CSX 4Q16 Earnings Call Notes

CSX Corporation’s (CSX) CEO Michael Ward on Q4 2016 Results

Probably an opportunity to move to a one man crew

“Well clearly as you look out technology is evolving David, there is going to be autonomous vehicles out there. There is no question, the only question is when and how much they will be deployed. And if you think about us putting the Positive Train Control system in place, which we will have in place as required by law. One does have to question why there needs to be two people on the crew when you have that kind of safety overlay in there. So over time, I think that will be an issue. I don’t think it’s in the near-term, but longer-term, that’s certainly something we’re going to have to address.”

Frank Lonegro

Expect a healthier environment in 2017

“Overall the industrial economy is more stable and energy headwinds are moderating. However, we continue to face a strong U.S. dollar and low commodity prices which constrains growth in some markets. As we think about the full-year 2017, we anticipate a healthier volume environment. ”

Labor inflation is on the healthcare side not wage side necessarily

“Ravi on your inflation question I think in the prepared remarks, you heard the $35 million inflation on labor and fringe and there are some pretty key industry drivers as part of that, it’s not really on the wage side of things, it’s on health and welfare side so medical inflation obviously there’s always going to be a little bit, little bit higher than we would like. ”

Frederick Eliasson

Pricing environment improving but may not get where we want until 2018

“Sure. So I will just remind again, we really don’t forecast pricing, it obviously has been a tough period, an extended period now from a pricing perspective and lot of excess capacity out there and our challenge to our team is of course to sell through this trough, make sure we sell the improved service product that we have, the unparalled network access that we have and provide innovative solutions to our customers and I think the fact that we, we’ve been able to do as well as we have I think is a good testament to both the fact that, it isn’t value driver of ours and it is also a good testament to the fact that we really do need to make sure to continue to value price to be able to reinvest in the business the way we want to. And so it has been a sequential downtick. We’ll see when it when it turns, I think there’s a lot of good things going on as the economy picks up. I think is good thing if we continue to low unemployment that put pressure on the wages. We know that. We see the deal demand is coming into play here as we get into the second half of 2017. So I think things are lining up for better pricing environment as move through the second half of 2017 but it might not fully be where we want to be until we get to 2018.”