Slide 1: Third Quarter Earnings Conference Call
[ How tomorrow moves ] ee eo" 201 THIRD 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: Third quarter performance
Third quarter performance . . . Volume 1,609K Revenue $2,666M Operating Income $825M Operating Ratio 69.1% EPS $1.08 Earnings Per Share Revenue growth — Driven by 10% volume increase, core pricing and fuel surcharge $1.08 Operating leverage $0.73 48% 48% — Safety, service and productivity Increa
Slide 5: Deploying capital for shareholders
Deploying capital for shareholders . . . Dividends — Board increased dividend to $0.26 per share effective with December payout — The company has increased the dividend eight times in the last five years Share Repurchases — Remaining $646 million of current share repurchase program expected to b
Slide 6: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing
Slide 7: Economic recovery continues
Economic recovery continues . . . Industrial economy expanding . . . . . . and inventories remain too low ISM Manufacturing ISM Manufacturing Purchasing Managers Index Customer Inventories Index 70 70 Unfavorable Favorable 60 60 50 50 Favorable Unfavorable 40 40 30 30 2007 2008 2009 2010 2007 2008 2
Slide 8: Revenue increases 16% to $2.7 billion
Revenue increases 16% to $2.7 billion Revenue $2,666M Volume 1,609K RPU $1,657 Revenue in Millions $114 $38 $2,666 $225 $2,289 Q3 2009 Volume Rate/Mix Fuel Price Q3 2010 Impact Note: See Fuel Surcharge Reconciliation 88
Slide 9: Improving economy drives 10% volume increase
Improving economy drives 10% volume increase Revenue $2,666M Volume 1,609K RPU $1,657 Volume (000) Third Quarter Summary 1,598 1,609 Total volume increased to 1,486 just over 1.6 million units Achieved sequential volume growth despite seasonality Each of the major markets grew versus the prior
Slide 10: Revenue per unit increases 6%
Revenue per unit increases 6% Revenue $2,666M Volume 1,609K RPU $1,657 Revenue Per Unit $1,710 $1,657 Third Quarter Summary $1,562 $1,411 Same store sales pricing increased by 6.6% year-over-year Increased fuel recovery contributed to RPU growth as well Mix affected by strong intermodal growth
Slide 11: Coal revenue increases 23%
Coal revenue increases 23% Revenue $835M Volume 392K RPU $2,130 Third Quarter Year-Over-Year Change Third Quarter Summary Revenue 23% Increased exports driven by Asia Volume 3% and European markets RPU 20% Higher industrial demand driven by strong steel production Coal 15% Categories Stockpile
Slide 12: Merchandise revenue increases 15%
Merchandise revenue increases 15% Revenue $1,428M Volume 643K RPU $2,221 Third Quarter Year-Over-Year Change Third Quarter Summary Revenue 15% Agricultural sector driven by feed, Volume 7% fertilizers and ethanol RPU 8% Industrial sector expanding with auto sales and the economy Merchandise Cate
Slide 13: Merchandise markets show broad-based growth
Merchandise markets show broad-based growth Revenue $1,428M Volume 643K RPU $2,221 Housing and Agriculture Sector Industrial Sector Construction Sector Revenue 11% Revenue 23% Revenue 5% Volume 2% Volume 15% Volume 2% RPU 9% RPU 7% RPU 2% 12% 38% 46% 37% 50% 32% 22% 63% Agricultural Products Automot
Slide 14: Intermodal revenue increases 6%
Intermodal revenue increases 6% Revenue $318M Volume 574K RPU $554 Third Quarter Year-Over-Year Change Third Quarter Summary Revenue 6% International market up on inventory Volume 19% replenishment RPU (11%) Domestic growth due to truck conversions and service offerings Intermodal Categories R
Slide 15: Sales and Marketing wrap-up
Sales and Marketing wrap-up . . . Fourth quarter outlook positive . . . . . . with industrial development F Favorable N Neutral driving long-term potential F Coal Agriculture Sector F Agricultural Products F Food and Consumer Products Chicago F Phosphates and Fertilizer New York Industrial Sec
Slide 16: Operations Review
Operations Review David Brown Executive Vice President Chief Operating Officer
Slide 17: Delivering in an improving business environment
Delivering in an improving business environment Culture of leadership, discipline and execution continues to produce strong results — Leadership: Continue delivering strong safety performance — Discipline: Cost control and operating Performance leverage driving improved margins Excellence Service
Slide 18: CSX a leader in one of Nation's safest industries
CSX a leader in one of Nation’s safest industries FRA Personal Injury Rate FRA Train Accident Rate 1.27 3.51 1.21 3.32 1.15 1.06 2.59 2.25 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2007 Q3 2008 Q3 2009 Q3 2010 18 18
Slide 19: Year-over-year performance remains stable
Year-over-year performance remains stable Service Reliability Network Performance On-time Originations Train Velocity (mph) 83% 77% 82% 77% 21.8 21.4 21.1 20.1 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2007 Q3 2008 Q3 2009 Q3 2010 On-time Arrivals Terminal Dwell (hours) 76% 79% 24.8 67% 69% 24.1 24.0 22.7
Slide 20: Resource utilization remains strong
Resource utilization remains strong Year-Over-Year Change in Volume and Resources Amount Volume (000) 1,609 10% Road Crew Starts 122,087 8% Local Crew Starts 35,972 4% Yard Crew Starts 69,048 3% Total Crew Starts 227,107 6% 20 20
Slide 21: Capacity available to support further growth
Capacity available to support further growth Active T&E Headcount Active Locomotives 14,006 13,647 4,093 4,017 12,883 3,839 3,598 11,107 11,324 3,295 Down Down 2,682 2,682 from from 2006 2006 levels levels Down Down 495 495 from from 2006 2006 levels levels Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 2006 2007 20
Slide 22: Productivity helping operating ratio reach new record
Productivity helping operating ratio reach new record Operating Ratio Managing resources to generate operating leverage 80% 78% Driving process improvement 75% 74% and controlling costs 69% Leveraging technology to drive productivity Total Service Integration (TSI) driving efficiencies Q3 Q3
Slide 23: Continuing to invest in network to drive efficiency
Continuing to invest in network to drive efficiency Capacity and Service — Infrastructure to increase train velocity and network capacity Chicago New York Double stack clearance — More efficient double-stack access to Port of NY/NJ St Louis Memphis Yard Automation — Remote control technology a
Slide 24: Operations wrap-up
Operations wrap-up . . . Strong safety performance continues to improve — Working towards goal of zero injuries and train accidents Resources continue to return slower than volume — Productivity contributes to the company’s record operating ratio performance Network operations and service leve
Slide 25: Financial Review
Financial Review Oscar Munoz Executive Vice President Chief Financial Officer
Slide 26: Third quarter earnings summary
Third quarter earnings summary . . . Third Quarter Results Dollars in millions, except EPS 2010 2009 Variance Revenue $ 2,666 $ 2,289 16% Expense 1,841 1,695 (9%) Operating Income $ 825 $ 594 39% Interest Expense (131) (140) Other Income (net) 8 6 Income Taxes (288) (170) Net Earnings $ 414 $ 290 43
Slide 27: Labor and Fringe expense increases 12%
Labor and Fringe expense increases 12% Employee Headcount Third Quarter Labor Analysis in Millions 33,976 33,428 2009 Labor Expense $ 653 30,219 Variance 29,883 Inflation (34) 1% 1% Increase Incentive Compensation (30) Increase Hiring and Other Costs (14) Subtotal (78) 2010 Labor Expense $ 731 Q3 20
Slide 28: MS&O expense increases 2%
MS&O expense increases 2% MS&O Expense Third Quarter Dollars in Millions MS&O Analysis in Millions $639 2009 MS&O Expense $ 500 $534 $500 $509 Variance Inland Transportation 44 Volume (24) Cycling Prior Year Gains (18) Other (11) Subtotal (9) 2010 MS&O Expense $ 509 Q3 2007 Q3 2008 Q3 2009 Q3 2010 N
Slide 29: Fuel expense increases 25%
Fuel expense increases 25% Gallons Per Thousand Third Quarter Gross Ton Miles Fuel Analysis in Millions 1.20 1.16 2009 Fuel Expense $ 223 1.14 1.12 Variance Price (34) Volume (15) Efficiency (4) Non-Locomotive (3) Subtotal (56) 2010 Fuel Expense $ 279 Q3 2007 Q3 2008 Q3 2009 Q3 2010 29 29
Slide 30: Depreciation increases 2% and rents decrease 2%
Depreciation increases 2% and rents decrease 2% Depreciation Rent Expense Dollars in Millions Dollars in Millions $232 $114 $226 $227 $106 $92 $90 $219 Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2007 Q3 2008 Q3 2009 Q3 2010 30 30
Slide 31: Dividends and repurchases increasing in 2010
Dividends and repurchases increasing in 2010 . . . Annual Dividends Cumulative Repurchases Per Share Dollars in Millions $5,294 $0.98 $0.88 $4,189 $4,189 $0.77 $2,639 $0.54 $0.33 $465 $0.22 Increased eight times over the last Since 2006, nearly 25% of CSX’s five years supporting CAGR of 35% outstand
Slide 32: With capital spending also increasing
. . . with capital spending also increasing 2010 Capital Spending Leverages improving Dollars in Billions economic environment Positions CSX for long-term $1.8 profitable growth $1.7 — Growth capital spending supports key markets — Productivity also enhanced with key investments Produces retur
Slide 33: Financial wrap-up
Financial wrap-up . . . Volume strength across nearly all markets continues — Underlying drivers of rail business remain positive Fluid network absorbing double-digit volume growth — Delivering productivity and reliable service as business returns Producing strong cash flow from core operation
Slide 34: Concluding Remarks
Concluding Remarks Michael Ward Chairman, President and Chief Executive Officer
Slide 35: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 35 35
Slide 36: Appendix
Appendix
Slide 37: Fuel Surcharge Reconciliation
Fuel Surcharge Reconciliation Third Quarter Dollars in millions 2010 2009 Variance Total Fuel Surcharge Recovery $ 156 $ 107 $ 49 Portion of year-over-year variance that is volume-related $ 11 Portion of year-over-year variance that is fuel price-related $ 38 37 37
Slide 38: Third Quarter Earnings Conference Call
[ How tomorrow moves ] ee eo" 201 THIRD QUARTER EARNINGS CONFERENCE CALL