Csx Corporation · NASDAQ:CSX
Csx — 2016 Bank of America Merrill Lynch Transportation Conference
19 slides from Csx's conference presentation, May 17, 2016
Slide 1: 2016 Bank of America Merrill Lynch Transportation Conference
| eee i - S sd ® : x CSX : = HOW TOMORROW MOVES 2016 BANK OF AMERICA MERRILL LYNCH [, TRANSPORTATION CONFERENCE ‘
Slide 2: Forward-Looking Statements
Forward-Looking Statements This information and other statements by the company may 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, margins, volumes, rates, cost
Slide 3: Presentation overview
Presentation overview . . . Solid first quarter results despite challenging environment — Cycled $95 million of liquidated damages; significant declines in coal Macro-economic headwinds expected to persist in 2016 — Low natural gas, low commodity prices, strong dollar expected to continue Effi
Slide 4: Solid first quarter despite challenging environment
Solid first quarter despite challenging environment Operating Income Operating income declined Dollars in Millions $139 million to $704 million — Cycling liquidated damages, which declined $95 million $843 $704 Strong pricing for rail service — All-in same store sales pricing at 3.1%; 4.0% exclu
Slide 5: Macro-economic headwinds expected to continue
Macro-economic headwinds expected to continue U.S. Dollar Index U.S. Corn Prices 2009 = 100 Dollars per Bushel 115 $5.25 110 $4.50 105 100 $3.75 95 90 $3.00 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Iron & Steel Production Index WTI Crude Oil P
Slide 6: Natural gas and global prices still challenging coal
Natural gas and global prices still challenging coal Henry Hub Natural Gas Prices April Stockpiles Dollars per Million BTU CSXT Region Days of Burn $10 178 $8 102 69 79 116 $6 54 101 68 $4 $2 2013 2014 2015 2016 2013 2014 2015 2016 $0 Jan-14 Jan-15 Jan-16 Jan-17 North 2007 – 2011 avg. South Thermal
Slide 7: Weak demand trends persist in fiscal second quarter
Weak demand trends persist in fiscal second quarter Year-Over-Year Volume Growth First Quarter Second Quarter to Date 11% 6% 0% (1%) (1%) (6%) (7%) (6%) (6%) (5%) (9%) (17%) (31%) (34%) Domestic International Industrial Construction Agricultural Coal Total Intermodal Intermodal Sector Sector Sector
Slide 8: Strong service yields strong pricing through cycle
Strong service yields strong pricing through cycle On-time Originations Same Store Sales Pricing Year-Over Year Change 79% 81% Merchandise and Intermodal All-in 76% 4.4% 4.5% 66% 3.9% 4.6% 4.0% 3.4% 4.1% 50% 3.5% 3.1% 2.0% Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2015 2015 2015 2015 2016 2015 2015 2015 2015 20
Slide 9: Full year efficiency approaching company record
Full year efficiency approaching company record Efficiency Savings in Millions 2006-2015 Average = $153 Million $282 Exceed $250 $198 $188 $184 $167 $159 $150 $112 $80 $5 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 9
Slide 10: Train length initiative driving efficiency savings
Train length initiative driving efficiency savings Weekly System Average Train Length in Feet 2014 2015 2016 7,000 6,500 6,000 5,500 5,000 4,500 Q1 Q2 Q3 Q4 10
Slide 11: CSX has taken significant actions to mitigate costs
CSX has taken significant actions to mitigate costs CSX Employees in Thousands Right-sizing resources to lower demand environment 4,400 32.1 32.3 32.2 Reduction — 1,900 T&E furloughs 31.6 — 260 locomotives stored 30.9 29.8 Significant actions to drive efficiency savings — Coal network rationaliz
Slide 12: CSX continuing to streamline cost structure
CSX continuing to streamline cost structure Appalachian Coal Fields Significant actions taken in West Virginia response to coal environment Russell ~100 Employees — Erwin, Corbin, Russell closures Impacted — Huntington Division consolidation Eastern Kentucky — Streamline coal shipments from Ashtab
Slide 13: Business mix significantly evolving more recently
Business mix significantly evolving more recently Volume in Thousands Revenue in Millions Coal Merchandise Intermodal Coal Merchandise Intermodal 6,761 $11,445 $11,333 6,476 13% 16% 35% 42% 55% 64% 41% 42% 24% 32% 16% 20% 2011 2015 2011 2015 Note: Revenue excludes other revenue 13
Slide 14: CSX of Tomorrow builds on key strategic initiatives
CSX of Tomorrow builds on key strategic initiatives Service Evolving Business Network of Strategic Initiatives Excellence Portfolio Tomorrow Lower mix of coal volume Network transformation in business portfolio Leverage technology Cyclicality across merchandise markets Intermodal investmen
Slide 15: Network transformation drives long term growth
Network transformation drives long term growth CSX Rail Network Key corridors drive growth in merchandise and intermodal — Focus growth on I-95, I-90 and Southeastern Corridors — Leverage two-thirds population; over 60% of manufacturing Focused on actions beyond our coal network to drive efficie
Slide 16: Network leverages secular Intermodal growth
Network leverages secular Intermodal growth CSX Intermodal Terminals Domestic Volume vs. ATA Tonnage Indexed: January 2006 = 100 ATA Truck Tonnage CSX Weekly Domestic Intermodal Volume Montreal 250 225 Northwest Ohio 2 200 3 3 Chicago 2 175 Philadelphia 150 St. Louis 125 3 Portsmouth 100 Nashville C
Slide 17: Hub and spoke strategy enhances network reach
Hub and spoke strategy enhances network reach Hub and Spoke Network Hub and spoke coupled with corridor lanes a key differentiator Montreal — Hubs create density, connecting mid-markets, driving growth Northwest Ohio Carolina Connector captures Chicago Philadelphia vibrant mid-Atlantic market —
Slide 18: Wrap-up
Wrap-up . . . Solid first quarter results despite challenging environment — Cycled $95 million of liquidated damages; significant declines in coal Macro-economic headwinds expected to persist in 2016 — Low natural gas, low commodity prices, strong dollar expected to continue Second quarter and
Slide 19: 2016 Bank of America Merrill Lynch Transportation Conference
| eee i - S sd ® : x CSX : = HOW TOMORROW MOVES 2016 BANK OF AMERICA MERRILL LYNCH [, TRANSPORTATION CONFERENCE ‘
CSX — 2016 Bank of America Merrill Lynch Transportation Conference on 6ix