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csx Q3_2005

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    csx  Q3_2005 csx Q3_2005 Presentation Transcript

    • CSX Corporation Third-Quarter Earnings October 26, 2005
    • Forward-looking Disclosure Statement This presentation and other statements by the Company contain forward looking statements within the forward-looking 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 made, 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 g () py p g 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 ( ) the outcome of claims and litigation involving or affecting y y (v) g g g 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.
    • Michael Ward Chairman, President and Chief Executive Officer
    • Clarence Gooden Executive Vice President Chief Commercial Officer
    • The t Th strong economic outlook continues i tl k ti Transportation Services Index • Overall transportation Indexed: 2000 = 100 demand near record levels 120 110 • GDP remains strong 100 • Manufacturing index reflects 90 continued growth 80 70 60 1990 1993 1996 1999 2002 2005 Source: Bureau of Transportation Statistics 5
    • Surface Transportation revenue increased $182 million or 9.4% in the third quarter illi 9 4% i th thi d t Third Quarter Surface Transportation Revenue Dollars in millions $2,125 $1,943 2004 2005 6
    • Surface Transportation revenue per car increased 9.3% in the third quarter i d 9 3% i th thi d t • Yields improved across Third Quarter all markets Year-Over-Year Change 9.4% 9.3% • More than half of the RPU improvement is from price • F l surcharge h l d offset Fuel h helped ff t rising fuel costs 0.1% Revenue Volume RPU 7
    • Coal revenues of $512 million increased $74 million on strong yield and volume illi t i ld d l • Strong demand across Third Quarter all markets Year-Over-Year Change 16.9% • Favorable pricing environment 11.9% • Stockpiles remain below target 4.5% • Outlook remains favorable Revenue Volume RPU 8
    • Automotive revenues of $200 million increased $15 million on strong yield and volume illi t i ld d l • Price and fuel surcharge Third Quarter increases Year-Over-Year Change 8.1% • Production increase and 6.2% reduced downtime • Overall inventory levels at target levels 1.8% • Outlook is unfavorable Revenue Volume RPU 9
    • Intermodal revenues of $337 million increased $10 million on improved yield illi i d i ld • Elimination of low margin traffic Third Quarter Year-Over-Year Change • Reduction in off-core volumes off- 5.8% • Continued yield management 3.1% success • Outlook remains favorable (2.7%) Revenue Volume RPU 10
    • Intermodal operating income more than doubled; d bl d operating ratio improved to 79.8% ti ti i d t 79 8% Third Quarter Third Quarter Intermodal Operating Income Intermodal Operating Ratio (Dollars in Millions) 90.5% $68 79.8% $31 2004 2005 2004 2005 11
    • Merchandise revenues exceed $1 billion, increasing $78 million on stronger yield i i illi t i ld Third Quarter • Revenue gains in all markets g Year-Over-Year Change • Volume impact mixed 8.6% 8.0% 8 0% • Chemicals volume down • Outlook favorable across most markets (0.6%) Revenue Volume RPU 12
    • Merchandise i ld i i ll M h di yield gains in all markets kt Third Quarter Year-Over-Year Change 18.9% 12.6% 11.2% 7.5% 7.3% 5.9% 7.3% 6.7% 5.1% 4.8% 3.7% (5.8%) (7.0%) (7.4%) Metals Food & Forest Emerging Chemicals Phosphates Agricultural Consumer Products Markets & Fertilizers Products RPU Volume 13
    • Looking f L ki forward . . . d • Demand remains strong • Favorable pricing environment continues • Yield management focus will continue • Contract renewals are steady y • Continued emphasis on fuel efficiency and surcharge coverage 14
    • Tony Ingram Executive Vice President Chief Operating Officer
    • Infrastructure damaged by Hurricane Katrina will be largely repaired by year-end ill b l l i db d Gautier Bridge Bay St. Louis Bridge Target Date: Q4, 2005 Q4 Target Date: Q1, 2006 T t D t Q1 Mobile Gulfport Pascagoula New Orleans Biloxi Bay Bridge Target Date: Q4, 2005 Rigolets Pass Bridge Little Rigolets Bridge Target Date: Q4, 2005 Target Date: Q4, 2005 16
    • New Orleans interchange volumes continue to b t be routed through alternative gateways t d th h lt ti t Chicago New York East St Louis Southeastern Corridor Memphis Birmingham g Montgomery Jacksonville Mobile New O l N Orleans Miami 17
    • Service levels have stabilized, while safety continues to improve hil ft ti ti Third Quarter 2005 2004 FRA Personal Injury Frequency Index 1.91 1 91 2.42 2 42 FRA Train Accident Rate 3.85 4.43 Velocity (miles per hour) 19.7 20.1 Terminal Dwell Time (hours) 29.0 28.8 Cars-on- Cars-on-line 232,324 232 324 233,469 233 469 On- On-time Originations 51.1% 50.9% On- On-time Arrivals 43.1% 40.6% 18
    • Steady progress is id t i i evident in safety performance ft f FRA Personal Injury FRA Train Accident Twelve Month Rolling Average Twelve Month Rolling Average Injuries / 200,000 Man Hours Accidents / Million Train Miles 4.83 4 83 4.80 4 80 2.37 4.71 2.29 2.13 2.04 4.39 1.91 1 91 4.26 4 26 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2004 2004 2005 2005 2005 2004 2004 2005 2005 2005 19
    • Looking f L ki forward . . . d • S f t momentum continues t ti Safety • Productivity gains evident Reliable R li bl Performance • Service has stabilized Service Execution Productivity Discipline Safety Leadership 20
    • Oscar Munoz Executive Vice President Chief Financial Officer
    • Hurricane Katrina impacts . . . Hi K ti i t • Hurricane Katrina impact assessment of $250 million includes: – Capital costs of rebuilding the rail infrastructure – Lost profits from business interruption – Other expenses associated with storm damage • Self insured retention is $25 million • Timing of insurance recoveries will impact income recognition – Third quarter pre-tax impact was approximately $19 million pre- – Fourth quarter pre-tax impact is estimated at $15 million pre- 22
    • CSX earnings per share increased 31% to $0.72 despite H i d it Hurricane Katrina impact K ti i t Third Quarter Dollars i illi D ll in millions, except Earnings per Share tE i Sh 2005 2004 Variance Vi Surface Transportation Operating Income $ 361 $ 247 $ 114 Other Operating I Oth O ti Income ( 8) 3 ( 11) Consolidated Operating Income 353 250 103 All Other Income 11 41 ( 30) Interest Expense 100 106 6 Income Taxes 100 62 ( 38) Net Earnings $ 164 $ 123 $ 41 Earnings per Share $ 0.72 $ 0.55 $ 0.17 23
    • Surface Transportation earnings increased 46% and operating ratio improved 4.3 points d ti ti i d43 i t Surface Transportation Surface Transportation Operating R ti O ti Ratio Operating I O ti Income i Milli in Millions $361 87.3% 4.3 46% Pts 83.0% $247 2004 Q3 2005 Q3 2004 Q3 2005 Q3 24
    • Expenses increased 4% over prior year E i d i Surface Transportation Operating Expenses Third Q t Year-Over-Year Variance Thi d Quarter Y O Y V i (Dollars in Millions) $ $9 ($2) ($8) ($28) ($39) Fuel Price Volume and Train Operations All Other Inflation Operations Productivity 25
    • CSX raised its dividend 30%, reflecting strong earnings and cash flow expectations t i d h fl t ti • Core earning p g power has improved p • Double digit growth rates expected over the next five years – Operating Income – Earnings per share – Core Free Cash Flow • Yi ld i now comparable to peers Yield is bl t 26
    • Looking f L ki forward . . . d • Full year guidance raised to a range of $3.20 ― $3.30 – On a consistent basis with previous guidance – Includes the third and fourth quarter hurricane impact • Fourth quarter o 2004 included 53rd week for Fiscal Calendar ou t qua te of 00 c uded ee o sca Ca e da • On track to achieve full-year core Free Cash Flow of $450 million full- 27
    • CSX Corporation Third-Quarter Earnings October 26, 2005