Norfolk Southern Corporation (NSC) Earnings Call Transcript & Summary

All right. We're going to keep rolling here with Norfolk Southern. Again, Brian Ossenbeck cover the transports. Very happy to have Mark George, the CFO; Ed Elkins, Chief Marketing Officer; Luke Nichols from IR here.

Clearly, there's been a lot that's been in the news and affecting the industry and of course, the company. So I'm going to turn it over to Mark who will give us an update and then we'll come back for some questions. So Mark, thank you again for being here. Really appreciate it. Turn it over to you.

Thanks, Brian. Good morning, everyone. Ed and I are looking forward to having a robust discussion this morning. But I do want to remind everyone that before we start during our talk today, we will be making certain forward-looking statements. And these forward-looking statements are subject to risks and uncertainties, including those described in our Form 10-K with the SEC and those related to the recent derailment. Before we get into business, I just want to take a few moments to discuss the very unfortunate derailment we had in East Palestine on February 3. I want to remind everyone, Norfolk Southern representatives were on site and took action to ensure the safety of the residents in close coordination with local state and federal officials, and that work is continuing now. And thanks to the swift response from law enforcement, fire departments, several government agencies and our crews. The initial impact was contained. We also immediately established a family assistance center within the first 18 hours to address the needs of the community and to support those who were directly impacted. To date, we've committed over $24 million in aid to support the local community, and our family assistance center has helped nearly 5,400 families. We remain present in the community and very engaged. We actually average around 20 NS employees on the ground on any given day, working directly with the community, addressing their questions, finding most effective ways to assist in the recovery process. And look, it's very imperative for us to make this right. This is going to be a long process, but we're here for the long haul. And it's imperative we do what's right for the community. Now that commitment also extends to the site remediation work that we're doing. To date, we've recovered 6.25 million gallons of impacted water. We've removed 3,226 tons of waste soil, and we flushed a mile of impacted waterways. We've also sampled approximately 200 drinking wells. And just last week during the Senate hearing in D.C., both federal and state EPAs spoke of their rigorous testing of both water and air, and they both consistently come back clean from contaminants associated with derailment. We recognize there's more work to do. And each day, our team is focused on that progress and making things right. An example of this on February 22, we announced that we would actually lift our tracks again in the railman area, in order to evacuate the soil underneath, which was a change from our original plan that would have effectively and safely remediated the soil without removing the tracks. This enhanced remediation plan was in respect of the direct result of the feedback we got from the citizens of East Palestine. Now this process is going to take up to 8 weeks to complete, but it's important to note that we will be remediating one track at a time, and this will allow traffic to continue flowing on the second main line, albeit at reduced speeds while traversing through the remediation area. We'll utilize alternate routing, both to the north and to the south to mitigate bottlenecks in the area and try to soften the impact of this reduced capacity on our premier route. So my guess, you're going to start to see some speed impact showing up on our AAR train speed as a result of that, again, probably for the next 8 weeks. Anyway, under the supervision of the FRA, the company has inspected all the wayside detectors in the area of the incident and found they were operating as designed. In addition the NTSB preliminary report found that our crews were operating the train in accordance with all the rules and the procedures and that our hot bearing detectors were working as designed. But despite everything working as intended, we know there's more we can do to improve safety. So last week, we announced a 6-point safety plan, which included the following actions: -- we'll enhance our network of hot bearing detectors by adding 200 new detectors, which is a 20% increase over the roughly 1,000 that are out there today on the network; and it's going to bring the maximum distance between detectors to 15 miles. On average, we're amongst the lowest in the industry with only a 13.9 mile cap, but there are some gaps that are wider than that just due to terrain, curvature, et cetera. we're going to make sure that we have no more -- we have no gap greater than 15 miles going forward. We're also going to be working with manufacturers on the next generation of multi-scan detectors to scan a greater cross-section of the railcar bearings and wheels. We're also going to work with our industry peers and complete a comprehensive review of the standards and practices for the use of these detectors, including reevaluation of the thresholds used to trigger an alarm. Additionally, we're going to be deploying some acoustic bearing detectors, which actually analyze the acoustic signature of vibrations that are inside the axle and can identify potential problems that a visual inspection would not. We intend to add 13 of these detectors into our highest traffic routes on top of the 5 that we already have in service today. And we are going to our fifth point here. We're going to accelerate our digital train inspection program where we partnered today with Georgia Tech, the Research Institute of Georgia Tech. And we're developing next generation of the most advanced safety inspection technology. We're utilizing ultra high-resolution cameras stationed in strategic locations on our network. And this technology will give us 360-degree health checks on railcars, and that will help us improve our ability to detect and diagnose defects before they become a problem. And finally, we recently joined the FRA confidential close call reporting system, which encourages railroaders to speak up if they see something unsafe. In aggregate, I would say that these 6 points are probably going to result in about $50 million of capital spend over the next 2 years, that would be incremental capital spend. And now regarding the costs of the derailment, we're nearing the end of the quarter here and our understanding of the associated cost is becoming clearer, but there is still work that's happening. So we're not going to put a number out there today for you. But I would expect that we'll have an update in our first quarter earnings release here coming up in April. But just to remind and put some perspective on the insurance coverage, which will allow you to frame it a little bit better, we've got basically 2 towers of insurance coverage. We have a third-party policy with the $75 million self-insurance retention limit, and we have a first-party policy for our own property damage, which also has a $75 million self-insurance retention. So we've got 2 separate policies each with $75 million of self-insurance limits. Now the third-party policy attaches for coverage losses above 75 and up to $800 million or $1.1 billion for specific type of pollution releases. It's intended to protect against legal liabilities for bodily injury as well as property damage to third parties. Our first property policies intended to cover losses and damage to property that our company owns or is in custody of and the loss of certain types of revenue and other extra expense. And so above $75 million, it covers 82% of the losses going up to a limit of $275 million. So all that said, when you're talking about insurance coverage, there's many qualifiers including the insurers reservation of their right to further investigate claims and contest coverage, and that takes a while to sort out. There are express restrictions and sublimits of coverage, et cetera. So we've just got to be a little patient here as we sort through all of the claims that we have with insurance. And I also want to take a moment to discuss another development, and we don't comment on litigation, but you will have seen that there was a lawsuit filed by the State of Ohio yesterday. I can say that the filing shouldn't really be a surprise in a situation like this. It's not really a surprise to us. They want to hold us to our commitments, and we're committed to it anyways. So that's great. We'll be working with the Ohio Attorney General and other stakeholders to develop 3 programs for affected residents of the community as part of some final resolution. You would have seen talked about a long-term medical compensation fund, a tailored protection program for property owners and programs to protect drinking water over the long term. So we're just starting discussions with the AG, and we look forward to finalizing those details as we continue to support the community. And with that, shifting to the business, I really want to just remind everyone, we are very excited about our new strategy that we shared going forward. We shared at the Investor Day in December -- and I want to remind you all it's rooted in 3 pillars, right? The first pillar is to safely deliver reliable and resilient service. And as we do that, that's going to allow us to propel smart and sustainable growth. And we will use that leverage to help us drive continuous productivity improvement, and we're going to execute on that strategy with a customer-centric and operations-driven mindset. So we will navigate this East Palestine issue. We're going to stay in the community. We're going to resolve it. But in the meantime, we got a business to run, and we're running that business, and we're really excited about the future. So with that, Brian...

Okay. Thank you very much, Mark, for that update. Covered a lot of things we'd obviously want to be asking about. Maybe just a couple of quick ones before we go deeper into the business. One thing we're all trying to monitor is just like what's the next step in the hearings in the reports. The public field hearing and the NTSB. So is there any -- I don't even know if it's been set or if you know, but is there any broad brush you can give us in terms of the time line of next steps and how this is progressing? Anything that's been set that we can sort of put on our calendar?

Well, I don't think there's anything yet with the NTSB at this point, but we know we've got more hearings. I think Pennsylvania, there's a Pennsylvania Senate hearing on the 20th of March. And then there is a U.S. Senate Commerce Committee. Well, it's Commerce, Science and Transportation Committee hearing on the 22nd where Alan will be there. And I believe, Chair Homendy from the NTSB will also be there. But look, it's going to be a fairly long process, and I think things will continue to emerge and request for hearings may continue to come, right? So...

And one of the other aspects of this is, the NTSB is looking into the safety culture. The FRA has got the review. Both of those, we couldn't really find much precedent for it. But I guess from your perspective, obviously, it's all hands on deck. Alan has made a number of announcements from that. But is there a concern -- or should investors be concerned that there's a broader safety culture problem? It seems like there's just been a streak of unfortunate derailments including during the congressional hearing. There's an unfortunate derailment, but it's very high focus right now, of course. Derailments happen on the mainline once a day for the whole industry, but from a safety perspective, can you give us some context in terms of how you feel, how that's progressing internally because clearly, there's a hyper focus from the outside looking in?

Yes. I think Ed and I will comment there. I want to say when you're a railroad, safety is always in absolute -- in the super high priority because this is life and death exposures that we put people in, our own employees, as well as the general public. So we feel good about the safety culture. That said, we have to continue to improve it. And we are absolutely committed to do that. And I think Alan has made that very, very clear in the hearings with the 6-point plan. And I know Paul Duncan, our new Chief Operating Officer, is screaming from the hilltops about the importance of safety. And as we work with the craft unions and going out and doing site visits, we're making it very, very clear. And we have been since Paul's appointment especially, safety is number one. I don't know, if you want to add anything to that, Ed?

No. We have a long history of what I would call a very robust safety culture, but that does not mean that we're sitting still, we have to do better, and we are committed to doing better and doing what's right, not only for our employees who we want to go home safely every night or every day, but also for the communities that we serve. It's -- for me, I started out on the ground. So I understand how lethal that environment can be, how dangerous it is, if you don't do things right. And we are committed to making sure that we're going to be a leader in safety across the industry.

Okay. Understood. So just on the labor front, it's obviously been a challenge for the whole industry for a while. But there's been some progress, and you've made some of those announcements on the paid sick time. So maybe you can just touch on how labor availability looks right now. I think we've seen a good step-up in the pipeline. So clearly, you're leaning into that but there are some areas that are still challenging. And I'd just be curious to hear how those paid sick time, which is a big flash point in the negotiations, if those are in place and how they're working here in the early stages.

Yes. So we've actually reached agreement with 8 of our 12 craft unions right now. That represents about 40% of our union employment. The 2 big unions are that are -- represent the T&E workforce, which are the locomotive engineers and the conductors. We continue to work with them on the quality of life issues that matter most to them, which really is more around scheduling than paid sick time. So we're in active dialogue, but we feel pretty good with the progress we've made with the other 8 unions we have an agreement for. We've got a path for another one here in the days ahead. So it continues, and the 2 big ones in terms of percentage of the union workforce are T&E, and their focus is something a little bit different, which is around scheduling, which we want to address with them because that's really where we have the hardest time hiring people is the unpredictable schedules. So if we can work on a scheduling agreement with those unions, I think it will really help us all, both the company and the union.

And in terms of the availability in the pipeline relative to where demand is, where you expect it to come in, how is that situated? It feels like you're maybe finally turning corner here in terms of getting more people where you want them to that's a big challenge.

Yes, I think we're on track for where we want to be in general with labor. There are still locations across the railroad that are below our minimum standards, and we're hiring right now, targeting those, I think, Mark, there's what, 900 in the pipeline right now?

We've got 900 conductor trainees in the pipeline still. So we continue to replenish that with new hires as we graduate people to join the workforce, we're kind of on track for a midyear target of 7,600 employees in T&E. So that's good. Meanwhile, I mean this is a living target. As we forecast demand, as we make changes to the train plan, as the actual volume, the mix of volume changes, depending on where it is in the network, we're always moving around what the targets are. And the 7,600 I mentioned -- that's one number. I think of it as we have 95 discrete targets because we have 95 crew locations. So there are some locations we are robustly healthy. And there are other locations where we're still critically understaffed. And in our core kind of super core routes, we probably still have about 15 locations where we are understaffed and that's where we're trying to channel a lot of our hiring efforts to get those up to speed, but we're feeling a lot better about our crew issues right now than we were certainly a year ago, but even 6 months ago.

I guess what gets those last ones over the finish line. I mean it's been a while since you put -- I'm assuming every single effort you can think of and then some into that is -- it sounds like the scheduling could be a big part of it, but some of it is just the region and the market. So you probably have to live with that to a certain degree. But on the flip side, it does feel like prior to the derailment, things we're starting to really improve from a service perspective. So maybe you can address the last point of labor, at least where you think a steady state would be? And then and then talk about the network. I do think it was making some pretty significant gains before that unfortunate derailment.

Prior to the derailment, service is the best it's been in 2 years, and even coming out of the derailment, service is starting to get better again. But I think from getting back to labor, the environment is helpful right now in that after the union agreements have been put in place, these are -- they pay well. These jobs pay well. It's getting easier to attract talent to take jobs like this now after the last negotiation we just have with the unions. And maybe a little bit of a softening market in labor is also helping in certain parts of the country. So -- we feel good about the prospects now. I think a year ago, it was a labor crisis. And I would say now it's just something we have to continue to work on.

No, I agree. I think we've learned a lot over the past year, 1.5 years in terms of what it takes in a post-pandemic environment to hire the modern or post-modern workforce. It's not the same way that it was 35 years ago, where you could gather up 500 people and then pick the best 10 or 12 of them for what is really a very, very good job, a career, in fact, that takes different things now, and we've learned a great deal. And you're right, there's -- regionally, there are areas where unemployment is extraordinarily low still, which makes it a challenge in that region. But we've become very creative. So I think -- I think one outcome of the last year has been we have a much different process and pipeline for how we attract new employees, which I think is going to pay benefits from here on out.

And then one more for you, Mark, on that front before I get into more of the end markets. When we think about -- and I think you've been pretty clear that there's inflation, you can all see it, but I think you've been reminding us that not to lose sight of that because you still have inflation on the labor side, obviously, went up quite a bit with the new agreement. Other rail inflation is still trending pretty high. You get the book reset, but not all of it, and not all at once, I would imagine. So I guess what I'm worried about is there's a little bit of an air pocket as we start the year for the industry in general because you still have to move the volume to get the higher rates. So there could be a little bit of a lag. I think the model of inflation plus pricing is still very much there. But I guess, I'm just worried that industry-wide, there could be a bit of a mismatch here at least to start of the year. So I don't know if you would agree to that or if you'd put some other context around it, but...

Yes, I think certainly, the cost inflation is there, although we are getting some relief on fuel. Fuel prices are coming down, but the wage inflation is embedded, and that's one of the bigger elements of inflation that we have to suffer through. But I will say, I think what Ed's team is doing on core pricing is really, really good right now. We wish volumes were even higher, but I think the inflation side on the top line from core pricing is actually very, very solid. Ed, why don't you talk about...

Yes. Our core pricing plan is still very solid. And we're actually running right on track for where we expected to be. 24 quarters, we've had intermodal RPU increases in almost 7 years on the industrial side. So we have a long track record. But look, it all comes down to the value of the product that we're delivering. And that's how we deliver value to our customers. That's how we deliver value to the shareholders. The service product, as Mark mentioned just a second ago, entering the year, best service product we had in a couple of years. We finished up peak season extraordinarily strong for the parcel carriers. Cycle times are higher than they were in other words, faster than they were a year ago or even 2 years ago. So we're able to present more value to our customers right now, and it is showing up both in terms of rate, as well as volume in many markets.

Okay. So it doesn't -- maybe I should be a little less concerned in terms of the start to the year, but it seems like there's still -- the volume component, I guess, is what I'm getting at, like you're still going to need the volume to show up at the higher rate, which is probably will at some point as it always does. But...

I think rate is good. Volume is the issue right for us.

If there's any questions in the room, raise your hand, we'll try to get you a mic. Ed, want to come back to this flexible freight concept you introduced at the Investor Day. With the service getting better, I would assume that those conversations are easier to have, but it's also called flexible freight. So I would assume that maybe it goes the other way. So it's a big number, I think, $60 billion, $61 billion. So maybe you can just step back and say how you got to that number, like what's in that bucket, what's not? And then before derailment or at least -- would you expect that to really start to show up? And once you get back to those service levels on a more consistent basis?

Sure. So we started with the total truck and logistics market for North America, which is like $860 billion in total. And then started backing into that number, what is our addressable market, both in terms of geography, but more importantly, markets. And so what you see there with $61 billion, which sounds a little bit precise, but it's probably not as precise as it appears, it is a subset of that total market, predicated off number one; geography, number two, our capabilities and the markets that are truly flexible freight. And our definition of flexible freight is a market or a product that can drive value from truck or from rail, depending on how much value is presented to them in terms of service quality. And it's not just Intermodal because that's where my mind goes first. Intermodal, it's certainly the most obvious piece of flexible freight out there. We are clearly targeting growth in our intermodal markets. But there are markets beyond that whether it's coiled metal, whether it's agriculture, whether it's food products, there are a number of markets and commodities that can drive exceptional value from a safe, reliable, resilient service over a long period of time, and that's exactly how we believe we're going to deliver the value that will allow our customers, both current and future to build their businesses around that service as part of its supply chain. It's manifesting itself in some markets now as we can present more empty cars because of faster cycle times. There are customers that absolutely want to load that car today. And so we're seeing that in markets where we can deliver a faster cycle time and more empty equipment. Other markets and other customers, it's going to take some time for them to unwind the alternative arrangements that they probably had to make over the past 2 years to keep their factories running and to service their customers. But the most important thing that we're doing right now is building that road bed of reliable, resilient and safe service for our customers so that they can make that choice when they have the opportunity to use rail. It's not an on-off switch per se. And I think we probably have to go through a full cycle of ups and downs to demonstrate to customers that this time it is different. And that's really what our message is, this time is different. But customers very, very rightfully so, are saying, "show me to some degree." And that's fair. But there's lots of customers that like I said, can drive value right now in our.

And is one of the things you're asking to put more industrial development behind there, which has always been a focus. I don't know if that's ramped up a bit in terms of helping develop the sites, maybe buying some new properties or accelerating some of the developments? Is that one of the proof points that customers are asking for?

The macro trends are very favorable for, I would say, our geography when it comes to whether you want to call it reshoring or onshoring or simply new real estate and industrial development, 9 of the 10 top states for doing business are on our network. The other one is Texas, which we have very good connections to with our interline partners. So we feel very well positioned, particularly in the Southeast for new industrial development, everyone probably saw the announcement from Scout Motors that they're going to open a new plant in South Carolina that will be served by Norfolk Southern. So we're excited about that. That is kind of the tip of the iceberg, so to speak, and the EV and battery world, which we've seen a tremendous amount of investment and interest in new development. But we're seeing manufacturing, I don't know if it's forever, but certainly for the meantime, change its approach from just in time to some degree, just in case. I think there were some significant lessons learned during the pandemic about supply chain resilience that are going to play very well for Norfolk Southern and for the United States, quite frankly. When you think about a very large consumer base that has a lot of money, has a rule of law, it has great infrastructure. You want to be close to your markets, and I think that's what many manufacturers are starting to pursue.

One other area we focused a lot on just in the normalization of all things that we cover is just the accessorial, storage fees, which are a byproduct of all the congestion in a bunch of different areas. So I know in the guidance, you have that rolling off to some degree. It's a little harder to track now, but what's kind of the cadence you would expect or any suggestion you expect to roll that off? And I'm assuming there's some offset because congestion came with additional costs, which I think you've sized in the past. But the net effect is you're not going to see it all drop off the top line without some offset. It's just trying to figure out to what degree and to what magnitude those 2 might actually offset each other and of course, over what time.

Well, I think fall '21 is when supply chain congestion started arguably. My proxy has generally been the steamship line rates on the ocean for the spot market in terms of what's happening inside that global supply chain. Those prices have come down by a factor of 10, I think, stuff like that on the spot market. So that signals to me that there is less congestion overall throughout that supply chain and less pressure, right? The other thing to think about is in 2020, we ended the year with goods purchased at a level that was probably 2025 level in terms of if you drew a straight line from 2019 to 2025 based on the trend from 2016 onwards, we had a very elevated goods consumption in this country. With the supply chain, use warehouses as a proxy designed for 2019 volumes. And so it was sort of a large amount of freight trying to move through a fairly small funnel. Over the past 3 years, the U.S. warehousing, infrastructure development has built out somewhat, and we've seen goods consumption flatten out. It hadn't really fell, but it's flattened out. So now you have a bigger pipeline for that to move through. We're seeing the supply chain congestion that is manifesting itself as accessorial or storage charges because an [ocean box] doesn't have anywhere to go, so to speak. We're seeing that lighten up and really begin to signal to us that the supply chain congestion is finally moving beyond where it has been for the past couple of years. And for those of you that have heard our quarterly calls every quarter, I thought it was going to start. And I think finally, we're in a place where it is actually starting to loosen up. And I think 2023 will be the year that, that happens.

It's probably actually happening faster than we thought this year.

So we're seeing it really unwind quicker than we had anticipated.

And in terms of the costs associated with that, is that happening at the same time, you have a little bit of a lag...

There's a lag in cases, your leasing properties and land that may take a year or 2 to fall off. But it's not that they're not being used still, but the cost of servicing that new business that's storage service business will take a little bit more time to fall out.

So what One area that's been volatile as it usually is coal, very strong in some markets, not so much in others, but the natural gas price being where it is, begs the question of how much longer intel we have to worry about restocking ending and potential plant closures and things of that nature. So maybe you can just give a quick update on the domestic side. And if you want to weigh on export as well.

Sure. Well, 4 years ago, everybody said, gas will never be over $3 again. And then one year ago, everybody said, it will never be less than $4 ever again. And here we are today with a price that's kind of back to where it was on natural gas. There's a lot of volatility out there. But for sure, on the domestic side for electricity generation, we're seeing what are now in the 2023 year, robust stockpiles at the utilities. And there is strong competition from gas. So we're seeing some pressure there. We don't have any planned retirements that are significant in the immediate term. The challenge right now, I think, is the world needs BTUs and there's been a tremendous amount of disruption about where those BTUs come from and where they go to. I'm not sure that we are at an end state yet in terms of how that all gets resolved, either in Europe or in Asia. But we remain pretty guarded about that global environment. I will say for export, particularly for metallurgical. There is an underserved global market probably for metallurgical coal. The U.S. has some new production, and we are benefiting from some new production on our footprint that we think will benefit the world. And we're staying up against it in terms of the tons that we're able to move. So we feel for now pretty good about the export markets. Anything else you want to say on that?

So in terms of all the volatility you've seen on the ocean side, going back to that, freight moving from the west to the east for the obvious regions to diversify, but also because of labor uncertainty, I think Norfolk, the port actually has a new service product with [Indiscernible] in April 1, I'm not mistaken, to go inland to Memphis. So I'm sure you're trying to take advantage of what's moved and trying to keep it sticky. How has that progressed? What's the time line of that because I'm assuming that the shippers when things get back to normal, they won't necessarily go back to the old way of moving things. So how do you feel the network's position to maybe hang on to some of that freight when trying to prevent it moving back.

Sure. Memphis is an interesting market. It's sort of mid-continent. And 15 years ago, if I had to draw a line about how far you can penetrate inland from the East Coast, it didn't really get the -- it certainly didn't get to Memphis, didn't get past Atlanta maybe. But over time, the steamship lines and the ports are really invested in making optionality something that their customers can benefit from. And I go back to one of the old adages that is water miles are always cheaper than land miles in general. And there are very robust routes and structures now to deliver freight to the East Coast, whether it's from Southeast Asia as manufacturing migrates or even from China. So what we're trying to do is provide for our customers that same optionality and give them the opportunity to benefit from the investments that steamship lines and ports have made to deliver that product to the East Coast and serve some of those hinterland markets that before really weren't feasible from an East Coast location and do it in a very efficient way. So we're responding to customer demand essentially by trying to develop these new services.

So in terms of the other side of Intermodal, what's the domestic market look like? I mean, we still have a pretty weak truck market trying to find the bottom, but it's cheaper to move on rail, service improves, consistency improves. So are you seeing kind of the end of the competitive dynamic with some of the switching in the shorter haul or are people not really making that decision. I know we're in a bid season, so it's a little hard to tell, but what's your sense coming out of it.

I would underline the weak truck market. It's been a challenge. It is right now and has been for a little bit of time. the indications that we're getting from bid season so far, which sort of climax is around April is that customers are able to find a lot of value with the product that we're offering. And our job right now, coming out of peak season last year, we said it is we have to demonstrate to our customers' customers that we are a service that they can put in the bank, right? And that's what we're doing right now, we're laying that road bed of outstanding intermodal service that's going to give our customers like J.B. Hunt and Hub Group, the opportunity to convince their customers and prospective customers that they can bet on intermodal. And the only way that they can do that is if we demonstrate it to them. And so that's what we're really focused on right now.

So we have a couple of minutes left, but we covered several end markets, including some of the bigger themes of the port shift from coast to coast and the nearshoring, onshoring. Obviously, you can't miss a question on coal, but what else is interesting from and you're in multiyear perspective when it comes to some of the end markets, you're looking at some of the opportunities that you're seeing, maybe that some of it is tied to industrial development. But what else did that we didn't cover that maybe we should be focused on when it comes specifically to the Norfolk franchise.

Well, I think in the long term, it's always interesting to look at the pipeline of projects that you have on the industrial development side. And those are projects that some of them finish, some of them start, and some of them do never show up. But that pipeline for us continues to be extraordinarily strong, particularly in historical context. We look at what makes up that pipeline of prospective projects. A lot of it is battery, a lot of it's EV. But a lot of it is other traditional industrial plays, whether it's steel or whether it's plastics or something related to petroleum. The U.S. is good at a few things. One of them is generating or producing BTUs. The other one is producing calories. So we continue to remain very bullish on both the ag markets as well as some of those industrials.

Okay. Well, thanks for wrapping it up there. I think we'll end it there. Mark and Ed, thank you very much for your time. I appreciate the update and all the insights today. Thank you.

Thank you, Brian.

Thank you.