Second Quarter 2007
                                                       Earnings Presentation

                        ...
Executive Summary

           Michael Ward
           Chairman, President and
           Chief Executive Officer




     ...
Operations Review

       Tony Ingram
       Executive Vice President
       Chief Operating Officer




                 ...
Strong safety trends continue

        FRA Personal Injury                     FRA Train Accidents
                       ...
Asset utilization sustaining gains

        Dwell Time (hours)                              Cars-On-Line (000)
           ...
Customer satisfaction at all-time high
                                  Over 2,000 customer
   Customer Satisfaction
    ...
Operations wrap-up . . .

   Excellent safety and service performance, with
   further improvement ahead

   Productivity ...
Revenues up nearly 5% to $2.5 billion
                                                Pricing actions produced
       Seco...
Merchandise revenue increased 5%
           Second Quarter                             Record quarterly
          2007 ver...
Automotive revenue remained flat
           Second Quarter                            Price increases offsetting
         ...
Intermodal operating income up 16%

    Comparable Operating                                Comparable
      Income in Mil...
Sales and Marketing wrap-up . . .
                                       Economy forecasted to
       Economic Forecast
  ...
Strong second quarter results
                                            Second Quarter Results

Dollars in millions, exc...
Record Second Quarter Results

                  Comparable Surface Transporation
                    Operating Income in ...
Labor and fringe increased 4%
                            Primarily due to wage and
     Second Quarter
                  ...
Fuel remained relatively flat
                             Cycling $19 million fuel
      Second Quarter
                 ...
All other expenses increased 1%
                                         Higher capital base
       Second Quarter
      D...
Recent actions reinforce shareholder focus

        Cumulative Shares                          Quarterly Dividend
        ...
Concluding Remarks

      Michael Ward
      Chairman, President and
      Chief Executive Officer




                   ...
Second Quarter 2007
Earnings Presentation

                    39
                    39
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csx 2007-Q2-bwslides

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csx 2007-Q2-bwslides

  1. 1. Second Quarter 2007 Earnings Presentation 1 1 Forward-Looking Disclosure 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,” “estimate,” 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 2
  2. 2. Executive Summary Michael Ward Chairman, President and Chief Executive Officer 3 3 Second quarter overview . . . Core earning power is Second Quarter strong and increasing Earnings Per Share Pricing actions produced $0.83 record quarterly revenues $0.71 $0.71 $0.58 Safety and customer 22% satisfaction at all-time Increase best levels Price/productivity driving Reported Comparable operating ratio lower 2006 2007 Note: 2006 comparable EPS exclude insurance gains and resolution of certain tax matters 4 4
  3. 3. Operations Review Tony Ingram Executive Vice President Chief Operating Officer 5 5 Leadership, discipline and execution Excellent trends in safety and service Customer satisfaction Reliable levels at all-time high Performance Service Execution Service Execution Productivity gains working against inflation Productivity Discipline Productivity Discipline Safety Leadership Safety Leadership 6 6
  4. 4. Strong safety trends continue FRA Personal Injury FRA Train Accidents 13 Week 13 Week Average Average 1.04 2.85 1.58 3.96 1.46 3.62 1.43 3.45 1.39 3.25 3.09 1.31 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2006 2006 2007 2007 2006 2006 2006 2007 2007 Rolling 12-month Averages 7 7 On-time performance trending upward On-Time Originations On-Time Arrivals 13 Week 13 Week Average Average 80% 69% 77% 76% 76% 66% 63% 63% 71% 57% 65% 52% Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2006 2006 2007 2007 2006 2006 2006 2007 2007 Rolling 12-month Averages 8 8
  5. 5. Asset utilization sustaining gains Dwell Time (hours) Cars-On-Line (000) 13 Week 13 Week Average Average 24.0 hrs 223K 228 27.7 226 26.8 225 225 225 25.6 25.2 24.8 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2006 2006 2007 2007 2006 2006 2006 2007 2007 Rolling 12-month Averages 9 9 Network operations fluid and consistent Velocity (mph) 13 Week Average 20.4 mph 20.1 19.9 19.9 19.6 19.5 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Rolling 12-month Averages 10 10
  6. 6. Customer satisfaction at all-time high Over 2,000 customer Customer Satisfaction surveys each year Indexed: 2004=100 112 Measures 15 aspects of customer service 103 100 Achieved highest rating in 97 four years of study 2004 2005 2006 2007 YTD 11 11 Operating productivity is improving Execution is driving better asset utilization ONE Plan flexing with market conditions Process improvement enhancing efficiency Total Service Integration (TSI) initiative will further improve productivity 12 12
  7. 7. Operations wrap-up . . . Excellent safety and service performance, with further improvement ahead Productivity gains will continue to improve the operating ratio Improving execution will continue to drive higher levels of customer satisfaction 13 13 Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing 14 14
  8. 8. Revenues up nearly 5% to $2.5 billion Pricing actions produced Second Quarter record quarterly revenues Revenue in Millions ($55) $164 Leveraging yield strength $2,530 to offset softer volumes $2,421 Uninterrupted revenue $109 million growth more than 5yrs 2006 RPU Volume 2007 15 15 Price continues to drive RPU growth Year-Over-Year Change 12.6% 11.8% 11.7% 11.0% 9.6% 9.0% 8.4% 8.1% 6.9% 7.1% 6.8% 6.7% 6.6% 6.5% 6.3% 6.2% 6.0% 5.6% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2005 2005 2006 2006 2006 2006 2007 2007 Price Increase on 'Same Store Sales' Total Revenue per Unit Note: ‘Same Store Sales’ price increases exclude impacts from fuel and mix 16 16
  9. 9. Merchandise revenue increased 5% Second Quarter Record quarterly 2007 versus 2006 revenues Leveraging yield strength RPU 9% to offset softer volumes Volume (4%) Revenue 5% Strength in agriculture, driven by ethanol 2006 Change 2007 RPU $ 1,656 $ 148 $ 1,804 Softness in housing and automotive related Volume 729 (26) 703 markets continues (thousands) Revenue $ 1,207 $ 61 $ 1,268 (millions) 17 17 Coal revenue increased nearly 8% Second Quarter Record quarterly revenue 2007 versus 2006 Strong demand in export offsetting utility declines RPU 9% Volume (1%) Tons up nearly 1% on Revenue 8% higher tonnage per car 2006 Change 2007 Pricing environment RPU $ 1,262 $ 107 $ 1,369 remains strong Volume 470 (4) 466 (thousands) Revenue $ 593 $ 45 $ 638 (millions) 18 18
  10. 10. Automotive revenue remained flat Second Quarter Price increases offsetting 2007 versus 2006 volume declines ‘Big 3’ production down; RPU 4% additional plant closures Volume (4%) Revenue 0% New domestics continue to gain share 2006 Change 2007 RPU $ 1,798 $ 76 $ 1,874 Volume 124 (5) 119 (thousands) Revenue $ 223 $ 0 $ 223 (millions) 19 19 Intermodal revenue declined 4% Second Quarter International traffic down 2007 versus 2006 New services increase domestic traffic RPU (2%) Volume (1%) Price gains offset by mix Revenue (4%) 2006 Change 2007 RPU $ 651 ($ 15) $ 636 Volume 547 (8) 539 (thousands) Revenue $ 356 ($ 13) $ 343 (millions) 20 20
  11. 11. Intermodal operating income up 16% Comparable Operating Comparable Income in Millions Operating Ratio 90.2% $71 $61 $55 83.3% 82.9% $32 79.3% Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 2004 2005 2006 2007 2004 2005 2006 2007 Note: 2004 excludes restructuring charge and 2006 excludes insurance gains 21 21 Third quarter revenue outlook is positive Favorable Neutral Unfavorable Agricultural Products Intermodal Food & Consumer Automotive Metals Forest Products Chemicals Coal, Coke & Iron Ore Emerging Markets Phosphate & Fertilizer 22 22
  12. 12. Sales and Marketing wrap-up . . . Economy forecasted to Economic Forecast improve in second half 2007-2008 2.8% Expect strong revenue growth to continue 2.4% 2.1% 1.7% Overall volume outlook improving in second half Strong service levels support long-term growth 2007 2008 GDP Industrial Production Source: Global Insight July 2007 23 23 Financial Results Oscar Munoz Executive Vice President Chief Financial Officer 24 24
  13. 13. Strong second quarter results Second Quarter Results Dollars in millions, except EPS 2007 2006 Variance Surface Transportation Operating Income $ 603 $ 645 $ (42) Other Operating Income 1 1 - Consolidated Operating Income $ 604 $ 646 $ (42) Other Income (net) 11 11 - Interest Expense (101) (98) (3) Income Taxes (190) (169) (21) Net Earnings $ 324 $ 390 $ (66) Earnings Per Share $ 0.71 $ 0.83 $ (0.12) 25 25 Comparable EPS increased 22% Second Quarter Results Dollars in millions, except EPS 2007 2006 Variance Earnings Per Share $ 0.71 $ 0.83 ($ 0.12) Less Gain on Insurance Recoveries (0.17) 0.17 Less Income Tax Benefits (0.08) 0.08 Comparable Earnings Per Share $ 0.71 $ 0.58 $ 0.13 Surface Transportation Operating Income $ 603 $ 645 ($42) Less Gain on Insurance Recoveries (126) 126 Comparable Operating Income $ 603 $ 519 $ 84 26 26
  14. 14. Record Second Quarter Results Comparable Surface Transporation Operating Income in Millions $73 $603 $30 $519 ($19) Q2 2006 Fuel Injury Earnings Q2 2006 Hedge Reserves Momentum 2007 27 27 Operating income up 16% Second Quarter Results Surface Transportation ($ in millions) 2007 2006 Variance Revenue $ 2,530 $ 2,421 5% Expenses Labor and Fringe 741 715 (4%) Materials, Supplies and Other 507 489 (4%) Fuel 289 288 (0%) Depreciation 221 216 (2%) Equipment and Other Rents 109 132 17% Inland Transportation 60 62 3% Operating Expenses 1,927 1,902 (1%) Operating Income $ 603 $ 519 16% Operating Ratio 76.2% 78.6% 2.4 pts Note: 2006 results exclude insurance gains 28 28
  15. 15. Labor and fringe increased 4% Primarily due to wage and Second Quarter benefit inflation Dollars in Millions $26 $741 New labor agreement $715 provides long-term benefits Train crew headcount declined over 300 2006 Variance 2007 29 29 MS&O increased 4% Increase primarily driven Second Quarter by inflation Dollars in Millions $507 $18 Personal injury reserves $489 improve $30 million on strong safety record 2006 Variance 2007 30 30
  16. 16. Fuel remained relatively flat Cycling $19 million fuel Second Quarter hedge benefit from 2006 Dollars in Millions $1 $289 $288 Lower fuel price and reduced volumes Fuel efficiency reduced consumption by two million gallons 2006 Variance 2007 31 31 Rents decreased 17% Lower Merchandise and Second Quarter Intermodal volumes Dollars in Millions ($23) $132 Operations driving better asset utilization $109 Favorable impact from the settlement of car hire expense with other rails 2006 Variance 2007 32 32
  17. 17. All other expenses increased 1% Higher capital base Second Quarter Dollars in Millions Updated asset life study $3 impacts depreciation $281 $278 $60 $62 $221 $216 2006 Variance 2007 Depreciation Inland Transport 33 33 Focused approach to managing costs 2007 2008-09 2010+ Plan long-term and execute short-term Productivity and effectiveness targets established Cross-functional and end-to-end process Benchmarking best-in-class Helping drive the operating ratio to the mid-low 70’s 34 34
  18. 18. Recent actions reinforce shareholder focus Cumulative Shares Quarterly Dividend Repurchased Q3 2005 - Q3 2007 Dollars in Millions $0.15 $1,192 $0.12 $0.10 $548 Q2 $644 $0.07 $465 $0.05 $422 $149 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q1 Q3 2006 2006 2006 2007 2007 2005 2005 2006 2007 2007 35 35 Financial wrap-up . . . 2007–2010 CAGR Set goals Set goals Surface Transport 10%–12% Operating Income Consistent Execute Execute continuous and and Earnings Per Share 15%–17% Monitor Monitor improvement Progress Progress Operating Ratio Mid-low 70’s Create Create plans plans ROIC Exceed COC 36 36
  19. 19. Concluding Remarks Michael Ward Chairman, President and Chief Executive Officer 37 37 Looking forward . . . Driving excellent value for shareholders Meeting the growing needs of our customers and the entire nation Investments geared to accomplishing both Committed to balanced approach to continue driving superior long-term value creation 38 38
  20. 20. Second Quarter 2007 Earnings Presentation 39 39

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