CSX Corporation

And the call over to today's speaker, Matthew Korn, Head of Investor Relations. You may begin your conference.

Thank you, Operator. Hello, everyone, and welcome to our second quarter earnings call. Joining me this afternoon are Joe Hendricks, President, Chief Executive Officer, Jamie Boychuk, Executive Vice President of Operations, Kevin Boone, Executive Vice President, Sales and Marketing, and Sean Pelkey, Executive Vice President and Chief Financial Officer. In the presentation accompanying this call, you will find our forward-looking disclosure on slide two, followed by our non-GAAP disclosure on slide three. And with that, it's my pleasure to introduce Mr. Joe Henrichs.

Thank you, Matthew, and good afternoon, everyone. Thank you for joining our conference call. Our performance over the second quarter met our expectations, led by the strong results of our merchandise business. As we had indicated at year end and again last quarter, We knew that we would have to manage through lower intermodal storage revenue and normalizing export coal prices. We expected intermodal volumes to be soft as imports slowed and destocking activity continued. That said, we also knew that we were gaining momentum with our customers, led by our improved service performance and in our own workplace as our one CSX efforts took hold. Our network continues to run well, and our company's initiatives, combined with our employees' hard work and commitment, are making a big difference in helping to set our railroad apart. There was much more to do, but our results this quarter show signs of the progress we are making as we lay the groundwork for long term growth and value creation. Slide five. Let's review the highlights for the second quarter. We moved over 1.5 million carloads in the second quarter, led by 3% volume growth in merchandise and 4% growth in coal, and our margins remained strong with an operating ratio below 60%, including the impact of the quality carriers trucking business. We generated $3.7 billion in revenue, which was 3% lower than the previous year and flat from the first quarter. Operating income decreased 13% year-over-year to $1.5 billion, and our earnings per share decreased by 9% to 49 cents. When making comparisons to last year, it's important to remember that our second quarter 2022 results included a $122 million gain representing 4 cents per share of EPS related to the Commonwealth of Virginia property sale. All in, this was a solid performance highlighted by great results in our core business. The fact that our team was able to drive 3% merchandise buying growth in such an uncertain macroeconomic market is a testament to what we are able to do when we work together. Now, moving on to slide 6. Earlier this month, CSX released its new 2022 ESG report, which highlights the tremendous progress that our team has made in moving our company forward. Since I started here last fall, You've heard me talk about 1CSX, about building a supportive and positive culture, and about the need to consider all of our stakeholders when measuring our success as a company. Many of you have asked me what this really means in practice. What does a railroad look like where its people feel valued and included, where its customers feel appreciated, and where the communities in which it operates feel respected? I think the pictures and highlights that you see here offer a small view into how we're making this happen here at CSX. To us, incorporating environmental, social, and governance considerations into the priorities of our company goes hand in hand with our one CSX focus, adding to the greater sense of purpose that we all share. These are real, authentic actions that we are taking today. We talk often about our environmental leadership. and our clear advantage here over trucks as a core part of our value proposition to our customers and our shareholders. By expanding our use of technology, conducting practical testing of alternative fuels, and offering support and encouragement to our suppliers, we continue to make progress. As we reported in our press release last week, we are testing biodiesel blends in locomotives in revenue service. Last month, You heard that we were in talks with CPKC to form a joint venture for the development of hydrogen-powered locomotives, which offer encouraging promise as a low-emissions fuel solution. What we probably do not talk enough about are all the incredible efforts made by our railroaders to build up the places in which we live and work. It has been a priority of ours to increase our company's positive cultural impact, and I am proud at how quickly the people of CSX have responded. As you see here, our volunteer hours are up substantially. Our CSX-sponsored community events have multiplied. And the number of people who we have been able to help and support has been incredible. I look forward to much more to come. There's one last item I'd like to mention. At CSX, safety is our top priority, and that's why we focus so much on our reported injury and accident rates. Our fundamental goal is to make sure that every one of our employees gets home safely every day. When that does not happen, and we lose one of our colleagues as we lost Derek Little last month, it affects us deeply. It's a reminder why we make so much effort on safety and how much more work we need to do. Now let me turn it over to the team.