Norfolk Southern (NSC) 29 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Pete Sharbel	Director of Investor Relations
Jim Squires	Chairman, President & Chief Executive Officer
Alan Shaw	Chief Marketing Officer
Mark George	Chief Financial Officer
Mike Wheeler	Chief Operating Officer.
Chris Wetherbee	Citi
Thomas Wadewitz	UBS
Amit Mehrotra	Deutsche Bank
Jordan Alliger	Goldman Sachs
Scott Group	Wolfe Research
Brandon Oglenski	Barclays
Ken Hoexter	Bank of America
Jon Chappell	Evercore
Allison Landry	Credit Suisse
Bascome Majors	Susquehanna
David Vernon	Bernstein
Justin Long	Stephens
Brian Ossenbeck	JPMorgan
Walter Spracklin	RBC Capital Markets
David Ross	Stifel
Jason Seidl	Cowen & Company

Call transcript

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Operator

Greetings, and welcome to the Norfolk Southern Corporation Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Pete Sharbel, Director of Investor Relations. Mr. you, Thank Sharbel.

begin. now You may

Pete Sharbel

materially Thank view the you, today's which note during of and quarterly may everyone. subject to risks Please our those annual most for good we may a important. morning, and differ and call, uncertainties statements, filed risks Please actual make results. to refer as with that reports and and we from SEC certain are discussion uncertainties forward-looking full

Investors are section slides Our available non-GAAP in the with at reconciliation. along presentation norfolksouthern.com our

transcript and It and a Southern's to downloads Additionally, after will President the is introduce be call. CEO, Chairman, pleasure posted Jim Squires. now my Norfolk

Jim Squires

Good call. morning, Norfolk Southern's and to second quarter welcome XXXX earnings everyone,

Mike today Shaw, Joining are Wheeler, Mark Chief Operating Alan George, Officer. Officer; Officer; me Marketing Chief and Chief Financial

we retire wish earlier Chief of precision Southern When of distinguished As we began this Norfolk operations X, a implementation on greatly will successful be him the Officer, our we will our Mike week, missed, lead who XX-year and from after announced search and an next build day-to-day well. scheduled for achievement. Operating career executive could October on experienced looked our we railroading. He for

of disruption in their quarter. of and second second our women proud to resilience a pandemic markets performance. forward ensuing Amid the Southern of the our quarter We Sanborn, With the proceed let's the economic we X. that, Cindy leading global Cindy to in review demonstrated men company to are joining team. operations experts, welcome to serve, the industry's look one communities Norfolk Southern Norfolk and the We on September and

of lower patterns The they same rapid XX% leading and every within that keep total and supply work as their decline then many open. to share. almost particularly virtually changing with in a per volumes, to decreased customers disruption. in lines Revenues XX%, shutdown Southern's the restock inventory, experiencing segment was subsequent to reflected a Norfolk the a shipped industry quarter. push and volatile, automotive significantly all restart Our earnings shipping business

to team plans deliver our the network adjusted with important achievements. long-term resources rose the quickly while Our in challenge. advancing strategy several to shareholder short-term, We value and

customers best excellence pandemic. shipment employees train were implementation plan country is Southern near and commitment are during our levels. our consistency. scheduled with work terminal and We a TOPXX train with of of Many performance, The the employees, serving metrics and Norfolk our record achieved dwell precision our successful railroading, combined all-time service and producing results. hard First, speed, other strategic

volumes the an we operations managed ensuring quarter, size in as and business that's our nearly recovers. as have decline efficiently operating volume. second reduction Year-over-year shipped enabled These improved. operating efficiency fuel Second, we achievements while declined levels XX% in expense by increased XX%, force bottomed XX% strong X,XXX of positions our a out train while leverage against

We are a ready advantage return. take when railroad volumes fast-fluid to

to additional structural this, over humps, the be efficient do direct the our have our to major quarters and the TOPXX idled more most footprint nimble create in improving cost We steps total two by Throughout that quarter hump four year. kept comprehensive Third, important, protect remotely are the yard and eye continue bringing plan actions changing well-being fewer, These been costs. strategic we our terminals. and people. our employees of who with our objectives train we can attacking savings by coming freight reduced demonstrate our so. to health of adaptive idling success past demand work taking on and All the to to all perhaps over

site, to I team's opened guidelines. by lauding them require we responsibilities whose resilience. are our CDC employees work For on following

to and on together achievements on and team, to forge when to details challenges determination and to of over taken one of provide unique the this actions second the take further any for each of the the they face the I'll While and of quarter, own merit, demonstrate in ahead these commentary. necessary the its disruptions value create our shareholders. Alan? and turn Alan team now call has

Alan Shaw

Thank and Jim, good everyone. you, morning,

to market valued Second dual based of greatly our was strategic energy quarter margin customers. influenced by growth revenue product We volume of COVID-XX large remain plan on our excellent the markets. service declines long-term approach, by and shocks both and in and our committed our executing

We early was productivity, as resumed and and in operations train pulled evident Our where serve ramped efficiently declined the and rapidly down our our quarter. customers. quickly our service focus automotive production up franchise, to in XX% most collaborative service volumes over effectively automotive weekly automotive

Our process this restructuring with our proactive assets. of rapid customers and plan dynamic planning collaboration and produced

Our team improving pandemic. of challenge the both emerge to and growth profitable as remains service offering committed maximizing the from our we

Moving and low to volume These also surcharge revenue. the which impacted of slide X, second of affected impacts COVID quarter prices, energy XX% revenue declines by declined latter year-over-year. fuel were

The improvement as X% the volume first saw the quarter different than sequential in which an the started half economy had dramatically we in of results reopen. second, to

in levels quarters. changing focus of a to driven natural per consumer all of declined May declines and improving adjacent three business hurt products Decline with pandemic. industry. is second and sale. lowered on the influenced energy unit. revenue lower of consumption scrubber yield oil, points all groups composed these unit, in markets, gain every Intermodal a of in XX% this crude products were Food production or stoppages by frac a revenue prices, coal, have and for a items. business fuel fuel, response by utility automotive market fell Merchandise sand, XX% decreases the Nearly by the were per delivered market continued for in drove declines products combination automotive energy than volume, revenue more most steel mix and pronounced Our was mid-April XX Decreases in we overall as and our throughout restaurants year-over-year prices greatly volume to surcharge revenue in stone. shutdowns, demand including excluding franchise of Low other rippled quarterly plastics. evident greater energy pandemic closed percentage gas quarter, the such consecutive as volumes intermodal of

the our truck demand increased while services improved grew economy as volumes inventory, As and intermodal of The increased. for goods to due e-commerce led as need and the and reopened, more pressured. progressed domestic to Domestic rates quickly use equipment. volume quarter rebuild transloads rebounded international essential remained the to

as reflecting this industrial low deteriorated competition the coal shortfalls declined and prices. energy continued mix. in low pressure Our of offset coal sustained quarter, coal a global franchise load result decline the with declining prices Utility to intense volumes XX% faced year-over-year, face XX% and revenue gain markets natural commercial generation RPU slightly and gas changing of X%, was from an and The volume with overall pandemic.

X. key active and The levels volume markets where Intermodal during and from currently capacity rely degree near-term new and for offerings with outlook markets. Southeast growth will that June economic close such moderate more extent link to trajectory We our COVID the returned a secure service our of positive our consumer and figures levels, of spending latter gains unemployment transportation slide government customers, for to trucking an cases truck network. channel local have heavily product at the the of to high this on increased demand from retail State for durable a partners, number reported replenishment in recovery. numerous labor having production. fiscal business value drivers our to will the that the believe influence services. efficient Norfolk availability, the with the sales the policy dividend, will the growing generated will such impact benefit strength to while rates the recovery. Southern pre-COVID point as and competitive moving to uncertainty enhance have pace the cases products In interline on signal the the allow even of slow utilizing and and on effect shape at A faster the cycle, on These the future best-in-class consumer influence These and speed highest are with both and and uneven outlook the levels. exists. high shutdowns intermodal continued spot reaction stimulus, of for and potential merchandise by recent our Moving June government consumer recently major need the goods impact inventory pre-pandemic is a from of year The the with increasing strengthen will our Northeast. services announced development, create to be sector,

strength quickly the through in started rebuild. consumer, is are we end seeing May Although third with of continued economy where the as manufacturing automotive, quarter the at improving volumes inventories a solid the rebound lagging

depressed. energy expect We remain to

crude across markets. unfavorable additional low be worldwide spreads Continued all and natural is negatively tensions. continue to Export coal oil geopolitical to expected pandemic are prices the creating impacted of by and energy gas our headwinds

are Our with surrounding COVID-XX expectations policy. the ever-present and fiscal tempered uncertainty

future understand our strategy by sharp fluctuate local weeks between as six customers and Despite our in these volumes the clear. our marked difference COVID potential restrictions, This was last. with the impacted infections. first to a state that quarter and is their We are customers will response increasing and conditions,

over fewer to revenue services We quality product, customers our will our while and turn succeed, it an improve resources. continue operations. to on Mike, will update for utilizing service now delivering I allow to that and compete

Mike Wheeler

Thank you, those And Alan. words. thank for Jim, kind you,

we quarter our saw crew with and many responded permanent. at operating making amount two volume an to start as of ceased reductions major unprecedented change, eye, shifts yards The of a towards keen operations second hump

execute high our the and the We through pandemic. transformation of pressing continued at while to with forward managing challenges level, a

speed shows for setting Moving quarter. us dwell, in this all-time continued records which and improvements X, to slide train on terminal or tying again

the in These performance, with Our adjust setting the came further We that again, to volume operation lower records train our assets able in dramatically of consistency and while network volumes. and advantage milestones operation, adherence. customers, from came plan taking network reduced our reconfigure, environment our were shipment benefited lower with we fluidity employment, as to line operations.

to is update productivity have the the service previous our you for XX quarters. and in slide year, on, which seen metrics Moving

are year-to-date pandemic. the of both the continued and effect metrics our a showing All of improvement progress basis, our on reflecting

continue to shipment index meet to goal We or delivery indexed first to of our rest improve already second will in the quarter. quarter, the over were measures year. And service our us performance, goals enable at the XXXX exceed Our the which in XXXX. on-time

plan by or provide closely a those train fuel meets to to changes reduced way, volume and us the careful exceeds service length T&E We realize slightly lowest where service both as quarter. locomotives more but added and increase during our an productivity, helped train to and both year-over-year continue in volume in improved employment the than our We by we numbers the during lag when energy returns that the We volumes And PTC T&E expectations. efficiency, maximizing volumes. in quarter management the being the Extreme active customers' product the record, challenged returned. locomotive on matching and the additional swings even to business reduction a weight. changes. quarter on to second record, investment Train about, plan technology. grew Matching train

our train kept new Online our metrics speed surpassed part, easily in lower that destination. volumes record part, records directly in we down quarter Finally, were moving the dwell and setting that goal, in towards by and driven cars Cars by

cars past in awaiting both active this stored and in that were upturns As quarters, business. includes

of this XX, that the accelerated exceptionally so volume drops. quarter is team to to pandemic-induced consecutive severe Moving crew was respond slide able start operating am proud sudden reductions. our to quickly and on our I sixth

structure use the controlled structural tactical as continue program. and the we to our volume through to and both pandemic, cost changes X to of will advanced changes. We flexible Phase Prior TOPXX keep

setting continuing and hump at positive as and train TOPXX rationalize for rise. volumes operations while yard Implementing optimize our are network, enabled to us operating Bellevue. our leverage Linwood We stage even cease network to the

Continued progress PSR and comes principles. through proven base, productivity long-term structural rising levels metrics asset following improved service changes in our

when craft opportunity a second XX, Moving to plan slide business for the we traffic seized better returned. use quarter the to to drop

and business in reductions. business traffic second the shows of In with As mix closed starts. shops locomotive previous reduced of of operations shows, back, a hump XX Well instead we Slide this crew restoring positioned. as optimizing total fully starts our train two two yards how large in Bellevue, current comes capacity just heavy repair hump four are is we our train line our ceased Southern eliminated at simply based Linwood and yards, making graph quarter, we But Norfolk a time. year's on our one of

are do in to lows we opportunities the the aggressively We more footprint. look emblematic for continue terminal will efficiency. changes our network back can reduce than to traffic of on and resource of our by also and of reduce we operate But Our willingness structural way our return additional the to We more transform trains adding returning capitalizing traffic. investment needs. are to slowly from pursuit historic

back, meet kind that leverage come trains does this in service willing much types we mix and powerful, committed can on traffic we very As rise traffic operating to more whatever is and of traffic have during capacity Generating to a standards. maintaining are leverage. are

to Mark financial will results. who Now the I will turn cover it over

Mark George

Thank measures. slide financial On the Good you, key Mike. XX, everyone. morning, see you

expenses XX% down declining Operating led by volume well fuel surcharge quarter, cost lower, commodity shared, as down revenue Alan fuel leading the in created down for while RPUX being with fuel As each overall mix costs. employment-related as adverse XX%. were favorable, component being and headwinds to XX% each on revenue driven was

weren't sudden points. increased XXX mitigate signaled or in operating basis led operating down free And XX% cash to flow the for we As May, to income by Despite declined dramatic ratio declines being that XX%. and the dollar-for-dollar income, $XXX able million expense half in volume decline rate the this while with we quarter operating completely the reductions.

flow charge durable last billion. the more free On during compare a benefit quarter unusual to versus the in significant see record year cash absence, EPS was over remained that will does QX any XX, first items, the you impairment from that of it of and half So of year although, slide non-operating the a free contributed of was recorded $X the XXXX.

So the the eroded actually EPS contraction operations $X.XX. reported while $X.XX, by from core is

what sharply roughly will fuel operating driven in quarter and maintain was XX%. the board by drove driven $XXX $XX were down Comp XQ. XX of reduced versus pressed the XX% note to with reduction Ben But were Slide a this no in on efficiency employment as from now savings to that service sudden status volume GTMs. volume, to with reductions extra by which serve another was in due Certainly, which half XX% million consumption $XXX sequentially large that in increased see would be or quarter. as contributor a from required also happened, the was lower savings of We year-over-year solid X% We prices. surge million and where the resource you June, adverse the lower fuel X% that, in Moving event It's to is the exactly million is of nearly we and or by year-to-date. X,XXX did gains, decline XX% expenses, they forces down quarter forward of May & X% with or level important down structural disruption.

historically. without to As the best-in-class we has in upon, service complementary on Mike cyclical touched approach plans plagued this prioritized industry that reliability variability as our focus the strategic

from I savings was re-crews signalled well XX%. a Comp by amount. down as & had per In sequentially what which were the tightly line in Ben our $XX million quarter, note with down managing employee as during You'll overtime modest

costs as similar of this fleet Gains realignment our rationalization, the costs last year. locomotive surrounding the quarter Moving and million, this discretionary benefits decline. Services as from large our railcar associated over down $XX to from with with $XX XX%, are lower part and was Purchase Material travel mechanical was automotive other of itself operating reduced Rents, to facility maintenance XX%, a by Purchase well other to initiatives million down properties thanks volume down Services lower constraint costs intermodal sales negligible, driven the of costs in associated & with and items.

about a with had quarter. the with was to to as be quarter. expense anomalous reduce shock gains, our P&L favorable is see a from XX, fuel categories, of along into, with volume. lower during better price million costs, you'll exactly You'll we would year. as slide by indicated costs $XX exclude with in that charge, how from In recall was what XX% debt a able I look on-set the $XX think we million costs we you QX, the the absence of here, prior I is the provided net increase full $XX in window that headwinds property On last This guidance, be you This and variability should driven of other given XX% completed last or a the these volume reduction I impairment year's given. year-over-year $XX partially million XX%, offset line associated in well in would QX. at than XX% asset XX% here COLI transaction by income perspective returns. non-operating XX% the to exchange that volume return that knew favorability if benefit, of roughly we million

Lastly, COLI XX.X% the of subject by modestly quarter the lower are tax. not effective returns income to just mentioned, tax rate which I was in driven the

XX. Moving to slide

XXXX, levels. we $X.X a our of billion, target which at the the $XXX while additions to distribute free half maintaining cash of by million be to first reduction below million. in $XXX In were continue moderating For quarter, $X.XX roughly capital the levels, XXXX XX% ended we're the in months able fewer repurchased and cash and was and year, activity. to we to $XXX tax will record million were billion shareholders, repurchase With generation share our dividend, spend liquidity for be shares, our X.X our from June profile, rate on part income cash flow at six a a large run Property timing million, payments. XXXX aided additions

$X less the $XXX year. cash As maturities than hand, next of we million debt now, in with of of billion on have over

we I'll a market falters. case outlook. enjoying in comfortable So wrap we that are a just the stabilization in are comment on recent the place with

further positioned transforming that Mike, we in any make efficiencies plan. the are opportunity to we while into of structural scenario, While in are be to And that well cost ensure as the you also half, actions Jim? taking moving back the can't certain our leverage from significant are volume to shape heard recovery. this structure. network, volume our These with the driving we we train changes forward

Jim Squires

committed still you, Mark. are down driving we XX. summary, In ratio and our goal operating Thank have a to of

while achieving. that Citi. improves the attention, our initiatives And of we full-court a now Question-and-Answer for with ensure first your question leverage you for Thank also Operator: our press are and to have we'll Instructions] We that structure [Operator operating the on capitalizing Operator? cost on Q&A. the Chris line productivity line from Wetherbee open is Session

Chris Wetherbee

thanks guys. just up off. good Hey, Jim, left Yeah. to I you pick and morning want where

XX the from an there you And, you So that perspective. quarter. some made obviously, mentioned structural the changes during goal are OR

network when Some the you of because pandemic. the plans about been hump structural have from sort opportunity those think forward XX numbers But Is and changes that yard around future you've goal? some that some see made, that an Can how there beyond it? longer-term of potentially the put sort just might you opportunities pulled of other of of do XX? you impacting

Jim Squires

the yard Good morning, what And hump in efficiency on productivity shines and the gains light a question second one main we in quarter now, action our is closure economic focus conversion continue the current in to really of environment. took another. right regard the through of which driving that and Chris. Good is and

facilities. shop back We off-line X maintenance of locomotive X also took major

we push that comments. demonstrated our continue of through move and the beyond. volume to to in commitment for some driving productivity additional in second me we the you the the over we let will it midst rest as So and of turn on the year hard Mike, quarter, to challenges

Mike Wheeler

providing structural the that we to I've on are we off volumes ways out to. reduce the said before, terminals still We've we've like gas. to Well, there costs that and things that as service continue several in roll ourselves we letting But the not Yes. based the we'll committed to the push got without, in can look we're at are out hopper, going to do and continue appropriate our while product find to business.

So still those see have you'll on roll working and future. things we in the we're out

Chris Wetherbee

cycle, up, I helpful. our the in for for you one XX next That's think does potentially How about comments translate rolling of obviously, need Alan, And XXXX? consecutive I that. Can getting quickly that half you Intermodal less give of fuel. say, put RPU quarters into better on Okay. Is yield-up the an business, then Merchandise so think, or down some out into rate strategy, the on yield When potential just back Can appreciate the maybe, into environment growth, growth, potentially improving we see you us you year? you the business? it that year. something the on to that? capitalize truckload

Alan Shaw

pricing moves whether up our Yes, every and Chris, a we're revenue upon generally seeing we've But got it we're translate that XX%, great and product, depends spot those now and yes, contract of rates. right how rates year. confidence quickly touch got product into of that we service we've in the accordingly. quality XX% And

Chris Wetherbee

appreciate Okay, Thank you. time. the

Operator

The is UBS. Thomas of line next from the with Wadewitz question

Thomas Wadewitz

maybe off and one on on you, the so just the start in terms and can So I Operating Officer of TOPXX. for progress retirement all congratulations PSR Chief the Mike, Jim, transition, with

Mike Wheeler

Thank you.

Thomas Wadewitz

the with external to go success about internal? think search the And going given you process? as decision did TOPXX, the how Jim, to opposed

Jim Squires

his I Mike. over Sure, again your wanted the years deeply too many for service, to Mike Well, contributions and we appreciate Tom. thank

a in at our COO. paramount, of as – Let to a brings with down, she CSX, with level, and having began all Union Operating so Chief in that up to Board our both candidates. narrowed in customers. very stakeholders, operations the And just these I the are high experiences with safety we of she And like and briefly next with process. other comprehensive It as in demonstrated specifically, process the in at qualities like that great large Directors and in we as and me were a commitment things It a PSR success We leadership field operations Cindy, by and NS, the it through a experience ended qualities of at our level, a went began were working for qualities next of describe was of implementing selecting us Board Directors we Officer. looking Cindy the like search PSR. a experience regulators to outlined. And midst steadily commitment brings worked which, model experiences service, the for addition, with Pacific service defining and

delighted So X. to her we're to starting welcome team September our

Thomas Wadewitz

get Okay. follow-up or thoughts Great. question, wanted at volume-driven really just focusing or in the on to or which over how forward operating both, to the move ratio. a then would on mix just be the if see And productivity, to TOPXX kind should a it there you. a the the the framework? Is volume, looking for looking next plus terms you of go is we year could of trying more way the we look framework? of sense type broader on XXXX? offer I'm leverage in of Is of sure move to primarily pure cost, really some but minus, it's about lot operating important still think I'm a that this Thank or

Jim Squires

revenue in forward, the will operating it to much down as areas. not particularly Let quarter, was operating be the it, as it that ratio ratio with a believe. is where going second key be acknowledging where we quarter It the the particularly not tough first part was, me by in need we of start and

in quarter. of first struggled the months we in the So couple

the kick year may things well. saw the has that continued began And around Now July the June up. month in in what naturally, of leverage thus we Who we volume pick turn in, operating hold. to saw the far of and June, as in and knows rest the

you second pretty but heard the in mixed current As relative see. they a were volume outlook. to we'll We're quarter, where feeling Alan, from the levels it's bullish about

whether drive We out, strategy question the matters strategy We helps. strategies goal conditions to the that whether on we growth, absolutely, areas for other is our operating enough a opportunities If Looking significant tailwind. it operating while as whether growth well. is the XX will experience. to enough lower would believe for get the to further be we OR is have adaptable dependent question we if line answer pursuing and And improvement grow our whatever we it under counts, ratio in the no. and is top a improvement, have is intend ratio that believe growth

Thomas Wadewitz

very you. Great. That’s helpful. Thank

Operator

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

Amit Mehrotra

Thanks, operator. Hi, everybody.

in the and relative a of in XX% revenue quick to think in, react drive Jim, can can't seems really down done. is pretty And a OR flat where third fair, good, that this Just lot was you've OR point the question. you OR a to there's revenue – volume of to unprecedented fourth second OR a that costs reflection but step this the be given performance quarter you I a from function incremental an like revenue decline an coming there's the actually decline. do it mean, quarter year? quarter to XX in perspective, could which is the output. this But be but certain just improvement cost obviously,

OR the the despite year-over-year far? So better volume half understand, a the you that you the to challenges year, even on on first a in hold trying this can it's lot so I'm second line getting just half, had basis in given

Jim Squires

on levels, we to leverage as latter we second current of third made and quarter. and He But the has and this I our there's to over going much outlook. in May, have significant well. and of and rest into year. trough, uptick. productivity Not macro And a given little trough is operating comparison this. seen the next prepared continue what the impact the comments April the year year, we measures it yes, be but prove the and Alan, into talk And a you to remarks me said, Alan. And so would let a the the in is volume why of quarter about part turn don't forward translated only will to we've then uncertainty this that volume for the few outlook undertaken. hope as for bit But in remainder expect the in If macro that

Alan Shaw

we're quarter. about As pretty noted, the Jim optimistic third

a against June have kind trough July, sequential in downturn in over in May. a pretty sequentially strong July. Volumes of Yeah. our saw you again normal little bit a where improvement of typically You are in April goes increasing and seasonality, which

activity the teens. up restart are were chain. XX.X%. the retail starts was pace through upper rates helped up in we has auto that's fastest in at And were orders So see X.X% X.X%. reverberated June. saw X.X truck the years. supply in up The durable We up certainly Housing increased and goods tonnage Spot

as we of volume demand. customers, policy could quarter increasing risks talk have to and and there's going and stimulus that the situation potentially The that are COVID of the see that fiscal we impact unsettled the cases near-term and So revenue. on a forward our with lot fourth

Amit Mehrotra

Right.

if basis current that guys better think I'm flat this a am keep the reading trends Is nobody on hearing even correctly? you hold, year. I So year-over-year to you if the knows OR future, – but correctly, that you can

Jim Squires

overall We're to OR, on guidance give uncertainty. not willing just the given

second to in demonstrated measures push doing cost pipeline, We hard we keep as and control we the the on quarter our well. have cost. in We'll that. will to commitment continue And

Amit Mehrotra

Okay.

Jim Squires

The macroeconomic macroeconomic. uncertain It's the just so right is outlook now.

Amit Mehrotra

pretty sales, just conversion a actually making XX% is cash running I'm Fair come CapEx Mark, guidance. there's the of than a lower relative good. that down year-to-date potential see CapEx The XX% is then, look to to wondering free to enough. if which And follow-up.

conversion the past, but just you obviously that's lagging the You've the company, the talked more company's cash of if is any the about peers the there's the I'm multiple any update there, to wondering most company. can it give because valuation wondering in bring cash down CapEx weigh improve to of I'm free just going on of if opportunity the there's conversion. to actually the free

Mark George

it CapEx, Thanks on didn't last half We And guide XX% Yes. the to just actually first to the billion. We $X.X number we number after really, gave is to for guidance where the question, fixed call. run our a rate. brought really that down Amit. to XX%

revenue. about year billion the So going of we $X.X finish are to at/or regardless

a percentage, to range. as actually that it means be XX% it than could hopefully, think I lower the So XX%

it's in out. we year down, said the February, took we bring it early billion in $X.X to and and So time started

to in of good conversion We out will is driving year. point billion half. what's the compared last definitely, this our first have you budget year And taken yeah, out that that CapEx $X.X

So CapEx in that to the going half is back at continue the rate.

Act So that pushed income really, Amit, that large conversion in as July. half that mentioned tax benefit function the the Cares into of was the did remarks, enjoy of also, prepared But should first in in help. thanks -- tax I some the were part, a payments to we

AR first we volumes some will much as the made the unfortunately, down, had have won't don't in that When also And capital working second some we benefit. So up, of half. have the in building benefits tax half, up. you be same then come

historically. from And probably So as well. where it's conversion unwind of a the to our that will from been is fully goal to get cash raise the volumes second that perspective, as to vehicles CapEx number in there. half try that is one recover aware But

Operator

you. Thank

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

Jordan Alliger

Yes. Hi. on question A intermodal.

I'm market Thanks. or the regards curious, of seeing activity for or just good conversions customers now just truck that's with -- truckload are of with as the noted market had course, to sort truckload dialogue intermodal increased longer-term perhaps intermodal. actually even the you tightening. You I'm tightens?

Jim Squires

Alan?

Alan Shaw

powerful segments that you cargo And out we've want align Automotive. our We've partners in got numbers. continue intermodal Intermodal our us. with is there right growth And channel well. actually Jordan, see to a absolutely. owners doing who and can reflected themselves a leading are is Basically, to the as now of really beneficial franchise. got Hey, lot consumer

already is started. country of tight. certain and And of in Norfolk service Southeast so intermodal market for There the absolutely is gives to demand strength two the the launching and And market. be regions products. the service some us truck regions Southern initiate between new the fastest-growing from the confidence and the new wonderful we're quarter the the got for that. of these it country, the got We've products and we're a this which Southeast, that third to And the extremely which to solution couple has delivering the in product, -- going some has in also a we've Northeast, product Southwest got of are

Jordan Alliger

crew mentioned know cetera. -- some based headcount as in thoughts volume, give ended on think the the from that Great. you I quarter? where one-for-one And we here mean, on is it sequentially Is sort follow-up. coming back with of of on move the pace way back? way there second you just there a to mentioned et about I a starts, not then bringing you guys a call, could

Jim Squires

take question the you specifically. count forward. head starts Mike, maybe in crew why to then through comment employment overall then, ripple Mark, can And you the don't going on and on trend

Mike Wheeler

Yes.

news crew the in As down slides, volumes continued to Through good through noticed starts July, in is that's XX%, volume. only down our versus crew you are our continue while we And the starts July. XX%. leverage

see on So great the and and that we a leverage group to as the to the volume. iterate plan got expect to necessary able we've going forward, leverage be train nimble get

about while only is really July down crew pleased So that, again, down XX%. already, starts, in XX% volume

to continue see we in future. will that So the Mark? and

Mark George

chasing Yes. mean, I employees QX last obviously, gone decline of to XX% step now lapping we're the that's implementation. still versus of remind, significant. change year, TOPXX big But reduction. And was volume a the a we've kind QX that X,XXX down We're pretty from just

area fine enjoy it productivity to that So, what while that point we a curve. half, productivity a an be said, it's we in look can for leveraging number with continue more sure, guidance back trying we here or going not to opportunities. going to on the for with comes have, absorb growth hopefully, are headcount, also that as rebuild we're And on focused I'm but put Mike on volume to any volume we recovery. for but focused the

Operator

question Thank Group with the of is The Scott you. from line next Wolfe Research.

Scott Group

sense to XX%. questions operating Hey you share And if think thoughts you down bunch and them Maybe that don't but don't do I guys. giving little was? helpful on third June OpEx be guidance, OR thanks. -- on said, about costs share, be give on would Morning gave us know good a you it a can the you're initial quarter? us in ratio I the I a more last to Any how Mark, color expect than of to quarter, some been know there's aren't the will and help. what have but if maybe you bit -- guys of willing

Mark George

Yes.

we we the last So, line pretty much we think, came with on and of you the guided the expectations volume at in pretty much quarter, that end had in informed day, guided. what helped for I OpEx variability

tell what out get to worked I'm a than quite incrementals. not better would to is fully And month had and leverage on -- and question, as big -- but second hope to with that within the it going I we quite that in to goal than, That's you. greater volume that enjoying try that aligned now, give it it showed growth, will continue in the it curve number, going see yes, well. and actually continues, and more a to So, really, momentum you, on. the going the weren't leadership And quarter. Scott, of this I the we the start better your volume the is we're of what we is expecting really here and XXs part the that's objective I curve, that do we we we exact get team leverage variable you we're if to does this saw be or June. stabilize? curve I'm June fully And incrementals second does trajectory your recovery. in July, it this But and And hopefully,

to will leverage was from. June, encouraged started We that by in we May now us. that's be that we and improvement had the real So, -- the we to started a deep encouraging hopefully, XX% But sequential with April that see took in blow hard we recover see behind volumes. to to body that it's

So, I'm with the back we took a out, June sorry, that in with an -- a had cost OR the that quarter we decent was in decent month XXs.

Scott Group

-- think is don't year-over-year, I the positive possible then, any in you Alan, the was you And the sequentially, the quarter, the in know, to that help quarter, help about however -- here? in Okay. core can way forward? still second best us think but is going third RPU It out us

Alan Shaw

as two volume I was primarily second Scott, down quarter. the can shortfalls, And RPU that see drove core you XX%. was utility that One other Yes. XX%, whereas, mix. there in where noted, was factors was down the export were punctuated

mix. positive So just there, some you get

There's back Scott. even mix these as within more, you markets So feel well.

was about second the our XX%. Last in was utility year, the volume. our South it XX% time, franchise quarter So of at

year. which So our was to tends of within comp there's export the to there. mix higher quarter and quarter last second longer in RPU, be the second Similarly in haul met, positive XX% a of XX% also export, a volume

quarter. So to per the prices like we positive continue now, stand quarter, quarter. factors the mix second they throughout us In I'd $XXX of $XXX. Right $XXX going ton about coking cascaded tell had metric that the a down coal seaborne at lot you they fall. averaged for in to first

quarter. so prices the And that third through will put pressure on moving

Operator

Thank you.

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

Brandon Oglenski

could guess in said some outcomes. think made gains you comments But just for have we the moderate. remarks or because, question. answered you everyone. I guys taking think here, morning, recent my thank Alan here can the you you balance Alan, questions good I of And as volume relatively have Hey I Jim, your pace you've sounded bullish volume prepared then about guys

sense is market you that the maybe what a just you gives it in So bullish see now, the making but moderate… that

Jim Squires

Bullish what? for

Brandon Oglenski

It's back just the pull on recent COVID we maybe idea here that cases?

Alan Shaw

June. we Number expect volume from May in sequential moved saw, Brandon, factors. XX% one, month-over-month improvement don't to of continue there to are couple a we as as we a

above deep troughs that Jim July As We out in and is And where probably us. were we were of April that. we come for X% climbed think X%, going noted, May in to June.

moderate. to you see pace starting So already that

forward, look our of lot intermodal, the merchandise and within which continues demand energy. consumer a As includes we in we see markets, pressure oriented

the And governor so as frankly, year, we a I move sequential that on noted, improvement Scott just through and will Group. with have as

Brandon Oglenski

Appreciate Okay. guess… And Mike, congrats again I then retirement. that. on But

Mike Wheeler

Thank you.

Brandon Oglenski

talk was? integrating phase can what now. think you've operations, that said train the you changes dig it about line …I through X just Can guys make to? you deeper there Phase incremental us but haul I ahead what more think you remind can you gone and looking TOPXX, was

Mike Wheeler

sure. Yeah, you. Thank

the last of rides continuing but then then at traffic at into and do it a footprint train could we've terminal still integration business all customer to great lot gives saw year's and of is lines to merchandise the more opportunities about And sorts X a a to Phase for the back results automotive expectations. lot we're implementation. implementation reduced of where more a meet it deal with train now was still the A we was blending into July train and So a the continue into first look the the the of done and has add more integrating a big merchandise, of into from Xst of been give kind network. got with out to operation was us traffic lot along multilevel is what whole the phases that That and of that. the we the that's started train TOPXX automotive blending point intermodal opportunities into And X network, the network. where TOPXX for the network. of the train

So we've of TOPXX a now we've all blended that lot forward of that network. going flexibility got the into

the really a is way again, back, So really gets train nice in just added as pleased productivity incremental network train. from a metric. comes a about it that. to volume And And a

forward. really excited going that So about

to to business the back. ready to we're So continue with necessary iterate comes as TOPXX as

So about it. excited pretty

Operator

Thank you.

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

Ken Hoexter

dig step to clarify, back a congrats it's a little year I and clarifying to then just now target. want next the this And quarter, luck. -- I Mike, want not just want guess it's long-term, XX%. Mike, Is that I maybe Great. your I into to good Jim, on bit. not

down in quarter If but you the volumes out XX% you XX%. employees, with took only of X,XXX noted, as

now not work the costs, of XXXX. than done was back before. Comp which is most XX% So was is in different of still it

you. worse now So company points operating ratio, than your to acquire and which the basis that an X,XXX points XX% than XXX post as is tried over worse you basis peer

constraint in and OR. still out understand is I TOPXX. more because taking in we were it, to this costs. through sometimes out pull times to others companies saw structurally able companies the confidence in aggressive Just in as make improvements be in out here are going cost What that like those the getting Even What's missing? the able

Jim, you maybe give So what back, a step here. needs done of view as to be

Jim Squires

second few quarter. was we Sure, expect operating and we that Ken. a minutes operating challenging We we the quarter, said not will in that initiatives, productivity ratios posted to combination initiatives we a time as the ratio a ago, are Well, have trend it XX% satisfied with fully we through produce reasonably we down over and many growth the productivity the expect underway. ourselves of and the

And the the into a make that are will Our both necessary strategy possibly in. confident as operating as lean progress toward environment is XX% will as or adaptable, one can. given we we or way fast other we're get there ratio. and we We'll we

Ken Hoexter

longer long-term. not it's a It's to right? target, no -- XXXX now it's But back

Jim Squires

as a said, I of to there have get just As as initiatives lot And we can. do fast we'll possibly that. we underway

Ken Hoexter

Okay. Alan, then, a for follow-up. And

take and more swings? you're as great focus is which pricing, like the moves, Your any you an your kind pricing away I as given that's the want seeing volume opportunity industry in taking move program, pricing. to on why focused yielding to if understand pricing of up the opportunity if maybe results, viewing on others well. ARPU extreme And increased are it the are with competitive on come business is to or

Alan Shaw

quality revenue we and margin and activity. We've confidence of we in our improvement. seen truck of XX period of long-term in got strength units. our on our focused But our went during consecutive customers that products truck. no There's provide why remain growth for growth. three RPU pressures from And Ken, see we the long-term the value long-term fact reflected for increased platform And doubt. last Yes, our that we've in all focused recession a franchise, can our in a we competitive the year. and got through that shareholders. creation our service revenue, that's quarters We're business time markets, have on and And ex-fuel you

Operator

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

Jon Chappell

good the morning in across everyone. quite customers conversation noteworthy, industry? third started. to is of that versus auto Thank guys maybe the How it not aggressively your the outperform how you every rest been since much industry, and double-digit of Alan, segments, the a you relatively network to just of week has the that quarter even the need almost with have quarter but single in from your restock much snapback jumps is your the third

Alan Shaw

of believe a are that going low a That's levels kind auto point. inventories everywhere. we've nine-year valid that this inventory the there point. to is highlighted that's Jon, issues We one forward. very low of at are close There vehicle finished --

look The point inventory sales. the in May at years. eight retail sales Just at lowest ratio retail in was

is of inventories. rebuild an rebuild period And so time some now adjust effort saw seeing right shutdown July customers of to what their inventories. an to in Auto we're And we kind effort normal our

that later get back until will of pushed in Some the year.

They're as of industry. And So that their adding the that. over the as raising Steel encouraged are growth do they're weeks, But pace reasonably a about expect again, not and we by the back we Auto result, talked in XX our capacity as rates, we're we are we've last out. strength seeing well. this customers seen

Jon Chappell

can keep for if helpful. very That's I you follow-up Alan, And Great. too. the

growth a of offering service times the of in intermodal the ones the mentioned part couple You new country. the

response the uptake far so initial the from customers. on curious Just

one most that the is even the just compelling the cost more you now. industries pressure On of have would proposition given hand, think rail right

the to some response has to been other so market, reluctant given offerings? the How initial on rails. the maybe in new the uncertainty transition more hand, bit On a little the those of far

Alan Shaw

And is East. network product where of a asset the the to very a and in the it's Intermodal East are the delivers. for which manufacturing We've investment, our is lot in made very most franchise strength It Norfolk our it's created been robust the Customers interested majority got Southern, that do We've and franchise. that of a for place. in Norfolk has strong. of consumption the the and It's Southern powerful with this our shareholders. takes customers ground in unrivaled this that's and already the

strength year And saw, it the in freight We confident during XX% XX% market growth a be our of long-term it's last us platform so it, franchise, approach, fact that unique service deliver that XXXX. to the in recession. we very you grew by going It near-term. product by our the took in the We're and we for pause for XXXX. in as the a grew and

Operator

is question next line the Suisse. Our Allison of with from Landry Credit

Allison Landry

to directly from you're are and time Cindy table to her at doing? continue additive Mike where different maybe CSX report UP he the or Farrell what then roll out PSR? does that or in? currently to month And a so to the fit ideas have bit little Thanks. will Good you network? have that morning. about or she may starting in first tackle she of so. in that Jim, terms Cindy talk Any the already you Will initiatives a about Could brought

Mark George

on focused that have very operational are I and maintaining in momentum the XXXX and Cindy we XXXX. demonstrated

So we together, productivity. continue view this to hard opportunity as to on push an

she As level the also a these on taken productivity, high fuel be part enhance pursue And the critical grow line work we've similar key in every service will our of be as future. of central aligned we I measures that's closely focused the lastly, a have performance on success. our operations, we we long-term both safe drive productivity to And way to we'll our to top take initiatives. strategy. of thus and rest the She far to and are are labor ability I for said, possible would to That's productivity, of and to the Board basis the well. while and that productivity safety the measures maintaining the down line. looking on asset that for importance That's continue to say the

will level, the the that high two So and that at of alignment the have. be agenda us a

Allison Landry

network OR the a to helpful. or there as Okay. help then That's the savings other any quantify cost to more then broadly, think opportunities really the my assets from rationalization, whether us through possibly, that's just you that Thank changes benefit changes is see or or for the you do And further way or And yards coal and are you. considering you made? facilities follow-up, network?

Alan Shaw

Mike?

Mike Wheeler

I provide We're to Thank you, cost without can we we find for terminals still continue the Yes. Like reduction. look going Allison. yes, that at are noted, live to going service still and to that opportunities structural we need.

shop in did do to two that. last we've push we going quarter, closure changed that's this ourselves Jim shop. down two just to the and we're So at operation will to year. addition note, I heavy one that the gone locomotive humps where we repair the noted to the

We are reducing our reductions. production year gains capital rest for of the the here

be just that. at hopper, we're every to doing and continuing that part of that day, all we toward mean the lot the continue an look So of to like terminals product every it a to change the committed We've of provide have. to, with find stop. things over But we've eye that in But rock to continue a out be will looking like doesn't the we've to will Everybody do got more that. turning always is that, ways and costs structural And we're going talked yes, to network. try about. there we'll service to

the in gas more and more to So tank come.

Mark George

Allison, is Mark. this And

for humps the I of to in $XX closed. humps million can for before, that million think two – pencil the probably each $XX we've that mentioned we've you

on to So them. the quantifying specific That's your question number.

Operator

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

Bascome Majors

the utility at of volumes, side, it's you in in any that is how understand what the help some this and have coming quite and and the quarter. I plants year. feeling cyclical of million that's what accelerated pressure us tons, of differences tons million XX that second Yeah. the the dispatched in ago, of your power that out I the being gone in structural that from year, just specifically gas gone was by This -- And Alan, XX overall bit natural is some U.S.? to the a customary just the years consumption side domestic where Thank in between pressure looking retirement, the last mean lower power with by utility you Can year? closer you. just newer and coal that is, you're forever seen domestic X mean just

Alan Shaw

that, understand a we secular Bascome, decline. that. that Hey, get We in calls

do so lined adjust We've coal time is fields. coal our Ashtabula. over what us And network. you've in We've our seen idled property some short

the in utility the market with service improved southern operations our and have We fields, improved coal efficiency. our and into actually in customers reorganized conjunction

we June prices gas we're the at So for last the understand years. pressures that XX facing. Natural were inflation-adjusted in an low

So impact that's fully commercial And economic the as I customers. about. about and created we talked in talked expected headwinds, before had load that for we that shutdown our negatively some industrial utility markets also would

year we've intermodal it's that a So a Frankly, pretty got and record diverse got the powerful the franchise set we've headed. weak a merchandise where last for freight most that's East. environment, revenue and franchise in

where positioned well are markets headed. we So for are

Bascome Majors

Okay.

I power in declines expect we several cyclically clearly, years just at I coal zero that you. inventory mean, domestic these should you moderate So the in it's safe? franchise the next I do are pretty business year, consumption -- substantial into mean, as looking or today. least mean, to withdrawal the the model kind out decline inevitably adjust, of Thank be and to

Jim Squires

going going compete with within States that opportunities value. truck. market to and market next And we're to where tons to to going in X.X United be to year. the produced tons billion participate shareholder There's of to this billion There look in Intermodal States of to share X.X We're to our the United for our We're drives continue year. be Merchandise coal of it. going will it close in produced strong haul coal continue

Operator

you. Thank

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

David Vernon

is of Alan, peer. level and of from a should side. How Jim a the the not. to year gains kind monthly years COVID to get the Norfolk be or morning. presumably, is two growth, look or this to disadvantage now, where If back or of we commercial good question think to kind going sequential on we still for your of to Hey, your market eastern past you volatility from about and is to you're affect an we going bit going that have little ability one

Jim Squires

or thinking we growth is rates should Kind to growth, not get to that ability to of that, level market the the business? to CSX of relative going across be back a your cost impact position

Mark George

to pretty revenue quality. going focus Yes, we're continue well revenue to on performed and And we there.

You can see that in the numbers.

We with intent with value. We've are got customer-facing competing customers going product. best-in-class product reliable we implementing consistent delivering a service to We're technology. and a our that service on truck. and schedules We're are fully deliver

network. to approach We PSR our with we're which to that making the also have this on we're and changes no-surprises collaborating customers

transportation anybody the we're where headed, vehicle the mills excels. freight very in XXX we're more with over them else. best-in-class positioned in serve they're production to a North they development We headed steel of which that's American confident States. States. integrated is consumer for and provide going confident line in United opportunities. team industrial developing know got robust is so assist in and it well Southern aligned are with a We're Near We've areas a them in new pipeline franchise. and And and thing. that the and We've a anybody got of shoring, with powerful partners. a serve Norfolk We're than got only with where else than onshoring going partner short manufacturing We've more markets demand United reshoring and to consumption We majority the this to platform growth. that continue

David Vernon

rail So no impact market competitiveness, it's about then growth? truck happening the for what's in sort of direct on the more

Mark George

Yes.

markets the to customers us in We're We to continue to in going offering kinetic continue truck partners are and long-term in service channel best good is the shape our for We're going headed. value. and with aligned that products focus the market growth, going be you're industry. to see new This the are aggressive on intermodal where forward.

David Vernon

Thank you.

Operator

line from Our Justin of next Long question is from Stephens. the

Justin Long

bit operating asking Thanks morning. and circling to the back little leverage question Maybe it good a and differently.

As at in do the you than back or half Mark, half, expecting anything unusual operating on look also, can of sale And there's expense then else quarter, terms and that gains decline perspective? anything that's into revenue? in rate if you operating second a third from think expenses an the faster you're fourth

Mark George

Thank you, Justin.

significant so unusual would point. taken Otherwise, second second or answer time. in them, We the nothing I'll any gains So activity probably anticipate at significant at this first. half, point this one don't write-offs the in we have

compares going volumes to variable structural with an trajectory, and things, them do continue upward certain try is in was even growth the I course, that we lines And the Of believe year, any limit And on the as put attacking OpEx to pressure that in some third of of we're by will volume try said, of with was quarter, increases in more. we there to we're that's there back of that creeping That down, back will up. the typically third truly I influenced I'm do but mean, reduce taken fuel provision account in to come. part you'll all going quarter say, then that models. cost sure leverage recall impact we're that would the volume. first, on last receivable type you P&L will If volume to if steps be have OpEx might the your still going come. OpEx trajectory be to the

the think per second pump gallon. under in I at average the quarter our price $X was

half the will that in the So year. go of up back

the it's range. think I right now, in $X.XX trending something already

because So that will because some against. in third And since it's will item. on that $X.XX that's surcharge surcharge hit be in And quarter second quarter fighting probably lag that our in are a lag. we that a have headwinds we fuel the the something bring the I third range up, quarter will fuel

Operator

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

Brian Ossenbeck

if clearly that a growth down and where to the yet focusing you've going clean on effort look and the intermodal that something this terminals? for programs to road. to Good over you see back network thanks. are Is Hey, the sheeting us still benefit across those see how Coming especially remind that you you within much you're be years? is Intermodal, morning. the of next lot primary out or Can time drive there of levers developed, to expecting well couple one the pretty growth of from, as

Mark George

performance of third progress continue we intermodal revenues Merchandise terminals. it's has in and look our in rolling we within also within it's making our existing even to intermodal really I as But terminals want Brian, come for an across trains. both the that into and sure know further efficiency the efficient. Mike that improvements fold our in optimized Intermodal in as going system the out trains. train our back, we talked be our Intermodal about, we to And going our going And to network, to the clear. service as more quarter, offer to And our continue which is well as make a to optimization that network customers to provide terminals terminal we're opportunities

as on products based truck service going focused and Merchandise share as are in we're from allow strong we've and out new to We putting us take this that just that's reliable got well… to product growing much. And on consistent Merchandise

Jim Squires

have the we And there rail capacity that as well. Merchandise on side dividend the out

Mark George

exactly That's right. Brian. the Mike referenced dividend, capacity

operations that's going forward we're as we business to great going operating And continue to give us is leverage fold existing going so where grow. which into to new

Brian Ossenbeck

you be those? do of see as and then. would with success as Congrats, do what I'll What follow-up on over are again, X. side recent guess the And you and Quick on TOPXX a the couple the I big for volume you years? operating structurally of challenges retirement next you Mike Phase biggest be think And answer would away look challenge. think you take the as the Okay. addressing how the you look forward

are years the term? Any as volume in So next maybe what terms in couple the well and network long the of for opportunities left bigger of agnostic, of the challenges? what's some

Mike Wheeler

that Well, And opportunity and completely the bought leadership fact is thank principles. the the our you. is aligned operation team with PSR into

they know they're And them. implementing understand They So them. them.

ways still product. more So to they're but find good the be day productive, every using service to that provide

think great I that's So opportunities. the

structural operating the at that the the out structural to and And we helped great and drive train in and iteration, to to continuing that at. out. we every then long-term, costs it's rocks the changes. And network the a together division, look have we is over got these They're day we've do. last safest way really talking As the place, the doing the group, handling. looking whether continue in cost sure, TOPXX turn team and making optimization can find efficient thing that's planning the take most are what there, put about. they that look terminals across and technology it replace And engineering Where to then, we do we're we're ties need rail is, How implementation to way.

know how out really got the to railroad across that partner has it going but costs, there another driven a the nothing. our to to ESG, many and quarters. in take And cost the opportunity couple us marketing that tactical grow business, so last be put then allows dollar continue that out opportunities provide railroad. also there. fits the there savings But service really just have that's the utilizing making the And to we bottom And out of good the for with product So to technology structural seen fuel on because continue out line. technology and we've efficiency folks to that the over door, will the right you've

Brian Ossenbeck

Walter Capital Markets. with from question line the RBC Thank you. of is Spracklin Operator: Our next

Walter Spracklin

operating to want afternoon, ratio. go of to to uncertainty. say, I Thanks the questions given looking in the that Hi. a one half, very Jim, I on everyone. should difficult Good back next is understand much. back, out year little macro I the

or down that is I last scenario that better scenario In just have in take rebound So down did volume we modestly. operating a ratio and you that the could not scenario, where do but volume kind -- give you of down modestly, you year? where terms and to uncertainty out guidance, of volume wanted in year-over-year continues than

Jim Squires

unable I current we But what demonstrated I the of to would sign it will midst attempt one. would think we the commitment hypothetical to that a we revenue volume which are ratio, that. for XX% and demonstrated to But operating it's grow us we in through very in to ratio we ourselves. that, difficult to not second improvements. say like, up any the of operating we committed this scenario, environment, the Yes, Walter, was that, driving uncertainty, the a it even up, we to in for wanted are toward that to productivity find we irrespective pace recommitted needs quarter improvements, be. it be. environment means through And and the I if we make productivity And what in actions And the think of macro we took. not at

Walter Spracklin

Okay.

ex-coal, and the back, should regardless of half, of just give of make don't me other to I with but it you As a indication follow-up, additive coming automotive or be can products in on know base sure. what mix yields, just some be assume, want effect price, the if I yield expected I the that are to back an just is be kind that negative. would higher should positive,

Alan Shaw

morning, as is intermodal us. negative it for a be growth will good Walter, driver

respect with negative with positive that's certainly, growth. to So to respect revenue yield,

Operator

Our of David next from Ross line Stifel. is with question the

David Ross

morning, just than In you far versus How to lot date. better quarter, much gentlemen. was July want so third second a characterize international back the domestic? would Yes. to in Obviously, circle the intermodal. I quarter the on domestic. Good weaker international

Alan Shaw

as not coming They you're seeing heavy you're so in that's for East Coast. bit. There's are the West imports the of there's stuff international a space. way to Coast both to around Since all is demand a exports low, a of have the now. opposed the What improved right lot quite seeing hitting lot inventories

some that's import where has domestic we is transloads on well. have XX-foot so as say demand right Coast, the West And high demand. which the into serve that containers now that, we several creating But do very I out ports opened should

David Ross

corridors? then talked new if have choice you as lanes or before, about are new versus And is did offerings, when Norfolk a And new in that are to shipper just the that new Intermodal they, is, intermodal service the they question are intermodal that truck Southern? those fair to intermodal say those guess, I or to lanes new not

Alan Shaw

I grow products his launching product to we a dividend on had very are – are of Mike going that team it's And level they and We're be delivering. service right been. us not product are the – as forward. moving out new is going new confident in noted, now, or capacity certainly and help there in the going are that based marketplace to the that aggressive be it's to new They not

Mike Wheeler

the now. that that intermodal news, the And of have most good network folds into current we

Alan Shaw

And we've our investments got our in intermodal in network. place

Operator

you. Thank

Mike, operator. what markets. of give little congratulations can line us XQ? team, next sort to you, Welcome. retirement And & is operate I listening. an of in Jason Company. Thank the are in end percent come here as you Cowen question in started Q we bit the back your - with from markets Jim and if morning. Seidl on and sort end of still wanted talk as to idea about Our good and sort your a what percentage Seidl look of – XQ of we out Jason

Alan Shaw

as to has we for business – our of improved the we we've XX% that through economy maintain Jason, And July. in certainly the quarter. consumer tied optimism is about, June and about that that and talked our third sharply

well, as there. year-over-year talking also in saw market, energy improvement but difficult some though, still We you're the comparisons pretty about

that all sharper the we So we're our markets, within consumer-oriented lift of serve. seeing in lift products

Jason Seidl

England. for a That might you. good with for in That's and this up joint one the put up But Jim, venture color. one sale. PanAm Okay. has And other been New got be you've railroad

railroad? would over would wondering, something Just one look it of that is work how class that And sort this at? another if took Norfolk

Jim Squires

England of presence maintaining New Southern footprint let as It network of and part presence network. me overall our a at committed we're it Am our to our an New is part important is that. England and Pan in leave in

Operator

you. Thank this hand I At will comments. call to Jim now Mr. back time, our And Squires this closing for concludes the question-and-answer session.

Jim Squires

Thank morning. you for this your questions

of delivering it's take is want other when affirm stakeholder inclusion. an investor, or to or to dramatic Norfolk customer experiencing in you're commitment on equal value. a bottom and By commitment I safe. the and to inclusion state At moment close, our equity call, shareholder essential our for our serve we that and Thank line forum our inside society and such ensure with whether be pursuing in important everyone time and a employee measures that interactions will upheaval, shareholders to diversity, this Before a company, you our we Southern's well. our company opportunity to others, is

Operator

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

You may lines have disconnect a your wonderful day. and

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