CSX Corp (NASDAQ:CSX) Q4 2019 Earnings Conference Call - Final Transcript

Jan 16, 2020 • 04:30 pm ET

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CSX Corp (NASDAQ:CSX) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now be conducting the question-and-answer session. Our first question comes from Brandon Oglenski from Barclays Capital. Your line is open.

Analyst
Brandon Oglenski

Hey, good afternoon, everyone, and congrats on a pretty good year relative to pretty difficult conditions. Jim or I don't know if Mark Wallace is on the line. But do you guys mind digging a little bit deeper into your macro assumptions behind the flat to down 2% revenue assumption? I think you did call out some headwinds in coal as well. Do you mind just repeating that again?

Executive
Mark K. Wallace

Yeah, sure, Brandon. It's Mark. So going into 2020, we expect a continuation of the current macroeconomic trends to continue as we know the consumer economy remains strong, but PMI and IDP and other macro indicators suggest we're not going to see a near-term increase in industrial activity. IDP is projected to be relatively flat for the year and the PMI read in December was 47.2%, which was the second worst since '09 and the fifth consecutive month signaling contraction. So given this, we're not forecasting a hockey stick recovery, but any improvement in the macro environment would be upside for us.

Despite these challenges, we're going to continue to get better at what we can control, providing high quality service to our customers and executing. We have not changed our outlook for long-term revenue growth. Intermodal, as we've said many times, I think -- we think we can grow 2-ish times GDP and merchandise GDP plus. So we're going to stay close to our customers, watch things and see if the sentiment improves throughout the year, but clearly, as I said, we're not forecasting any type of a big recovery in the year.

Analyst
Brandon Oglenski

Okay. And I guess it's a related follow-up. Mark, can you just tell us how the marketing strategy and sales strategy has changed at CSX, especially related to intermodal and merchandise?

Executive
Mark K. Wallace

Yeah, sure. I mean, we -- in 2019, we spent a lot of time revamping the entire sales and marketing organization. We've changed a lot of people, brought in some great talent. We've actually developed a strong marketing team, no longer a pricing team as we've discussed in the past. The marketing team is doing a fantastic job working hard, doing actual marketing activities and looking for opportunities to gain share and from truck and going after -- and providing the sales team with those leads and those opportunities to grow our share as we are leveraging this fantastic service product that the Jamie and his operating colleagues have provided the sales team to sell.

On the intermodal side, again as Jim has alluded to, we're through our lane rationalizations that began in late 2017. We have a great intermodal network that we're leveraging, and we're excited to sell our -- as Jim said, our 95%-plus trip plan compliance or trip plan performance numbers and even higher in some other -- in some lanes is exciting, and customers are taking note and we're