CSX at 18th Annual Global Transportation & Industrials Conference: Strategic Growth Plans

On Tuesday, 20 May 2025, CSX Corporation (NASDAQ:CSX) participated in the 18th Annual Global Transportation & Industrials Conference. Led by Chief Commercial Officer Kevin Boone, the discussion centered on CSX’s strategic initiatives to enhance service, reduce costs, and capitalize on market opportunities. While the company faces challenges in certain sectors, it remains optimistic about achieving positive volume growth through improved operations and strategic investments.

Key Takeaways

• CSX anticipates positive volume growth for the year, driven by intermodal, aggregates, and grain markets.
• Ongoing infrastructure projects, such as the Howard Street Tunnel, are expected to enhance service and network fluidity.
• The company is focused on achieving inflation-plus pricing in the medium to long term.
• Despite Q1 challenges, CSX expects sequential improvements in service and cost performance throughout the year.
• Long-term earnings growth is projected, supported by industrial development projects and infrastructure enhancements.

Operational Updates

CSX highlighted several operational updates, focusing on recent volume trends and market dynamics:

• Intermodal volumes are expected to surge in Q3 due to tariff relief in China.
• Strong performance in aggregates and grain markets, particularly in the Southeast.
• Coal demand remains robust, driven by domestic needs and harsh winter conditions.
• Challenges persist in the chemical and forest products sectors, with anticipated improvements later in the year.

Boone attributed Q1 service pressures to significant storms and construction on key network lines. Adjustments are underway to improve intermodal transit times, with expectations for sequential service enhancements as infrastructure projects are completed.

Future Outlook

CSX’s future outlook is anchored in strategic investments and infrastructure projects:

• The Howard Street Tunnel project is on track for Q4 completion, enabling double-stack train operations by Q1 next year.
• Investment years 2024-2025 will see projects ramping up, with a large steel plant contributing by 2027.
• CSX is well-positioned to benefit from East Coast port activity and decoupling from China.
• The company aims for high single-digit to low double-digit earnings growth over the next three years, contingent on a stable macro environment.

Pricing and Yield Analysis

Pricing dynamics and yield trends were key discussion points:

• CSX aims to exceed cost inflation in merchandise pricing, despite trucking market softness impacting intermodal rates.
• Export coal pricing headwinds are expected to ease by year-end, contributing to yield moderation.
• The company remains confident in sustaining inflation-plus pricing over the medium to long term.

Margin and Cost Focus

CSX is committed to improving margins through cost efficiencies and revenue growth:

• Margins are currently 800 basis points worse than pre-pandemic levels.
• The company is focused on enhancing network fluidity to naturally reduce costs.
• Sequential margin improvement is anticipated as service enhancements take effect and coal headwinds subside.

Conclusion

For a comprehensive understanding of CSX’s strategic plans and operational insights, readers are encouraged to refer to the full transcript provided below.

Full transcript - 18th Annual Global Transportation & Industrials Conference:

Unidentified speaker: Fantastic. All right.

We’re going get going with our next session with CSX. Really happy to have Kevin Boone, chief commercial officer, back at our conference. Thank you, Kevin, for for being here again. I’m gonna pass it to you for some opening comments, and then we will get right into it.

Kevin Boone, chief commercial officer, CSX: Okay. I don’t have a lot of opening comments. I do wanna Matthew Korn’s joining us here. I would like to say the award winning Matthew Korn. He leads our IR and strategy.

Great to be here. He’ll be supporting me all day. Look, I’ve been at this conference for a number of years. It’s great to be back. I’ve been in a number of different venues.

Always good discussion and a lot going on in the world that we can discuss. Clearly, a lot of policy that’s changing trade flows and other things that I’m sure we’ll get into, but a lot of exciting things that are happening also at the company. And we’ll talk about some of the challenges that have occurred here over the last quarter or two, what we’re doing to solve those issues and some of the optimism that we have as we move out of ’twenty five into ’twenty six and ’twenty seven.

Unidentified speaker: Fantastic. All right. So I always we always start pretty short term near term, just talking about recent volume trends, and we’ll get into all the other big things to be talking about. So we’re starting seemingly starting the quarter pretty well from a volume standpoint. Volumes are tracking up, I think, over 3% quarter to date.

What is from your perspective, what’s doing better than you would have thought? Anything doing worse than you would have thought?

Kevin Boone, chief commercial officer, CSX: Yeah. I think that’s a fluid question. Obviously, expectations are changing pretty rapidly in market to market, but intermodal has clearly been a bright spot. We’ll probably see a lull here as we get into the next month. And then as you’ve heard in the news, we expect a lot of volume coming into the ports here as we move into July and into the third quarter with the ninety day, obviously, relief on the tariffs from China.

And we’ve heard from a number of customers, there’s 1,500,000 loaded containers ready to go. And so we’re seeing that in the market right now, so we expect that to happen. From market to market, let’s move around. Aggregates is a very, very strong market. We continue to see strength in the Southeast.

A lot of road infrastructure activity. We’re staying up against that volume pretty well, probably some opportunities there from a network perspective. Grain is a very, very strong market. We’re starting to see a lot better performance from our network on the grain side the last couple of weeks, and we see additional opportunity there. I guess on the other side, obviously, coal continues to be strong as well.

We are seeing some more domestic demand, so we’re looking at moving a few more sets into our system thoughtfully, obviously, some of the challenges the Blue Ridge sub and our Street Tunnel create. So we want to do that in a very thoughtful, network aware way. But we see opportunities on the domestic side that will benefit us. And we’ve had, you know, we’ve had some issues on the mine side. We have two mines that are out currently.

One of them should come back and hopefully operational in the third quarter and then the other one probably late this year into next year. Chemicals has been a little bit we’ve seen some choppiness in the chemical side. We do have one particular large customer that’s been down. Their production should be back up this week, and we’ll start to see that ramp back up. But that was fairly significant for our network and a lot of other moving parts that we’re trying to watch and stay up against.

Forest Products is probably the one where we’ve seen some near term weakness, just some more idling maintenance outages as they’re trying to, you know, figure out where the market goes. Some optimism as we move in the back half of the year, but we’ve seen some paper mills and box plants slow down here probably in the last two to three weeks. So that’s probably on the watch item list for us.

Unidentified speaker: Great. So there’s been this very well sort of publicized import cliff into The US. It doesn’t feel like we’ve seen that show up in rail volumes yet. And I guess the question is, is it is it is yet? Is it a yet?

And it’s we’re gonna start to see it over the next few weeks, and there’s just a natural lag of when it comes into a port versus when it shows up on a rail? Or is there just not gonna be the same degree of volatility in even in international intermodal volume is what we’ve what we’re seeing on on on the ocean side.

Kevin Boone, chief commercial officer, CSX: Yeah. I think cliff is a strong word. We’ll see some softness on the on our port side of our business, and that hasn’t yet to show up, especially on the East Coast yet. But I do think there is strong inventory levels on warehouses, particularly on the West Coast and in California, where we’ll continue to see shipments. There was a lot of anticipation that this was going to happen, so you had some pre stocking that will help our domestic intermodal business, I think, the next few weeks kind of hang in there as we see this lull in the import side.

Unidentified speaker: And then does that mean if we have some healthier inventories and we don’t see a big drop off as should we then not count on a big spike in volume in later in Q2 or in Q3 as this next wave of imports comes in? Or do you think we can sort of see a big benefit to the volume as we look out to Q3?

Kevin Boone, chief commercial officer, CSX: Yeah. We’ll certainly see a benefit. I think the magnitude is still a debating item right now, but we’ll see some healthy growth, I think, as we move into later July, you know, maybe into August is our anticipation. And then I think the question is, are we going to see a second kind of pause, you know, if we don’t get more clarity on on the tariffs, obviously.

Unidentified speaker: And then I know you’ve talked about positive volume growth for the year. Are you still comfortable with that sort of view? And I guess, how dependent in your mind is your ability to grow volume on macro versus, hey, we are if we can just get some better service, we can grow volume just because we’re under serving demand right now.

Kevin Boone, chief commercial officer, CSX: Yeah. I don’t think our you know, when we came into the year, we were expecting a macro environment that was improving. We certainly can’t have a macro environment that falls off a cliff necessarily, and that’s not our expectation. And we’re not seeing that, just to be clear. But we do think, as a service, as the network becomes more fluid, as we gain speed on our network, that that will manifest into additional opportunities and also obviously help our cost structure as well.

So I think the big focus when we just had a meeting earlier this week as a leadership team is we’re going to build momentum into ’twenty six, and you should see quarter over quarter improvement, both on the cost side and hopefully the revenue as we build on some of the network improvements that we’re achieving. I think there’s markets. We obviously have an easier comp in many of the markets that we serve on the merchandise side as we get in the back half of the year, and we hopefully can take advantage of that from a year over year growth perspective. And then, as I mentioned on the coal side, we should have a large substantial mine come back online. You know, we’re going to see some more domestic demand.

We had a very good winter from a domestic coal demand perspective and expect a very, very hot summer as well. So we’ll continue to be thoughtful of adding more sets into our system to handle that demand. So those are things that should be positive for us. And hopefully on the forest products side, we’ll see a little bit of a pickup from where we’ve seen a lull here over the last few weeks, months, and that should be helpful as well.

Unidentified speaker: So maybe let’s spend a minute or two on coal because it’s rare that we talk about that as a bright spot. You’re up mid single digit on volume, and NS is up 20 on volume. UP is up over 30% on volume. Why is it so broadly strong across the rails? And and in the context of what I just said about Norfolk and UP, like, does your coal volume actually get even better from here?

Kevin Boone, chief commercial officer, CSX: Yeah. I mean, the Western, obviously, railroads are more focused on the domestic side. You know, when you look at UP’s business, not really an international business for them, export business. And I think that’s where you’re seeing the strength year over year. Strong winter in terms of what we saw in the South, and a lot of inventories are at levels where, you know, they’re going to want to be replenished.

And so we’re seeing that. I think, you know, from a policy perspective, we are seeing on the margin, you know, from some of our customers maybe a little bit more willingness. That pressure is not there. There are instances where we’re in the early stages of hearing, you know, some hopefully extensions on some of the plants that we serve. They weren’t going to be shut down but, you know, well into the future now, and that’s benefiting us as well.

So I think that’s the strength we’re seeing. Obviously, where we are on met coal prices, not a horrible market, not a great market, and hopefully we’ll see above $200 and then into that $220 2 20 5 dollars range, which I think is a lot more supportive for us to see additional volume. Right now, I don’t think you’re seeing producers really run full out to try to meet that demand that’s out there just given the lower prices that we’re seeing. But very strong on the domestic side, I think, versus the expectations coming in the year. That’s an opportunity as we get into the back half of the year.

And then the export market’s pretty dynamic right now. We’ll see how that happens. The hope I have on the international side is purchase agreements. You know, a lot of talk about balancing trade deficits and if you have agreements, let’s put it out there where, you know, whether it’s China or India or another market makes commitments to to take more of our coal, think that could be a very, very bullish outcome for for our, you know, domestic or for our our production to go in the international market.

Unidentified speaker: Just a couple of quick follow ups. How how long do you think this domestic strength can last?

Kevin Boone, chief commercial officer, CSX: We’re being really thoughtful, and it’s not going to be you’re not going have a peak and then come down. I think it’ll be sustainable through the end of the year. And then, obviously, it’ll be weather dependent on another strong, hopefully, winter this year and then into next year. But, yeah, we see it kind of sustaining over the rest of the year.

Unidentified speaker: And on the MET side, it sounds like you think that we’re going to get back above 200. Why do you think that’s the right? Is that just the historical average? And or is there some fundamental fundamental reason why the price should go higher from here?

Kevin Boone, chief commercial officer, CSX: Yeah. We’ve looked at this a lot. The cost curves, you know, when you look at the significant inflation that has been absorbed in that industry, the cost curves are much higher than they have been, obviously, pre pandemic. So we think the balancing the right area is kinda not two twenty, two 20 five where it makes it sustainable, where you can reinvest and, you know, support production. So we think over time, that’s probably the right price.

Unidentified speaker: And let at some point, let’s say we get to two twenty five. Do you think about going to the customers and say, hey, like, we don’t this volatility in the price that what it does to our earnings and our stock. It’s just not worth it. Like, can we just lock in? Can we shift away from this quarterly reset of price that gets so much sort of attention relative to what’s and it’s still not a huge part of the business.

Right? Do you think about going back to the guys and say, let’s just do a normal rail pricing setup again instead of this quarterly reset?

Kevin Boone, chief commercial officer, CSX: I I would love to do that. I think when you look at their business models, they have to compete in the global market, and we have to make sure they’re competitive in the global market. And so our ability, you know, we’re not and we’re a fairly good portion of the cost, deliver cost, and we have to move with the market to make sure that they’re sustained through downturns, and then we participate, obviously, when the market is very healthy. And I think that’s worked really well to keep them in the business. The great thing right now is they’re all delevered.

They have strong balance sheets, so we’re going to help them through a little bit of a law in this market, and then we’ll participate when the market really gets stronger here, hopefully, maybe as early in the back half of this year and into next year.

Unidentified speaker: Okay. I want to think a little bit longer term for a minute. I go back to the Analyst Day last year, and, you know, you talked about we’ve got 600 to 700,000 carloads of opportunities from discrete opportunities. You talked about trans flow, quality carriers, inland ports, Pan Am and MBR. You talked about, at some point, the Howard Street Tunnel project, double stack trains and 500 new customer sites and merchandise pipeline more than a billion.

I’m like, oh my like, there’s like this huge opportunity. Right? And then you end up you end the analyst just saying, but volume and volume’s gonna grow low to mid single. Right? And, like, it felt like there was a disconnect a little bit in terms of this huge opportunity that you laid out versus sort of what you actually think you’re gonna actually do.

Kevin Boone, chief commercial officer, CSX: Yeah.

Unidentified speaker: Help me sort of connect the dots.

Kevin Boone, chief commercial officer, CSX: Yeah. I think I look at ’twenty five and, quite frankly, ’twenty four as investment years, when you look at what we’ve started to put in place. And you’ll see a lot of these investments starting to ramp into the back half of the year. When I think about industrial development, you’re going to continue to see more and more of a contribution from those efforts into this year and certainly in the ’twenty six and then ’twenty seven. When you think about know, things like the largest steel plant on our network that’s being built, you know, that’s going to obviously be hugely beneficial to us.

That’s coming. We’re not seeing volume today from that, but that’ll really start to be fairly substantial as we get into that ’twenty seven period, which was the end of the three year guidance. So those things are happening. Shovel’s in the ground. The projects are moving along, and so we have a lot of confidence in those things.

MNBR, very, very early on, Working with the CPKC on that one, we’re very positive on what we are doing from an incremental volume perspective and also how we’re transitioning some volume from a cost savings perspective and having some benefits there. Inland ports, I think we not only have some announced projects, we’re working on a number of other things that I think you’ll see benefit us in the ’twenty six and ’twenty seven. And certainly with all of the port activity and what’s happening in the world, the decoupling from China, I think we’re well positioned as that more and more freight wants to move on the East Coast, and we’ll benefit from that. Which one did I miss here? Howard Street Tunnel, obviously not seeing a benefit from that.

We’ll by the first quarter, we’ll be double stack capable. Remember, fourth quarter, we’ll finish the project, the tunnel project, and then in the first quarter, there’s two other bridges that have to be double stack cleared for us to run the double stack by next year. And so you’ll see some substantial new routes opportunities for us as part of that. So these will certainly be benefiting us more as we move into ’twenty six, ’twenty seven. You’ll start to see some signs of that hopefully in the back half of this year.

Unidentified speaker: And so just to follow-up on Howard Street. So are we on track for completing that in Q4? And then as I think about ’26, is it just lapping $10,000,000 of cost per month? Or is there actually a tangible volume opportunity that starts right away? Maybe it sounds like it starts right away in q two.

Kevin Boone, chief commercial officer, CSX: Yeah. I think, you know, q two will turn start turning it on. Obviously, you can’t fill a train day one, and we’ll we’ll grow into that. But we do think that will you’ll see quarter over quarter benefits from Howard Street Tunnel from a growth perspective from second quarter all the way into fourth quarter and then ramping into ’27. That’s certainly going to be a big benefit.

The project is on time, on schedule. We haven’t run into any major issues, knock on wood. So Mike and I Mike is monitoring that every week. And both that and the Howard’s both the Blue Ridge sub are on track by the fourth quarter, and those will be very, very beneficial to our network for sure.

Unidentified speaker: Maybe let’s just talk about the network. Obviously, in Q1, we saw some pretty material pressure on some of the service metrics. Just looking backward, is this just those couple of areas? Or is there sort of broader issue here? Feels like we’re starting to see some improvement off the bottom as we’re going out to Q2.

How do you think the network is performing now? And and where do you think we go?

Kevin Boone, chief commercial officer, CSX: Yeah. I think there’s you know, Mike would tell you there’s a lot of been a lot of lessons learned from what we had. I I think the the storms were pretty significant, what we saw in the first quarter, and that’s that didn’t help. And when you take out two main lines in, you know, your network, you have four north south lines, and you take two of them out, obviously, the resilience is not there that you normally would have. I think the benefit of our network and the uniqueness of our network is how adaptable it is and how much optionality we have when things happen normally, and when you have access to all your lines to be able to adapt and adjust when weather comes or other things hit you.

We haven’t had that capability, obviously, with those two lines being under construction right now. So that’s hurt us. Probably, in hindsight, you know, probably hurt us a little bit more than what we had expected. But I think we’ve got a good plan. Mike and the team are working around the clock, I can tell you that, every day and are finding opportunities.

And I think we’re learning from it. You’ll see adjustments. We’re making some adjustments on our intermodal. You’ll see 50 lanes here that we made an announcement on Monday, 50 lanes that will improve transit times. And that’s going to benefit us from going to the market as well.

So a lot of things going on, a lot of learnings, a lot of focus on kind of improving. And I expect sequential improvement as we move through the year. And then obviously, there’s going to be probably a step function opportunity as we get these projects behind us.

Unidentified speaker: So maybe this is like a chicken and egg question. Like, we’ve got some pressure on service now. Do we need to spend additional cost to get service better? Or is it the opposite that as service gets better, cost comes out? Or maybe it’s both, I don’t know.

Kevin Boone, chief commercial officer, CSX: Yeah. You know, this is kind of the second time I’ve seen, you know, since I’ve been at CSX eight years, where we’re in kind of a service recovery mode. I can tell you, as a network spends faster, costs fall out. You know, the recrews, there’s a lot of things. You need less locomotives, all those things.

And I we’re in that curve. We’re bending that curve right now. Obviously, you know, Mike Matthew wanted me to remind you that, you know, the Blue Ridge was out for two months in the first quarter and three months this this quarter, so it’s three months that we’re dealing with in this quarter that will be of a little bit of a cost headwind. But that’s an opportunity as we move through the year. So I think you’re going to see cost momentum and then hopefully with these revenue projects and a lot of the things that we’re focused on, you’ll see that revenue really start to come through, the things that we can control and drive as we move into the year.

Unidentified speaker: Maybe just a quick follow-up to that. So we’re seeing some sequential improvement in service metrics. The volumes are pretty good. We just published labor productivity. Actually, now headcount down for the first time, it was in four years or something, year over year.

But you’re saying, hey, we’ve got now three months of this project instead of two months. Like any way to sort of frame how to think about sequential margin improvement Q1 to Q2?

Kevin Boone, chief commercial officer, CSX: Yeah. I am the sales and marketing guy now, but second and third quarter generally are better quarters from a margin perspective, and I don’t think there’s any reason to believe that seasonality has changed. So we do expect some improvement there. In order of magnitude, obviously, there’s a lot of different factors, but we do expect that. Obviously, we’re getting burdened by about $10,000,000 a month related to the Howard Street Tunnel.

And there are some, you know, obviously, costs related to just the network fluidity that will continue to improve as we get in the back half of the year. But we do think I think we said this, Sean has said this, first quarter was was the bottom. And from that, we we expect better performance.

Unidentified speaker: I wanna talk about price and yield a little bit. It feels like for so many years, right, price above inflation was the constant the given for the rails. And it feels like that’s become much less of a given the last few years, and we don’t get same store pricing disclosures anymore. But but where are where do you think we are now from a price cost standpoint? And as you look ahead, does that get incrementally better?

Does it get worse? Just, you know

Kevin Boone, chief commercial officer, CSX: You know, I don’t think anything has really fundamentally changed in our merchandise business. When I look at it, obviously, you know, when inflation was running a lot hotter, you know, we went out, obviously, to recover that. As it comes down, we still want to obviously exceed the cost inflation that exists there, but nothing’s really fundamentally changed. You have moving parts within markets. You know, if the chemicals is having a very good year, which it did last year, you’ll see, obviously good RPU performance overall for our merchandise franchise.

When that’s a little bit weaker, you’ll see that be a drag. The big, you know, the fundamental issue that we’ve had is the trucking market has been down for, you know, a prolonged period of time. So when you look at our intermodal business, that obviously has direct impact. We participate with our a lot of our customers when pricing improves and obviously don’t participate when the pricing is not improving. So it’s that has been a challenge.

It’s been a challenge in some of the markets on the merchandise side to a much, much lesser degree, but it does help when, you know, you have pricing strength on the trucking side. So we were optimistic coming in the year that at least we would bottom, and I think we have bottomed on that side and we’ve seen it. What we would like to see is the next leg of, you know, supply starting to come out of the market and starting to see some opportunities there. We’ll see what, you know, this wave of imports does to the market in the near term. That’ll be an interesting case study here.

And we are seeing signs that supply is coming out. You obviously track that, Scott, but we are seeing some supply come out from the driver’s side, which is encouraging as well. But that’s been the challenge, and I think that’s the next step in our progress towards better pricing is having that trucking market more supportive. Now, we’ve benefited substantially from, obviously, export coal pricing, And that’s been a drag on us. And we’ll hopefully, by the end of the year, obviously, that’s not going to be the drag.

It has been from an RPU perspective. So we’ll lap that. And hopefully, we’ll see some positive contribution from that as we move into next year.

Unidentified speaker: So as I think from a reported yield standpoint, down 6% in Q1, yields ex fuel down 4%, do you think that was the peak decline? Do those declines moderate as we go to Q2? And then when do you think that could turn positive?

Kevin Boone, chief commercial officer, CSX: Yeah, I think, you know, just export coal alone, you’re going to see that moderate as you get through the year, and that’s a substantial drag. Fuel surcharges, you know, unfortunately, we’ve seen fuel go down a little bit, not substantially, but, you know, that’s going to be a little bit of a drag here into the back half of the year. That would be nice to see that as a tailwind as well. But, yeah, I think you’ll see that moderate. You know, mix is always an important component when you look at RPU overall, but we don’t see any major shifts in, you know, our our in the RPU story.

Domestic coal, when you think about the strength that I talked about earlier, that’s a lot of southern utilities, longer length of haul, so good RPU on that side. And then intermodal, that’s, you know, if you see a lot of influx of international coming in, obviously that runs at a lower RPU than the rest of our business. Good still good business from a profitability standpoint, but lower RPU. So mix is always gonna, you know, play a part in this, but don’t see any major shifts. And then some of these headwinds that we’ve experienced over the last eighteen months kind of start to, you know, moderate a lot into the back half.

Unidentified speaker: But overall, you still feel, hey, we’ve got coal is gonna do what it’s gonna do. But outside of that, the the ability to just to sort of get back to and sustain inflation plus pricing, you still feel very good about?

Kevin Boone, chief commercial officer, CSX: I do. Yeah. Over the medium, long term, I I do. And, obviously, a more supportive trucking market is part of that component. I I don’t think it’s sustainable where where pricing is today.

Despite where pricing is today, we’ve I can I can rattle off 20 wins that we’ve had on the trucking side in terms of conversions? So we’re still going after that market. I would expect that to substantially improve as as we got to, you know, have a better backdrop on the trucking side.

Unidentified speaker: I want to spend a couple minutes on margins. I know you’re not, you said that’s not your hat, but you’re here. That makes sense. Exactly. So, I get you don’t have a long term operating ratio target anymore, but relative to where we were pre pandemic, right, based on our model, the margins are now about 800 basis points worse.

And even if we adjust for quality carriers, right, it’s 500, six hundred basis points worse. I guess, ultimately, at what point does margin become a sort of bigger focus here again? Do you like is railroad should this be a low 60s, sub-sixty type OR railroad? Or is that just not the focus? Or I don’t know.

How do you want to answer that?

Kevin Boone, chief commercial officer, CSX: I don’t think it’s not the focus. We’ve had a lot of discussion. I think this team is competitive. We obviously didn’t like the results in the first quarter. I think we’re talking a lot about that internally.

Certainly, in a model like ours, we have a lot of fixed costs and, you know, I need to go out and find a lot of profitable business, obviously, to put on the network that can help margins. But I think, you know, Mike would tell you, Joe would tell you, there’s opportunities for us to look at costs and we’re going to do that. And, you know, as I mentioned at the beginning of this talk is I think the goal is, and I think we have line of sight to that, is both to improve the momentum on the revenue side and the cost side as we move into 2026. And I think we have a plan to do that working all together. And it’s across the board.

There’s efficiencies you can drive. I can tell you a better network that’s more fluid is just going to cost fallout. I’ve seen it over and over a number of times that occur, and we’re in the beginning of that. You’re looking at our network today, and we’re going to see sequential improvement. And with that will come opportunities on locomotives, you know, the crew side, deadheads.

All those things have costs that are associated with them right now that should naturally fall out as the network improves.

Unidentified speaker: So what I’m hearing is the service, we’re past the trough, right? As that gets better, and you think it continues to get better, costs come out, and then hopefully, some of the company specific volume opportunities build. Right? The coal headwind, we’re gonna start to lap at some point. And so we’re gonna get to a point where we can see volume, productivity, better price, and sort of in your view, like this could all come together in 2026?

Kevin Boone, chief commercial officer, CSX: Yeah. I, you know, I think it’s not going to be like you wake up in ’26 and ta da. I think you’re going to see the natural progression that we’re working on this year. And hopefully, you’ll see line of sight that we’re going to build momentum into 2026 and see some visible improvement as we get into the back half of this year.

Unidentified speaker: And when I go back to the Analyst Day, when you talked about three year high single digit, low double digit earnings growth. Even then, you sort of said, hey, ’25 is not gonna be that. Now maybe it’s worse than I don’t know. Maybe it’s worse than you originally thought. But is that still the right high single digit, low double digit?

Is that still the right full year CAGR? Or should we say, hey, 25% is 25%, and we go back to high single digit to low double digit starting in 2026 and just sort of ignore 25%?

Kevin Boone, chief commercial officer, CSX: Yeah. You know, we’re a quarter and a half into this twelve quarter endeavor that we guided to, and I don’t think we’ve lost any confidence in our ability of all the investments, what they can deliver from a growth perspective. There’s a lot of things. I’m very confident in the team and what we’ve built. The foundation of all the industrial development projects have been years in the making, quite frankly.

These things take a lot of time and can be frustratingly slow, but we’re ready to reap the benefits as we get into next year in in ’27. And so I think all all the things are are set up very, very well for us. Obviously, we need the macro to be stable at a minimum. You know, if we had markets like housing and auto, which are incredibly important to our franchise and have been down for, obviously, the last two or three years, if we could get some lift from those, I think that would be additional opportunity for us. So those things, we’re at cyclical lows in some of the markets that we serve right now, and it’d be nice to have a little bit of cyclical tailwind as we get into ’26 and ’27.

We haven’t assumed that when we when we did that, and that’s that provides, hopefully, some upside to what we can do.

Unidentified speaker: We are running out of time, but maybe just where the the next session’s gonna be with chairman of the STB. I don’t see him in here yet. But maybe just to help us transition to that, there’s been a little bit more, for whatever reason, chatter about rail m and a. I don’t know. Why do you think we’re hearing a little bit more chatter?

Does it make sense? Or is this just sort of like fake news and we should move on?

Kevin Boone, chief commercial officer, CSX: Well, it’s you know, the timing’s well because I I think you should let Patrick handle that question. Look, you know, I think we’re really focused on what we can do. We think there’s a lot of untapped value that we can control and drive from a, you know, a share price perspective. You heard about our confidence in what we think we can deliver as we move into the next year and the following year. So I’ll let others kind of comment on that.

It’s not really the focus of this team, I can tell you that.

Unidentified speaker: Awesome. Thank you, Kevin. This was great.

Kevin Boone, chief commercial officer, CSX: Thank you.

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