Thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the CSX Corporation Q3 2024 Earnings Conference 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 during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Matthew Korn, Head of Investor Relations and Strategy. You may begin. Thank you, operator. Hello, everyone, and good afternoon. Welcome to our Q3 earnings call. Joining me on this call are Joe Hinrichs, President and CEO; Mike Cory, EVP and COO; Kevin Boone, EVP and CCO; and Sean Pelkey, EVP and CFO. In the presentation accompanying this call and available on our website, you will find slides with our forward-looking disclosures and our non-GAAP disclosures for your review. It is my pleasure to introduce Mr. Joe Hinrichs. All right. Thank you, Matthew, and hello, everyone, and thank you for joining our Q3 call today. First, I wanna thank our entire ONE CSX team, who have been tireless in helping our employees and their communities recover from the hardships caused by two hurricanes in a matter of weeks. Helene, in particular, had a big impact on our network, and we'll talk more about that today. We have largely recovered, and we have made sure that CSX has been there to support our rail owners who have needed assistance for themselves and their families. That said, there's more work that we will need to do to repair and replace some of the physical infrastructure that we lost, which Mike and Sean will discuss later on this call. Now, stepping back and looking at this entire quarter, I am proud of what we accomplished. Our aim was to grow volume, revenue, and operating margin compared to last year, and that is exactly what we delivered. Our Merchandise franchise continues to grow at an impressive pace, benefiting from our service leadership and the numerous initiatives that Kevin and his team are pursuing to bring new business to CSX. Operationally, our efficiency and cost controls remain solid, but we are still only getting started with some of the ways that we're using valuable real-time data to optimize our network. We have had our challenges. This quarter, we had to adapt and respond to significant weather events, equipment issues at our coal terminal, and lower diesel prices. Throughout, we've kept our focus on our long-term goal to deliver consistent, sustainable, profitable growth over time. Now, let's go over some of the highlights. On Slide one, it shows our key results from our Q3 compared to last year. Despite the severe weather, we were still able to post some very good results across the company. Looking across the highlights listed on this top line, total volume grew by 3% versus last year, led by strong performance in our core Merchandise business, where volume also grew by 3%. Merchandise revenue grew by an impressive 6%, supported by 3% growth in volume and favorable pricing. Our operating margin reached 37.4%, inclusive of our trucking business, and improved 180 basis points compared to last year, demonstrating strong year-over-year expansion as our guidance indicated. Now, these charts summarize a solid quarter for CSX. Total revenue reached over $3.6 billion for the quarter, up 1% from the same period last year, even with lower fuel surcharge and coal prices. Operating income increased by 7% compared to last year, as we delivered strong internal margins from top-line growth and cost control. Earnings per share grew by 12%, supported by solid results for the business and our commitment to capital returns. Our results this quarter demonstrate strong execution as we build powerful momentum behind our proven operating model. We remain motivated as a team, keeping in mind that I've told you since I joined CSX over two years ago, talented people working together as ONE CSX team with a common goal can accomplish just about anything. Now, I'll turn the call over to Mike to provide details around our operational performance. Thank you, Joe, and thanks to all of you for joining us today. So here's a rundown on the operating activities in the quarter. Let me start first, though, by thanking our ONE CSX team for their extremely hard work and their teamwork to deliver solid results through a challenging quarter at times and specifically in certain locations. So let's go to the first slide on safety. For employee injuries, not much has changed since the last quarter in terms of metrics. Although we see a higher frequency than our desired target, we're finding the injury severity rate is lower, and as a result, we've seen a reduction in lost days of work for injured employees. For FRA train accidents, we continue to see a year-over-year decrease in incidents. Our biggest improvement has been driven by a reduction in Human Factor yard train accidents. Through our SAFE CSX initiative, we're improving our ability to reduce workplace exposures, and this will continue to drive positive results across the network. We recorded our lowest number of human factor train accidents in September, and human factor incidents are our leading cause, and that progress is really great, and it's a great achievement by our employees here at CSX. So looking at the next slide, our railroad remains fluid, albeit we have had and still have some weather-related challenges. Our overall velocity, considering the effects of the weather, shows the resiliency of our network. Our ability to maintain our fluidity came directly from the effective response of our field forces and our ops teams. We managed changes to our service plan that provided needed service to our customers in an efficient manner throughout this period. Collectively, we were able to ensure our strategy of safe restoration of service was accomplished without injury or accident. While network speed is extremely important, our focus has been equally strong, ensuring our major engineering work gets accomplished according to the plan. With multiple weather constraints, we were able to stay on plan while maintaining our network velocity. While our dwell metric was affected by weather, we did see an increase of 3% more carloads and moved it with 3% less train starts.... So we continue to manage the inventories in our yards for our customers, and always, always look for a more efficient way to move the cars. Weather aside, the team is focused on service and efficiency, and the lessons learned from our response and actions as a team will certainly help in the development of our operating leaders going forward. Over to the last slide. We continue to work with our sales and marketing team to align our operations with the needs of our customers. Excellent service and cost discipline are always at the forefront. Our metrics do reflect weather-related difficulties. However, our field forces, as I mentioned earlier, worked extremely efficiently to get us back operating as fast as possible. But the big thing is we did this collectively as a team, with our service groups staying close to our customers and communicating important two-way information throughout. Our vast network resilience and faster recovery over our network has allowed us to remain in line with our customers' needs throughout this weather, and I'm very proud of how well the entire team has come together and worked to provide service throughout some challenging disruptions. Communication between our service network and field operation teams is very strong and continues to strengthen. These last couple of months have provided plenty of opportunities to show what we can do with and for our customers. So all in all, I'm very proud of the team, and I'm thankful for their efforts in this tough but very good quarter. Thank you, and over to you, Kevin. All right. Thank you, Mike. In the Q3, as Joe and Mike both mentioned, we were presented with a number of challenges from storms, a strike at our East Coast ports, and another temporary outage at our Curtis Bay Terminal. We're very proud of the level of communication throughout the CSX team and our focus on serving our customers through these challenges. This was highlighted by our most recent customer survey, out just this week, with our Net Promoter Score at the highest level since we started measuring. With major storms impacting our network, we are working with our customers on the rebuilding efforts to ensure CSX is able to deliver the building materials and other essential supplies to the areas where they are needed. There's been a lot to manage through, even for a railroad with the experience of CSX. But working together, we've been able to find creative solutions to keep freight flowing. At a high level, market conditions remain a bit mixed. We are seeing continued strength in some of our Merchandise markets, and while truck rates appear to have bottomed, there remains a soft market. Diesel and natural gas prices remain low, and benchmark coal prices have moderated. All that said, we grew total volumes and revenue over the quarter as our service-led initiatives continue to bring new business to our railroad. The team has continued to build momentum by working with our customers, and we're going to continue to push hard against a mixed economic backdrop. I'm excited about our upcoming Investor Day, where you will hear more from our commercial leaders who are laying the foundation to deliver profitable growth for CSX. Let's first review our Merchandise business, as shown on Slide seven. As a whole, Merchandise continues to be a great contributor for us. As we anticipated, volume growth accelerated this quarter, supported by new business wins, truck conversions, and the ramp-up of industrial development projects. Revenue gained 6% compared to last year, driven by a 3% gain in volume and solid pricing. Note that with lower diesel prices, fuel surcharge was a drag on both total revenue and reported RPU. On a core base, basis, or same-store basis, our Merchandise pricing remains solid. Chemicals continues its positive performance for the year, delivering a 9% volume increase year-over-year. We've seen consistent, broad strength across plastics, industrials, industrial chemicals, LPGs, and wastes. In Ag and Food, the second-half inflection has taken off as we had hoped, with volume also up 9%, led by grain and feed ingredients as customers turn to the Midwest for supplies. Close collaboration with our operating team has ensured consistent service as the strong seasonal demand has kicked in. Those products also saw great year-over-year growth, with healthy improvement in pulpboard demand contributing to a 9% volume gain. Some of this new forest product business is shorter length of haul, which was a factor in 3Q reported RPU. Results in our Minerals business were mixed, with volume up 1%. Cement is doing very well, supported by construction demand and the ramp-up of new customer facilities. But wet, rainy weather was a modest drag on aggregate shipments over the quarter. All that said, the underlying long-term trend remains very favorable. Other markets we serve are facing more near-term challenges. As we've highlighted through much of this year, the metals market, particularly steel, remains soft, with sluggish demand, ample supply, and low commodity prices. One reason for softer metals demand is a weaker than anticipated automotive market, where conditions have deteriorated. Volumes inflected negatively for us this quarter, and mix was also a modest headwind to auto RPU. As Joe mentioned at an investor conference last month, the industry has seen consumer demand diminish by high retail prices and interest rates, which has led to higher dealer inventories and slower production. Our belief is that interest rate easing cycle will help these markets normalize. Lastly, total fertilizer volume continued to trend negatively in the Q3, though we were able to pick up some favorable spot moves. For the remainder of the year, we expect to see a carryover of solid year-over-year momentum in Chemicals, Ag and Food, Forest Products, and Minerals, while trends in Metals continue to be challenged in the near term. Let's turn to Slide 8 to review the Coal business. For the Q3, total Coal revenue declined 7%, a 2% decline in volume. As shown in our financial report, we saw export and domestic shipments move in opposite directions, with export tonnage increasing by 10% year-over-year and domestic tonnage decreasing by 12%. Low natural gas prices continue to limit the utility burn. All-in Coal RPU was down 5% compared to last year, and 7.5% sequentially, in line with our guidance last quarter, and largely driven by the declines in global benchmarks for metallurgical coal. Looking ahead to the Q4, markets seem relatively stable. Utility stockpiles are sufficient, and though natural gas prices recently approached the $3 mark, we do not anticipate any near-term step-up in volumes. Export demand remains consistent, particularly from buyers in Asia, and the Australian met benchmark has stabilized around the $200 level toward the end of the last quarter. Given the lag in our export contracts, we anticipate a modest- to- low single-digit sequential decline of all-in coal RPU in the Q4. Turning to Intermodal on Slide 9, total revenue declined 2% year-over-year, while volume increased 3%. International shipments grew at a solid mid-single- digit rate, while domestic shipments ended up effectively flat for the quarter. As we talked about in past calls, we did see a shift towards West Coast arrivals over the summer, which lifted our transcontinental interchange business to the east. We also opened up new business with several customer partners. Overall, we did see the Domestic business gain modest momentum over the quarter, but activity with some of our main channel partners remains relatively soft. Total Intermodal RPU decreased 5%, largely due to lower fuel surcharge and a mix with international outgrowing the domestic business. We're pleased to see a relatively quick short-term solution for the ILA, as we did see the effects on our volumes during the strike. The trucking backdrop has remained challenged through twenty twenty-four, but we do see signs of market conditions bottoming, and are well prepared to handle more volumes as the market continues to improve and the team continues to find new business for the CSX Intermodal network. Summing it up, the team performed very well this quarter, especially given the number of external challenges we faced. Still, conditions for the Q4 are mixed, with certain markets continuing to show positive momentum while other markets remain challenged, including those markets more impacted by the current interest rate environment. What will remain consistent throughout market cycles is our commitment to serving our customers, and we remain confident that our creativity will continue to create opportunities next year and well into the future. We look forward to sharing more with you in November. Now I'll turn it over to Sean. Thank you, Kevin, and good afternoon. I'd like to start by reiterating our appreciation for the tireless work of our fellow railroaders to help friends, communities, and the network recover from the devastating impacts of the recent hurricanes. From a business standpoint, Helene impacted revenue by $10 million-$15 million at the end of the Q3 and drove a small amount of incremental expense. It appears the Q4 storm-related impacts will be larger than Q3, with a current estimate of around $50 million. That includes storm recovery and rerouting costs near $20 million, as well as roughly $30 million of net revenue impacts. Additionally, a significant rebuild process is already underway for miles of track and multiple bridges across our Blue Ridge Subdivision. While we're still evaluating the scale and timing of these capital expenditures, our early read is that rebuild costs will likely exceed a total of $200 million, and the construction will take us into next year. Now to the discussion of the Q3 results. Capitalizing on powerful momentum generated over the last several quarters, the ONE CSX team delivered 7% operating income growth in the quarter, with EPS up double- digits. Our proven operating model and increasingly collaborative approach with customers delivered profitable growth at strong incremental margins. In fact, combined Merchandise and Intermodal revenue, excluding fuel, has grown by at least 3% for seven consecutive quarters, including 5% growth in the most recent quarter. Total revenue increased by 1%, impacted by lower coal revenue, as well as declines in fuel recovery, other revenue, and trucking. Expense momentum continued as costs were down 2%, with more detail to come on the next slide. Interest and other was stable compared to the prior year, while income tax expense increased $16 million, with higher pre-tax earnings partly offset by a lower effective rate. Let's now turn to the next slide and take a closer look at expenses. Total Q3 expense fell by $36 million. While lower fuel prices were a key driver, other costs were up just slightly, as efficiency gains and other items mostly offset costs from inflation and 3% volume growth. Turning to the individual line items, labor and fringe was up $45 million due to inflation and higher total headcount. The sequential cost increase from the second quarter was driven by the July 1st union wage increase, along with higher incentive compensation. Employment levels have remained stable throughout this year, with carload growth of 3% in excess of 2% headcount growth in Q3. I would also note about half of the year-over-year headcount increase is from Quality trucking conversions of outside party drivers to company drivers. Adjusting for this, headcount would have been up just 1% versus the prior year. Purchase services and other expense decreased by $25 million, driven by lower casualty expense and a favorable inventory adjustment in the quarter, with ongoing efficiency gains mostly offsetting inflation. Depreciation was up $13 million due to a larger asset base. Fuel costs decreased $73 million, driven by a lower gallon price and improved efficiency. The operating team delivered our best quarter of fuel efficiency in three years, benefiting from both tactical operating initiatives and increased utilization of fuel-saving technology. Equipment and rents decreased by $3 million, while property gains were unfavorable by $7 million. Now turning to cash flow and distributions on Slide 13. Free cash flow continues to be strong at over $2.2 billion. Investing for the safety, reliability, and long-term growth of our railroad continues to be our first priority use of capital. After fully funding these investments, we remain committed to our balanced and opportunistic approach to returning cash and have distributed over $1.9 billion to our shareholders year-to-date. Economic profit highlights our priority to grow operating income while maintaining capital discipline and pursuing high-return investments. While lower year-to-date, economic profit grew in the Q3. We remain focused on increasing economic profit over the long term and are confident that focus aligns with the interests of our shareholders. With that, let me turn it back to Joe for his closing remarks. All right. Thank you, Sean. Now we will finish our prepared remarks by going over the guidance updates for the remainder of the year. As I outlined at the beginning of the call, we are proud of what our ONE CSX team delivered in the Q3. As planned, we grew volumes, revenue, and operating margin. Now, going into the Q4, near-term conditions look modestly more challenging. As I mentioned at an investor conference last month, we knew that lower diesel prices and the decline in global benchmarks for met coal would be a drag on revenue over the second half and the Q4 specifically. Since then, we've gone through two hurricanes in our service region, excuse me, and have also seen volumes soften in a couple key customer segments like metals and automotive, a bit more than we were expecting. Practically, this means that we expect modest volume growth in the Q4, supported by favorable markets like chemicals and ag, that Kevin talked about, that continue to perform very well for us. Lower fuel and coal prices, together with that modest volume growth, are leading us to expect a slight decrease in total revenue for the Q4. As we show here, we estimate that lower fuel surcharge and the total effects of a slightly softer coal market will lead to roughly $200 million in revenue effects year-over-year, just on their own. Our Merchandise franchise continues to run very well, and our operations team is pushing ahead with efficiency measures that are having real benefits. However, slightly lower revenue, combined with additional expenses out as we reroute and rebuild after the hurricanes, are going to limit our near-term margin gains. We're still aiming for $2.5 billion in total CapEx this year, but as Sean described, we will likely see some additional capital needs for hurricane rebuilding, some of which will occur in 2024 calendar year. Finally, there's no change to our commitment to a balanced, opportunistic approach to capital returns via buybacks and a growing dividend. Let me close with this: We've given many updates today. There is some near-term uncertainty in the market, and we are rebuilding after two major hurricanes, so we have had to adjust our short-term assumptions in response. All that said, the bottom line is that CSX is running very well, and we are building momentum across the railroad. This continues across the second half of 2024, and we'll keep building into 2025. We are excited that in just a few weeks, we'll be hosting many of you at our Investor Day in Amelia Island, where we're going to give you more detail on our strategies to deliver sustainable, profitable growth. We encourage you to bring your best questions for the whole team. For now, we're ready to answer your questions about the quarter. Matthew, please start the Q&A process. Thank you, Joe. We will now proceed to our question- and- answer session. As you all can appreciate, to make sure that everyone has the opportunity to take part in the time that we have, we ask you to please limit yourselves to one and only one question. Operator, we're ready to start the process. Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Your first question comes from the line of Brian Ossenbeck of JP Morgan. Your line is open. Hey, good afternoon, and thanks for taking the question. Just wanted to ask a big-picture question about price cost and your ability, or how strongly you think you can get back to a positive spread on price cost next year. You have the labor negotiations that have already set, a price for increase on, on the headcount side... or sorry, on the average comp side. So maybe you can give us a little bit of sense in terms of how those conversations are going with customers now that that marker has already been set in the market, and if there's anything on the other side that you hope to get out of those negotiations when you work towards more of the work rest rules. Thank you. Brian, it's Sean. I'll start and then kind of kick it over to Kevin to talk about conversations with the customers. But just so, when you think about price cost, we've been consistent saying all year long, you know, that spread between dollars of price and cost of inflation has been positive all year long and about as positive as we've seen, you know, in the last decade. So, you know, we're not necessarily seeing anything negative in that regard and not seeing a turn in that either. So that's very favorable. In terms of kind of the setup in the inflationary environment for next year, wage inflation, you know, we expect north of 4% next year. These tentative agreements, some of which have already been ratified, are at 4% midyear next year. We have 4.5% we just increased here in July, so that'll carry forward. That's 4.25% for next year for wages. Health and welfare expenses look like they may actually be lower than that. So I think, I think wage inflation, including health and welfare, will actually be less than 4%. T hen inflation across the rest of the book, likely to kind of be in line with what you're seeing in terms of overall PPI, you know, maybe call it 2.5%-3%, somewhere in that ballpark. So it's not like the equation is extraordinarily challenging a nd, you know, I think, kick it over to Kevin to talk about conversations and how that's going with the customers. Yeah, I think there's, you know, a couple of factors. Certainly, I think we've been highly successful this year and exceeded our plan, coming into the year, despite a trucking market that obviously has been more persistently down than what we had thought. So I think that's probably an opportunity next year. So it's a watch item, but probably more an opportunity than a risk, hopefully, as we move through the year and, you know, that's where we're competing today, more and more is, versus that truck, and so that would be a helpful dynamic for us. But overall, we do expect inflation to come down over time, and that would be reflected in some of our price, but we still obviously look for ways to you know cover our costs and do those things in the right way, but really focus on delivering service. And if we deliver the right service, and that service continues to improve, then the customers see the value in that, and we're able to price to that service. And Brian, it's Joe, one last thing. You mentioned work rules at the end there, a three-part question. The reality is, you know, Mike, myself, many of us believe that in order to have the real meaningful conversations with our union partners on safety and work rules, you have to get beyond the wages and the benefits conversation, and that's one of the reasons why we've been so fortunate to reach these tentative agreements and be able to get past that, so that we can then spend the time over the next several years working together on improving our efficiency, improving our safety, but also listening to our employees on their needs for work rules, for, you know, for time, work-life balance, those kind of things for scheduling. We're excited about the opportunity to do that in partnership, once we get past the kind of national bargaining type topics of general wage increases and benefits. You know, Sean mentioned that we're really excited about the fact that we're actually gonna be able to reduce some of the healthcare-related costs associated with our union employees next year, so a lot more to come on that. Thanks. Thank you. Your next question comes from the line of Ari Rosa of Citi. Your line is open. Great. Thank you so much for taking the question. So, gents, I'm curious, obviously, we're dealing with a loose trucking market. It's been that way for a while. In terms of upside to intermodal pricing for next year, maybe you could give us some indication on how those conversations are progressing with customers. And then, obviously, 1% revenue growth is a little bit soft. Is there anything you can do in terms of mix to maybe accelerate that beyond that kind of low single- digit type number, you know, whether it's focusing more on the Merchandise side or, you know, again, fixing that mix on the intermodal pricing? Thanks. Yeah, well, obviously, the success we've had in Merchandise is a very good mix factor for our business, and you'll hear in November that there's a lot of exciting things that we see within our Merchandise markets and what we're doing, and the teams have got a lot of great work. But I won't. I don't wanna preempt that, today, and we'll share that in November. But, you know, when we think about intermodal pricing, you know, there was an intermodal customer of ours that spoke yesterday, and they're certainly closer to the market dynamics on a day-to-day basis than maybe we are. But, you know, I think there is some hope that at least we bottomed here, and, you know, at some point next year we would anticipate some increases 'cause, you know, the truckers out there aren't very profitable right now, and they end up having to cover their costs at some point. So we're seeing probably slower than people expected, supply coming out of the market, and that will adjust, and I think that will provide opportunities to convert more volume in the East and hopefully at better rates. And as you know, in many cases, we're tied to that. Some we have some spot market business, and others we follow the price as our customers benefit from that. So it'll be a gradual, you know, path forward, but I do think it's probably a better backdrop than what we saw in 2024. Thank you. Your next question comes from the line of Jonathan Chappell of Evercore ISI. Your line is open. Thank you. Good afternoon. Sean, you threw a lot of numbers at us on the short-terming stuff, $200 million from fuel and coal, and then the $50 million from the hurricane impact. I know it's still early in the quarter. I know there's a lot that can happen, but when you take those things, mix in kind of the softer auto and metals, when you talk about revenue being down moderately and operating margin reducing, so I'm guessing that's deteriorate sequentially, what kind of magnitude are we looking at there? Are we talking about, you know, tens of basis points or substantially greater based on what you see today? Yeah, Jonathan, there are a lot of numbers, so yes, and you got them all right. So thank you. So Joe mentioned the revenue headwinds. Those are year-over-year in terms of fuel and coal. You know, that probably translates into about $100 million of operating income headwinds year-over-year in Q4, and then add on that, you know, what we're estimating for now to be roughly $50 million from the hurricane. That's a significant headwind on a year-over-year basis that'll make it challenging to grow operating income, challenging to grow margins. What that means on a sequential basis is, you know, normally you would see seasonality, Q3 to Q4 margins might get a little bit worse. You know, they'll probably be worse than normal seasonality as a result of all the dynamics that we're seeing there, including the impact of the storms. In terms of how much worse, you know, I think we're still working through cleanup and recovery, still hoping that we can recover some of the revenue that's been lost. Obviously, you know, keeping focused on efficiency efforts. Mike mentioned, you know, even with volume up 3%, we took starts down 3% in the Q3. So there's a lot of momentum there. There's some things that we can do to help offset it, but it will certainly be worse than normal seasonality in terms of margins and operating income Q3 to Q4. Your next question comes from the line of Scott Group of Wolfe Research. Your line is open. Hey, thanks. Afternoon. So, Mike, as you're trying to balance service and efficiency, any thoughts on headcount trends from here and overall sort of cost trends? And then, Sean, I know you had a comment about the comp per employee stepping up sequentially. Any thoughts on how to think about that going forward? Thank you. Hey there, Scott. Yeah. Let's we'll start with headcount. You know, first of all, our focus is on retention when it comes to headcount. Overall, we're hiring for attrition, people leaving, and it's actually at an escalated rate than what we want. So that's a big focus, is to bring that rate down, 'cause there's churn in the headcount, people that are here for two years and so, and then they leave. Second, though, we are, we're good in, you know, pretty much every location with a couple of locations in the Northeast that we're still hiring for. It's not a big number, but, I don't see. I see our headcount getting better for that matter, as we get more fluid. You know, you gotta remember, and or maybe you don't, but in July, we probably had our best operating and customer service metric month throughout the year, and then we got into all these difficulties. So getting the railway back in shape here over the next few weeks is job number one. The cost that you referred to, yeah, that our focus is to continue to deliver the service, but make sure that we're extremely efficient and not hung up on anything other than the cost it takes us to get there and what they need. And so I see the cost continuing to be a betterment there. It's just with the disruption to our network, as Sean has mentioned, this next quarter is gonna be, you know, not where we wanna be, but this you know the approach we've taken where we've, you know, minimized the amount of starts through all this disruption, still handled more volume. I see more of that. Yes, no question. Yeah, and I'd just add on, on the headcount piece there, Scott, we normally, well, at least last year, you know, we saw an increase in headcount from Q3 to Q4. We'll probably see an increase this year, just very modest. And the reason for that is you've got the train and engine hiring pipeline. What we're hiring for right now, essentially, is midyear next year, vacation peak. So those folks will get marked up and qualified right about the time, and attrition gets a little bit higher about that time. So, but that'll be modest. We'll still expect volume to grow in excess of headcount, especially when you normalize for the, for the quality company driver piece that I talked about. In terms of comp per employee, we normally see a little bit of a step-up Q3 to Q4, and that's related to a few different factors. You know, the first is that you start winding up some of your capital programs, so we have employees that charge more of their time to operating expense at that time of the year, vacations as well. T hen, you know, I would add on to that this year, the impacts of the storm driving some higher overtime in the early weeks of the quarter here. So all those factors. I don't think it's gonna be significant, but we should see a little bit of an increase in labor per employee. Your next question comes from the line of Tom Wadewitz of UBS. Your line is open. Great. Yeah, good afternoon. Wanted to just, I guess, two questions really for Kevin. How do you think about the sensitivity of, you know, you doing this multi-year work and, you know, industrial development, a lot of, you know, kind of, you know, I guess long time horizon work. Do you think there's some degree of sensitivity to those projects, to the cycle? You know, it does seem like, you know, you talk about a mixed outlook and it seems like there've been some weakening in certain markets in 3Q. Is that something that, you know, people slow down projects? I don't know if there is some kind of election-related impact, but just wanted to see if you could offer any thoughts about, you know, maybe how cycle and other uncertainty might affect how rapidly projects come on in, you know, 2025, 2026. Thank you. Yeah, I think it's certainly a factor, and I think you have seen, you know, we've seen announcements obviously on the EV side, which is actually, you'll, you'll see this in November, a very small portion of our portfolio, and we've adjusted for that when you see the portfolio. But that is, that is a factor. I mean, with the economics, what the economy is doing at the time will either accelerate or decelerate some of these. But when the shovel's in the ground and the capital's already being put to work, those projects want to, you know, obviously go to utilization and, and get a return. And we're seeing, you know, a lot of these projects have shovels in the ground currently, so we have a lot of visibility that they're gonna happen. Could they slip by three months or six months? I think that's possible. We're not. I don't think we're seeing it in a broad way, other than maybe the EV, obviously, announcements that we've seen. But those are, you know, six to 12 months ago. So, yeah, I think that's a factor, but, I think we feel very, very confident, given what we've seen and the capital already spent on a lot of these larger projects for us, that those are gonna be tailwinds for us, and we'll give you a lot more visibility to that, in November. Your next question comes from the line of Brandon Oglenski of Barclays. Your line is open. Hey, good afternoon, and thanks for taking the question. Joe, I know you addressed this with the first one, but maybe I think it's worth coming back to, you know, the new five-year agreements that you guys signed with, I think, 3.5% inflation locked in. A lot of investors just question, like, why go early there, especially as inflation's coming down. Like, couldn't you get a better deal if you waited? But, you know, in your response, you said, like, there's things we're looking to do differently here. And I know when you came to this industry two years ago, you said, "Look, labor relations are something I wanna focus on." So can you elaborate on what you hope to get out of this on the other end? Sure, Brandon. Thanks. I mean, first of all, you know when, we all travel the network and talk to our employees, I can tell you the single largest thing other than safety, which is always, you know, a topic of conversation, that employees told us was they didn't like what happened last time. They didn't feel in any way, shape, or form part of one team and didn't feel like they were appreciated and valued. They went three years without a raise during very highly inflationary time periods and during COVID, when they were, you know, essential workers, and all the things that happened there. Both our union presidents that we spoke to, and the union leaders, and the employees all said, "We don't wanna do that again." I can tell you, having been there on the day they were voting, Congress told us, "Don't come back here again." That's a long way of saying that it's really important to remember that, you know, no one was satisfied or happy with what happened last time. If we just go on the same path we've always been, we'll repeat that, and we'll say, once again, everyone was unhappy. And as Mike talked about, you know, one of the most important things that we need to do for our network is stabilize our employment levels, get the experienced people to stay, and create an environment where people wanna be here to help us provide great service and do it safely and efficiently. All those come from people who are motivated to be part of the team, but also who have experience and stay here. So we sat down as an industry and talked a lot about what happened last time, and we endeavored as a coalition to try and reach an agreement, voluntary agreement early with willing union partners, which there were several. We weren't able to do it as a, as a coalition, but then quickly we were able to do that with CSX, and as you saw, Norfolk Southern and BNSF followed pretty quickly. The good news here is, you know, there's been a basically, a pattern established, for lack of a better word, of, you know, what the economics are gonna be. Sean mentioned there's gonna be some healthcare reduction costs coming to us and to our employees next year, which is great. But also we, we start with a 4% next year, but the fifth year is a 3.0%, and that's really important. So it goes 4%, 3.75%, 3.5%, 3.25%, 3%. That's really important because, yes, inflation's coming down. We have to remember that we're in an environment where people are seeing these headlines from Boeing or the ILA or other things that are bigger numbers because they're going back to even periods before COVID, in some cases, where they didn't get, you know, extensive raises. So there's a lot of mixed messaging out there. Our view is, this is the right approach for CSX. It's the right approach for how we're working as ONE CSX team to make sure our employees feel valued, and appreciated, and respected, and listened to. And that our belief is that you get the national agreements out of the way on the wages and benefits, and then you can go to work on how you work together to improve the efficiency of the network, work on safety, as Mike talked about, and also, you know, listen to other issues that need to be resolved. We have five years to work on that now, without the noise of the national negotiations. If you look at what happened last time, we never really got to many of the local work rule stuff because took three years through the national agreement. So that's how we're looking at it. You know, I think you can see the efficiency that we saw in the Q3, you know, and the incremental margins on the volume in the Q3 were substantial, and that's the power of this network when we have our employees and everybody working together to serve the customer efficiently. Your next question comes from the line of Christian Wetherbee of Wells Fargo. Your line is open. Yeah. Hey, thanks. Good afternoon, guys. You know, I know it sounds like Q4, from a margin standpoint, difficult to make year-over-year headway, given some of the headwinds that you're talking about, which makes sense. I guess, when you think about it for a full year, I think that probably means, you know, sort of little margin in 2024. I know I'm asking you guys to look out a little bit here, but kinda conceptually, with the environment that we have today, with sort of weakness in some areas, maybe some strengths and some company-specific strengths in other parts of your network, is this the type of environment that you think you can consistently grow margins in? I guess, what are the sort of puts and takes that you think you need to see as we move into 2025 for that to continue to happen or resume to happen again? Yeah, Christian, thanks for your question. Obviously, for 2025 specifically, we're still in the middle of the planning process, so it's a bit early to kinda definitively say anything. But, you know, what I would say, broadly speaking, in longer term, and we'll highlight this at the investor conference in a few weeks as well, is the setup for CSX, in terms of where the service product is at, how that's impacting the customer experience, and the interactions that that's creating, which translate into growth opportunities, not to mention continuing to be able to price, at or above inflation, is very supportive. The other piece of that, of course, is the fact that the network has capacity. We have locomotives. We have crews. Like Mike mentioned, there are some places we're still hiring, but for the most part, we're only hiring for attrition. We've got line of road capacity. So, you know, you take all that together, it's a good setup for strong incremental margins. There's always things we can't control that could make it more challenging or easier for us to achieve margin improvement and operating income growth, which frankly is the first goal. Operating margin is really sort of the outcome of all of it as we grow into the existing capacity. Fuel prices are down. You know, if you look at where they're expected to be next year, it should be another headwind for us. Export coal prices seem to have stabilized, but if you carry that out to next year, that would be a headwind for us next year. You know, we're gonna do a lot of construction on the Howard Street Tunnel next year in Baltimore that will cause some reroutes, some network disruption, not to mention the rebuild coming out of these storms. So there's some things that'll, you know, make it a little more challenging. We, you know, we may see some headwind or some tailwinds from the trucking market. You know, we're watching that closely and hopeful that, you know, the environment there is a little easier next year than it was the previous year. But certainly, longer term, having the capacity to grow and continuing to deliver a consistent high level of service to the customer is a winning equation for us. Your next question comes from the line of Daniel Imbro of Stephens. Your line is open. Yeah. Hey, good evening, guys. Thanks for taking our questions. I guess, Kevin, I wanted to dig into just the volume growth side. I mean, you mentioned some share wins and truck-to-rail conversions. I'm curious if you can just add more color around maybe the cadence of wins or what categories those fell into during the quarter. And then, I think there's some concerns out among investors around Merchandise pricing. So, I'm curious, how is Merchandise pricing out in the market today, and are you seeing business that you're winning being more price competitive than past bids? If If there's any change in that as you win this business? Thanks. Yeah, we certainly compete every day, right? And we have a great service product that's only getting better, and that's obviously been re-emphasized by the, you know, some of the surveys that we do with our customers. So that's certainly a lot easier environment to sell into that than an environment where your service isn't great and, you know, we experienced that a couple of years ago, where we were challenged with, obviously, headcount and some other things. So nothing's changed from that perspective, and the team is focused on that. We wanna deliver value to the customer, and the value, you know, when we're able to do that through service, the customers are willing to pay for it and we're always looking for ways where we can provide value outside of price. Can we cycle their assets and reduce their capital spend, and do other things that create efficiencies for our customers? Those are great discussions that we have all the time, and probably more so today than with Mike and his team being very helpful in those conversations. So there's not a big dramatic change in that. You know, as we go into next year, as I mentioned, you know, the trucking market. Sean touched on this. I think that's helpful. We are successfully converting truck volume in our Merchandise franchise, which I can say is probably more than what we've done since I've been in this role, and we've got a momentum around that. What could even influence that higher is certainly a tighter trucking market, where customers aren't seeing savings by doing nothing. You know, when you sit around and you have to do nothing, you're getting savings, you're not as compelled to maybe move some of that freight over to the rail. When that changes and that environment changes, I think the team is really ready to capitalize on that. So I think that's... We're in the, hopefully, in the early innings of that. But despite all of those headwinds on the trucking market, we have converted in areas, across the board, and you're seeing it in our numbers. Forest Products and other areas, Metals and Equipment, we expect some great conversion there over time, by the team. We see those opportunities more and more as we move in the next year and the years beyond that. Your next question comes from the line of Jordan Alliger of Goldman Sachs. Your line is open. Yeah, hi. Just a question: I think you indicated in your remarks that you're seeing a modest improvement or uptick, or something along those lines for domestic intermodal. I'm wondering if you can give a little more color on that, you know, how that looking now relative to international, which I know had been really driving things in intermodal, and is it enough to sort of move the needle on your yield for intermodal at this point? Thanks. I think, you know, at this point, we're safe to call, you know, that it feels like the bottoming, certainly, and, you know, that gives us hope that we've reached that. What the inflection will be and look like, that's a watch item for us. You know, there is talk of pull forward. We're not hearing about that as much, but that's TBD. We expect, hopefully a more normalized peak season, but that's a watch item for us. But, we're optimistic that that will occur, and we're planning for that as well. So, we do think, you know, the fundamentals don't support a lot of the trucking supply out there, and that's gonna rebalance. Certainly, probably took a lot longer to rebalance given some of the influx of profitability they experienced during the pandemic. They were sitting on a lot more cash to ride this cycle out than maybe previous cycles, so hopefully I think you'll learn through the earnings calls with the other truckers and others that, you know, they're seeing some stability as well, but we're seeing stability. I wouldn't say in an inflection at this point. Your next question comes from the line of Stephanie Moore of Jefferies. Your line is open. Great. Good afternoon. Thank you. You know, I was hoping you could talk a little bit about some of the, the diverted volumes that you called out ahead of just the labor negotiations and, and potential strike in the East Coast. You know, maybe if you could talk about the impact that you did see, you know, during the quarter, and then kind of what you're hearing and seeing now in terms of those volumes, you know, returning back to, to normal flows and, and normal to the East Coast. Thanks. Yeah, I mean, it was a little bit modest. We did see some shipments naturally move over to the West Coast, and then we would've benefited from that moving from the west to the east, but it was relatively modest. You know, we did see some impact, obviously, with the port shut down on the East Coast. You saw that for a few days, and then I gotta tell you that our operating group on the intermodal side was ready to ramp back up immediately. So very little disruption coming out of it, but those were some lost days that we would expect to recover through the rest of the quarter, but it did impact us on the near-term basis. Your next question comes from the line of Ken Hoexter of Bank of America. Your line is open. Hey, great. Good afternoon. Maybe talk a little bit about export coal demand and the stability in the market, given the growing importance and volatility. You know, how stable can we look at this level of demand? 'Cause obviously we talked about the benchmark pricing and what's happened on the yield side. And then, Joe, Mike, you mentioned the service levels multiple times. How do we align the service levels with what we get to see, which is the erosion in the on-time originations and arrivals down into the low 70s, upper 60s? Maybe you can just walk us through that. Thanks. Export coal, my favorite subject. I think, you know, when you look at this market over a long period of time, in any cyclical market, you see supply response when the prices are really good, and then you obviously see demand response when the macro is not so great globally. What I do think is different going forward is you don't see the supply response like you did in the past. Obviously, the financing and other investments aren't there to bring on new volume into the market, and I think that's a better backdrop for the market we serve and the mines that we serve today in a global competitive environment. So I'm hopeful that that creates more price stability longer term. And, you know, the other thing is, their costs have risen globally as well, and so I think the natural price for coal is probably gonna stabilize above where it is today, and that gives me hope that we'll see better pricing environment going forward. Certainly what you've seen here recently is China stimulus, and that's been the talk, right? And they are a big consumer of coal in the global market, and you know, that has given some optimism there that that could recover. So we compete in the global market. Our customers compete in the global market, but I do think the supply or lack of supply response going forward is probably a healthier environment for us. You know, it makes me optimistic on our met business in particular that we'll see that more stable in the future. Hey, good afternoon, Ken. Oh, sorry, there was a - it was a two-part question, so, operator. Look, Ken, so to put it as basic as I can, we, we really focus on, on the CSD number. So if you want a number, that's the one, that's our first and last mile. That's the one we say, customer basically lets us know what they need, and we bring it. So how we get the cars there on the trains, regardless of the weather conditions, we, you know, we have, we have a big automotive network that we, we don't necessarily. We run a scheduled plan, but it changes quite a bit between loading. So we don't change the train schedules other than to modify to where they're going to. So the on-time performance isn't as important as the car cycle, and that's how we look at it. So you're right. We wanna be in, like, we want. You know, if seven out of ten trains are running on time, what we're watching for is to make sure the cars that are on those trains are getting to where they need to fulfill the customer's needs. That. You know, you can take dwell, you can take car velocity, all those things you're trying to balance with, first of all, the service product you've promised to deliver, and that's really back to the CSD number. That's the one we look for that. And then how we get it there, we're trying to do it the cheapest and most efficient way. So, I'm not. I'm not saying it's not important, but we have been very those last, not just this weather here, but this last six months since I've been here. We have been really trying to find a way to find the efficiency and the service, and the numbers right now. I'm not gonna say they're blurred. They're all important, but we're balancing each one, and yes, disruptions hurt our on-time performance, and that has been reflected this last quarter. Like I said, if you go back to July, you could start to see where we're going. So it is a focus, but it's one of a few that we balance to get those end results. Thank you. Your next question comes from the line of Ben Nolan of Stifel. Your line is open. Yeah, thanks for taking the question. I wanted to ask a little bit just on pricing. It seems like the one area or one of the areas where you actually have been able to get a little bit better pricing is on the chemical side. Chemicals specifically, is that just a function of a healthy market where there is some pricing ability? Is it maybe starting to see some impact from quality, or just maybe talk through how the chemical part of the business is evolving. Yeah, I think there's a lot of factors that obviously play into RPU, length of haul, all those things. I don't see the chemical market really that different from some of our other Merchandise markets where we've been successful. So, I know, you know, optically, maybe on an RPU basis, that appears to be the case, but, I think, you know, when you look at across that Merchandise portfolio, there's really not a big deviation between the markets. You know, as our service continues to get better, as I mentioned before, as we deliver, as we can cycle their cars faster and save them capital, all those things factor in and deliver value to the customer in other ways where we can monetize that through price. The line of Jason Seidl of TD Cowen, your line is open. Thank you, gentlemen. Good afternoon. Appreciate you squeezing me in here. Wanted to talk a little bit about intermodal yields. I mean, there was a lot of movement of freight from the East Coast to the West Coast in anticipation of the port strike.... Do you see that switching back? And if so, what sort of impact should we expect on the yields? And then, I guess I'll throw a quick one in here, too. How are you feeling going to that January 15th date with the ILA? Do you think it could be strike fears 2.0? Well, you know, I don't have any inside look at how that's going, but it certainly will be a watch item for us. I'm hopeful that, you know, obviously, an agreement will become well before that and create some and eliminate some of the uncertainty that that could create again for us. You know, when I think about freight and the movement of freight, it naturally wants to move to, you know, a certain port and efficiently, and so you've seen the East Coast outperform the West Coast over time. Some of that's because of the manufacturing shifts you're seeing. Some of that away from China and other parts of the world, and more naturally wants to land on the East Coast. I think that continues from everything as you see us trying to decouple from China and those factors, and that's a great thing for us. If you look at the investments that are being made on the East Coast versus the West Coast, I think those are supportive of for our growth, and we'll participate in that as well. But in many ways, we're somewhat agnostic if you know, again, if freight wants to move in the west, then move to the East Coast, that's not a bad thing for us. That traditionally would truck. And so that's an opportunity for us. I do think you know, over time, as we continue to see the East Coast volumes continue to increase, I think we can push more into Chicago and other areas. That's an opportunity, and we'll see that further play out here over time. Then, the inland port strategy that we have, it's gonna create a lot of value, and it's gonna you know open up opportunities for our customers to look differently at shifting even more freight over to the East Coast, 'cause we can efficiently move it inland with our East Coast ports in a very, very efficient way. So I don't think you know we'll get through this noise on the, obviously, the labor negotiations, but overall, I think the trend continues, and we're gonna benefit from that as a railroad. Your next question comes from the line of Bascome Majors of Susquehanna. Your line is open. Bascome, perhaps your line is on mute? Your next question comes from the line of Walter Spracklin of RBC Capital. Your line is open. Yeah, thanks very much. Good afternoon, everyone. Just curious on the competitive marketplace. I know you-- there's a lot of discussion on truck, but I know your main competitor on the rail side is affecting quite some meaningful changes that is leading to impacts on their service. I'm wondering if you're seeing that come up in the marketplace at all. Are you seeing any... You know, is there any larger contracts that are coming up that you see as either an opportunity or a risk here? I'm just curious to get a better handle on how much of an improvement in your competitor's operations is affecting your or impacting you in terms of winning or losing business in the marketplace. Yeah, I think, look, we, you know, as I mentioned before, we compete every day. We compete knowing that we have a very, very good service that continues to improve, and I think the customers are seeing that stability in the leadership team that we have built, the consistency of our message and what we're trying to achieve, and they understand our objectives, which is to grow with them, and I think that's very helpful when you get into those discussions, that they understand where we're going, and that there's still gonna be stability among the leadership team and the team that we've built, so you know, we continue to have a very, very effective cost base. We can compete when we need to compete, both on service and cost, and I think in those cases, we're gonna be very, very competitive, and we're gonna be winners in that situation. So, you know, we're focused, obviously, on other opportunities, too. We wanna grow the pie. We wanna grow the market. We wanna move the freight that's not moving on rail as well and I think having those discussions along with retaining our own business is really helpful in retaining that business. So, that's where we're focused on right now, is growing the pie, and you know, I think we're gonna have a lot of success. We've had a lot of success this year, and we're gonna continue to have that success as we move in the next year and the years beyond that. Your next question comes from the line of David Vernon of Sanford C. Bernstein. Your line is open. Hey, good afternoon, guys, and thank you for hosting the call and taking the questions. So Joe, it sounds like you're invested a lot in the culture part of the equation. I'm wondering if you can share some perspective on how some of the churn rates or turnover rates, however you guys measure them internally, internal net promoter scores, that kind of stuff, has changed as a result of those investments? Yeah, thanks, David. I mean, first of all, we look at many metrics, but as we've talked about many times, culture is kind of hard to measure. I've likened it to love, which is, you kind of know it when you feel it, but you can't really measure it. That being said, you know, we see it in many ways. For example, we do do net promoter scores with our employees, and both on our management side and our union side, those numbers have moved meaningfully in the last two years. They're not where we want them to be on the union side, and we still have work to do there, but they've come up significantly from where they were just two years ago. Mike mentioned what we're looking at in the form of attrition, both in our new hires, but also longer-term hires. The attrition rate on early new hires is really important to us because we invest, you know, six-plus months of training in them as a conductor, and if we lose them after all that, we have to start again, especially at some key sites.... So that's really important. But it's more than that. I mean, you know, if you look at the efficiency gains we're getting on, you know, quarter over quarter over quarter this year, and importantly, you know, Kevin mentioned it, the best Net Promoter Scores we've ever had since we've been measuring on our customer side. Those are all impacted by attitudes and the, you know, the work that our employees do. And if they feel part of the team and feel listened to and valued and appreciated, they're gonna give us a better outcome for our customers and better efficiency and a safer environment for everybody. So it's, you know, it's hard to measure with one thing, but I can tell you that we feel very strongly that we're seeing the results of the efforts that we put in and the results that come from that. We, you know, we've had, you know, 20, roughly 20 family days, with over 30,000 people attending. It's the kind of environment where people want to be a part of. People are telling us over and over again, they're proud to wear CSX gear in their communities again. All those things are important for retention and attracting talent, but they're also important for how people work together. I've said many times, this is a Service business, and Service business must really work hard on their cultures and their employee engagement because the employees are the ones who provide the service. If you would have seen all the notes we've received this year from our employees, thanking us for reaching out to every employee in regions impacted by the hurricanes, making sure they need anything, whether it's a generator or it's water or anything. The notes I'm receiving and our team is receiving, and they know they're not a number. Those things are important in our business. They're important for attention—for attrition. I'm sorry, they're important for retention, but they're also important for the energy that we have that feeds into ultimately our customers. We believe it's working, and you can see it in the numbers. You know, Sean mentioned, you know, we have seven quarters in a row now where we've grown, well, you know, Merchandise and intermodal revenue by 3% or more. That's seven quarters in a row, in an environment that's been, you know, complicated and you also see it in the resiliency of our network and how quickly we respond to issues, and how quickly we can get back up and running. I mean, I wanna, last thing, and you've heard a lot about weather and hurricanes today, and you probably don't wanna hear any more about it, but the people that have been around here a long time, thirty plus years, are telling me that the impact of Helene on our network is the second most impactful hurricane they've seen at CSX, Katrina being the worst. That tells you the scale of things we're dealing with, and yet, we're talking about an impact of, you know, $50 million in the quarter, as Sean noted. Obviously, we have some significant capital costs to rebuild the network, but that's people working together with a spirit and a motivation that doesn't come if people don't feel like they're part of ONE CSX team. So also been, you know, getting national agreements done before they expire, that's never happened in the railroad industry. Those are examples of things that are happening because of our culture and because of how we're working together. Ultimately, that plays out in the customer service we deliver, in the safety we actually deliver and Mike mentioned it, our severity rate is down dramatically in injuries over the last several months. That's really important. The injury rate hasn't really moved, but the severity rates moved dramatically. That's the kind of thing you get when people are working together, and their culture builds from there. Thank you. This concludes our time that we have for Q&A, and with no further questions, this concludes today's conference call. 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