CSX Corporation

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2022 CSX Corporation earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star 1. Thank you. It is now my pleasure to turn today's call over to Mr. Matthew Korn, head of investor relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter call. Joining me on today's call are Jim Foote, our president and chief executive officer, Kevin Boone, our executive vice president of sales and marketing, Jamie Boychuk, executive vice president of operations, and Sean Pelkey, executive vice president and chief financial officer. In our presentation, you will find our forward-looking disclosure on slide two, followed by our non-GAAP disclosures. And with that, it'll be my pleasure to introduce our president and chief executive officer, Jim Foote.

Thank you, Matthew. And thank you everyone for joining us today. I'll start by expressing my thanks to all of CSX's employees for the hard work during another quarter of tough operating conditions. And I am very pleased to welcome everyone from Pan Am who joined the CSX team in June. We look forward to working together to build new single line service across a combined network. Our second quarter results were solid as we continued to benefit from strong customer demand and firm pricing. But our ability to hire and retain new workers, which is vital to improving our service and growing the business, remains challenged. We are not alone in facing this problem. The labor market is tight. Prospective recruits have many job options. And the pandemic has had a profound effect on employees' work and lifestyle preferences. Our hiring process has been steady but slow. We will not let up in our efforts to grow our engineer and conductor headcount and improve network fluidity to pre-pandemic levels. Since the time of our last earnings call, uncertainty and volatility have clearly increased in the financial markets and in parts of the economy. Inflationary pressures have moved higher and interest rates have risen. We're staying diligent by keeping in close touch with our customers, monitoring our order rates, and constantly updating our forecasts. But what remains constant is that right now, as we have seen this entire year, there is more demand for rail service than what we are able to satisfy. The efforts we are making now to grow our workforce and add capacity to our network are not just to satisfy current demand. We are investing because we see plentiful long-term opportunities for rail, driven by customer demand for more fuel-efficient, environmentally-friendly transportation options and growth in domestic manufacturing. We're excited about our potential, but to realize it, we must focus on near-term execution. Our entire team is aligned in our goals, and I look forward to keeping you updated in our progress in the quarters ahead. Turning to our presentation, let's start with slide four, which highlights our second quarter key financial results. We moved nearly 1.6 million carloads in the quarter and generated over $3.8 billion in revenue. Operating income was $1.7 billion, which includes a $122 million gain from our Virginia real estate sale. Recall that in the second quarter of 2021, we recognized a much larger $349 million gain from this transaction. Pains per share increased 4% to 54 cents a share, which also includes a smaller contribution from the Virginia sale compared to a year ago. And our operating ratio was 55.4%, which includes a 320 basis point tailwind from the Virginia real estate game, but also includes combined headwinds of roughly 450 basis points from the impact of quality carriers, higher fuel prices, and Pan Am acquisition costs. I'll now turn it over to Kevin, Jamie, and Sean for details.