CSX Corporation

I would now like to turn the conference over to Matthew Korn, Head of Investor Relations and Strategy. You may begin.

Thank you, JL. Hello, everyone, and good afternoon. Welcome to our second quarter earnings call. Joining me this afternoon are Joe Hendricks, President and Chief Executive Officer, Mike Corey, Executive Vice President and Chief Operating Officer, Kevin Boone, Executive Vice President and Chief Commercial Officer, and Sean Pelkey, Executive Vice and Chief Financial Officer. In the presentation accompanying this call, you will find slides with our forward-looking disclosures and our non-GAAP disclosures for your review. Also, please note that our 10Q has been filed and is available on our website. With that, it is now my pleasure to introduce Mr. Joe Henrichs.

All right, thank you, Matthew, and hello, everyone. Thank you for joining our second quarter call today. Before we start, I want to acknowledge and appreciate all our CSX employees who are out there working throughout the Southeast United States as we deal with the weather effects from Hurricane Debbie. We are prioritizing the safety of our employees and our communities in everything we do. Now, this was a strong quarter for CSX. I am pleased that our results reflect the momentum that we are building as a one CSX team. And I am proud to see how teams all across our railroad are working together in better and more effective ways than ever before. Operationally, we are developing initiatives to take an excellent scheduled railroading model and make it safer, leaner, and more cost-effective, while providing the consistency and flexibility that our growing customer base demands. And commercially, our sales and marketing organization is creating new, more targeted methods for us to go to market, create partnerships, and use our leading value proposition to convert customers onto CSX Rail. Now, there is much we have accomplished so far this year, and we are eager to maintain and build on our momentum over the rest of the year. We keep reminding the entire OneCSX team that when we are aligned with each other and work together as one team, there is really nothing we cannot achieve. Our employees, our customers, and our shareholders are seeing how we are growing the business, controlling costs, leading in customer service, and leveraging our network capacity in ways we never could before. The successful culture we are building at CSX is delivering positive business outcomes. Now, we can go over some of the highlights. Let's go to slide one. On slide one, we show that some of the key results from our second quarter compared to the revised results from past periods. Later on this call, Sean will provide more detail on the review of the accounting treatment for engineering scrap and certain engineering support labor as described in our financial report. Total volume grew by 2%. With our intermodal franchise again leading the unit growth of 5% versus last year. And we're proud to achieve this result, even with the constraints at the Port of Baltimore that impacted our coal shipments. Our coal team did an excellent job finding creative ways to respond to the Key Bridge collapse and deliver for our customers. Our operating margin reached 39.1%, which represents a 280 basis point sequential improvement. Revenue of just over $3.7 billion was flat compared to the second quarter of 2023 and up modestly over the last quarter as strong merchandise pricing and volume growth offset lower coal prices and decline in other revenue. Operating income was 1% lower than last year but up by 8% sequentially as our efficiency efforts helped reduce expense. Our earnings per share were flat versus last year and up by 9% sequentially. Overall, this was a good quarter that was right in line with our expectations. Had we not faced the incident in Baltimore, our operating income would have been higher year over year. Our challenge now is to keep moving forward by focusing on our execution, even as markets fluctuate and unexpected events occur, as they always do.