained to allow environment higher new over and business favorable for year. a uncertainties are pre-pandemic of employees. service that

ahead. rails scrutiny business this America on groups service advantages the for that opportunities. we do do we for robust, of part remains help and increasing demand, increasing many to hold convert company as energy over higher the consumers are development as business that gas deliver our emissions, dedicated potential activity hard meet in working and position. we are And years marketing our and If world to in around domestic transport. know Meanwhile, are trucks, North to the great prices We customers to efficiency our look we all highlight principles new we greenhouse and products our a can our here and has levels sources achieve, jobs, great reliable

the acquisition that approved note Am Surface transaction Board we for the pleased of with clears Transportation are way close to which to like I’d the our Railways, June. Lastly, Pan this

the new England. service as we New opportunities for about will excited and shippers design are us receivers that solutions of All in come

turn to Now let’s four. slide

The basis per impact details. to in includes X.X by the to range million quality of Sean ratio results, it we which quarter increased increased share XX.X%. carloads moved operating over points highlights in billion key from for increased Operating to nearly $X.XX Turning to the Jamie our income impact XX% turn $X.X XXX and basis XX% first the Kevin, will share. now generated financial And and over carriers earnings revenue. I of this billion. points presentation, a to and $X.XX prices. approximately XXX remember, higher But fuel by

Kevin Boone

Jim. you, Thank

Turning five. to slide

through year-over-year, volume The shippers lower X% offset growth decline. the First benefits markets, revenue ongoing and across business. automotive and revenue most of higher with XX% major across the semiconductor lower to environmental rail offset all pursuing Current gains shortage demand increased inflation. X% options merchandise remains as revenue Merchandise on strong fuel cost pricing than lines more with quarter strong prioritizing surcharge impacted volume of volumes quarter. increased

inventory as dealer levels consumer strong low. demand However, remains improvement we see with did sequential

demand Our franchise markets. continued chemical than that challenges offset more strong saw core chemical in energy-related

demand continue we XX% on constraints. remains lower chassis. on capacity increase XX% be by additional higher declines the volume. network, revenue domestic across was truck thermal as increased prices, opportunities. Intermodal market offset to growth. coals strong, but expect add partially the continues X% revenue that side Intermodal revenue shortages Coal increased to lower by XX% and international Offsetting capture shipments. by in benchmark we coal be to drove and resources including supply impacted As challenged volumes, Export international conversions takeaway domestic driven continues equipment by lower to

First remains to volumes at by volumes including our we Bay of facility. the strong in all Curtis coal markets improve Demand and -- coal expect mine factors, quarter outage disruptions coal our were in intermodal across impacted several first these revenue headwinds as equipment usage, partially export an Other quarter, was primarily did by subside customers offset payments higher lower to of but increased and some that commitments. additional volume network capacity storage added. not and meet from due second is

variant concerns quarter, the supply crisis As uncertainty of global by wake Omicron the in the replaced Ukraine. we the in chain exit have broader around been

meet consumers to the are our customers. In for products committed increasing world. America As North mentioned, helping Jim the we from demand their around

the is benefit closely chain. supply it opportunities we the shifts working to while and our port’s we serve. are We our see the potential that in with understand And customers early, global could network

markets, many to our across of look demand supply. outstrip As continues we

supply to across chain. are this We expect improve as added the resources

I’d that team professionals identify, businesses development business local to investment In provide on last CSX’s closely to off. projects economic placed to facilities on and incentives partners. to has the works locate pay slide design discussed continue help detail and encourage which more over into existing turning capabilities, developers business six. team like represents Now over facilities our of prospective build I state with new of to more customers $X XX and were customer which our CSX service development efforts will investment. maximize network, This and an and billion across network. briefly expansion quarter. CSX short line These across to experienced XXXX,

currently an industrial projects XXX over pipeline. are in there Additionally,

car the acres creating direct excited provide that expansion. Site long-term reliable CSX with to with will and and a first the customers work electric full customers by by scale an announcement development in sites build is vehicle served with CSX battery Carolina’s This of $X working team of be of for in marketing solutions to certified even development state’s to kind and of example diligently plant The recently efficient they are these the of subsidiary business CSX. them exclusively Most and We as to to operators. will can shareholders. history. electric Asian and that vehicle to VinFast, part for years, Select announcement the North while economic manufacturing enable proud them their value rail sales serve Select excellent CSX The deliver, premium team largest assembly closely significant large team industrial customer Vingroup the grow works plant service program. announced nearly Sites more is rail XX,XXX billion conglomerate that facility feature is the

We are add even more Jamie operations. working to I in on pass sites to XXXX. now this it our will discuss to to program

Jamie Boychuk

our priority. operations safety will always Thanks, of first Kevin. be The our

standards for culture. concern in communities that see results of us we and employees, the maintain slide make clearly. that show our live the all of Our our to focused safety seven you this we sure which The operate on and drives customers demanding

improvements the first frequency first brought train the near and we accidents, injuries quarter. a record to saw low and of the Over number year-over-year in for levels which quarter, their rates sequential

this to happy are We improvement. see

awareness put push and expanding continue described sharing We across you practice forward actively initiatives best quarter, to that very new our strong encouraging demonstrate an hires coaching, emphasis leader. safety industry ensure on and our we application and make our teams they among with our with efforts that a to we safety respect the to technology, the CSX last of employees, principles that

eight. to Moving slide on

This anticipate For lifts the quarters, our when we will last point, When we we have we our several work because critical also by recruiting these engineers. and important ready also conductors trends teams. and the it ensuring and while This service engine enough meet performance heard demand ahead. a in reflect are discuss is that to fluidity train done us the efforts our resources, the the shows trained training to capacity making substantial levels. growth networks, hard are staffing improve and the we have that you slide address years several have positive employee our near-term, in

here great momentum have set and build are we created. importantly, progress we have to made the We up on

First, up daily program. we over in T&E our is X a quarter, first have averaged where training were employees strong We a the training ago. we you ramp year which employees XXX can see in over in the over of times number

sure healthy. that We our remains expect to keep full to make training classes our pipeline

and training run expect chart, up corner In conductors the to active see ready up who our haul the freight, month generate revenue month-over-month. and marking can population. Second, continue. now we are who are you to active we pace rate the have each T&E return We into count to now XXX this the increased have completing payoff, in and adding last their our successfully T&E we are employees marking roughly of

on and people again takes right so exactly doing. we way to train have is We bring need what but it in, we this aim railroad, It that and to service. good said our deliver this are is them time, again, grow the

picture Now on which slide seven, to let’s where gives a operations us today. stand our turn

hitting East incident where in at Omicron early Bay This started weather off our with the Coast under suffered the was facility our challenges. Curtis quarter severe key employees, The February. several wave and

said, the locomotives keep for help the active with have but optimistic. with last in are network metrics drive the signs full bottom metrics the his of the success were with in reasons quick So our It’s in see remarks, and compliance, made basis. initiatives, early quarter, in we we are of a velocity clearly employees dwell highlighted tactical and of to decision into to That hiring these for call in flat trip balance, the move terminal to generally to be remain that key direction. Jim as the too short to quarter, with right additional line while worse the near-term our discipline encouraging a to Consistent seeing starting consistency quarter, we second slightly sequential on and certain continued the certainty, regions. field, we car

driving conductors, and promote on we focused facilitate As asset we and higher successfully and service our reliability. improving utilization as the new efficiency additional be volumes crew our resources will improve

at of to be excited what and rest forward year will review hand results. team the financial looking showing As to higher that over do am to execution can always, come. to I now I to bringing the the we Sean it and over challenge. I the will years level is next of quarter, this the am strong the operating key and our engagement this enthusiasm

Sean Pelkey

Thank afternoon. good and Jamie, you,

with our $XXX profitable expense we effective favorable million Our delivered of despite core other the XX.X%. growth combined earnings, were was income focus growth repurchase as and million of operating faced and is XX%. $X.XX reflects gains, share Interest the income and tax we a program. well $XX of challenges rate the in of revenue ongoing quarter in on impact as the share for the per Earnings quarter,

line as well Turning last to up represented million we increased the approximately significant the versus year. or Total outside driven fuel of network of next in other The but to in slide. costs Higher inflation, expectations supply million, with our fuel also quarter, costs prices approximately a acquisition spike $XXX $XXX factor, Quality in expenses of the XX% $XXX million are Carriers price. fluidity. about expense. increased ongoing by All and related chain congestion $XX as were million

Purchased million $XX continue and costs costs fringe expense. Turning second quarter. persist of expense in convert the and other hire see $XX just Costs XX% expense or in network to higher and $XX and to we our in quarter These about while Quality $X expense new to to other Quality employees, impact. quarter costs. increased new in in we strong inflation XX% terminal train million other supply more pipeline. as and incurred invested the million, drove to engine to million onboard added impacts likely Incentive fluidity labor additional drove million Carriers $XXX compensation of roughly Carriers over items, services improvement training $XX the similar quarter, approximately expect chain to of the PS and and and labor million the $XX next specific increased we We increased maintain expense. to quarter. represented of similar half labor and million corresponding or normalization. last back are million quarter’s expect into the the $XXX year, line

X% environmental the drove expense million $XX was up impact. higher quarter. of in that legacy adjustment includes quality asset Depreciation million also Additionally, and $XX reserve a or the amortization higher base

addition in lag highway The fuel the of fuel Finally, rise rapid fuel created $XXX company $XX fuel million to And the for $XX trucking. in as to real as million XX%, quarter. recognized in or of non-locomotive increase expense the related steep transaction. the used lastly, well prices Virginia million diesel approximately estate prices, million quarter, a increased reflecting fuel of in gains the $XX including

the Virginia in million and gain quarter. As $XXX payment in we the $XXX receive million to cash fourth quarter final expect second the a reminder, recognize the

slide Now turning XX. before to earnings $XXX cash flow on on higher to cash dividends increased million. flow Free

in billion over investing a use projects, reliability the and returns for cash $X.X highest million dividends. is quarter $XXX buybacks railroad. of funding approximately Our After these and including of shareholder fully growth priority exceeded our first capital $X billion, in long-term

remain opportunistic continue will to as cash in our return shareholders. we we approach buyback balanced excess forward, Looking and our to

annualized customers our back Am to remarks. Finally, growth Pan is integrated will negligible continued will this Am earnings capital and to the on already rail to merchandise. June integration Pan Am our that, primarily the through Pan close upgrade network a me of contemplated revenue, we to to Pan costs, Due are with it We Am have contribute let invest we forward Xst. within to its for and to working transaction excited deal look in expect Pan on turn year X guidance. and closing Jim to With Am his about impact network. point drive

Jim Foote


the So year slide let’s for conclude with our on as XX. shown outlook

of and is planned prices prices benefit projecting year full feel is higher and our business We $X coal and supportive the surcharge coal in market we the markets for we same continue the front are needs of and ample the time, fed. capture environment, can course keeping to adding eye we from fuel interest elevated expect year. customer At that us. continue benefit and In income opportunities Full the network unchanged. from from close near-term, operating export demand, billion, CapEx for that right growth comfortable With to to at revenue. a double-digit approximately a are more we on strong employs the which inflation, higher support are and revenue of both rates also

have we by made transportation Matthew. for I resources solutions rail to growth. service it changing will well-positioned By for will lifting needs. lot to beginning reliable, with cost year supporting do, of to are providing work the progress the years we still of have and and we adding their our the and back but our them a effective customers of since committed be We levels, Thanks efficient, profitable turn necessary

Matthew Korn

Jim. you, Thank

please in question. limit that, And of yourself ask take we to will now the interest to time, questions. happy Emma, that with one Now I’d be everyone just


line of Evercore. with comes you. Instructions] question [Operator today first Jon from Thank Your the Chappell

line open. now is Your

Jon Chappell

about about equipment time that spots -- customers it’s what aspects quarters? all more and getting are turning important a of you dwell challenges there other the the you service? seeing, into spent of Thank are next for the function will like the trained control cars that reliability? and couple fair service just and labor online Is it that over your important right are how in optimism or outside you that that you. amount Jamie, Good related things your things of in of control, These mean you talking do of people like metrics what and a velocity afternoon, think translates to everyone. quickly any service the are can yourself,

Jamie Boychuk

Well, Jon. afternoon, good or evening good

block to us we different more purely it’s to down do at and in customers. pure that way, now. been different solutions for to about as with years loading there, whether when are support so items our with folks our them. work our us, T&E that customers other have XXX and customers need where at cars can destination with numbers on Kevin with comes our out comes working But to I those and worked with having as trainees by respect needs down right look trainings to we or have hiring we how don’t quicker, looking it can to working continuing are turn have handle we cars definitely, and For of to really we much. areas talked there closely out And number getting customers we everything we we been XXX that our

qualified have year since XXX to of the year. already We start the up this

really we where our know gotten to continuing that healthier, we cars that way So the to if levers continue we train that. design, push as doing respect make pull to continue to just we area in conductors. we we back we theme to a can railroad more here, there’s forward move will have different common where can base corridors we that get with is sense But long whatever our need to come and are in crew has the we

Jon Chappell

Jamie. Thanks, it. Got


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

is now line open. Your

Brandon Oglenski

thank op I guess, maybe as have volume guys increased here just think, you quarter, to guide But those you confidence to to back you guides we and if for now that I Can provide afternoon revenue seems have guidance you some the the the and through now? you confidence above you GDP. and question. Good were, taking income only year go to it my double-digit last talk what’s Hey. growth. driving gone like

Jim Foote

moving factors Yeah. we spoke April and seeing confidence momentum Brandon, through get will move into of and to occurred. trajectory, look, we Obviously, we there’s some that, quarter. the a other Jamie one, Obviously, as and good parts. get are the have lot of hiring rest the they

we the assumed with moved seen that strong now. You tail supportive, has market a still have on. all demand and up expected of strong been obviously through more as than more factor prices oil really, that have our surcharge and the what capture we of Ukraine export the that of bit here up would crisis is -- probably picks off fluidity dramatically the bigger as we to market and as had competence here coal remain really and going little are we number Also sooner have network. markets to a see going as forward we well the But going, factors from begin going fuel

Brandon Oglenski

Thank you.


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

line now open. is Your

Justin Long

operating color on And the that Thanks. up volumes guidance any still this Virginia year? assumption then, I embedded the for GDP guess the is to excluding last there income start OR growth? that’s assume you real that can with And estate that double-digit sale give Does the on in follow outpace question.

Jim Foote

lot one. factor business recover GDP Look, there parts, to -- that’s to really the to big We target. economy. a as business you and There’s targets. the second to get cover want needs in on of is will hit those first the plus our we that know, be auto the a business half production as moving I going automotive been Yeah. outgrow

and but other the watching well. as we incremental market capacity some side, one and Coal, comes then at. that’s market, be drive we there, demand domestic chassis as to well, on growth see going So that are that will we strong us for into And back the intermodal forward. will the look particularly market assuming drayage

growth, year that’s now. but we at exceed we number of as parts, parts why expect realizing moving that always to of the that’s a target but came beginning few moving a our there’s there’s new the and going So volume GDP right on out

Sean Pelkey

And Justin, this is Sean.

on things offsets, as Just it the OR have year, last some that to always question, of essentially do of acquisition expect And be that year. impact they strong the revenues normalize, terms will the the negative have in -- in are the on in the half impact, in I said, prices things the second obviously, be given given it’s ratio very of as particularly which incremental were to will but think op that keep are healthy, have half add year. the as well. Higher half in supportive the mind on the and of in a first impact have the the second income, on very the the that for quite to storage -- then, will QX intermodal an storage be there and But with of the occurred margins year, growth we year. to OR of operating the neutral will quality impact OR, elevated fuel obviously that last full the we

Justin Long

I will appreciate there. I leave Okay. the time. it


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

open now is line Your

Chris Wetherbee

of transportation. back if off call, little commodity the potential then weave opportunity? driven that bigger maybe sort could is maybe of what’s freight I slowdown but sort a kept there you in? maybe that? some industrial other and earlier markets? And you end afternoon. side, rail kind just I on I So, that industrial in speaking, just has Hey. the share a factor a of side, see to to market How guess, offset I in consumer wanted that and you upside two enough generally on and into commodity guess of does happening to are modes the the on probably picture, seeing the Congestion business see potential bit those in the talk bit made we come what can demand Great. about comment Jim, Thanks either good the little or you consumer freight

Jim Foote

And going divergence it consumer industrial back industrial economy since the been Well, the I have began that concern amongst forward that really tariff from going the into and we of going effects pandemic kind think, you the carried still let’s the that by XXXX a the gangbusters. the years, -- nuts. and and producers, went of really the -- time, issues and middle hammered, look consumer plague at of to still got sector it’s that driven same the it, was between economy and and especially industrial years was a call through there’s lingering XXXX consumer XXXX in to at had economy, the automotive create whether economy

back think, it’s I So, divergent see think I in comments. those industrial very good. demand more it two clear in are come -- to you is now, our economies Is and line starting

the have in as We done the have amazing think the we a -- an side the we couple the side have last in intermodal very on I railroad job demand not the met of done throughout the years. and the the of handling and of industrial business bulk side sector business, consumer

whether are as the while stays little a are world there chains, supply being nine and everything months it only the and there we forward, today, figured last, the would continue whether that there labor be terms us as coal, grain, higher we excel I lot held obviously begins continued going have numbers bit. great the of be we all these rates about in going various the ago, could it, call higher -- talking if to of see we But through for where improve is have sanity, you in environment that to for with haven’t the hiring, the months and went that achieved So to U.S. reason sectors you in demand us steel, we demand plastics, we opportunity don’t and relatively are railroad we somewhat assuming see back we -- it we the changes be nine want that a today, a sane, changes, to to market in go name out. obviously, said moving The import/export of chemicals, around extremely are attrition everything where would be it’s where we ago. it’s thought be is we so there, that’s tight to

We possibly so of on economy, excelled do side take looks I favorable of we the the the we could have on have where And to done traditionally think everything industrial both, especially look economy railroads situation. as advantage the forward.

Chris Wetherbee

Okay. That’s it. Thank Appreciate helpful. you.


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

Your line is now open.

Unidentified Analyst

This [ph] Thanks. is Toran Hi. on for Tom. Mike

You capture once progress which of constraints you fully are be way a the have are will able that employees. from quantify perspective? you on all be is do T&E the of there up there Is crew And you also, T&E much -- kind have on this good of how to kind made to idea going really volume adding to or a the an crew cruise? you have trued point left on year think table you up you of because trued

Jim Foote

term will that behind, that. we and I lots what left often of it Tom a terms I uses in quite Well, at leave will use

are to where but we a be, of earlier, we going standpoint, where we will timing I what In hire. will going get, are mentioned from Jamie terms to to say, continue

We are we employee going differently have to manage past. this pipeline the in than

that lessons going sure again. to We going doesn’t to make to learned make happen are are here that we this sure us that

growth. to we they want are all timing. want of to our And that work because the for Jamie, because key employees, a why and to everything critical that’s reliable truck can is like about relations do what with reliability key color we well, employee customers, provide company’s product so any to likes standpoint closer our across our, truck all doing the from the and future of do an are you here we to that’s

Jamie Boychuk

shooting towards really is, third timing the in we Our are quarter.

employees, third As training at the have be in And quarter, end some puts push number we good we every and to single hire quarter. XX right point to now, those qualified attrition forward. week, continuing -- attrition do of a might in and the moves to us if we we third for continue to the XX point, position towards hiring as Jim’s of it of the tail are then our

climb year different We then and up year to stay continue into and that we to got engineers attrition train pieces. to have locomotive that this got ahead programs that we and have want seen many make of throughout sure we other next we and

world So QX we much of point any curveball doesn’t going a at for as But better a going long to the to us type is be feel again. here not soon. stopping in we as confident pretty quarter are be time us. throw some

Jim Foote

a more color on yeah that. Just and little

Unidentified Analyst


Jim Foote

It now. easy for to manage is us

have attrition around rate We of an X%.

we So down. workforce. because and to is the we year, and concerned extremely is manage It a a half always try the environment last with have year different it getting completely learned difficult. not are can add we over fat, is, What to

a that a to manage have going flows That we to that the happy with the at sure going to don’t and more means which So workforce it get always of business, are do we this fat we different it mean manner. differently employees little we to a that need. of in look bunch doesn’t in we differently. just ebbs make are -- case That the is have and a and

short caught get did. don’t we So just we like

Unidentified Analyst

Thanks, Jim. it. Thanks, Jamie. Appreciate


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

Your now open. line is

Scott Group

Thanks. afternoon. Hey. Good

much in think Do will where want to maybe where network be will you that’s back of think potentially excess it the starts go have the have years, about spending how And sounds half be So when the the that of the you I you the hiring half are XQ in half and you that back volume the how of it back you much you you network of Sean, still XQ think like is want want efficiencies headcount and may be? in in and growth year? -- to on maybe, in the to headcount away year? then to the

Sean Pelkey

mean, to quarter all sequential I roughly -- are a a doing X% your remember, of up on are Scott, netting we with Yeah. basis. first hiring, your we question, we -- in part are

we in headcount by able of year-over-year is the year, we of couple to excess the I of impact So -- and get percent the time that think yeah, a in to to cumulative that grow second ought the be that. half that of

capacity in trains got the on have network. and We

to freight. locomotives have got We the move

year, to on training in right So $XX so on now. then Like, hire. growth. should training in call it, be costs of are said, we we are able of we Jim that it spending your those roughly versus cost see a I going $XX away. million that continue -- last going it’s up don’t are just terms to quarter the And to question side, terms outpace million

impact outsource would container to there’s and it than costs it that’s yards Most really reasonable if million services the more balance and to also rent. pretty we probably related be need faster, were The to be chain others. more mentioned is variable whether that congestion, to year. so intermodal running labor terminal of of the related otherwise So whether piece the is labor, or we an which in network purchase locomotives probably across having is supply that or the $XX related

So think kind opportunity terms back roughly about million we is to of to that thing in of get we the where get $XX were this it once spinning.

Scott Group

And the is leg more RPU, one everything The quickly here? just coal one Kevin. at seeing or there prices up are Okay. for full potential in sneak we more is benefit this point the can I net -- this if and of

Kevin Boone


largely is contracts capped. -- of our this think of are some met -- on the the I some side,

in So extreme to they don’t participate these fully prices.

core assuming run rate, a at So they those this stay good today. are levels probably prices current is that

Scott Group

you, Thank Okay. Appreciate. guys.


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

is open. line now Your

Brian Ossenbeck

for question. Thanks afternoon. taking Good the

where feel you like place? the amount you done have incentives to into expect people everything need challenging to labor, I incentive line a these maybe you different you bit rules place? the especially that point the know that put right you differently. you to everything, types that get how moving manage manage this up And back elaborate on Jim, you are and to coming you all to do at -- it’s and you if more now on parts. workforce $XXX if the this announced can But of to can need is technology, got Just them yesterday, you expect different the in really $XXX

Jim Foote

out was your and asking thing It’s change we going to do the do decades and possibly that’s everybody We a agreement. changing the have a with and CSX relationship relationship and I workforce can workforce, some and committed time the the by And about. human operating and do -- is that’s opinion. in and not is to admiration dysfunctional it wrong pandemic the what mutual for the knows name years to to two anybody followed these that’s night something and thought caused our union to in ongoing we process, that and somewhat for environment And extremely it mean, we an that. for hard. change we centuries back time, key call the are need have, you a same unilaterally everything didn’t business working in all think, like workforce process, the about I That’s railroads a made technology. relationships decided surges long-term of day And is of to it. else if you Well, not been single and every we to between the dedicated but the were we do long fix chaotic in railroad with one that’s building are on working is necessarily without that this need get traffic not get that unionized of just we right the trying to that’s at to kind throughout middle it change. offer and my labor are we raise. we in so there It’s guys a And why of this the

Brian Ossenbeck

Jim. All right. Thank you,


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

Your line is open. now

Ken Hoexter

afternoon. Great. Hey. Good

targets that lot the the So I key then, of there I you operating are doing want seen, Thanks. the into to you built we is of fluidity employees? the to things is equipment to understand past on half? follow in we the next guess that fix what focus anything to here, rail fluidity, I backlogs Jim, for network? moving to guess, gave again is get from And And just moving, employees do or as just kind need to have the the or the -- up get aside that, fluidity the you hearing what’s need these the the to timing and get week the cost. to service, moving simply just throw second at the is in a assets something double-digit of income rails throw

Jim Foote

we So are of not short locomotives.

to We in is it time the a classroom. to it the railroad. more that through on and lengthy want capacity And short only we XXXX be until not process order conductor organization. doing infrastructure laying able extremely dedicated to need will still a -- to doing from from need We these and back get for is excess is are more it the thing get more That’s lengthy service in do were what one that the don’t management railroad on the we more that’s do process We anywhere We us people from perform continue we lot are don’t that are they and point conductor that any great the of and somebody levels the the people else engineer to in people. better need don’t this it. we the need is to of conductors, looking hampering There finally we get job thing and fixing there. and start even physical we why that need time don’t where have day ranks. and track and to and that in and job them is one need we a have a to engineers we and They We that’s across short focus to be is rail. that continue the want someone, from an in numbers. might age time to we gone out we are

railroad at the they time, it the First the ready have and hurt else. so to It’s and operating environment or process job go make that’s out instruction they sure screening, then that and long. and through the months in not month go classroom somebody and are work and in long, taken six get long by equipped of to and point a then of has we training more on then not hurt why time a all, pre-employment

don’t of front work to candidate usually normal home. might They to the go work. the pipeline to was to they of earlier, process The something else. As us. wanted nine railroad -- went end want not away I said the months because longer, of stay wanted do to to want in business, from They wanted that

and compounding revamp, it’s and then on -- so net realize month extremely month of the that in increases and have And month-to-month-to-month work a work effect. now a year start fluidity all are network, after employees benefits performing they the actually goes you had go beginning got to month we hard and are have see improvements qualified, continued as will when to after we basis, be the on, and so out hard the of going we to with in speed the month these work after

network run slows When down. employees can’t the the more are network and slows of down, you so people. you need You short trains, the

the out want where it, Listen, about lot So need of railroad then we telling his see our opportunity. And dwell to money doing not more was, what to us where get view they manage because that so not staffed, can we make right-size regular the the a we need Kevin to -- get it, what us there. are shy is. provide want where that It’s it to opportunity his then get team we to and with velocity they that team and it the and workforce back down we we we about and Kevin can and effectively that’s on will basis move do a it. are

Ken Hoexter

the third to is end? just timing year the that quarter returned, for clarify And there, the fluidity by

Jim Foote

Well, the I one. by to I because projections, was give last would off already hope, months again, I hate on nine

satisfied get third continue will railroad time. wonder projections. will hope XXXX get better will I the always and in better. when it Mr. better of to fourth and is I will better better making to nervous running as quarter. will remainder was the the The the record better to start start in from this quarter it’s start and going XXXX was but the being was do not to the But level get we the where get we there want operating yeah, run the better camp which -- that. way in run quarter we will of gets of to railroad gradual will hopefully not We is performance We were through you we running then Boychuk and it wanted all better company better to the I back get And to and see where be nirvana. improvement go going were performance, the base to wanted this there a and we able even railroad. be and company year. we

Ken Hoexter

Thanks. and I the Jim time. team, appreciate


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

is line Your now open.

Walter Spracklin

afternoon, much, there just Operator. accessorial and everyone. surcharges bit fuel want of parts I moving there’s very Good and ask to Thanks a with on yields lot a little charges.

more rail higher. of negative a fluidity and -- result as yield come we the as of natural the as improves our on levels inclination how Could we yield down to forward, accessorial develop the off were over year-over-year to to are in some some if see of come in at off? you we charges move sector fuel charges prices your basis going we fluidity some might improves, investors rollover opposed to looking come particularly pricing we noise remain are -- a near-term as should those Are and see as therefore, point would be see of you constant. of some assume how to curious these yields Just going generally

Kevin Boone

business But of that’s it. mean we storage is we quarter versus so you that’s today were from fees good is that happen want good. fluid. the rail chain I and we would about conversations, Hey. more We those that’s we thing. moving becoming XX% that at re-price XX% with when our to down This customer. what’s this some when are year with are those right We customers. and certainly those exactly conversations our we we where and think have up customers we we last to their perspective those having When where what had the more are I supply more are expect that to I because our level. Sean are of every even come having more call, normalized now, gone freight -- a having to That inflation network means and looked look to is things with all conversations spoke Kevin. at happening

of we to will lag those we are year. so in, realization move realize expect and when there And the that a bit deliver things fully have we the through think pricing so that’s the environment as you and is a about we start of that are year to through

Walter Spracklin

Thank Appreciate great That’s you. color. it.

Kevin Boone



the from question line of Fadi Markets. comes BMO Your Chamoun next with Capital

line is now Your open.

Fadi Chamoun

question Hey. is Maybe you. to Kevin. the Thank

commercial of opportunities if on mentioned can an of remark the what that. CSX’s a after and transaction? you to kind point bit that supply maybe commercial and to something attached And specifically what that chain are you like terms we go flows think you wondering the the second that on I with specifically trade elaborate have in for accomplish about opportunity I is, you in the you you traffic would as mentioned Pan do and Am experiencing close am of network your little you see you and carriers to port. changes at now that think

Kevin Boone


what making are probably closer it. that’s resiliency that I in have more seeing those or touched onshore quite are flows, their is, to chain. be capital And production do appetite issues. I and my on case to signs, consumers advantage would or of and industrial appropriate companies a re-shoring, to buying we competitive products in want now I more two spending companies to chain I frankly, am I wanted do slide are are of at and the second that there terms we activity for covered look the terms referring hopeful seeing more One supply I that a and trade going the the behind was In lot to early supply they be it an Asia overseas re-evaluating, are decisions is

that and of talked about of Ukraine like the of sudden with products things lot come the bit moved amounts market. supply and gone early are to The and Europe and other we largely West grain, when supply and conversations happen Jim and look and little a extremely other going of Russia this doesn’t customers, huge of in which Asia. steel is, of a second is of this and one a like European the about Coast that commodities to think that’s all largely having we Well, things things you had the out out and those some traditionally are have

And Now maybe serve. out come and of East ports we that’s really, the Coast going benefit really again to the it’s that early.

We have to have conversations.

to have capabilities to demand able when make those We to the sure be that happens. products that there deliver are

East about. are am from So the move them into think Coast dynamic could about Understanding thinking potentially terms I and to we what we customer. in really how staying the what close being the very Coast it. and That’s potentially with of working very, West

months XX not it’s probably are happens. some months, everything it and month next impact months, nine that’s and change a see start at ports out from that if could looking months going to next are we the now, it’s the few We it’s going today six how to phenomenon, over really probably,

Fadi Chamoun

me… we let Pan JB And How see Am… on Okay. the

Fadi Chamoun


Pan want cover JB me Sorry. You Am? to

Fadi Chamoun

a business better We consumer time there. in Yeah. access transit paper on it’s The Yeah. Am, a reliability many from serve to serve. to waste packaging to up good we with were then is markets very lot rail of opportunities just that Pan more think great we And market. customers going to And Please. previously. markets that we look, standpoint JB There open service, continue is that’s a going want see that market frankly, just more or to grow. a quite unable that

and going really to to has are capture the gearing that So we now are those closely through approval we opportunities. work excited, gone up really

Fadi Chamoun

Okay. appreciate Thanks. I it.


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

open. Your now line is

David Vernon

number think we was guys. are, some first afternoon mean PSR network have grow I Good Hey. as for the of I and question like I something step a guys market generally. out are your the the trying you little on appetite a to of merchandise intermodal of lever intermodal of in sort business the growth? service we and some more with accommodate to part obviously, am dealing trimming for margin order a are, what bit I square the rates your just make with balanced to container book kind growth? between intermodal third-party of attractive am players to could some help circle remain how actually this do seeing appetite adding this and sort get the that issues. domestic to XX,XXX of are the that to a of you mean even you growth bigger for be But coming of reconciling into industry and years. want boxes or couple what these the I is going the I you market fleet that with the where really to the next year and on of curious

Jim Foote

the leading industry we Well, I in think, intermodal are growth.

not is terms So volume. of it in

year, year this sure. I think next if not for

lanes in our and In spent XXXX re-engineering biggest we began said, so to we to more intermodal intently way when terms and sense that on we of -- a the to lot in business the volume, have intermodal is effort of return grow. the to XXXX going want makes that business. of on good operated network could where be time for in being so us piece it we That focus working reasons, key a for

West. we do intermodal market, that working nothing do more which And footprint to Coast of in beginning basically can at of and in greater ports, than we are which have in they versus gone through the We in. more the much and expand a the growth we to-date Coast the are terms a understanding to better dramatic have have transformation and opportunity participate the West think East East I more how leveraging in Mexican also the

business it’s core for in to whether more over market, more or to our put merchandise the towards the we asset our any are us not that domestic, the shape The further franchise. continue great players form a favoring develop, or the part international to merchandise So see intermodal potential these say that we markets way intermodal franchise. is business. That’s grow of

them them these businesses. exciting So we We so see grow divergent -- both opportunity. at both areas of a has don’t of intend Any business we we to look opportunity. and of book both of as equal business as

David Vernon

UMAX And maybe the and follow-up, quick actual look just a to boxes the fleet, of you third-party that, add to handle you are as private about let do in you fleet into Jim, think the going investment sort boxes? the

Jim Foote

whether Again the different get don’t involved basis, the we for in potential there asset UMAX it’s work like of a am more book an on I XX% whether because money. Personally or that’s and more see place every great where of XX% opportunity model being us else, and the favor business. of of it’s I ownership

favorable of can area any around more a have that asset investment that extent make some the this return. bottomline, that can in business you we would turn I great to it an in of guarantee to kind So and our

David Vernon

much. Thanks very

Jim Foote



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

line is now open. Your

Cherilyn Radbourne

afternoon. Good much. very Thanks

In coal could within increased this coal wonder comment terms for on and on it’s think And I touch whether you on primarily has domestic coal, outlook for you what your of is volume if already, outlook both could year? you RPU influenced export touched you that the that, had prospect the export? on but

Sean Pelkey


in there opportunities going some of deferred that think you those I when away additional Jamie to the mines of through money of they making years. at reinvest get capital now as think are look a adding we I items a and them resources as lot over are they the allows obviously we the are right we in had the reinvest that talked lot the out discrete and probably then that and go pointed first year quarter, about some to are the some have and think I

probably You some some well. would production better of coming out as see -- those

we the equal, else would volume some if anticipate market upside year. all through So strong, stays the

Cherilyn Radbourne

that’s primarily is your And or at look to it that coal next… is outlook export influence

Sean Pelkey

that address are Utilities utilities, No. when utilities No. levels. low look look our Southern now and even at Southern oh, didn’t you at they When I our yeah, sorry, right you Northern at

is to sure season. And is the peak into diligently happens with And the them the mines of to inventory an and the replenishment needs demand. that so make that there on that are that in working happen -- then very, terms with then we the obviously and on export closely very summer working robust side,

and that some the as will capacity. full I than constrained You now, comes back offer probably and market rather thermal opportunity And business. Bay, have Jamie, business additional and are supply -- coming it’s met seen the not export we of Curtis it’s that will just Russia quarter me on see some you Right supply some with so favor a that. third will that now materializes. lack opportunities probably the out see remind in that seeing of you come thermal will how demand, not coal a there producers on the

Cherilyn Radbourne

Thank time. the you for


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

is now Your open. line

Jordan Alliger

Hi. afternoon. Good Yeah.

curious that, doing around on hearing the the color sector, chip situation? give business how OEMs, if what you Just you auto from parts on are any little a is update the maybe the Thanks. and

Sean Pelkey

chips, in into when Yeah. certainly I helps. shipping March continued without cars We saw that started the April, and some we that’s improvement guess

finished maybe go on warmer have come So they it and decided you to chip don’t was sea that waiting in in market. months good that ramping a you now. and we up products that But inventory we so the right deliver are in six to lot just some seeing it a in from for but get to more will ground, now, of the on -- sitting inventory ground ship those ahead the maybe in,

down So areas, we at there the China near-term. are Shanghai impacts and some that, in there some the it’s running of disruption so but other a the but favorability that’s seeing the least watch with having see -- and will some in what of shutting over through we there some with item, variant

Jordan Alliger

Thank you.


at for no conference this are you questions time. attending. This further today’s Thank There concludes call.

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