BBT_White_background-REF22571
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
242
On Slideshare
242
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. CSX Corporation BB&T Transportation Conference February 15, 2006
  • 2. Forward Looking Disclosure Statement This presentation and other statements by the Company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operation, and management’s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the Company’s success in implementing its financial and operational initiatives, (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the Company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the Company’s website at www.csx.com. 2
  • 3. For 2006, our core strategies remain intact as the foundation for delivering value Shareholder Value Creation Profitable Growth Margin Expansion Revenue Operational Performance Impact Discipline Culture Core Strategies 3
  • 4. Those strategies have improved the company’s earning power significantly Surface Transportation Operating Income in Billions Rolling Twelve Months $1.5 $1.4 $1.3 $1.2 $1.1 $1.0 $1.0 $0.9 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Note: Excludes 2003 provision for casualty claims, and 2003 and 2004 management restructuring charge 4
  • 5. The strong pricing environment and contribution focus have improved yields Revenue Per Unit Year-Over-Year Improvement 11.1% 9.7% 9.3% 8.6% 7.8% 6.6% 2.4% 0.1% Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Note: Second quarter 2005 excludes a benefit from a rate case settlement 5
  • 6. Yields, productivity and an improving culture have driven the operating ratio Surface Transportation Operating Ratio 89.3% 87.1% 85.5% 85.2% 83.3% 83.0% 81.3% 80.5% Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Note: The first three quarters of 2004 exclude management restructuring charges 6
  • 7. Going forward, CSX expects steady double-digit growth through 2010 2006 – 2010 CAGR Operating Income 10% – 12% Earnings 12% – 14% Free Cash Flow 10% – 12% Operating Ratio Mid 70’s Return on Invested Capital Meet or Exceed COC 7
  • 8. Safety momentum remains strong FRA Personal Injury FRA Train Accident Rolling 12-Month Average Rolling 12-Month Average Injuries / 200,000 Man Hours Accidents / MM Train Miles 1.16 3.42 Six Week Six Week 2.29 4.79 Average Average 4.72 2.13 2.04 4.43 1.91 4.32 1.71 1.65 3.99 3.78 Q4 Q1 Q2 Q3 Q4 1QTD Q4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 2006 2004 2005 2005 2005 2005 2006 8
  • 9. ONE Plan is gaining traction; on-time performance is improving On-Time Originations On-Time Arrivals Rolling 12-Month Average Rolling 12-Month Average 43.0% 54.3% 40.9% 40.1% 51.1% 39.6% 50.3% 50.3% 38.9% 38.4% 49.0% 75% 62% 48.2% Six Week Six Week Average Average Q4 Q1 Q2 Q3 Q4 1QTD Q4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 2006 2004 2005 2005 2005 2005 2006 9
  • 10. ONE Plan is gaining traction; Dwell and cars-on-line are stable Dwell Time (Hours) Cars-On-Line Rolling 12-Month Average Rolling 12-Month Average 27.1 225K Six Week Six Week Average Average 234,132 233,876 29.7 29.7 29.6 29.4 29.3 28.7 232,172 234,165 233,271 233,118 Q4 Q1 Q2 Q3 Q4 1QTD Q4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 2006 2004 2005 2005 2005 2005 2006 10
  • 11. ONE Plan is gaining traction; velocity to improve with Gulf restored Velocity (mph) 20.1 Six Week Rolling Twelve Months Average 20.3 19.9 19.8 19.7 19.3 19.2 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 1QTD 2006 11
  • 12. Competitor yields are accelerating, implying continued opportunity Year-Over-Year Growth in Revenue Per Unit 18% 16% 15% 13% 11% 11% 12% 9% 6% 3% 0% CSX NSC BNI UNP 3Q 2004 4Q 2004 1Q 2005 2Q 2005 3Q 2005 Q4 2005 12
  • 13. Volume growth will reflect continued focus on higher margin traffic 2006 Volume Growth and Contribution Intermodal Coal Merchandise Auto Volume Growth Long-term Contribution 13
  • 14. That focus drove a 63% increase in intermodal operating income in 2005 2003-2005 Intermodal Profitability Dollars in Millions 91.2% $248 88.7% $152 $110 81.8% 2003 2004 2005 Operating Income Operating Ratio 14
  • 15. Intermodal volume growth will be concentrated in key service lanes • On-time performance provides foundation for growth Syracuse Buffalo Boston – Chicago-Florida 80% Detroit – Chicago-Northeast 90% New York Chicago Cleveland Philadelphia – Northeast-Florida 90% Columbia Baltimore Cincinnati St Louis Evansville Portsmouth • Key service lanes have train Charlotte capacity to handle growth Nashville Memphis Atlanta Charleston • Trucking capacity is expected Savannah to remain tight Mobile Jacksonville New Orleans Tampa Intermodal Terminals Miami Priority Intermodal Corridors 15
  • 16. Coal volume growth is expected to remain strong • Stockpiles remain low Syracuse • Utility demand remains strong Buffalo Boston New York Chicago Cleveland • Car utilization is improving Philadelphia Baltimore • New plants being served St Louis Portsmouth • Western coal use to increase Memphis Charleston Savannah Jacksonville New Orleans Tampa Coal-fired Utilities Coal Reserves Miami 16
  • 17. The strong economy is expected to drive Merchandise growth Merchandise Revenue • Manufacturing remains strong $4.2 Billion • Plastics production increasing 10% 26% • Customer service is improving 13% – Supports long-term growth – Drives increased utilization 14% 12% 8% 17% Chemicals Emerging Markets Metals Forest Products Phosphates & Fertilizers Agriculture Food & Consumer 17
  • 18. Automotive volume growth will be limited near-term • Light vehicle production expected to be flat Syracuse Buffalo Boston • Traditional Big-3 expected to Detroit continue losing market share New York Chicago Cleveland Philadelphia Columbia Baltimore Cincinnati • Production at the CSX-served St Louis Evansville Portsmouth Hyundai plant is increasing Charlotte Nashville Memphis • Long-term strategy continues Atlanta Charleston to focus on “new domestics” Savannah Jacksonville New Orleans Big-3 Assembly Plants Tampa “New Domestics” Assembly Plants Miami Distribution Centers 18
  • 19. Industrial development will further drive long-term growth Merchandise Ethanol facilities Feed mills Syracuse Buffalo Boston Aggregates facilities Detroit Plastics plants New York Chicago Cleveland Philadelphia Coal Columbia Baltimore New projects St Louis Portsmouth Intermodal Nashville Port developments Memphis Atlanta Logistics centers Charleston Savannah Automotive Jacksonville New Orleans Assembly plant Tampa Supplier facility Miami 19
  • 20. To support growth, increased capital expands capacity along key corridors Surface Transportation 2006 Capital Spending Capital Spending in Millions 53% $1,420 $1,055 $960 15% 14% 18% Infrastructure New Capacity 2004 2005* 2006* Locomotive Cars & Other Note: 2005 and 2006 excludes capital spending relating to Katrina 20
  • 21. The investment will leverage the rich northeast and growing southeast markets 1994-2004 Income Growth 2004 Income Chicago Chicago New York New York Jacksonville Jacksonville New Orleans New Orleans LT 5% LT $50B Miami Miami 5.0% – 5.5% $51B – $150B 5.6% – 6.0% $151 – $250B GT 6.0% GT $250B 21 Source: Bureau of Economic Analysis
  • 22. Sixty projects are scheduled through 2007; first twenty are already underway Albany to Albany New York Chicago New York 2 Locations Terre Haute Terre Haute To Nashville Nashville 10 Locations Waycross Atlanta To Atlanta Waycross 8 Locations New Orleans 22 Miami
  • 23. Of the first twenty, eight are focused between Atlanta and Waycross Capacity Expansion Projects Lily, GA Atlanta, GA – Waycross, GA Rock Spur, GA Rock Spur, GA Upton, GA Upton, GA Third Quarter 2006 Woodbury, GA Woodbury, GA Fourth Quarter 2006 Bartlett, GA Ambrose, GA Ambrose, GA Jacksonville Haywood, GA Haywood, GA Waycross, GA 23
  • 24. Another ten will be completed this year between Terre Haute and Nashville Capacity Expansion Projects Terre Haute, IN – Nashville, TN Chicago Third Quarter 2006 Carlisle, IN Carlisle, IN Smith, IN Fourth Quarter 2006 Hazelton, IN Hazelton, IN Rankin, KY Rankin, KY Rankin, KY Casky,, KY Casky Staughters, KY Staughters, KY Cedar Hill, TN Trenton, KY Trenton, KY Goodlettsville, TN Goodlettsville, TN 24
  • 25. In addition, two projects will be completed between Albany and New York Capacity Expansion Projects Albany, NY – New York, NY Third Quarter 2006 Fourth Quarter 2006 Albany West Park, NY Fort Montgomery, NY Newark / New York 25
  • 26. Transportation demand is at record levels, with further growth expected Transportation Services Index Transportation Demand Indexed: 2000=100 Indexed: 2000=100 120 125 110 115 100 105 90 95 80 85 70 75 60 65 2000 2002 2004 2006 2008 2010 1990 1993 1996 1999 2002 2005 Sources: Bureau of Transportation Statistics and Association of State Highway and Transportation Officials 26
  • 27. More consumption is being sourced through imports, extending the supply chain U.S. Consumption U.S. Production and Imports 2000 Dollars in Trillions Indexed: 2000=100 $10 180 U.S. Imports $9 160 U.S. Industrial Production $8 140 $7 120 100 $6 80 $5 60 $4 2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010 Source: Global Insights 27
  • 28. The competitive environment supports the Rail Renaissance Intercity Freight Revenue • The trucking industry is faced Dollars in Billions with several challenges $525 $450 – Congested highways $375 – Labor shortages $300 – New hour of service laws $225 – Rising fuel costs $150 $75 $0 • Rail-truck partnerships bridge '60 '70 '75 '80 '85 '90 '95 '00 '05 those challenges, creating value Est for both Rail Truck Source: Eno Transportation 28
  • 29. Yet rail stocks continue to trade at a discount to the S&P 500 Price-to-Earnings Ratios by Industry 23.1 Healthcare 19.4 Industrials 18.7 Transportation 17.9 S&P 500 17.4 Utilities 17.0 Telecom 15.9 Railroads Note: Reflects closing January stock prices and LTM earnings per share 29
  • 30. CSX’s price-to-earnings ratio has room for improvement Price-to-Earnings Ratios 18.4 16.9 16.7 15.3 15.2 14.4 CSX NSC CP CNI BNI UNP Note: Reflects closing January stock prices and 2006 First Call earnings estimate 30
  • 31. CSX’s commitment towards achieving its targets will drive that improvement Evolving Investment Thesis 2006-2010 Targets • Operating ratio Commitment • Mid – 70’s • Economic cycle Commitment • Grow through the cycle • Cost of capital Commitment • Meet or exceed COC • Long-term growth Commitment • Double-digit growth 31
  • 32. CSX Corporation BB&T Transportation Conference February 15, 2006