CSX Corp at Robert W Baird Global Industrial Conference Transcript

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

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : I guess maybe just to set the table, what both do you see as the structural advantages of the CSX business and network?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : And I know that the team has messaged the importance of culture and the cultural change that's gone on over the past few years. Can you give us some anecdotes or how would you describe the importance of that as you both see it?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : That's a great perspective. Obviously, over the last week, we had a change in administration with the election outcome. [Help] early days, obviously, but help us understand the impacts as you see them from potential tariffs, tax reform and deregulation?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Yes. What's more to come there. Mike, help us understand what you're seeing as you look at the service metrics and performance of the network, as Sean referred to, lower train starts with volume growth in Q3, encouraging? Is there more opportunity to take resources off the network? What do you see today?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : That's a great perspective. If we think about the Cumberland example, how did that -- how did you discover that? You're taking route miles out. Where do you see more opportunity for optimization across the network?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : To stay on that topic had the opportunity and get fortune to tour the Waycross facility last week. So we're in the yard tower, sitting next to the yardmaster and just watching these cars come in, uncouple, roll over the hump down into the bull. Just a picture of --

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : And the error rate, you tell me close to zero?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : But yet, Waycross was cited as a yard, your largest terminal, where there is more opportunity for efficiency. Where do you see that? What do you see when you're in the tower?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Yes, it's a fascinating place. But it's not just all decades of experience. You're using a lot of technology?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : It looks like a trading floor, screens everywhere. How are you using technology to improve operations, the customer experience?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : That's great. Obviously, you need a strong service foundation and culture, but the benefit there should yield growth. Talk a little bit more about the Site Select program. You've been at this for years. It takes time to install that production capacity for your customers. But what's the visibility you have from a growth standpoint as you think about your merchandise business?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : And the other big growth driver you talked about was the modal conversion opportunity. You've got an advantage with East Coast port connectivity; you're building more port access in lands and working with those national accounts. Why is that attractive business for the rail just given the lower yield dynamic but talk about the profitability of that business and the growth opportunity you see?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Clearly significant long-term growth opportunity. As you think about the fourth quarter, how are volume trends tracking relative to expectations? And describe the progress you've made in remediating some of the challenges after the worst hurricane since Katrina?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Yes, significant disruption, but resilient performance, nonetheless. How do you get paid for that service? I appreciated the chart last week in showing those pricing dollars ahead of inflation. But help us understand those pricing conversations as you're having them with customers and your ability to realize the value you're delivering?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : And where do you see you outlined some big buckets for potential optimization and further efficiency gains, talking about asset utilization, fuel, safety, discretionary nonlabor costs. Where do you -- how do you size that opportunity within those various buckets?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Yes, I'm glad you brought that up, Mike. Labor productivity has to be a huge opportunity. But how are you training the next generation of railroaders. I talked to Casey, and I enjoyed that conversation last week as well. But it's very specialized skill set, how do you transfer your knowledge, decades of experience so we've got the next generation ready to go?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : That's great. And Sean, is obviously nets to your three-year outlook as you look at a CAGR for high single, low double-digit earnings growth. There are some unique factors that may tail into '25, but '26 and '27 look good as you realize some of those growth benefits. Help us understand the puts and takes as you see it over that three-year horizon?

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : Yes, I look forward to that long-term benefit. I guess with the remaining time, just be interested in how you express your confidence in the ability for the CSX network to realize this growth potential. It's been a challenge for the industry historically but help us understand the confidence in your potential to chase it down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 1:55PM, CSX.OQ - CSX Corp at Robert W Baird Global Industrial Conference

Question: Garrett Holland - Robert W. Baird & Co., Inc. - Analyst : It's great perspective. With that, we'll pause there. Thank you so much, Mike. Thanks, Sean. Thanks for the CSX team for being here and hope all of you have a great day two of the conference. Thank you.