csx Q3_2005

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csx Q3_2005

  1. 1. CSX Corporation Third-Quarter Earnings October 26, 2005
  2. 2. 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.
  3. 3. Michael Ward Chairman, President and Chief Executive Officer
  4. 4. Clarence Gooden Executive Vice President Chief Commercial Officer
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Tony Ingram Executive Vice President Chief Operating Officer
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. Oscar Munoz Executive Vice President Chief Financial Officer
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. CSX Corporation Third-Quarter Earnings October 26, 2005

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