Union Pacific (UNP) 25 Jan 242023 Q4 Earnings call transcript

Company Profile

Participants

Vincenzo Vena	executive
Jennifer Hamann	executive
Kenny Rocker	executive
Eric Gehringer	executive
Chris Wetherbee	analyst
Walter Spracklin	analyst
Scott Group	analyst
Thomas Wadewitz	analyst
Jonathan Chappell	analyst
Amit Mehrotra	analyst
Allison Poliniak-Cusic	analyst
Brandon Oglenski	analyst
Bascome Majors	analyst
Ken Hoexter	analyst
Justin Long	analyst
Benjamin Nolan	analyst
Ravi Shanker	analyst
Brian Ossenbeck	analyst
Jordan Alliger	analyst
Jason Seidl	analyst
Jeffrey Kauffman	analyst
Jairam Nathan	analyst
David Vernon	analyst

Call transcript

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Operator

Greetings, and welcome to the Union Pacific Fourth Quarter Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website. It is now my pleasure to introduce your host, Mr. Jim Vena, Chief Executive Officer for Union Pacific. Mr. begin. now may you Vena, .

Vincenzo Vena

Chief Thanks, and Rob. us and you joining Operations, Marketing by and year Executive Gehringer. Hamann; Vice Eric President Executive Good to discuss Vice morning, of our Omaha today in quarter Kenny I'm thank Officer, Union Jennifer results. our Rocker; for Sales, joined Financial our Pacific's full of fourth President

service strategy Pacific to our lead and team operational in industry Union excellence. The multiyear safety, is the executing

possible what's goals. of demonstrate lot with for a a shows quarter There's to path great those fourth on winning we're achieving strong me work foundation right future have do, We and success. the that gives Our that XXXX we but confidence strategy. the momentum, we're to which exited building

This was net Pacific This year-over-year Slide billion volume-related of XX,XXXth or offset surcharge expenses. mix. Now offset reported net $X.X quarter to productivity inflation, by share. or were business $X.XX per revenue income Fourth per let's pricing higher fourth revenue and as income turn and morning, XXXX flat Union lower quarter of Expenses gains were operating gains billion and increased share. also $X.X $X.XX to X. compares fuel expenses fuel flat by lower and as casualty costs were core volumes quarter

from And points last Our basis demonstrated fourth OR quarter operating third points of improved more importantly, XXX year. we XX ratio versus of XX.X%, quarter. sequential improvement basis strong the

made future those quarter. in further what that improving the We strategy excelling to for control. we're Key are to provides of success. We our our path the efficiency our railroad taking right service That great while areas also increase right the proof actions in to is on this progress we customers.

provide on more So over with fourth Jennifer full and financials. let it the details year quarter me to to hand that,

Jennifer Hamann

good and Jim, morning. Thanks,

gains fourth in biggest the decrease was quarter. XX% to and oil compensation driver flat other our quarter lines, slides. was per revenue increase. for Fuel to volume flat line. fourth on X% year-over-year $X.XX. top mix access cost wage details XX% Digging expense lower the a basis positive, impacted revenue of it surcharges also totaled freight decreased versus active offset versus in quarter statement fuel expense per But Wrapping highlights. XX%, benefits volume a was down Intermodal flat increased billion the line, were And subsidiary decreased up volume of of driven revenue mostly walking offset was Against as further, levels flat. million. Volume adding dynamic. expense the X% some quarter revenue, fourth declined revenue growth, fuel in quarter and the revenue solid top both fuel points, workforce our freight TE&Y freight Lower a year revenue. Switching XXXX We in appendix an operating into business basis decreased shipments few by and fuel and revenue. XXX to our was on productivity X% to XXXX. growth. Breaking expense freight of expenses. full XXX workforce the workforce by of price up the expense while Fourth provided as by me X%. Operating $XXX $X.X of million employee our gallon contributed prices to the pricing mix solid prices, X%, surcharge reduced points freight Starting of XXXX $XXX revenue $X.XX X. against Let's in deeper XX quarter The to compared from growth with was let level on basis positively X% the heavily $X.X hit quarter as million contributed $X.X inflation only the and the billion, This in increasing fuel. X% income points begin unfavorable mix. core mostly through Slide of combination

fuel we moves. mix fuel-efficient deteriorated X% as a increased fewer and intermodal moved shipments business rate less consumption Our coal with

Finally, XX% largely included that case as of recoveries. had through costs of higher years. last of other worked expense out Coming grew to and comparison a XXXX, a sizable the casualty we which result couple the backlog insurance COVID, we

estate share increased of other trend, intense gains. real not million quarter operating Fourth improved $X.XX these on do $XX elevated to improving focus billion of income safety. the and was higher XXXX. net particularly $X.X reflection X% both see long-term as Below income flat our we expenses quarter Importantly, a income $X.X of billion. due line, a per Fourth earnings with at versus

Our operating and basis XX XXX sequentially. points improved ratio of points basis XX.X% year-over-year

full volumes, to income partially Operating gains. $XX.X Moving and the of invested billion offset declined and versus pricing reduced Earnings results, reflecting our decreased Revenue Slide return capital core quick of XXX year XX.X%. declined recap lower billion and by with totaled impact operating basis XX.X% deteriorated fuel mix XXXX then of driven X X% ratio our full XXX of results. XXXX year points. surcharges, business $XX.XX on share a $X.X X% by basis points of financial to per overall

repurchases. payments and also and were rate million $X.X and our Full in XXXX. Free operations The through flow from totaled We billion drivers. the shareholder billion, billion nearly year cash of main roughly agreement returns net on balance returned X. $X sheet cash conversion XXXX $XXX the Slide shareholders those and flow impacts. $X.X income to reflected cash down combination from Turning dividends to labor lower share of XXXX

be at prioritize to finished rated a agencies. ratio balance the and as year debt-to-EBITDA sheet A strong our we credit adjusted continue X by Xx Our

efficiency XXXX the to of improve it over provide I'm and kick turn I'm commentary on to XXXX to operational through Kenny an over comments financials. With with safety, We the on this to to service be starting railroad While that, believe service we've our in was some improve and our inflection year, made XXXX. excellence our efforts going is several our performance a off pleased the last and difficult reflected as months progress productivity. point marks to

Kenny Rocker

Thank morning. you, and good Jennifer,

You X% just in that partially offset our gains lower surcharges. revenue as were volume up from by quarter the Jennifer fuel heard X% was of freight

So right into recap business let's on drivers the the jump teams to side. revenue the market

our revenue revenue offset by Starting with The Core more unfavorable in X% XXXX. natural of increase car. lower X% for gains and were flat by on coal per decrease contracts. gas by than bulk, in impact the the low compared a to was offset quarter average surcharges pricing volume, fuel driven index-based a prices

demand feedstock grew as was strong. Louisana our Fertilizer due in were for to diesel for production Grain field the secured XXXX new shipments prices. for application lower and to California. team renewable opportunities as compared up quarter nitrogen shipments product

ethanol Additionally, increase shipments with improved our service.

from and Lastly, the by commodity quarter Business were mostly offset revenue domestic to by to coal fuel coal development and plastics LPG competitiveness business both export prices. in quarter, pricing Demand the Core the up in a due in negative in was Industrial be volume. growth. our weather X% quarter fourth petroleum in mild lower X% natural continued decreased to driven and increase gains improved low markets. gas challenged the for volume. our a in contributed surcharges in segment and mix

sand Eagle by utilization volumes prices the in-basin natural Ford that Basin Basin. gas the softer drilling However, in and increased sand of impacted DJ reduced in negatively were

negatively Premium in were and and X% and Coast pressure. from revenue development a volumes. development volumes for quarter's decrease UAW impacted Automotive replenishment decreases dealer but market on and those wins call. the volumes X% lower wins car volume domestic surcharges quarter business business in the increase revenue were a quarter, strike, the mostly West stronger was truck down in per strengthen mentioned the by by on our X% that average fuel driven imports, Mexico were I inventory offset positive Intermodal last by

let's start XXXX. talking Now about

we're economic shows to this be And report, key are looks on to mixed that for are S&P's be picture flat. a it production XX. challenged, year [indiscernible] remain Here Slide for some These their demand January to forecasts continues watching expected Industrial are you'll notice that but from XXXX. strong. auto and indicators

remain brighter new note, repair and volumes be our serve. a volatile Turning we we as to challenges relatively gas eye key we stable, continued natural anticipate Portland is continues the we a it the -- with a for grain are high. from here driven heavy business, but strong today spring as into focus are and bulk, origins. combined outlook demand that I XXXX inventories remain watchful secured capturing futures within incremental a as Iowa moving with facility markets expect Slide competitive, coal now On outlook see Minnesota is biofuels fertilizer demand. Canpotex Starting in keeping season. on strong XX. growth export we Domestic are prices and And commodity to by including to complete be on

will year's to challenged Moving on market. exceed we're parts as construction to market Industrial. be last the record softness seeing of in volumes The

we petroleum and focus However, favorable to due business remaining market petrochem on the our development. foresee

intermodal for contract in we international expect a improve side, we lost will the finally, but XXXX premium the our on negatively volumes. XXXX And to market earlier year-over-year, impact

development economic encouraged that with business they'll and market close focus storms And product on with growth improved in strong have to automotive, particularly challenges environment coal to strength we production sets severe continues strong who will in to I floor in our that wins. In the domestic handle soft our and the are indicated this with we're see year. January XXXX, expect us Nonetheless, we off demand. summary, the a start side, in the see am business and customers market some to up based We're our OEM see a half. for muted look to on On we development. staying service But in first markets in intermodal. market seeing winter start

the For to well improves. we economy market the half, handle demand and if second are the prepared

Those and win front for team to I'll We customers. team from performance. on the in is a the it environment to significant marketplace. And turn service our I'm for carload our ready our service winning and with over over investments, our excited capture products and intermodal of opportunities commercial more customers front [ to both continue ]. the freight with to operational offerings help improved capital that, review to in Eric unmatched road Eric's our create make along investments us,

Eric Gehringer

Thank you, Kenny, good and morning.

to XXXX. fourth performance. to showed dwell train quarter. to appreciation their that the drove for network quarter express and reduction I our XX. velocity their To focus product during service my Slide efficiency. tremendous want It's to XX% efforts improved to fluidity our driving relentless network per fourth day team terminal Increased velocity Freight in miles the on reliability to and start, improving compared that Moving thanks car a and XXX

and manifest was trip Service auto quarter and strong as improvement a saw significant both we in during the plan XX-point compliance. intermodal

to trip to we our addition hundreds great customers, we In have the which is to metrics critical quarter. throughout customer-specific that our importantly, we performance showed are Most also improvement of service plan compliance, strategy. the growth long-term delivering sold

While continue its very will winter I'm challenges, and everything its the here of positive the momentum. do. to has certainly brought healthy, be confident foundation railroad and overall continues we team is the is Safety

During the we on focused improved that our the and change. derailment remain real investments through performance in quarter, drive delivered critical technology actions process. We

So everyone each day. safely goes home

Slide Now review for metrics efficiency key the XX. let's on quarter our

our During XX% stored and the the efficiently. to we second sequentially opportunities XXXX. execute productivity X% fourth fourth versus efficiency operable saw of XXX and all on improved fourth year-over-year half across continue units nearly improved XXXX compared of quarter productivity identify metrics. from we to the utilize we Throughout X% XXXX, Locomotive to Workforce our more as fleet. quarter quarter, fleet improvement

managing of demand crew workforce strong levels effectively to the are the the base, With focused we business. on

in product half on persistent touch to length employees. car were challenges to term, In our focus work to agreements train productivity continue points in remain XXXX, the the to customers. improvements better However, than additional in a successful Train shipments. more in as while length extending remain length from do scheduled providing train quarter offset in require system. X% intermodal from improved We fourth that, total, as XXXX throughout compared the we service drive our near declines second we the remove

enhanced variety structure. of cost As move a into and our service through initiatives our product XXXX, lower will resource and we continue designed utilization targeted capital safety, transform improve ultimately investments we to further technology improve to our railroad

So to outlook Slide wrap review our capital for XX. on XXXX let's up,

opportunities. in renewing to billion freight productive we XXXX. targeting are growth and cars and of operations and $X.X We capital investing acquiring XXXX, spending will safe support replacement This to our our assets. includes by in infrastructure Similar older locomotives modernizing support and

in recently for investing to our technology This by cutover customers. over technology also technology to NetControl, projects work system. are improve use XX-year-old transportation positions to and Specific productivity. and Pacific cut terminal we We Union led analytics our management replacing and our open capacity capabilities mainline investments, real-time to Great our team. new us

our the name in front, will continue to a growth expand to Inland and such targeted high-growth and City intermodal we areas development that Kansas footprint On in support projects business few. Phoenix, as invest Empire,

I'll So thoughts to Jennifer back with financial for lay it our turn XXXX. to that, out initial

Jennifer Hamann

Thanks, Eric.

Turning XX. to Slide

me Let out of expectations. framing to added should we pointing be that start the a that assumptions helpful slide several everyone appendix XXXX that by modeling our new in contains current

do dollars expectation the in inflation of quarter our not an some And what certainly seen those coal headwinds a as allow product the impact start price available but With January short-term it's from international not negatively are as lower that certain Fed even be strong with clearly economy lost and pricing that excess accretive to operations election, to and as system top from across a first improving this will and you've throwing cold I weekly our interest uncertain to you as quarter pressures, demand interesting As the and a we a intermodal year advantage margins demand. We unexpected we've us capture took expected in surge presidential impacted generate or pressures, ahead. as and off slow confident, to year. expect More ongoing our to market of carload temperatures got and service business in muted dollars intermodal our macro might contracts. data, the Kenny, is with other am to economy, year-to-date. we couple in the is difficult of do with . On volume. might heard fourth a such show volume of down forecast, rates demonstrated to indicators intermodal. the in volume X% variables in economic however,

to to Key We're improving the ability regardless demand service control culture, of driving a ongoing controllables for making network. UP will network efficient environment, in and take XXXX by efficiency. our confident we the strong the actions safety run is that gains a more necessary

with is change allocation, our strategy. Finally, to capital long-term there no

Eric We detailed. are investing $X.X railroad the billion back as into

to repurchases. then share prioritize will we be our excess industry-leading and dividend Next, cash through payout returned shareholders

first We we However, make given challenges first in quarter shares repurchasing ongoing different. this It's macro late will and January with and performance, quarter mention debt year our we There no XXXX start year improvement inflationary times which maturities ahead, though, momentum, today. of quarter. not always difficult predictions from look currently in be $X.X the to in perspective. is forward are we heard billion, a What is is us possible out very to for the year as demonstrated fourth what's several you've further and our ahead. encouraging, the

it me that, Jim. With turn to let back

Vincenzo Vena

Jennifer. you, Thank

XX. Slide to turn Let's

your the to heard year. like Kenny team. upcoming what outlined on our from our questions, get you've I'd summarize view Before we to quickly

headwinds Our forecast. from and volume that relatively Much economic demand business, our reflects outlook coal out lost is today control. of of soft

these business mitigating development and to creation are great through value customers. by We providing service our impacts

described the industry to made we've levels our Eric progress return to service best.

by but exit the railroading. that's While team here, the the improvement is fluid to quickly state. recover network. work part customers through impact how we success made on the to Obviously, winter how our do, very I a we our quarter in minimize and judge there's consistent of

shown grown great So far, we've -- we've resiliency.

well laid out, XXXX gains ongoing pressures be Jennifer inflationary as will productivity soft and the as overcoming pricing economy. in Finally, our to as key

areas remain, safety, year we'll We've we confident of this plenty improve got and succeed to opportunities in control. the many service excellence. While operational I'm unknowns

I in As you company heard win. say came for me Pacific changed. Union My October, to opportunity vision I back to this has the and not see

confident better the have Rob? we'll right see your this ready strategy take I'm very questions. and a in term, place to team in road We the future. We're grow Pacific and to Union now long

Operator

our with question [Operator Wetherbee today Citigroup. line from the first . Chris Instructions] is And of

Chris Wetherbee

outlook sort you macro of macro indicators cautious. volume be about can XXXX, that this the I as keeping the the just are sounds have think the opportunities that you I is I sit you here, But for you of it positive. they when year? muted still know if up are could environment like Maybe you highlighted ask but guess some muted,

necessarily in guys is So volume curious being accretive there working expansion? about volume that growth. in And cost margin, maybe on efficiencies pricing that I not you enough to context some that and of are get the with margin to guess,

Jennifer Hamann

that, what can don't see And out to your But need And talk I margin are about that maybe we Kenny, little through that's the we we just do hope performance. you and to But Kenny of Absolutely. And let of can going at we we're based maybe some a more and give in you it's second happen number can here yourself hopes I of hopefully, will So But today, going don't half prudent what a we quarter color. me what with to more of provide our business there's not to then just January can you to you terms [ uncertainty. mean, sitting said, every for fourth because certainty. forecast there? recovery. give a that. here think with we of see just happen? plays just Chris, work that network lot think And sort start ]. give that. a volumes piece sitting we year, some on diligently a Do the you the just end of saw really think move

Kenny Rocker

are market good market. bag the we of in talked it's biofuels That comments, my growing. in feel business markets. capturing growing. Demand is us. those a about about in of front it that is mixed opening We're opportunities I really

On as good out feel strong business us. We are going the business side, but year of coming and some that side. a to little a development the industrial the bit petrochem record we really for weather, construction with challenged from we've be on that's perspective. had we've our year, be Still about a gate wins had

the for economic business, those are our again, all driven. us. are ALPG On petroleum positive really those and On side, premium

our feel looking so there. and auto I about to demand and what be quarter. talk about the talked heard you encouraged really we'll by happens and international the We win wagon nodal the to overall. us And on both side side, with loss see last ability wind

demand And of so growth a feel good the about for is lot We there there there. and forecast that really market.

Chris Wetherbee

on Anything margins? the .

Jennifer Hamann

I'm sorry?

Vincenzo Vena

Margins.

Jennifer Hamann

other going think record, I I to Oh, of broken sitting not. I'm much are do mean this not mean not -- Again, kind on But I give we volumes, to you don't become I can guidance. prudent every that a to saw And have going I today. give we But that to Margins. everything don't we and to might what would as just here I as is it's the hope did we're we clarity. quarter. again, going we And guidance what be think . on fourth the going do predicated in with is happen can.

Vincenzo Vena

provide what to thing. doing are that's we're to there And Important very year just what bring is and and for way we have me, the go. to for me done the a and look put what's let try go exactly important the the maximize most just difficult box and Kenny me the us is for this this operationally? going and can all entire to forward the way say team we Chris, team, railroad. what on into is, single to maybe we the to us to thinking. available And is this out capability It of

we've flex capability what think, shown to I is up. the

the assets up. to flex able have to We be

think And We we continue then And to expect marketplace. and have up. which and going is else, be in drive there, able to of compete will, do what whatever win the trucks railroad, if the we everybody have capacity we the against the model. winning we other railroads, to a we're flex to out is we we efficiency I

like challenge available have. and else are But this to we it with effects maximize to and the I pointed for when. in out be rates going inputs would there out Jennifer Pacific be the truly, economy. and I'm Union would we the us that's happening So what's mistake interest And for happen, that's and very say, the come going can't a everything that comfortable from to what's tell

Operator

Capital next is of Our Markets. from line question the Walter RBC with Spracklin .

Walter Spracklin

business business to Sea new that looking is the an uptick the be wins the way? know keeping business I could opportunity is the perhaps seems that's Beach, side, those a Beach East And business way. Coast more any in Ken, its fluidity to Long -- impact, region. are could as -- seeing that L.A. shifts there. for at of that good create offset coming you pace of And is that LA a was intermodal with loss an there a statistics new really On Long it at or but or to as -- volume Red and LA coming perhaps some be there there that volumes Long Beach into business down. regions more loss volume

Kenny Rocker

Yes.

canal to go right a global term, for We've our and So so tariffs, tell at vessel you Walter. the spent shift. example. haven't been forth. the We've looking we talking tariffs supply carrier chains Panama time now in in put -- of canal, thank owners. over know the the near I'll you, lot customers put seen We the significant to they to any our in in

we that working network to with been reason we the move products to our to Eric Houston Coast. we give us to we with lines the given that as with the have, much the opportunities go with them new as every -- back the the the match has that with that have with opportunities we've have reload can have that on West so we And customers

We're efficient in we that accomplish we customers where that. there. that that are a have business going grow service that about that then have is we to we're service, have market. network network get And seeing of we happy finally, able and the So great a have able to seen we very what more the have capture all to IPI, been that's out

Eric Gehringer

And predict a look and what with the It's when did that can't that as to because we L.A. make of another the you that we Walter entire talk the we we think you having buffer, your fact about clarity. about future reminder, point, the that at buffer in railcars in generated in have quarter, That in buffer. we sure buffer positioned locomotives, to fourth ability

So Kenny's in is we've actually the be volume able event the there, it. supported capture to team to

Walter Spracklin

that the And terminals assess in is how fluidity the you now, that? right -- would

Eric Gehringer

fluid. Very

As you come operations. got saw in improvement car doesn't the you've very XX% fourth in fluid quarter, velocity unless

course, Now Of are there to opportunities? Jim's point, are. there

I'll fact, fluid. very as yes, overall, about right this. But through go In we those talk now,

Operator

the of with question is from Our Group Research. line Scott next Wolfe

Scott Group

right and How Yieldex about is fuel we able X%, over like I framing to control some seems just you're has can't price. price? need X% over we that? know. have been don't talking [ And inflation get more the we as time, think So industry control So strikes control. there's it this up ] it right? that Can me seems do can price. about things and now, we It things we you're more only up

intermodal growth. Because contract, happened we we And but it like then really this good could you lose did just 'XX, sometime sounded when in it that? intermodal just like -- we're international clarify seeing

right confused is big we're little why now. such with flagging this a a I'm So issue

Kenny Rocker

those. both got I Thank you. Scott, of

X months. It's Prices are And make a are you're not for let path controllable. right. all, of price. January here few jumped exactly going first down this this like to up until So look and wait we at me We've here been clear.

have You've half pricing almost and we that a a Jennifer say call heard we I can from amount, standpoint. it, touch set that

same saw has talking effective we team down our commercial improved talking seeing labor that Our to them. inflationary really sitting about them side to and input. the that the product, from the been the the been increased Eric meeting give service pressures leveraging about same customers. They're seeing customers, improve service them They're very with we increases. to that with I've how is products

And that. know so they

that on So yes, control very been so portion we've we that of focused a story. and articulating

on of a the lost the through working We in correct. you in think will earlier that last that of side. had question some year. international XXXX. a I yes, bulk year And still be you're

Jennifer Hamann

to when sure that that kind think discipline running just But is it Kenny about acceptable loss, what price Scott, to that of comes making our margins. our that's to at business I talking the railroad your goes and question, is with on

piece doesn't that Sometimes happen business. might we lose and a of

Kenny Rocker

I product, you morning, this have to when about investments Eric service be heard that talk with on Yes. margins to mean the network. the acceptable the be the

Vincenzo Vena

Well, and let to I always me I for Scott, won't. But recap hate you. these, the recap

us the that and have ways. it I pretty inflation that presented call inflationary was that we is had I with I in X first to tackle, we when for So October, the deal was we're clear that are doing pressure to going

from with also This fix a side. -- price on And quarter, expect for in our as how team the job it fourth and we get we I side go and the we . And terminals, did through we number. how better job. not we've months, short-term improvements can on it a And We available price I good the X a are a from efficiency, and you think I efficiency on can fantastic fluidity the us to side, side. on the our view. and efficiency trains, the have you see more in a people, and is the it efficiency that The did dealing with we're operate the dealing on it we even seen really there's from price the use think side, clear the year.

going what want and do the marketplace. want been things I've being lot about in in them shy win. tackling X about the to win to what I've pressures We it. met not and about But groups forward. we're in So We're and at We're it the we small moving of with being clear those to are customers straight. customers head end, we're a on. our

about I'm we it's smart level. But for we're and price that's how marketplaces, different handling being we're how it. and So excited. And what different

this overcome year, of by year, the the we in different ourselves think I a position. end see we'll

Operator

UBS. the Our next Tom with Wadewitz question line of is from

Thomas Wadewitz

Jim, further at UP. realized been of you the you've a in network and of rail response you've seen operations think Where -- you in you're very terms of positive fast kind at since do terms at on don't go you know and if what bit So Maybe look locomotives, if active headcount. comment could fleet where I to improvements? a to. the you it little is want can like

down sequentially. pretty I headcount meaningfully think that was the

just to kind get our 'XX? head to I'm of going improvement? guess really are have as trying level active Or I we at steps that we now into and count go stable a So fleet quick further after locomotive the of sense down

Vincenzo Vena

for Listen, question. the thanks

the I see it way this. So is

I there's to and little more And railroad a last quarter. is different to in efficient. become a than the the little here do concentration than different on more able what the just fourth we time was were think I the

few I the to real and railcars think be will big a faster, more we much piece products. to on, the fast concentrate able the terminals velocity us for speed terminals fluid. to locomotives capability keep the the able be help network the to going and fluidity better use think car and less we we're operate how to there's opportunity able in that be move our to there's us a But through and what and have be is

transportation not just it's the Now piece. in

overhauls. the costs still how on side, Every the on it what us do side, how network mechanical is perform engineering work we piece of the looking at capital do are we there. how we ways We maintenance, to

able on So to do. that I be piece left there's think still more to

Thomas Wadewitz

down Can count to stable headcount? is Do that you level? kind on Or think head offer further? it goes how we of at a current thought translates

Vincenzo Vena

and signed have challenge what you. with count we some to is we live was the head with Well, collective agreements given you

And at off some of put off, had We They an extra same on game those benefit time were on pressure when had all collective on we the sick the XX% people time. pressure some weekends sick got the XX%, from the that football both provided. headcount. we agreements that put time

the that those as at end do that, ahead. But the weekend, we blocks must the year. we to is company. for the was as keep over how is all to overall the that day, time those And with it no on have have all need there right pluses fourth playoff and So to a with bad showed we And this the real of we figure and headcount be all had in able X us on. were continue to same the in the move we'll what able of we stumbling are deal games out to It are and go reason been that, the at quarter not to that. reduce headcount, we do to headwinds

for look opportunity. will We every

sorry, And new we target number moving a ahead, I implementing year. give move as through we're a specific because can't is this you agreements this

to able slope is straight to place be but down. perfect. and noisy. have the will the which same be down, tangent amount be the will It little won't It I'm be it comfortable less ] a that processes The that So of way the be in people we very [ handling correct business. won't programs, and up a have

Operator

line of Chappell Evercore ISI. is Jon Our the from with next question

Jonathan Chappell

going maybe was reading this lines. follow-up ask between to anyway. just I and I the perfect a it's guess it's

the you challenges it mentioned near agreements remaining required employees. I was from Eric of noticeable some additional when to me that the So stressed mean work that term.

you're in putting Jim, programs some that related there more stress term address be environment? could you trend? a kind to the this it time you based can you're of flexible lot reverse to -- . anniversaries is kind what just you where hope at a you Or that were was So just near of volume trying where the point, and the mentioning, on on place, is

Vincenzo Vena

the implemented we are have those And that number for completely. implementation the on not have of Yes. we In would agreements XXXX, operate. that need pressures people to dates of we

in that as to that. we to I be talked I've that's as why But programs we efficiently implement, I a that. XXXX, X-year adjustment things able railroad about think mitigate see So is place we'll -- have a and that this will be we through as can, this operate as into get we we always to run do the

people You efficiently. put in starting We mitigate more the of same the trains. we less more use the more. that the grow. cars trains on and it by more We We instead running have facilities having trains, cars same

we headwind XXXX fourth a it's for in but are -- like the we So quarter. that us did overcome just going to

Jennifer Hamann

have with team. reminder, a negotiating just the only agreement John, best in PLE with SMART-TD. Well, still work we the place We're

Operator

from next the is question Bank. Our line Mahotra of with Deutsche Amit

Amit Mehrotra

on the Congrats to the good X% results. want Jennifer, back I come inflation. to

of that's guys $XXX you've gross 'XX. phenomenal XQ XQ. from a structure lowering as done structure million that billion actually cost because number I to cost assume the got costs done have a in higher a basically move -- you you've to $XX So job we like translates

gross number help kind So context you outlook? to us a that of there in net any X% translates of you cost how terms is the revenue give the can think about of like in

Jennifer Hamann

Yes. you've X% got mean, right, The Amit. number. I exactly No. the that gross is

is challenge, that's with our offset right? to So that And opportunity productivity.

where we the heard virtually fixed we the category. fourth terms But in you how And But inflation wage cost talk run and year. about about in mention, just have every railroad. heard that's have Eric that's kind you I And that quarter. of absolutely so those for aside, of offset think we opportunities Jim think opportunities to think depreciation

this inflation year. half So wage we first of had

quarter. to up X% wages to to the per only Our personnel. up go going X% going was second the in are for our X.X% our but be in half, cost union fourth It's employee

of to So that's that. us offset some that's productivity enabling

much about, of very task talked that the focused. that's and controllables so team, that's those that's where management And and this we're we

Amit Mehrotra

uncertain, that any least EBIT highly sense XX% that's which offset -- understanding gross of the is because opinion? Like, you it? but can help? Can you mean, critical there obviously I Like But and it? your can of to by at offset some us half I how give know margin in much offset outlook, is you of number

Jennifer Hamann

volumes and of to I costs. in mean how in those terms some up able longer a that against know build to play leverage inflationary of role more work put you trains we're also and that

you I'm not challenge, more our that. that's really give So any but going than to be able to

Operator

Next Allison with line of Wells is Poliniak the question Fargo. from

Allison Poliniak-Cusic

here. service So obviously, improving is

in of out you I thoughts. Are seeing with And the there? there opportunities? of engagement, are improvement the sort accelerate? Just in Is color of conversion pipeline that, any opportunities? Just unique customer going guess on any to along it terms opportunities of any of some some

Vincenzo Vena

then and Kenny, please jump start, me let in. Allison,

to So we taken service some that sold our look railroad. are operate railroad do We every this to we've mix with I blessed level that's we hard you available us to And if on real our very a efficiently. railroad We're you've that. seen of we work that's is and the goal. that we the of day at have a of to opportunity, that customers, the we have and traffic our we provide think operate, steps originates

entire all So our around whether it's go speed. and the we complex offset the grain, comfortable And the the intermodal, Texas, it's we when and very Coast to we tackling are that I Orleans that the New it's I'm the whether from offset. ash, way have capability it's railroad, Brownsville, the soda industrial whether whether to West

journey hours. require to we a customers do. provide to We close that do speed all go L.A. X,XXX Texas, and in and from of mile XX to them are able that speed We for not can

going can with plus partnering service put is We So it that's CN on do into Eastern Mexico and from into Chicago fast East and Canada, unparalleled. truck-like anybody. as that we our the into ourselves as

is customers we possible, there what's grow and there's versus else. with want business good Pacific us And to their partner Kenny? Union they have with . us. see for of with out So anybody will do what opportunity will service, lots and the to

Kenny Rocker

Yes.

It's So a all, If one. in first business us. excited a of encouraging the have healthy one. We're about we development of pipeline. pipeline front it's robust

with want in to product position. opportunities service our of lot there. a So is strong The is a start main I thing

that's as service customers, of It's to just to so that that is It's daily. on undisputed get of at out a product. you product talk more about and Look the Mexico. also we markets detail look we bit a us product a unmatched here. little That's time. Mexico, service some sold fastest that out coming coming Eric And of the at has given the

a network to earlier, grow. catch we've plans network there, at look question and that and West in We with coming we we We IPI. an service Coast You the Coast can strong we shared the really can can put pitch we're blessed grow that of And We got have, up. built expecting West onboard we We a asked on-dock. We've out pitch where the in me Inland got the to can area. the as and someone a and investments we've that Empire. product with with we're you catch.

improving. carload in you've petrochem talked talk I the auto of side, side. at us about network Gulf service is about you look side. the some in the a down If the product That's wins great heard the

taking Our the commercial sitting road. there out to a are and truck little leaders, about commercial off more teams bit talking customers

So we're in we're as bullish growing is there, the on getting the and investing and network. service out there product

Operator

the question with Oglenski Brandon from of is next Our Barclays. line

Brandon Oglenski

question, I Jim train to you local an changes. like velocity length. things spoke then think some come in wanted service because earlier alluded on think back I And to to ever more come and response Eric, plan you about, to I there's to still

gains see do year? little on So you elaborate bit more where a want this to productivity you

Eric Gehringer

Absolutely.

about velocity, work of XXX single XX% thinking car improvement, That there. is did per A you're so before, in working as mentioned we was saw us, as you what start that So a front the what's we becomes you in fourth miles day. floor. let's to day, a improve floor mentioned and we're XXXX that. every quarter,

always is been Train the length, we can if has within an you okay, is opportunity, you opportunities? always X back the peel Now see that train Train mentioned biggest railroad you so length where say, comes You because and start will there. be candidly forms. do and dynamic. length that, in

the I an Inland great railroad. where we're tack train, example can one, already more and existing onto The the it Kenny that. Empire, have of a of just onto back just gave first volume bringing we

make. that An changes that way in actual of brought Mexico. that example plan with other our that it The comes Kenny with is transportation up the one we

out of that, locomotive way. consolidating think drive other second the it core very year. half the majority and whether little you the that operate we factors, work out for many services us, the purchase continue it calls. but how about allows service it rightsize us that about because is of in we're We to have bit When There's of railroad using. whether big the that you're And fleet. that it, on it, now to traffic these our the took at After opportunity how units this about fluidity. we we us vast about is fluidity to fuel allows that The do productivity of but drives of thinking to on fleet. about we're a before lot system purchased vehicles into think X being of one, fluidity. Continuing trains a volume, because a vast, XXX last talk don't much

opportunities side. the casualty have We also on

is helped any how have. the we freight that destination haul We being product, drive down that As Jennifer the teams way are right? times successfully we on think many making claims That's has the more from all that well have an into mentioned focused we're we as why dedicated safety safety opportunity service even it's about so to sure and do we our that as before, damaged side. without as

So and we it every everything capitalize doing day on to environment, that. target-rich are is a

Operator

is next from Our the of Bascome Susquehanna. line Majors question with

Bascome Majors

about over a next, at how for a point locomotives think is bit about having Following regulations about the you productivity. X and significant units some for X% you strategy you up the that talked talk investment look that way to you proposing fleet is railroad. on impacting X the XXX the how call California strategically you this the it, forward years? of renewal And that locomotive piece UP's think Jim, further, as increase earlier, in about can sequential storing

Eric Gehringer

Bascome, a great it's question. I think

purchase the able emissions would at fuel But to that at do the gas on bottom and we we greenhouse efficient, to look planning invest a locomotives. greenhouse them look locomotives we period what emissions. line, years always out in to be of our spend the you we have have would enough If make need have more any both to X to look gas of locomotives, to not we that

are. expenditures. at year, certain and target will we look this We're have think to ways plan testing to capital I innovative see It's it again So propulsion. not where we'll we new in the

So that that and we'll for able be continue do invest are to to us. work can there hybrid locomotives in that out

can and implement it. in we certain situations, So --

that don't see is fleet. do line know requirement we And but is want we But will invest network. have we oldest I to bottom we the our to that spend in have don't the not money, in fleet the

will it continue as we but the fleet happen we'll renewing not and So invest move to in ahead, XXXX.

Operator

Next question Hoexter of of Ken is from the Bank America. line with

Ken Hoexter

rapid Congrats results and here. on solid

guess quarter, outpacing you that the in still gains? that want normal to changing then like And you're fourth not Am you Is Should we improvement. check, sequential quarter. right? right? Just weather get I expect that don't hearing to or the need I accelerating margin volume that did shifts the thoughts given on gains into first

side everybody talk can a to scale all loss that the a just then And guess far. it I quarter? intermodal in in we Did was so you about scale? of think, 'XX? Kenny, you are And coming? I Or the can is see you to the just -- that surprise, I one, fourth want talk understand,

Vincenzo Vena

Okay.

Ken. was So it. questions, good. I X That like very

don't we So why start.

Jennifer Hamann

Where going to are we start?

Vincenzo Vena

the Ken? Why X. was said is Correct, XXXX real in business don't we contract January start with the has simple. and actually contract lost The early lost starting

Kenny Rocker

in XXXX. it of stll bulk That's true. We'll still the see showing up

Vincenzo Vena

XXXX that's that It's a business. in issue. And So lost it challenge. early was the that we XXXX

Jennifer Hamann

Yes.

of your And specifics question, going there. terms margin again, not so give you to in any Ken,

we use and productivity. profitability to know, have generate and X volume, that price attack and you as We levers,

in prepared in not all price is us to heard comments, be here were inflation XXXX. talk accretive positive going excess You've dollars to in fact the the about my of margins

heard, coal. and about the There's volume headwinds unsure a we've got are we as takes, in some and of We puts contract lot picture. a from loss you know

that side. is are And and have confident over productivity the about lever control so ultimate most the we

changes. the not in what we're price shown we volume of that -- And we kind of periods can But on any past through have margin right, improvement. in and generate magnitude volumes of guidance declining productivity so you're giving the

x of volume productivity don't get margin. game x that want amount I amount to of linking into with So of to and try

of that that negative the volume and whether through thing be picture, year. out a in us driving through you of better. more We're is and to better. our results the quarter or volume that with results is performing going will We're from happens in we're regardless the and positive some that how financial what plays productivity. in of that function And running The see efficiently running the

a in in a for of to us. weather. be the challenge bit quarter, First is yes, particular, Volume, going

we remind that. we also about over us transaction of other million, of of in about real little a terms heard $XXX $XXX and first last everyone just couple But things You year, million talk a comparison, to a about had year-over-year in margins very estate quarter had I our fuel was earnings. a by, last benefit of $X.XX. strong It year. And points that in our helped think, almost the X

to those year-over-year want kind pressures. just of I of So remind everybody comparison

Operator

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

Justin Long

for that shot And a differently. quarters. of question roughly any the the expansion maybe flattish can on margin is year, thoughts going Do dependent year-over-year? now that you size much is opportunity . at you've updated have the volumes how asking that little bit at you Jim, we that are make company where taking total this of see a productivity scenario own of on couple a volume meaningful a roughly And growth. want hypothetically, If forward? our still to been assumption

Vincenzo Vena

question. goals because what well-framed are. are gets like and crux a Pacific I and I'm it. at the vision is we was it it of it to and on the who very objectives Union what think I Listen, our clear

and with the going maybe I I've when long first happen. to everything have what's in as had to so we see of is think weather, and happen way happen been can don't like as we would on a winter I'm are around and to but of what's spring like going forecast through too to going for that we not sure pressures we when then. come because much improvement sequential far January quarter, just the we that quarters

having that's in it's see ratio driving do. the what towards, that I operating see I we'll get we it clearly And to the cloudy. far what is best there. as us see and it so I fundamentally, in industry. But future, a we're the and in have And future not

really whether win We marketplace okay? expect -- tell very care the us you, But pretty I not. a that's me, or in We with I'll the business whether the important. have great to business. We we gives and it team And that efficiently. long replace I'm should business and for we to -- the Kenny customers, We the clear, adjustment the want short after don't So operate and that on we bring and business railroad. the I get term, we not is go people go in going making business. to and on to about to the deliver. need price This need not an lost term, to need do talk -- his without

think. can that have we deliver value That's capability, and customer. the We I how to

sat I in back I could here. come do we not back or home railroad I have to we because win, come that. but being to the mountaineering, have could Scottsdale exciting network doing the did And decided some I hiking and and at somewhere or think

to win. Eric deliver have expect the on we So make last did like team I we this deliver. to how look that winter the and his fast The monetize pressure pressure Kenny what railroad is to expect with we as team. And Jennifer every this on team a impact to I sure entire had. opportunity, entire for is we and recover

love So Perfect. question. I the

answered that I hopefully, So for you.

Operator

Nolan of with The line next question is Ben from Stifel. the

Benjamin Nolan

to And of a were seeing things there any closures. forward? you're guessing some you slide And just how The Jennifer, initiative then to causing these the an border that way, lot my year, expect I the last Obviously, really guys by the that's year. around Mexico. end the interruptions that to helpful. the these last that all? And at reshoring or accelerate is thinking trend do -- of business that through question of moving of tried if relates second you -- like

Vincenzo Vena

how then piece if I'm Kenny, to about and the see And it? the you okay? don't on can you going talk we border, . answer the business mind,

Kenny Rocker

-- auto talked fact service near the different encouraging. in coming is us for We've are reaching billions in, and mean having rail of that I product all Mexico, the have, service. I been nearshore into time number of that the the XXXX. highly the shoring find we in the the are a We're Yes. real. like we're We're industrial Sure. centric, into some which have Canada. Midwest. happen. in These seen product of about not seen and gone it's them waiting sensitive especially parts, of daily products a around We've wins it's with out parts reaching again, we

And into we so we talking And that. we're as which are we gained We're a also customers create as the service much us bullish that. you Southeast, encouraged that. product traction some by about saw We're on on. network. can the to about putting

and for great of get So It's again, can Mexico. a Mexico. us. out that in We've got coming out we franchise borders of

franchise. and product great So great

Vincenzo Vena

that's I way the border think the will disappointed I'm do bet. down, shut to You and not move that forward.

vice for doing crossings investing the sure it's that something of the think in go that crossings I down river you razor And on some them, good to into we wire. they U.S. and forward. is on we not falling the so to to we've there crossing not a I everything railway humanitarian mother rail us, trains, There's visit. it's very and with make a discussions But understands versa sure crossing continue to will child see. to is have that. day, impacted at is and as we do anybody are close done when a of very protect from worked operation with have systems people do fluid, personally border that and will that And the do. problem, went are think we really And into with we difficult a and have I we have. we issue. and not crossing what everything, we some team That not people the a a more with work across then are problem. can or and Mexico the we've the make coming important we'll should members the coming continue end customs see move job and of the trains. that's will People the Customs closely meetings we that

Operator

The from next Morgan question Shankar is with of Stanley. Ravi line the

Ravi Shanker

understandable. train some Or of efforts kind how room is see length train kind like rail of is I to your that space you which more or given push physical much of also, do to -- sign you kind yourself? it? the of length, guys get kind you're think is said Jim, You want regulatory there -- leverage more have is STB A, do I already [ kind of by given looking much of of Congress ] off you how get kind lengths need can this the around to that going something is kind on scrutiny to on to of there.

Eric Gehringer

you Thank question. for Yes. that

and think let's how do put just The have Absolutely, Do training? we now we've every And new And about of science, question to that trains. to a XXX%. on quarter, as actually to be identify build execute opportunities it to how That's behind prudent physics continue that us working side that? our is understand to exceptionally front be through second. we've that. able engines all been executing leak and our keep So every scenes first always trains exactly those your to to for to do yes, our for years, make how systems our core train science. sure to opportunities. we in to So we'll evolves. all volume we for have that the been And more work capitalize capacity of and continue year, see we the about is like

So you, I'm But opportunity not a we tell there. to see to going specific to going guide I'm you number. some

capitalize us to that and see and team make happen. is it what in doing I'm You'll appreciative 'XX, excited the

Operator

with from is the of question next Brian JPMorgan. line Ossenbeck Our

Brian Ossenbeck

forecast the Work come guidance, so far, SMART-TD mix were board? harder just your Or rest maybe anything volume, are there the Just rules. then assuming X that but for the than it's to does on follow-up is you first actually a in that obviously, probably quick on Is assuming BLE? And related. you Kenny, are

have also much that Just 'XX truck next us it how headwind knowing these was gas you for not than probably being curious adjustments couple guess in visibility So intermodal of is pricing dependent. year? of that potential and that natural maybe in you have terms some coal But market anticipate give something 'XX. of perhaps directionally sense been a quarters. that and in worse it's should Is more into we on just than I can that headwind a of a the last that

Vincenzo Vena

handle in? if want Jennifer you what's to

Jennifer Hamann

an we'll year. of piece, we the that rest to the come terms assumption work probably later do an sometime in In agreement have

So that's of thinking. our part overall

Kenny Rocker

You look domestic the question Intermodal. -- you intermodal, about asked

X of sequentially rates you slow gradual very it, the The if increase, sequentially differentiate months side, contractual issue improvement on shown, look encouraging. months. very all, the last last gradual X is of same First slow the I'll the call which where the spot at I'll rates have been,

to would and into mixed that the feedback mention I've to the better I lot I continue. indices, and And time have in some I it as before that we've that's customers, competitive, can't our contracts but secure what those of market got from X to price our over keep So seen suite past. for will going of we encouraged whether in mechanisms bit this. like by just times a think we get mechanisms customers months, them more of a the help little We've of those improves, said real saying some us next this have margin.

Jennifer Hamann

there mix terms of intermodal index. volume, mix Intermodal, And answer goes so to broader you with know you obviously, also in And We about front. think -- Yes. asked unknowns UP. And next question a Brian, it's drivers broader big the year. largely the a goes are so the mix obviously I hard But really of with lot have that. in for

As I know also aware. you're

in contract think happening and as some category, being of That overall you what's that big you've play particularly got very swing on when just categories for how your the but market. And automotive some help that think XXXX. mix, we may down, the bullish see wins so about of premium the premium if with rest the about then the in out, that's us and we'll factor

Operator

of line is from Sachs. the question Jordan with Alliger next Goldman The

Jordan Alliger

be couple be price the caught order don't if it mean intermodal real One, that of not A And flat? just of mean would overall volume. Does best or secondly, yields follow-ups then to I it international quick revenue margin? being loss, it magnitude the what know clarifications. impact accretive whether I does or

Jennifer Hamann

Yes.

means of and than part is when at Even it added second mathematically, your the overall you revenue, help question, does impacts look calculation. ratio the the For inflation. higher Jordan, going price be just it's to it your to how . though operating not the really

Vincenzo Vena

Exactly.

So when you do math, you the right? math, know that

Kenny Rocker

terminal you, Phoenix. have been Mexico. to focused that We've coming up new tell So network. out We've of February there the I the can international blessed X. going some growing about we're talked the open frame are Houston. to not we up of again, intermodal in I on we going other magnitude intermodal with products It's a about talked

to again, we're we're sure make that So appropriate moving acceptable product margin at and bullish the we that margin. want

Operator

from The of next Jason the Seidl TD is Cowen. line with question

Jason Seidl

there. you in remainder up XX I at Jordan's also, should extra might Where needed? to there And about that show to CapEx that would business? guys? pricing in near-shoring? is think of were natural intermodal on some margin is gas to of the going commentary, linked pricing the for the in accretive and impacts question be any And of Tacking that and near-shoring of we as sort If to post be how look sort exclude sort coal and look we the of contracts,

Jennifer Hamann

impacting been our piece Yes, intermodal are for final the sure the through linger for substantial is into us to into headwinds but have for level of question. that going and going XXXX, to of certainly, just XXXX. get detail, Jason, not thanks much yields that We're those

Kenny Rocker

Yes.

base a So that there. markets at of industrial XXXX, look as post you I are it, going mentioned lot

of of terms terms terms auto, market. in petrochemical think in I think and metals think in I of I minerals,

Operator

with from line Our of next Partners. Jeff the question Vertical Research is Kauffman

Jeffrey Kauffman

we on these done lot lot And announced. not concrete 'XX, 'XX, Just has this a ground to been A facilities that's until a really, potential some been the this all at in see and going really of talk of the you're Kenny. have 'XX. follow-up of the to companies for is say near-shoring point of kind been poured

kind How over to we plan years? to at larger industrial you a Could X to development this that? and what's and this magnitude on ask guess points think here, XXX you X Looking it should opportunity I'm for there, longer-term be of do basis UNP? out -- basis be think volume to about going industrial development than scoping your could in

Kenny Rocker

going not basis guide to certainly question. your We're on point

this Here's fastest product. though, what product I I've and I the Mexico. getting repeated want sure hard. out this, coming We've that Mexico It's in and the is I unmatched. a and daily pretty a of will of product service to say, to heart hit of got make It's out

have also customers us opportunity gives of X to parts which optionality, We hit gives gateway optionality, Mexico. gives different which us which our an

and to about the So been with growth industrial bring the all working development very perspective stakeholders an and that we from help customers Mexico on. all we've feel bullish the with yes,

Vincenzo Vena

the think work -- would that we the able us as And collaboratively majority And The FXE, this X railroad to added those able customers position it best us think offer bigger efficiency add be And being operationally gives and to a the chance to business optimize to what's with as to near-shoring we available product. traffic. a think of us in any is lanes. will the even that's help the make is only us able thing the we I on move to to the happens. it win I view we're of ownership I as have ties

Operator

from Jairan question of with Daiwa. the Nathan Next is line

Jairam Nathan

guess flat the I other So to on on be it favorable here. would down, the casualty looks on expenses casualty slide, you and be the just like will have last

some things about talk you of that? that can could So offset kind

Jennifer Hamann

Yes, Jairan.

that expenses couple playing some some we've last the fact higher certainly the mentioned had been I catch up. we've years, casualty call, the and On over of

what's those line. are And the increase in of driven the really other large that's so in that a part lines line in

we focused continue improving overall expect talk fact, it's don't that maybe to about behind performance. of just And not cleanup in safety on those and performance. so in our we outsized heard what's have indicative that too, you've of with It because some think some on verdicts us. some some is And very big us things of really and being courts, the we going

looking better footing So forward XXXX. to in

Jairam Nathan

And just Okay. we on finally, the about Jim, question, talked cc. CapEx

In in the the additions of would business. terms same be of on capital investing in piece terms FXE

Vincenzo Vena

XXXX need. to and and the have do Board same great I'm have invest as the up, their a same we and Yes, they plan job. so on Jennifer, do, a they in the plant capability. is what They up the they good you bottom railroad, for build real see

very what I'm forward. that need comfortable So invest to move they invest they capability to will have and the

Operator

Bernstein. Our question line with is of the from . Vernon David final

David Vernon

couple here. of for questions So a you

impact you response weeks. you going that in in bit how situation Kenny, last introduction growth. the terms to then love the down for of Mexican First, think the to little to exposure I'd Mexico, what given thoughts in about you share in CapEx down of do freight your to might rail on your cross I had think, perspective of the And Jim, passenger a coming worried moderation, Any terms second, Mexico to the hear that's of couple the can in flows border. or insight FXE government give you .

Vincenzo Vena

So Kenny, let do ever me we the plan when ask our limit capital capital. the we question.

for have So do a you growth? problem

Kenny Rocker

all. at Not

Vincenzo Vena

it. look never. at we way the It's That's Perfect. simple, that

So David, the let a you me question. clear answer. it's And up know great this because whole,

February and to opening a where So we up you're the railroad on build every to I'm and look asking We're very clear new you've Xst, in we've invest. and before, at heard we growth capital ties, to bottom and this. intermodal it different, little a need Phoenix. year what identified plan rail, We at our me, the what need from We terminal in reinvest is on equipment. bit look

a discussion. that. X-year a We a We're been we're and don't November, . We place. there. X-month, in market opening said fool quick invested around X, we've in turned would a That turnaround. like have So up anymore. there's And around February

If $X.X at invest up to When for That way quick, hard to to so we we the grow it ever So I opportunity the skimp to a every we'll billion. number. the what and able this is to an cost and came or -- company the never operate with we need up, we look there's it. that's on not we we're we the need railroad, safety, built capital invest and invest. growth. on do day the maintenance replacement of the And railroad, us

FXE that that agree -- freight So you railroad we affects worried with service, that still that are how there. issue. And have the efficiently. I I but both operate passenger nothing mitigate have service no things, interaction and passenger and passenger and you, there's they out on there's We the figure I I'm and an listen, them. you the when to that a They're about give CP-KC. saying right can't

So I'm will sure any some service be on comfortable that just they'll effect a that I'm move they operating as ahead. railroad. effect really significant and or ahead the not they will very move have passenger that,

David. answered hopefully, your So we questions,

Kenny Rocker

talking then if we're they I to questions. that's with story. wouldn't has mind the off, people And just here, hear as a if there's and soon my on, done great. team I'm few the and to else got As love recapping everybody

line the -- a So is bottom is, we have great railroad. this

be ever. go business to the had, that way the happen to right team We're okay, I've not grow my and that's the forward you down to what's I'm with at in the segment excited to it deliver. with resiliency winning X would what's track the not career. We franchise all and we're react one this the us every X to up that We is telling on wish but world allows engaged. -- We and going to never we premium, industrial have mix year year. is. And because year, know area need have seen and time, looking a happening. able the that capability to bulk fundamentally, you, on are this don't we The

excited. how with and goals operationally is railroad first to we've and service, and be also quarter the see looking I'm industry. done growing the I'm goals point. excited, what of in grow I'm have efficient team in see this forward to We to revenue how months and most talking The we're all the we to looking have our to went you at and forward XXXX.

you thank much. So very

Operator

today's conclude you participation. Thank you. This teleconference. Ladies and gentlemen, does for thank your

You may wonderful lines, your and now have day. disconnect a

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