Norfolk Southern (NSC) 29 Jan 252024 Q4 Earnings call transcript

Company Profile

Participants

Luke Nichols	executive
Mark George	executive
John Orr	executive
Ed Boyle	executive
Jason Zampi	executive
Chris Wetherbee	analyst
Scott Group	analyst
Ed Elkins	executive
Ken Hoexter	analyst
Brian Ossenbeck	analyst
Thomas Wadewitz	analyst
Brandon Oglenski	analyst
Walter Spracklin	analyst
Jason Seidl	analyst
Bascome Majors	analyst
Ravi Shanker	analyst
Daniel Imbro	analyst
David Vernon	analyst
Ariel Rosa	analyst
Jordan Alliger	analyst

Call transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the Norfolk Southern Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Wednesday, January 29, 2025. I would now like to turn the conference over to Luke Nichols, Senior Director, Investor Relations. Please go ahead.

Luke Nichols

Good morning, everyone. Act today's meaning will provision of Private Litigation during statements certain of that Securities the within the Reform note call, make we forward-looking the Please XXXX. of safe harbor Corporation, and materially SEC to quarterly relate risks reports annual of we and future Norfolk to events These for results. Please as disclosure most which may refer those statements subject differ future are and and the a actual view performance full filed or uncertainties of with Southern from uncertainties our risks to important.

to along norfolksouthern.com GAAP Our today's during measures of our are that basis. or used being our available are presentation ratio. call references non-GAAP including measures, slides in on prospective at the any operating operating an comparable Investors adjusted section, note non-GAAP with ratio today provided adjusted the to Please reconciliation all

now It's Chief to X. Executive Slide Mark Norfolk and George. Officer, to my Southern's President pleasure Turning introduce

Mark George

here Good morning, ore, Zampe, you, joining Operating everyone, Chief our and for and I'm thank Ed Officer. our Financial Officer; Chief by our Chief Jason Marketing John Officer; Elkins, joined today.

performance, QX strong narrowed of margin to further very peers. results, are with another our Following quarter close out solid to gap the which pleased XXXX we

the us X% to Our revenue strong operations enabled a more quarter, volume X% fuel. move in yielding ex in increase

sustainable deliver We position Norfolk continue our on commitments growth. to Southern while to building for momentum

fast. running is network Our

are are they metrics as ever Service Our been. efficient. as terminals strong have

We $XX nearly the we committed than delivered $XXX million guidance and When $XXX was in million with us that commitments a million we business, year you we with exceeded or a together, gave costs, rewarding we spring. all where on cost the line wrapping to it to the delivered and noticing we in more more of are customers the put exercise continue Our all strong discipline. removed we made. QX up

results. was XX.X ended range The XXX:XXX. employees and I are operating of these end dramatically financial our at Southern. the hard safety the OR the at results am to It's to worked all guide our between the year. improvement we grateful the celebrating, XX.X, Norfolk And laid second improved out adjusted proud metrics of half worth deliver favorable throughout not surpassing ratio outlined. Our just we that organization the in

Our are one serve. guiding as embracing as as safety employees the a another we value, well communities protecting

driving positive are employees and forward. the company Our propelling change

taking share you. As the you and for on more evaluate we with productivity in I'm remember, John, volume our while results did improvements, to Jason operating and that XXXX. excited this X% Ed

with start Let's John.

John Orr

you morning. I'm Thanks, safety to Mark. operating excited update Good and all performance. on our

Slide made. Turning all the is which are value decisions to operating through X. Safety

and improvements team entire to in Our outcomes strong the protocols date committed are positive safety of testament a of our to rigor safety engaged our in of pursuit indication can we is achieve and excellence. The the a XXXX.

Our period ratio FRA I'm XX% encouraged that compared year. increased the last X.X:X.XX. by from results QX same to reportable improved And injury our

lowest December injury In X.XX our in FRA was was fact, reportable ratio ratio and since XXXX. the December,

improved year by And into we building carrying strong momentum train are XX%. positive these rate full and accident both FRA on the results. in Our for cases, QX

Southern, X XXXX At over strategy. at XXXX operations. For for our started people hours of across we million man heart all and example, injury-free the Norfolk finished are

approach integrated operational engagement. management of business planning building with educating is thousands readiness, Academy leaders, curriculum skill that training combines Thoroughbred and technical its Our offers an and

safety driving proactively are excellence. enterprise We and performance

building generational are railroaders. We

Turning to Slide X.

and XXXX, efficiency improvements. service X.X is In traction, velocity. network progressively delivering simultaneous performance our by dwell approach gained anchored Our PSR and

speed active capacity, train reducing intermodal taking and expenses This XX%, is fleet our and and gained terminals to capital. Year-over-year, moving maintenance fluidity generating and rightsizing are were XX% our aligning unit less the decreasing yards, XX%, by in fleets up X.X%, quarter, We system growing the and faster volume, speeds, remarkable respectively. speed fleet. In the and in the a train gains improved it merchandise success down stories between true level.

up and ultimately, growing we the we took drove grew with out less, more business As assets, did X%. velocity, volumes we by

example, per over car car For year-over-year rose miles day XX%.

efficiencies, to seeing similar overall GTMs and are fleet. and our Velocity allowed the benefits the also And by our locomotive per full We both in we productivity. our XX%. increase fleet improved more quarter reliability record Year-over-year horsepower material locomotives, decrease delivered available us drove store expenses, year. dual for fleet

operating the outstanding are we're to a delivering also very quality all, perfect X% parcel X We more our After culminating drive a volume we successful per we efficiencies, handling strong, controllable peak day As intermodal finished year service. customers. committed season, company with a failures. product with for year-over-year,

X. to network matter. committed we Turning Slide margin and XXXX, close Speeds to In to tackle underperformance gap. our

said, exceeded. Mark total As our effort, through we team

maintenance feedback for car will and our our meticulously root near room provided real-time example, field. the For to repair processes cause, drilled down fine-tuned

well includes challenging speed by infrastructure and repair additional Improvements war from repaired XX%, AAR down slow result, were decreased order The stops need gains Over-the-road in are reduce network, room, significant fuel attention year-over-year historic delivering design crew actively overcome productivity coming our crew for speed mandate contributed XX%, drive XX% efficiencies. a every and and interruptions increase. They respectively. whose the to drive need permanent bottlenecks. room and also and availability. for now has turning to and war As running speed out speed into year-over-year to their are our temporary XX% barriers speed

a I'm example, and detention every this about effort, XX%. When year-over-year, reorder. down NS overtime both crew For costs terminal talking is were say I team

waste, structurally key restructure revenues funds These have allowed eliminate the working entire disciplines to across and cross our us are and broadly increase being ecosystem requirements, compromise. to efficiencies. projects up drive enterprise without cross-functionally, capital We for

handlings, X.X, infrastructure. improvement in mechanical in These productivity In further turn Coupled rocks out for productivity stretching their the XXXX processes. roll is XXXX. grit, to are in drive. momentum. of closing of our standards entering next in our with operating new tremendous for plan operating achieved for We savings. our on the we I'm efficiencies value and and we and peers. And Ed. require They and has challenge, focus over tenacity net transformation unlocking incredibly with network. The with and driving will to PSR gap reduce our now to operating will It The phase times us rose introduce are are and proud showing service capabilities fuel NS value will XXXX, terminal team results continue big creation I in will plan every are the for it will tighter QX. development. connections

Ed Boyle

I John, everyone. my cold Thank and good apologize with upfront morning, here. bear for that ask and you you, me

led for our on groups. intermodal start Overall Let's agriculture XX. volume and That was Slide fourth X% year-over-year. improved quarter by the

coal Our pressure declined portfolio RPU and within the revenue intermodal for within the and to we've total most due lower primarily fuel and mix of year. rate negative noted revenue, surcharge with that along

Merchandise year-over-year which volume record improved out by and offset quarter with some slightly fuel that corn in of from increase by consecutive growth. gains less The business marks opportunities, RPU XX energy-related markets. driven X% and declines these higher in metric but another of XX saw quarters were shipments new spot quarterly in , a soybean and automotive, metals

in in realized headwinds. RPU international pipeline both increase Intermodal, to freight with year-over-year fuel a with intermodal container records to gains be remained prices rates generally sales and empty domestic line demand causing quarterly through wins, also both volume low, face automotive. We set for quarter. X% industrial and volumes. Premium products less market and we continues increased for domestic In Truck last

contract However, and up recoveries note less from rate X% finished lift true-ups. that RPU to a fuel due

coal. natural lower prices X% export prices Let's gas reduced prices, to while decreased driving seaborne to impacted turn revenue. with our low X%, experienced Volume coal Utility decline continued due demand business. burn a in

Okay.

the Moving flat volume fuel results. along about to rates. XX, for growth record Slide of X% year the that The merchandise $XXX lower as significant million led faced unit the strong an revenue business a XXXX. was full full per and growth. revenue bright RPU headwinds intermodal of achieved unit talk revenue spot important we was in with in company coal fuel Overall, let's less unit and achieved revenue, We volume year

Let's ahead. XX and go look to Slide

growth product our are is by that customers enjoying for Our volume service driven outlook XXXX the reliable now. modest

markets, vehicle some production and lower build. sales to expect our inventory we weaker-than-expected due For merchandise

our We expect improved markets manufacturing such rates in plastics interest chemicals as and activities waste. strength supported and by lower

market However, share value confident the and markets of we tariffs recapture for the many in well us. will new potential introduce near-term the some deliver uncertainties, serve. customers these to positioned we're expect our that that uncertainty Despite are

U.S. growth demand intermodal read Turning and helps of has markets. uncertainty. Strong which MX a a source to remove agreement, tentative a driver. ILA import export and key been our

will probably some create new tariffs headwinds. However,

but XXXX move these was to on for in to yet seeing financial want that's gradual to and thanking and their continued business Truck We driven serve. year us, finally partially markets capacity excess expect consistent, reliable these started the customers of trust has to built has industry with Jason their such year natural have and some I'll in repositioning growth lower close new review recover, end it with progresses. headwinds. We're down. pricing we offset going just by the we export resilient now volume results. we a prices utility empty grow some again XXXX. continue coal to into turn to keep improvement generally rejections. And a I over as demand metrics increasing and elevated as factors transformative we once to inventory Zampi by And along due to expect softer to tender the in our is that, to prices that levels. We're gas in falling territory eye key for service and as partnerships for come our

Jason Zampi

Slide numbers with speak reconciles that I'd start I'll I'll adjusted our items There Ed. which the X results are highlight Thanks, for you. to today. XX, GAAP

these the $XX I'll incident, benefit million exceeded where we a costs momentarily. First, recap Eastern the to incremental recoveries of with in insurance related are quarter. net Ohio

first We also million which transaction, the last recognized of recognized of finalization a Lionel Virginia quarter. related the portion was $XX to the gain

we the income. Adjusting Eastern wound And ratio $XX sunset for cooperation you'll the down the a in restructuring agreement, proxy EPS Additionally, recap the quarter of line we final the Ohio items, projects an impacts. derailment-related to in provides costs. signed other as operating these resulting XX continue of the Slide have finally, campaign additional XX.X%, in was inventory certain technology tranche and $X.XX. to financial came million costs for incurred and below note

incident that further $X.X the billion the community date, incurred to related we settlement, the in nearly related to remediation other action environmental see You'll efforts and to with incremental assistance. class costs have year current

year in total. million $XXX $XXX recorded of the alone, insurance over and we recoveries bringing However, pace in million accelerated, have now this

basis points comparison the EPS last end adjusted operating of in quarter, approximate was quarter Moving little down we discussed. gains to Slide driven year due headwinds, a strong We to contract ratio our growth. From perspective, high we XXX improvement Ed XXX to the at of up million in revenue and ratio points, of single-digit of the by and drops versus last generated face net on that income XX. the basis had sequential operating productivity recognized that the and better projected just recoveries a than the as results $XX

accruals. million Strong fuel expense on higher year-over-year asset labor and productivity $XXX our wage the XX, which of and half was base. comp items, Slide except line of and helped expense improvement note to Trailing in inflation drove you'll within up incentive offset decline the improvements expense on over depreciation, improvements all efficiency of larger

In addition, category. higher in purchased in this was volumetric million cost of the down great services costs, progress $XX year-over-year face

note yet down network. fluid we of as also another benefit continue locomotives, store expenses our come the You'll materials to

down year-over-year be story. target down comes to XX. we the that and XXX to his a a cost productivity productivity We and results improvement, full and John delivered ratio basis delivering point and to our of points $XXX $XXX on despite on and basis revenue exceeded original million had savings. year team operating commitment that's to to really overdelivered gains, see Slide of that improvement, compared Turning XXXX XXX million you'll XXX guided exceeding nearly slightly. It

momentum into to to over moving turn commercial how a I'll thinking with we're lot XXXX. for it financial. and about we're fronts, up and XXXX of So operational, discuss wrap Mark

Mark George

you, Thank Jason.

close to So performance XXXX. you heard strong about the really out

momentum We XXXX. powerful have entering

it that outstanding at markets hard people of to again are and XXXX, the share. our will capture confident point, resolve made we and While We our we XXXX. into do lean predict we are in to service happen in will this

guidance now Turning to on Slide XX.

again productivity. We revenue be OR peers whatever CapEx range long-term control on planning will target to are is of year. Ultimately, XXXX. points core are One X% with margin offsetting our guidance XXX we which we baseline exceeded by resume and close the XXXX of per expansion translates XXX basis with to our range. volume takeout, fuel end million in to complete cash than in that our cost positive growth gap equation points, be and and the basis with from looking continue and the XXX allow share exceed repurchases. $X.X for high will and $XXX will of balance improvements free called thing us pricing, sheet target fully the We XXXX driven million $XXX for strong is in at volume billion the healthy environment. our of performance, more coal. to original headwinds That operating to our margin flow from restoration

So with into Q&A. get that, let's

Operator

Wells with [Operator Instructions] question first Your Wetherbee Chris from comes Fargo.

Chris Wetherbee

have over significant bigger is see next productivity we we can guess ago. into can think out that. for were sort then strides the as little and kind you you zoom on up understand picture from we if think source pick of opportunity? maybe You OR break next the the million where kind a guys what what you could so we made the of could about target that I of you $XXX you of mark. couple down Obviously, a potential Maybe year years, the think of as of XXXX. sort years, buckets Maybe couple in And the do is? where the bit

Mark George

talk runway question. we know productivity, where bit XXXX. confident $XXX we of a that can exceed We but the to XXX. because 'XX we really I'll Chris. on out little we about we're the Thanks, we We Appreciate million can seeing and John we're out laid that. the laid excited target the have target for you exceed think -- exceeded

going OR. We to put we really forward. the going think out now longer with OR, the opportunities definitely basis XXX improve continue regard the So long-term improvement for have here to we're self-help optimistic guideline the that basis on a on more surge, we're point path I volume And boost environment. that XX kind expecting, of kind And of think that's a are a the of to get where got we kind range. we've we turbo regular I where the economic recovery once we're the to

you John, talk So to buckets the for the... want about

John Orr

pushing everyone. a Yes, ourselves that stops great I bedrock we're 'XX. with think really hard We're Chris. really, a absolutely. it Thanks, question good increasing. service to answer that for platform and standards It's we're and one off of in And really and starts in coming our solid good productivity

and all and and cars, skills how across a building have capability. working increase thorough improvement across new locomotives, the of reliability the really structure really the tighter headcount for education GTMs a rubber-tired framework model. going trying really increasing resources We're business availability of and utilization our the and to to operating important for step we with more fleet, Academy certain it's people the and deliberate assets rightsizing And capabilities hard output the operating be functions align and to the standard and segments deliberate vehicle continuous of IT to the even and in network of safety on through onboard the deliver infrastructure [indiscernible] network and assets, the to

Mark George

taken we excess Chris, see as bit line more to costs, more of a will be it this cleaner area, can going in by So efficient. just running and look item. show John's again, and comp be connections I where little everywhere, to efficient ton a We've there's out identified year, an the more up that think overtime that P&L, at then and you you're continue

reduction John fuel as see in pretty higher well as upon, also, we'll But year full reductions pretty think improvements car You so remember, in effect we we'll get I touched headcount that just We'll even in much rents, in XXXX. we'll materials, efficiency in the across see see purchase XXXX. from board. improvements, of the rents and equipment services, a reductions meaningful had

Operator

Research. from comes question next Wolfe Your Group with Scott

Scott Group

follow Just yield. just How the in labor labor on opportunity how up side, growth labor 'XX? incremental -- volume up mix feel about want maybe color you good headcount the in of on X%, down any And versus on really to productivity QX the with the think year, about X%. then revenue I to productivity X% volume for do

Ed Elkins

first of I'll Scott, we do take question I X% how revenue about it's which digit, was Ed. sort think on the part year. your the there, next growth think of mid-single

We we we weakness. got where expect the lot year, know another a of growth our headwind. But there. of will really into and place in markets. only be Coal still coal fuel a We going headwind this out price is most see

X% and of I'll growth price turn it we Jason. volume expect So deliver headwinds. our over both those to to plan against

Jason Zampi

Yes.

think the into we've had great I the T&E runway in out, called you labor there, all call labor labor fourth quarter, appreciate not benefits but out we'll focused move on think the I the XXXX, ranks. we've some probably productivity have I only the as operating more continued across And on we in productivity as productivity got there front, on the side.

Unknown Executive

our effort very, coming Yes. QX developing labor purpose 'XX almost negotiations terminals really the drive ourselves year full and of that empowering together basics, craft within we you and had And leading And employees. and think all a performance And discretionary 'XX how ahead and reduction to getting versus and XX.X% productivity intent initiatives. about discipline our on things with some I in local as XX%. more distilling as very solid really getting and it's creating that baked the engage to back and couldn't lot more, supervisors creating our to Jason. where of overtime agree an we

Operator

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

Ken Hoexter

guess balanced? you how lastly, growth? yields looking all war And Just commentary when on a all of comment, revenue. the volume volume thoughts on volumes on And so if terms room you see Was And can the buyback fairly the the that it's for join Need that I 'XX. John, chance. clarify I or into you're I in then Speed at a to want cadence get then

Scott Group

a got always we've Ken, for you. seat

because fast Just in bring they move seatbelt your there. .

Ed Boyle

this is this a year, to deflation be it's our And, got we again next across markets Yes, I just in going past. of volume -- most to has as it's When we're Ed. really by deliver the to combination. going how that's going then a plan think year led and price about be growth it

Jason Zampi

your we've sheet, our a share through our the philosophy job good distributions that's rebuilding that On repurchases, really fronts: this line And able sales. second X on insurance capital Yes. profitability, been year changed. really done here recoveries we've question hasn't those and to achieve balance on and the improved

the So we we're framework and key to in it's resuming And buybacks. able share out then of but and was we year always then that us. pace. to That's ago. creation be that critical we've going interrupted start year, laid 'XX, invest this a business and the sheet delever in dividends throughout component pay Obviously, first, measured balance a XXXX the our have repurchases share got of years a to value to at couple a path

Mark George

had particular, can a probably core to growth, the add face. to expect pricing headwinds think say, We don't because get revenue volume like the do We're Just I we I of in the solid in are couple think trying others hone really to few in probably here have probably merchandise. We intermodal we've volume on to some a on also pricing going bit as again, more good, little points maybe growth. volume.

up regard then coal with that we'll and to have also particular, fuel hoping truck And a still in we're do that and come to market. -- see So we pricing, with but co-volume. maybe stronger start headwinds

end X% to. how all mix put the growth guiding and the we're that that's in you it master, So revenue up with you

Ken Hoexter

include And thoughts? can that one is thing clarify any I that? the of just that Or Does there? tariff before

Mark George

mean, today. I Yes. includes our outlook correct. . That

Operator

with from question Brian next Your comes Ossenbeck JPMorgan.

Brian Ossenbeck

pricing remains little and improves value of the here to ask more consistent. a wanted bit the as to just service more about I it

the So talked on challenges based losing and past, disruptions service you you've about that market maybe had. some in of the some share

do see momentum improves, you of little see you of that as it bit market both? share in bit that's [indiscernible] yield? gain or how So upside the of So do perhaps interested guys year? a more a when progressing to that is recapture Or this hear little of

Ed Boyle

this this It a good Thanks one. is actually is. -- question. And take We a Ed. the lot we internally. for around It's

should very share think move think service interested somewhere has are has we're that's or about the reclaim never to is way and the share whether used I and moved would in customers. And think that's our that it forward else with because now I else it value that but how existing the from the I wallet customers, by put delivering. it way we us, much customers it's our rail, the in with on that our expand of coming we way that have whether share share opportunity wallet to interested how it about can in everyone and chain. our the of We're the very supply both customers adjacent we

working that. we're really hard on So

reliable, the service to day. of recognize we to to improve that been in being through where very able continue deliver service, every the of very particularly a exceptional to year. product. offer fully expect about as count good a can on when terms customers value been diligent merchandise In that service and The this We've do value we service again of can that deliver we've price our successful, we continues we value markets our resilient value

Mark George

short, gives both. In think say. and We share . both pricing really volume sides, good value on I that service of should leverage Brian, recapture, the us

Operator

from comes Wadewitz next UBS. Your question Tom with

Thomas Wadewitz

noticing. well. in come you is, wanted okay, more from? the Brian's that we specific just I hey, that growth see, segments? I a have on business? think, Are as chemicals wins Nice there that part just think set on strong that about around you with some well? following kind network that -- I kind Or kind already comes being doing is likely share? that, beginning, and what I And to like some of are question, are how Mark, customers component guess the to you of the of have say, new do optimism to also got gaining think stronger. Is terms in chemicals see do continued some you're you doing the momentum results the where of of are customers up of more And some you of examples other in of new where said at

Ed Elkins

Yes. question. pretty That's good a

For our of a over know us, when look across few particularly we chemicals. very our merchandise have service markets, is -- of markets, we specific we that our and in at because one customers have our those areas suffered time

local to we're on spent a product really this I and so specific fundamentally segment. When in morning the and we on putting with a And a specific lot time. on And where how that's how customers. emphasis customers, deliver call actually, that very much were be deliver want and sure value that think about our ratable customers can targeted and lot is our we talking wallet for we deliver more we more and particular John of of for share I about them our making basis. that to can We go, value service for

was in better what's respond more the in of success look we agility as that of in us previously actually is very deliver have and way of to at advantage to marketplace. be ag higher agile network on service going second X the that. It we couldn't actually market were and a a we I the take as our to velocity. markets our this The over good where a gives offering past example the piece inside able what quarters

intermodal year, we we They growth, They think this resilient it last a still, consumer economy. have year. have year. we growth lead going In terms and this again see where I very of other to markets bullish is a will very appears did

going themselves better I are of those opportunity product. manifest both more service us with So think in for to things a

Mark George

mean had at we've good levels. is extraordinarily service a years I it high intermodal for now, a couple product but of Yes. really

Thomas Wadewitz

chemicals on as to chemicals some be you clear well the market. getting Okay. growth you But some have That's just guess, not comment, in back. market good. though, visibility I as -- business back like That's looks say are business coming to maybe

Ed Elkins

That's correct. Yes.

of We that . top sight wallet opportunity have we're line to of. share on specific

Operator

comes question Brandon Oglenski next Barclays. with from Your

Brandon Oglenski

was op on wondering elaborate plan the you're to I could you this year. changes John, if making the

your I it but think you a like in operating maybe in comments. slides, called plan newer a refreshment

can there? maybe you elaborate So more

John Orr

Yes, road it, really next new plan, our improvements out on-time efficiencies, our as customer-facing terminals. asset or performance point We've operating the standards. tightening evolution and refreshment the iteration the the our continuous on of and the as we've moved absolutely. network That you our The call improvement progression of was metrics, turning health, in over is improvement. our through next been speed. And is starting down

road us lot more of of a use the the business. We're that order make on lot size at yield more the our better in fleet, to trip disciplined yield gives that back accessibility and end to their the our be front [indiscernible] more And collective to our So start will operate. sizing we of availability to the engine It how articles we on and trip and really looking got, connection we or speed. creating and terminals, in rightsize to once our that, how and needs we our our to plan speed do or competitive. and weights employee grow cars, standards train for for do And the on our increases us that up the flexibility help do and we've over of then customization Ed really be service a that productivity. leverage right meet

Unknown Executive

So to reduce handling...

John Orr

philosophy us that locomotives possible. locomotives, will in of the consumption, the of as will length of of things. of those that time to active demand fuel all allow longer. as That all back extending the again, service leave the the And absolutely. read Yes, long locomotives, our trains to

capability X the one So last it will the of to and as of iterations while. in to It step, the but many of months very be we heavy get improve, to took us confident a continue . it position to deliver. lifting next took in this team a take

Operator

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

Walter Spracklin

is know a for question and it's point basis targeting this XXX John, to still peers. been gap John. relative I of improvement, a bit to you've XXX So OR

labor So and you that XXXX be kind in over in like you protecting hatchet what's that I did curious go could we customer and of Is kind it you upside back And know might service? a what my to question when and -- as anything? what to just speed constraints is if to where fast faster furious OR. Are Just see holding of take from agreements? it a summary, back, we you holding be clip?

John Orr

just tell leaving I'll stone our to clear unturned. got a But Jason's not things, let's about we're on flag set number have how in we of that. And a be challenged me you, any including increase our Well, miles I is efficiencies, our taxis think car that mean what productivity. going recrews. I up day, to he's locomotive we right our down we're fuel per the on do on But leverage to budget. me.

We've got purchasing big our rocks services. to and fuel gain our on

is a and philosophies the war leverage to take out or proud the And the pressure our and really, last from up and anomalies us competitive in better year a while we attacking improvement in drive the people, million room we me it them educate really slightly of I'll pull to go to the improvement cost of the We're team to give mentality out for to back on continuous our and so the triage approach edge. the problems, it finished on disciplined $XXX more elevate deliver of where day-to-day up we or to is million love guidance, team triage standard. I higher that everything. restructuring And operating ahead plan the question, $XXX takeout. putting

things are it got it's these holistic do approach that and it's Mark's I've giving with Jason this. Ed a didn't are So we're leadership, doing and partnership Hunter really us and that to a

in foreclose we're advancement. And there's here. on unturned. that's We're for agenda. know And no a our of way. We're So holding disciplined our back. capability me few will customer we're to it back. going locked a that's structural holding stone come. to why cents I the going are I There's improvement customers not And not on continuous nothing do in

Mark George

learned other in pace there's of here. Walter, lot would the super of John's obviously, very to say why probably it a about that doing of the change have that what I'm which lessons it Brands of a he cerebral past, at happened being cerebral studied of it approach I the he's proud some in a that you roads. X.X. is calls based all he approach It's PSR part on X.X, the

evidence this the doing compromising volume on is we're while not here taking customer So more we're and that service.

proud -- what for of great I we story, this think be a I So he's here. it's John all think should is doing and

John Orr

I'm proud everybody It's of effort. whole takes team. . team a It here. the

Walter Spracklin

Yes, you're up. definitely delivering and just keep appreciate . I it it.

Operator

Your Jason Cowen. comes from next Seidl with TD question

Jason Seidl

hope to good a focus on congrats the progression talk in on Thank operator. last compliance, what's team, to and you to look Trip measures? I seasonal dip better, going when bit that. seasonal and little we is And Mark both One, quarter. expect But intermodal what better performance more than wanted probably QX I the there in XQ. Can should what you, merchandise plan 'XX? sir. feel of you forward you year And clearly QX X at was the those for us much things. from the normal about a think

John Orr

worst my don't good why solid through delivering when I out overall, especially came I we're that. and fourth And possibly without And as you vortex. mean, and you We as you hard, we But hold go saw can. V-shaped we ourselves. start on to -- of prepared customers came hard drive to impacts we've because think number the got it were for and the But polar like quarter started Well, hit quarter. we as impacted And we me accountable for it it can triplane. port of the quickly. triplane, we get these with saw philosophy overcommunicate as despite I some being by able the really we delivered our in environmental into fast into pretty back fairly getting and to strong, work deep hurricanes devil . the year conditions this recover a results. and is the strikes things. But

Ed Elkins

quarter, threat One expect, the to and snap did, this challenges something the say industry year, you one and of lot going with flows. stoppage was of resilience, changes, a of proud volumes Yes, back We back, about hit norm. responded we the here's third way, get report distorted really I'm to things quarter which a and another those whole both a something we whether very that's of say would of fast you to the snapping on hurricanes. volume definition how And way had I you that progression. with regard of didn't as one, I really fourth it royal what couple the

I adjust. really think we did

Scott Group

end-to-end a same -- I And think trains Yes. and underpinned really And velocity a merchandising allowed get love by were X.X is were respectively, XX%, us period. to in what unit XX% the that improvement up intermodal. on overall they I in X.X%

So all tide of continuous rose of that our with trains improvement.

Operator

from comes with question Jefferies. next Your Moore Stephanie

Unknown Analyst

fuel for out you on we of Maybe John, on Hafen efficiency me more some called like? earlier, I This specifically are maybe that question results. piggybacking heard the the kind the and . those the infrastructure could good specifically, tackle understand Stephanie magnitude of next savings what is Congrats mechanical look you're Joe could of items on optimization of you to what phase guess, and Moore. a some sort gains. looking of help

John Orr

a in bit start I'll And and year. sure. of XXXX down things, we the in just efficiencies. a to the it QX of coming and X.X X.XX in And in, hard fuel. solid at record at It's we fairly were worked a where record number 'XX, were we For really a of had that we and a we -- finished quarter ended a with at get number to a including fuel headwind up

by HPT distributed really power, So stopping of that decent was founded balance use a trains, and for strong on having right-sized the less. locomotives rightsized

over we road gather mechanical there. decreased because and of then war could So significantly disruptions the intelligence room the our number the of

more you're and locomotives, cars you're idling we're when not idling the across So road. better And trains building capable trains, not wasting fuel.

increased So of additional and them of because utilization. our storing having our and pulling more fuel the constrained over-the-road capability out productivity asset discipline was resources,

deliberate So distribute impact a we events. on lasting locomotives We're fuel. at how dwelled work also looking our between

our systems and and reduction that distribution of drive those and our the with balancing locomotive out vendors, things self-supply opportunities we all So vendor ownership fuel. the arbitrage categories the structures, new how fleet that discipline

process, are that. the part further further We progresses, things we're expect at also in say those I we've pretty of towards automation the and and towards results. From our fleet -- we mechanical for the the with repair. started we'll it of right and in flight. as and a how that of on have locomotive have all year So doing to blessed energy part place systems car would the cycle significant management assets basis year. We're quasi-manual a that we're And really looking towards put get we year the now, latter latter our delivered traction fleet

So the that even we and how and how sorry, AER on we value -- the physical, locomotive production efforts visibility our bill or we've and from mechanical the done get car. our

get that? performance start we'll any in are strong on as and you year. those to So if have flight, things on through all really color see things perfect of we these Jason, the

Jason Zampi

No.

about be commitment John, mentioned, the accelerating you as are total think then of some think the areas key there our those moving to going on XXXX million as really -- productivity and those we key $XXX of -- that I think I into plus.

So that's great.

Operator

Bascome from comes question with Susquehanna. next Majors Your

Bascome Majors

of in X now. almost CEO been the you've seat Mark, months

a about months? and to you board first and what's XX planning your next management bit clearly Can everyone senior aligned #X the for priority annual as is the dynamics, through talk gone Board's a meetings. You've the Board CEO, where couple process little over XX is you

Mark George

a a members. yet engagement past Look, came And within of are got them majority beautiful Pascal. all really background. from has in We've the all pleased XX been unique our different the board see respect way remarkably quarters lot The Board shown Thanks, and to boardroom. months It that's avenues. unified. in mutual really being the from of congealed the I'm everybody's they've given new

So we've I and in the believe support They And strategy, management its objective, principal because they supportive results. questions they would their opportunities. on to are, just to I'm yielding it's they also the Board really team yesterday assembled, we as that say proud what had but in actually. And -- that the coach guide want help and we can meeting that know super they believe do can they they a where journey believe which see be as of.

fully Board by dynamic, think right supported the I'm thrilled well. So team now, feels the with as I and our management

Operator

Morgan question Shanker with Your Stanley. next comes Ravi from

Ravi Shanker

here. a Just clarification

see headwinds the that? the are course tariff mentioned being tailwinds that to year. hearing before you But what see rail the to of potentially into potentially You side and volumes do on of expect headwinds? the through Kind tariff a tailwind power we restocking you before shippers

Mark George

a around opinions to but different space, impact that we Ravi, things We even I certainly I the have reasonable different made while But view a business. they're day, a At move said transportation vary, the maybe -- of out. things where rail how with. think suddenly a their end tariffs respond We alternative uncertainty how mildly may these we from how And what play take subjected I can is think tariffs. people time, if disagree Ed perspective, on to economy. may And don't to have in the in manufacturer's over But out. U.S. know out producer's will the GDP. play tariffs, going perspective, they're are they the moved sources? play

it's that move border to And the it. is to domestically produced to import be GDP there an whether across onshoring, whether coming we're now or due being some as going

our And to in wash nimble play beauty is wherever could But the bit to So enough going volume. network to now be out the it net that it's terms the I supply source in kind is think from. of a different. adjust a change comes little of of

don't I whether baking tried little? it's I baking Ken it's to it's how I It's up manifest, we'll whether a don't international why move per domestic, ready we're you Ed, exactly and question, but as particular all in know going clean an that to a crossing we're be move. the border it, say nimble that just don't but in, think We that think we're enough. se. ask wouldn't So to headwind

Ed Boyle

all. at disagree don't I Look,

And talk different some our all how tied think Over But about look, it's think that you're international right, our to boss. trade. or tied tell leaves not. to But you're that of than our that less I Mark. And saying you would domestic customers X/X I on I opinions you're business think they exactly XX% manifest have not itself economy because let's my that's going exactly to right. bags. is I'm

economy they're whatever in opportunities, sales the We're our We be able going force most going to operational with And to the of to and frankly, that developing respond be we're domestic that capability now. international. or whether those to there enough policy delivers trade nimbleness we're delivers. have the make whatever to

Operator

comes question with . Imbro from Stephens. Next Daniel

Daniel Imbro

the on just coal one Maybe outlook.

bearish mentioned outlook versus few prior the your a slide in more times You expecting expectations meant deck.

stronger I of guess, given the you half on year. driving then back any can the talk update contract about results online And this XXXX software you're bringing outlook that what's there?

of when right I sort announced into numbers? way think should contribution think it it, to million that annually when was you about X tons and the . is still but flow that about

Ed Boyle

I I the think you're referring at couldn't hear right, to Is you beginning... Daniel? coal. that

Daniel Imbro

coal Yes, . side. the Sorry.

Mark George

we about price continuing. at what's that we we think the quarters, been the markets has coal international for forward when see of the look going first at under look and couple pressure curves, that's When now that with on we and thing

a risk particular that in downside probably there's think the dimension. for I market

the see. we'll have side, wait and volume to On

there's currently seaborne on terms that the of some clearly think side. I in downdraft demand

of side. domestic help gas for there's out which demand think on rates, nat gas nice probably the we've trajectory stockpile very I side. side, . plenty the on but We're had will then utility domestic that the couple the utility has on burn winter going which a still And weeks here, forward prices, of there closely, determine prices watching helped

now, There's the way right the I and up, upside curves cat. recent they've not think of moved indicated. go little bit variable nat if cap nat weeks. that's But an that's a are up important prices in

Ed Elkins

to was going question from we quarter the second . forward. and volumes coming your And customer, expect our new about on in second yes, see that

Operator

from Bernstein. comes question next with Your Vernon David

David Vernon

of forward a help us the we coal should kind question of secondary you in sort how for can be modeling Ed, average here then broader of kind moving So the RPU understand And team. sequentially.

kind of margin that year-over-year, bps anything is OR gains we seasonality in be performance. should around those If thinking should about of the showing up when improvement you're the XXX note of terms or there

that lot of to around going or is of kind getting I'm lend questions whether a be got export some hit from XQ falling all those contracts. just remarketing of coal together. They've to trying

what you that help shape out us If could hit the when XXXX? -- for to starts headwind

Ed Boyle

probably the kind is continues think I headwind and now going of Well, there forward.

As we get later the in year...

Mark George

He's asking about RPU. coal

Ed Boyle

the adjusting think now. keep we that year a to and think, should else into manifests to that's everyone our we're that we off, our about. Yes, we down just too. going in certainly we prices And the to models. It's going the see I what to models as term. near some downside seaborne talking there's But Longer baked I'm continue the term, down, still think medium probably be

Mark George

OR, that a momentum to at what range. And got original from our And service David, makes of strong of us on -- we've product that's guide and question really top lot the operational progress. confident our we're on end your

improvement that, out of and inflation, that point pressure points of basis improvement. in the that basis nearly points of So is the headwinds. face I'd depreciation XXX on from price XXX annual fuel OR

quarters, think the in I about just would there's takes individual the it in say you If puts and quarters.

that despite first incentive basis know XXX out, in increases, annual of deliver timing of the like of the the headwinds. ability so For confident we're when got But it the example, those. timing quarter, to volumes points you you've you of those again and average all improvement things seasonality wage comp in all

Daniel Imbro

momentum more that the year? seasonal is is of mentioned? push -- the some of some it those in you Or comment, first that of by factors Does the offset half

Jason Seidl

all operational our fronts. I'm to going, momentum, how really pleased I I that's momentum . referring on with think the is just and we're think,

Operator

question next Rosa Citigroup. with from comes Ari The

Ariel Rosa

extent through some strong given have your that -- of might just distorting of the of to in fourth volume seen then we perspective mentioned quarter, port we what or get did And forward to some what to kind add those some stoppages results in have you intermodal there. of the of or to in volume So manage pull resources port on flows. saw stoppages variability the kind I wanted to you costs of extent some variability of the add volume?

Ed Elkins

This Sure. Ed. is

resources as see to I really think, or hiccup quarters, in destinations, volume truly, think starts, much and handle but Coast turned defer we train terms without John, able West did it to were and more I'll we a some was and the of of during or third East I certainly that the additional fourth Coast, East to Coast back really for servicing other until commentary service rolling. Probably the anticipated long stoppage. attempting existing the that? make trains that with happen. on as fluidity which our John, Coast on East good we volume we biggest could sure up work kept didn't on to were any very was product, that And customers the thankfully, you incremental us challenge got

John Orr

We I handle it absolutely were agree to with your very assessment. able well.

a we're I little bit track There knew we're issue, in communicated that chance that and really think of us pretty gives effectively supply. car get slashiness but able soon smooth the to. and up as out to quickly a back on That the we a sector as market against. was was

Operator

Your next Jordan Alliger with from question Sachs. comes Goldman

Jordan Alliger

on least across time? that active . that even and tailwind sort of of adding is development and curious So just that put timing this upsize for incremental of the I'm week network, over some I your potential about you talking sort think $XXX,XXX of what's about at XXXX, to a or factored out carloads ago, of so into industrial the pipeline.

Mark George

the pipeline In that We industrial came themselves the facilities. And year we projects manifest team. powerful can with offer the just great but are production new offer. it really come. that online. out for development for year, think these customers X are we thing be have strong. to XXXX we value a I and service expansions nice, put very robust this just going about we to our very are quarter, is X Those full had for continues years process and many numbers pipeline facility represents that a And fourth the to those and pipeline our therefore, not testament locations And to that's the throughout hopefully,

Operator

are over management time. now further for the There will turn no questions closing I conference to at remarks. this

Mark George

connecting look the forward Okay. Thank safe. we appreciate really quarter. Be We you, to everyone. Take participating, and all care. throughout . you

Operator

gentlemen, Ladies We your disconnect ask you call lines. today. concludes that you this thank your participating and conference and for for

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