Csx Corporation · NASDAQ:CSX
Csx — Investor Presentation (July 2015)
15 slides from Csx's investor presentation, Jul 22, 2015
Slide 1: Fredrik Eliasson, EVP CFO, Ex Parte 722
Fredrik Eliasson, EVP CFO Ex Parte 722 July 22, 2015
Slide 2: Four pillars of any revenue adequacy policy
Four pillars of any revenue adequacy policy: Measure Progress – Don’t Constrain it Address Replacement Cost Imperative Promote Differential Pricing Ensure Free Market Results to Foster Investment These pillars are essential to sound regulatory policy 2
Slide 3: Success of the Staggers Act since 1980
Success of the Staggers Act since 1980 Global Railroad U.S. Freight Railroad Employee Productivity2 Inflation-Adjusted Rates1 Tkm+Pkm per Employee Indexed: 1981 = $100 U.S. $100 Canada Mexico Brazil Russia $57 China Ukraine Germany India 0 5,000 10,000 15,000 1981 2014 Globally, U.S. rails are most
Slide 4: Value creation for shareholders and U.S. economy
Value creation for shareholders and U.S. economy CSX Vision To be the safest, most progressive North American railroad, relentless in the pursuit of customer and employee excellence Railroad Value Proposition Capital Revenue Investment Operating Dividends, Expense, Share Interest, Repurchases Taxes
Slide 5: Balanced approach to cash deployment
Balanced approach to cash deployment CSX Cash Deployment S&P 500 Cash Deployment1 2005-14 Average 2005-14 Average Capital Investment Capital Investment Dividends Dividends Share Repurchases Share Repurchases 28% 34% 44% 12% 60% 21% (1) Source: Capital IQ, as prepared by Morgan Stanley, July 2015 5
Slide 6: U.S. rail industry requires higher capital investment
U.S. rail industry requires higher capital investment U.S. Industry Comparison: Capital Investment1 10-yr median Capital Expenditure / Sales Electric Utilities 22% Railroad 17% Coal 14% Trucking 10% Barge Operators 8% Air Freight 6% Housing & Construction 6% Auto 5% Chemicals 4% Steel 4% Grain 2% (1
Slide 7: Capital investment of $2.5 billion in 2015
Capital investment of $2.5 billion in 2015 CSX 2015 Capital Investment Total = $2.5 billion1 Infrastructure & Equipment Replacement Growth & Productivity Investments PTC & Regulatory $0.3B $0.4B $1.8B 80%+ of capital investment in replacement and PTC (1) Planned 2015 capital investment; actual resul
Slide 8: Asset replacement costs are 3-4 times book value
Asset replacement costs are 3-4 times book value Track Locomotives Freight Cars Per Track Mile1 Per Locomotive Per Freight Car Depreciated Cost: $0.4M Depreciated Cost: $0.6M Depreciated Cost: $31K 3x 4x 3x Replacement Cost: $1.1M Replacement Cost: $2.2M Replacement Cost: $100K Note: Depreciated and
Slide 9: Major infrastructure costs ~40 times book value
Major infrastructure costs ~40 times book value Bay St. Louis Bridge Virginia Avenue Tunnel Year in Service: 1967 Year in Service: Late 19th Century Depreciated Cost: $2 million Depreciated Cost: $6 million 38x 42x Replacement Cost: $75+ million Replacement Cost: $250+ million 9
Slide 10: Investments aligned to evolving business mix
Investments aligned to evolving business mix Utility Coal Volume Domestic Intermodal Volume Tonnage in Millions Carloads in Thousands (45%) Decrease 65% Increase 1,485 141 898 78 2006 2014 2006 2014 10
Slide 11: Growth investments create public benefits
Growth investments create public benefits NW Ohio Intermodal Terminal Montreal Northeast Midwest 2 Boston Chicago NY/NJ 2 Philadelphia Baltimore St Louis 4 Norfolk Piedmont Atlantic Memphis Wilmington 2 Charleston Savannah Gulf Coast Jacksonville Mobile New Orleans Tampa Ft. Pierce Miami $200M+ inve
Slide 12: Higher returns create investment opportunities
Higher returns create investment opportunities “Virtuous” Investment Framework Class I Railroad Spend on Infrastructure & Equipment1 Dollars in Billions Higher $29 5% CAGR $28 Returns $26 $25 $23 $22 $20 $20 $21 $19 Higher Higher Reinvestment Cash Flow '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E Return
Slide 13: Constrained returns lessen public benefits
Constrained returns lessen public benefits “Vicious” Investment Framework Impact of Constrained Return Less investment Capped Returns Less efficiency Less reliable service Limited Reduced Reinvestment Cash Flow Less resources Constrained returns would drive under-investment and limit growth 13
Slide 14: Summary: Four pillars of revenue adequacy
Summary: Four pillars of revenue adequacy Measure Progress – Don’t Constrain it Address Replacement Cost Imperative Promote Differential Pricing Ensure Free Market Results to Foster Investment These pillars are essential to sound regulatory policy 14
Slide 15: Fredrik Eliasson, EVP CFO, Ex Parte 722
Fredrik Eliasson, EVP CFO Ex Parte 722 July 22, 2015