CSX Corp at JPMorgan Industrials Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Ossenbeck - JPMorgan - Analyst : So a lot of good detail. To start off, Sean, I think, just to focus a little bit more on the near term for the time being. So you've got the $350 million headwind that you laid out on the last earnings call. We're pretty clear about what that meant, but obviously it's been a tough start for the network and for the industry on a weather basis as well here, so any more specific thoughts you can offer at least to how the year has started, particularly the first quarter, which we know is always tough for the rail industry, but specifically to you guys here?

Question: Brian Ossenbeck - JPMorgan - Analyst : And when we talk about all the uncertainty that's out there from the tariff headlines. I mean I don't know if any have come across this morning as we're speaking, but it's hard for the network and for customers to adapt to that, so what have your conversations been with folks as you've gone through this in the first couple of months of the year? And you had the slide with autos having a little bit of volatility or off to a slow start in the January time frame. Was that related to kind of the stop and the start of the tariffs? But I'd love to hear just how you and Mike are planning to -- with the customers, to adjust to that. Because it's a bit of a whiplash. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 11:30AM, CSX.OQ - CSX Corp at JPMorgan Industrials Conference

Question: Brian Ossenbeck - JPMorgan - Analyst : So when you think about the commodities or end markets that could be exposed to the tariffs as they're written, which is a big if, how that changes or if it changes, what are some of the ones you more -- you mentioned metals, potentially a bit of an uplift. What are some of the top 5 ones that you're focused on? I imagine maybe a little bit of a concern from a retaliatory perspective on China, for maybe export ag and coal, but what are the ones that, I guess, you and Kevin are focused on from a end market perspective?

Question: Brian Ossenbeck - JPMorgan - Analyst : One other big wild card we're watching for the time being is just the potential to levy some fees on the China vessels coming into the U.S. and -- obviously not a direct impact but certainly a pretty big indirect one I would expect if that were to happen. So when you speak to your ocean carriers and everybody else in that supply chain, do they have a read on what that might do? And how would that affect the CSX network?

Question: Brian Ossenbeck - JPMorgan - Analyst : So on the met coal and, I guess, export coal specifically, last year, had some closures. You had a shiploader break. You had obviously the bridge collapse, so tough year last year. It sounds like the first quarter is maybe off to a little bit of a soft start, but is there -- you already talked about the headwinds year-over-year, so is there room just to have a little bit of an improvement just because last year was so difficult?

Question: Brian Ossenbeck - JPMorgan - Analyst : Can you talk a little bit about the domestic market for intermodal and the truck conversion? Because it's more of a theme. And it sounds like it's actually getting some momentum. Maybe it's the service products you guys have had out there for a while, but what's driving that? And I guess, kind of more importantly, how do you think it can stick? Because it's -- you said it's a pretty weak truck market, so the fact that we're seeing it now is worth the question.

Question: Brian Ossenbeck - JPMorgan - Analyst : And on the domestic side, in particular with the early start of the bid season here -- or early in the bid season, rather, how do you feel your channel partners are faring? Anything you can do to help them? I'm sure the service, product, communication are helping, but what's the sense as we get underway here for bid season for that group in particular? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 11:30AM, CSX.OQ - CSX Corp at JPMorgan Industrials Conference

Question: Brian Ossenbeck - JPMorgan - Analyst : With all the stuff that's happened over the last couple of years with the ports and the labor uncertainty, I would assume that we get a little bit of a share shift back to the Gulf Coast and to the East Coast, but clearly you can handle transcon and interchange, anyway, so what are you guys planning for? What do you see right now? And I guess, ultimately, how will that impact the network if we were to see sort of a normalization or reversion of that [share shift]?

Question: Brian Ossenbeck - JPMorgan - Analyst : Maybe you can talk a little bit about the industrial development pipeline. You guys have been pretty vocal about that adding 1 point or 2 of growth per year, over the years, you talked about at the Investor Day. Has any of that really shifted or changed given all the uncertainty here? Or those are just long-lead projects that take time, anyway.

Question: Brian Ossenbeck - JPMorgan - Analyst : So cargo theft isn't something we really talk about on earnings calls, but the more we talk to shippers and go to these conferences, it comes up almost all the time. And it's getting more coverage in the press as well, so how do you think about that at CSX? How does the industry address that? And is this really as big of concern as it seems to be when it comes from a shipper perspective?

Question: Brian Ossenbeck - JPMorgan - Analyst : So you mentioned some of the productivity initiatives earlier and Cumberland yard. And how are those progressing so far? I think we heard a lot of them at the Investor Day. One that was pretty interesting as well was just the real-time visibility, I think, Mike was talking about into the network. It sounds like it's a pretty big initiative, so anything else that gets you excited as you look forward the rest of the year here?

Question: Brian Ossenbeck - JPMorgan - Analyst : Maybe just give a little bit of color on pricing and how it's flowing throughout the start of the year. Obviously the truck market is not really helping too much, but I would imagine a better service product can also help move the needle a little bit on that as well. And then on the other side, you did talk about costs, about the productivity, about the crew starts coming down, so maybe just thoughts on general inflation and how that started to begin the year relative to where you thought it would be.

Question: Brian Ossenbeck - JPMorgan - Analyst : Okay, so 5% below plan but still above expectations...

Question: Brian Ossenbeck - JPMorgan - Analyst : Okay, okay. Maybe we can wrap up just with a little bit on the Howard Street Tunnel because, like you said, we've heard about it for quite some time. And at the Investor Day, it's all pulled forward in a pretty accelerated fashion. So you did outline some of the, I guess, engineering that you had to go through, but the train starts coming down, the rerouting -- you've laid out the costs, but what are you going to do in terms of like the revenue side? Is there going to be a disruption on service? Like maybe you can explain that a little bit more. And then you did give some opportunities, but like is there a bigger market we should be thinking about that now that -- when that's done, that's now available to CSX as it hasn't been in the past?

Question: Brian Ossenbeck - JPMorgan - Analyst : Okay, well, that's a good place to wrap up. Since we're out of time, we probably should, anyway, but thanks very much, Sean, for kicking us off here. We appreciate you being here.