Margin and Earnings Outlook
Q: Can earnings and margins improve in Q2 despite Baltimore port closure?
A: Management believes they should be able to grow earnings sequentially from Q1 to Q2, even with the impact from the Baltimore port closure. They expect both top-line growth and strong incremental margins, while containing costs. However, export coal remains a headwind, with coal revenue per unit projected to decline by mid- to high single digits from Q1 to Q2 due to pricing pressures.

Operating Metrics Deterioration
Q: Why have velocity and dwell metrics worsened, and when will they improve?
A: The company acknowledges that current operating metrics are below expectations due to strict maintenance curfews and engineering programs that temporarily impacted train speed and dwell times. They are making adjustments, including refining work programs and splitting up tasks, and expect improvements over time. Despite metrics, customer service remains strong.

Coal Revenue Pressure
Q: What is the outlook for coal revenue per unit in Q2?
A: Coal pricing has declined, and management expects a mid- to high single-digit drop in coal revenue per unit from Q1 to Q2. This is due to both the Baltimore port impact and overall market pricing pressures in export coal.

Headcount and Labor Costs
Q: How will headcount and compensation per employee trend going forward?
A: Headcount is anticipated to remain relatively flat into Q2, with potential slight reductions in the second half through attrition. Compensation per employee is expected to decrease sequentially in Q2 due to lower winter-related costs and increased capital program activities. However, a 4.5% union wage increase will affect costs in the second half of the year.

Pricing Environment
Q: Is weak demand causing pressure on pricing and revenue per car?
A: Despite a challenging market and weak demand, management indicates that pricing remains stable. They continue to capture inflation and are focused on balancing price with volume growth. The first quarter results were satisfactory, and they remain on track with their pricing strategy.

Industrial Development Growth
Q: How is the industrial development pipeline contributing to growth?
A: The company is in the early stages of growth from over 100 new facilities that have opened. These projects, particularly in the aggregates and metals sectors, typically ramp up over 12 to 24 months and are expected to contribute to growth through 2024 and beyond.

Intermodal Volume Trends
Q: Why is international intermodal growth outpacing domestic, and what can improve domestic growth?
A: International intermodal saw double-digit growth due to easy comparisons from last year and the addition of new services and partnerships. The domestic market is more competitive with trucking, but the company performed well despite these challenges. An improvement in the trucking market could enhance domestic intermodal growth.

Baltimore Port Impact
Q: How is the Baltimore port closure affecting coal volumes and operations?
A: The Baltimore incident is expected to have a $25 million to $30 million net impact in the second quarter, primarily affecting coal shipments. The company is working to offset about one-third of this business by redirecting volumes to other terminals, such as Newport News, with minimal additional costs incurred.

Customer Relationships and Market Position
Q: Has uncertainty at competitors helped CSX gain volumes or strengthen customer relationships?
A: While not directly addressing competitor issues, management notes increased customer engagement and trust. Customers are opening up their supply chains and expressing appreciation for CSX's consistency, reliability, and improved service, which is leading to collaborative growth opportunities.

Intermodal Competitiveness
Q: What is needed to regain intermodal volume lost to trucking?
A: The value proposition for intermodal remains strong, though tighter due to competitive truck pricing. As the trucking market recovers, the company expects customer discussions to accelerate. CSX is confident that its compelling service offerings will lead to growth when the market improves.

Capital Allocation and Share Repurchases
Q: What is the company's approach to share repurchases moving forward?
A: The company remains committed to share repurchases, though buybacks were reduced in the first quarter due to a rapid increase in the stock price. They plan to be opportunistic, increasing buybacks when the stock price is favorable, and are committed to significant repurchases throughout the year.

Supply Chain Shifts and Industrial Opportunities
Q: What is driving the tenfold increase in industrial development opportunities?
A: Companies are reevaluating their supply chains post-pandemic, focusing on bringing production closer to end consumers. This shift is leading to significant investments in CSX's network, particularly benefiting from the valuable consumer markets they serve.

Port Dynamics and Trade Shifts
Q: Are there expectations for trade shifts between East and West Coast ports, and potential impacts?
A: Management does not anticipate significant trade moving from East to West Coast ports. There are substantial investments in East Coast ports, indicating strong demand. If shifts occur, CSX could see incremental opportunities, especially if freight moves over their railroad instead of by truck.

Customer Concerns Amid Competitor Uncertainty
Q: Are customers expressing concerns due to issues at other railroads?
A: Customers are seeking certainty and visibility in their supply chains. CSX is seeing increased willingness from customers to collaborate and share information, highlighting trust in CSX's service levels. The company remains focused on reliability and consistency to meet customer needs.

Employee Response to Operational Challenges
Q: How have employees contributed during operational disruptions like the Baltimore closure?
A: The company highlights strong employee engagement, with numerous staff volunteering to relocate temporarily to assist with operational adjustments following the Baltimore incident. This responsiveness reflects positively on the company's culture and commitment to customer service.