Slide 1: 2010 First Quarter Earnings Conference Call
[ How tomorrow moves ] 2010 FIRST QUARTER EARNINGS CONFERENCE CALL
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, volumes, rates, cost-savings,
Slide 3: Executive Summary
Executive Summary Michael Ward Chairman, President and Chief Executive Officer
Slide 4: First quarter performance
First quarter performance . . . Earnings Per Share From Revenue improves strongly Continuing Operations — Driven by volume growth, core pricing, and fuel surcharge $0.78 Operations remain stable — Safety levels strong, with service $0.64 22% 22% levels solid in difficult weather Increase Increas
Slide 5: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing
Slide 6: Revenue increases 11% to nearly $2.5 billion
Revenue increases 11% to nearly $2.5 billion Revenue $2,491M Volume 1,486K RPU $1,676 Revenue in Millions $37 $2,491 $101 $106 $2,247 Q1 2009 Volume Rate/Mix Fuel Price Q1 2010 Impact Note: See Fuel Surcharge Reconciliation 66
Slide 7: Improving economy drives 5% volume increase
Improving economy drives 5% volume increase Revenue $2,491M Volume 1,486K RPU $1,676 Year-Over-Year Volume Growth % of Total Automotive 5% 64% Intermodal 34% 14% Merchandise 36% 7% Coal 25% (13%) Total 100% 5% 77
Slide 8: Core pricing stable; revenue per unit increases
Core pricing stable; revenue per unit increases Revenue $2,491M Volume 1,486K RPU $1,676 Year-Over-Year Change Same Store Sales Price Increase Total Revenue per Unit 21.2% 18.3% 14.5% 14.0% 10.5% 5.9% 6.7% 6.8% 6.4% 6.2% 6.5% 6.5% 6.6% 6.3% 5.3% 5.0% 0.2% (5.4%) (8.7%) (7.1%) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 9: Coal revenue declines 1%
Coal revenue declines 1% Revenue $736M Volume 373K RPU $1,973 First Quarter First quarter summary Year-Over-Year Change — Lower utility demand due to above normal stockpiles and weather Revenue (1%) — Increased export demand driven Volume (13%) by the Chinese market RPU 14% — Higher industrial dem
Slide 10: Automotive revenue increases 79%
Automotive revenue increases 79% Revenue $170M Volume 74K RPU $2,297 First Quarter First quarter summary Year-Over-Year Change — North American Light Vehicle production increases off low base Revenue 79% — Sales growth driven by incentives Volume 64% and Improved credit market RPU 9% Ongoing dri
Slide 11: Merchandise revenue increases 11%
Merchandise revenue increases 11% Revenue $1,198M Volume 539K RPU $2,223 First Quarter First quarter summary Year-Over-Year Change — Metals and Chemicals favorable on increased industrial activity Revenue 11% — Ethanol and Phosphates drive Volume 7% Agriculture-related markets RPU 4% — Housing and
Slide 12: Intermodal revenue increases 20%
Intermodal revenue increases 20% Revenue $323M Volume 500K RPU $646 First Quarter First quarter summary Year-Over-Year Change — RPU higher on fuel recovery and improving pricing environment Revenue 20% — International growth with inventory Volume 14% replenishments and exports RPU 5% — Domestic up
Slide 13: New UMAX intermodal service formed by CSX-UNP
New UMAX intermodal service formed by CSX-UNP UMAX offers nationwide New Service started in the service on all core freight lanes second quarter — CSX and UNP will now market transcontinental business jointly — Fleet of 20,000+, 53-foot containers dedicated to service Initial financial impact fo
Slide 14: Sales and Marketing wrap-up
Sales and Marketing wrap-up . . . Economic recovery expected to continue — Industrial economy is projected to grow above 4% throughout 2010 Second quarter volume and revenue outlook favorable — Revenue growth expected across nearly all markets Business development leveraging network investment
Slide 15: Operations Review
Operations Review David Brown Executive Vice President Chief Operating Officer
Slide 16: Delivering under challenging conditions
Delivering under challenging conditions Culture of leadership, discipline and execution continues to produce strong results — Leadership: Safety performance was strong and continued to improve in the first quarter — Discipline: Cost control and operating Performance leverage helping to improve mar
Slide 17: Helping to lead one of the Nation's safest industries
Helping to lead one of the Nation’s safest industries FRA Personal Injury Rate FRA Train Accident Rate 3.62 1.36 1.30 3.29 1.13 3.13 2.99 0.81 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2007 Q1 2008 Q1 2009 Q1 2010 17 17
Slide 18: Service levels stable on fluid network operations
Service levels stable on fluid network operations Service Reliability Network Performance On-time Originations Train Velocity (mph) 79% 83% 21.6 74% 69% 20.8 20.9 20.1 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2007 Q1 2008 Q1 2009 Q1 2010 On-time Arrivals Terminal Dwell (hours) 79% 25.8 69% 67% 24.5 24.1 6
Slide 19: Crew starts decline 2%, as volume increases 5%
Crew starts decline 2%, as volume increases 5% Year-Over-Year Change in Volume and Crew Starts Crew Starts Volume 5% Road Crew Starts 119,039 (1%) Local Crew Starts 34,535 (4%) Yard Crew Starts 67,883 (3%) Total Crew Starts 221,457 (2%) 19 19
Slide 20: CSX is well prepared as volume continues to build
CSX is well prepared as volume continues to build T&E Employees Furloughed 2,533 Currently recalling furloughed T&E 1,093 employees to support growth Peak Current Hiring employees in certain locations Locomotives Stored to also support growth and attrition 707 272 Locomotives and freight cars
Slide 21: Operations wrap-up
Operations wrap-up . . . Safety performance continues to be strong — Helping lead transportation’s safest industry and one of America’s safest Productivity is driving greater cost efficiency — Working aggressively to manage resources as volume continues to build Customer service levels remain
Slide 22: Financial Review
Financial Review Oscar Munoz Executive Vice President Chief Financial Officer
Slide 23: First quarter earnings summary
First quarter earnings summary . . . First Quarter Results Dollars in millions, except EPS 2010 2009 Variance Revenue $ 2,491 $ 2,247 11% Expense 1,857 1,725 (8%) Operating Income $ 634 $ 522 21% Interest Expense (142) (141) Other Income (net) 11 3 Income Taxes (197) (130) Earnings from Continuing O
Slide 24: Labor and Fringe expense increases 10%
Labor and Fringe expense increases 10% Employee Headcount First Quarter Labor Analysis in Millions 34,037 32,896 2009 Labor Expense $ 662 31,175 Variance 29,310 Incentive Compensation (48) Inflation (40) 6% 6% Decline Decline Efficiency 34 Other (13) Subtotal (67) 2010 Labor Expense $ 729 Q1 2007 Q1
Slide 25: MS&O expense declines 5%
MS&O expense declines 5% MS&O Expense First Quarter Dollars in Millions MS&O Analysis in Millions $521 $505 $477 2009 MS&O Expense $ 477 $453 Variance Recoveries 17 Safety Improvement 7 Subtotal 24 2010 MS&O Expense $ 453 Q1 2007 Q1 2008 Q1 2009 Q1 2010 25 25
Slide 26: Fuel expense increases 48%
Fuel expense increases 48% Gallons Per Thousand First Quarter Gross Ton Miles Fuel Analysis in Millions 1.31 2009 Fuel Expense $ 191 1.27 1.25 Variance 1.21 Price (87) Volume (7) Efficiency 5 3% 3% Improvement Improvement Non-Locomotive (3) Subtotal (92) 2010 Fuel Expense $ 283 Q1 2007 Q1 2008 Q1 20
Slide 27: Other expenses collectively decrease 1%
Other expenses collectively decrease 1% Other Costs in Millions Inland Transportation up on off-core volume increase Depreciation Rents Inland Transportation $398 $396 $395 $392 Rents decline on cycling prior $57 $63 $58 $63 year foreign road settlements $120 $113 $111 $100 Higher capital base
Slide 28: Productivity is driving greater cost efficiency
Productivity is driving greater cost efficiency First Quarter Cost Structure 2010 2009 % Change Fuel-adjusted Volume 1,486 1,419 5% 5% Fuel Short-term Car Hire $ 515 $ 423 (22%) (1%) Variable Costs Unit Train Crews Third Party Services Terminal Operations Long-term Scheduled Network Crew
Slide 29: Financial wrap-up
Financial wrap-up . . . Economic recovery resulting in overall volume growth — Most markets rebounding strongly from the lower 2009 levels Continue investing within balanced regulatory framework — Expect to invest $1.7 billion in 2010, with $170 million devoted to PTC — Complete implementation o
Slide 30: Concluding Remarks
Concluding Remarks Michael Ward Chairman, President and Chief Executive Officer
Slide 31: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 31 31
Slide 32: Appendix
Appendix
Slide 33: Fuel Surcharge Reconciliation
Fuel Surcharge Reconciliation First Quarter Dollars in millions 2010 2009 Variance Total Rail and Intermodal Fuel Surcharge Recovery $ 147 $ 105 $ 42 Portion of year-over-year variance that is volume-related $ 5 Portion of year-over-year variance that is fuel price-related $ 37 Since total fuel surc
Slide 34: 2010 First Quarter Earnings Conference Call
[ How tomorrow moves ] 2010 FIRST QUARTER EARNINGS CONFERENCE CALL