Csx Corporation · NASDAQ:CSX
Csx — J.P. Morgan Aviation, Transportation and Defense Conference 2010
24 slides from Csx's conference presentation, Mar 10, 2010
Slide 1: How tomorrow moves
How tomorrow moves ee eo" J.P. MORGAN AVIATION, TRANSPORTATION AND DEFENSE 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, volumes, rates, cost-savings,
Slide 3: The year 2009 in review
The year 2009 in review . . . Challenges abound . . . . . . and CSX responded Worst industrial economy in Maintained strong core past half century pricing discipline — Industrial production down 10% — Same store sales prices up 6% Double-digit volume declines Produced strong safety across th
Slide 4: Strong response produced strong financial results
Strong response produced strong financial results Operating Continuing Operating Margin Income in Millions Earnings Per Share $3.66 $2,768 25.3% 24.6% $2.77 $2.87 $2,260 $2,285 22.5% $1,981 $2.24 20.7% 7,358 7,358 7,358 7,116 7,116 7,116 6,827 6,827 6,827 5,793 5,793 5,793 Volume Volume (000) (000)
Slide 5: CSX ranks among the leaders within the S&P 500
CSX ranks among the leaders within the S&P 500 Operating Continuing Operating Margin Income Growth EPS Growth Improvement (bps) 2006-2009 2006-2009 2006-2009 460 15% 28% (4%) 140 (1%) (55%) (21%) (130) CSX S&P S&P 500 CSX S&P S&P 500 CSX S&P S&P 500 Rails Rails Rails CSX CSX ranks ranks among among
Slide 6: Safety, service and productivity drove strong results
Safety, service and productivity drove strong results Safety Service Productivity FRA Personal Injury Rate On-time Originations Rightsizing Results 81% 1.47 79% 79% 76% 1.24 1.22 1.19 (15%) (14%) (13%) 2006 2007 2008 2009 2006 2007 2008 2009 Volume Variable Total Costs Costs Note: Variable and total
Slide 7: Recovering economy is favorable 2010 backdrop
Recovering economy is favorable 2010 backdrop Gross Domestic Product and Industrial Production Year-Over-Year Change 4.3% 3.0% 2.1% 1.5% 0.4% (2.2%) (2.4%) (9.7%) 2007 2008 2009 2010P Gross Domestic Product Industrial Production Source: Global Insight 77
Slide 8: Strong volume and revenue growth expected in 2010
Strong volume and revenue growth expected in 2010 The U.S. economy is expected to grow at a Economic modest rate of 3% off a low base Outlook Outlook Economies for the U.S.’s major trading partners are expected to grow 4.5%, led by China The inventory cycle remains strong for 2010 and Inventor
Slide 9: Volume is up 3% YTD, growing in nearly all markets
Volume is up 3% YTD, growing in nearly all markets Volume Growth Year-Over-Year Change % of Total Automotive 5% 78% Intermodal 34% 12% Merchandise 37% 7% Coal 24% (17%) Total 100% 3% Note: Data reflects year-over-year volume growth through the first nine weeks 99
Slide 10: Coal volume growth is expected in 2010
Coal volume growth is expected in 2010 Second half utility coal expected . . . and export coal expected to to be less challenged . . . reach 30M tons, driven by China 2009 Volume 2010 YTD Run-rate Actual Volume 2010 Forecast Tons in millions Tons in millions 37.0 32.6 31.4 28.8 30.0 30.0 22.5 China
Slide 11: Merchandise volume growth is expected in 2010
Merchandise volume growth is expected in 2010 Agriculture Sector Industrial Sector Housing Sector YTD Volume Growth YTD Volume Growth YTD Volume Growth 49% 22% 2% (1%) 4% (5%) (6%) AG FC PF CH MT FP EM Percent of Sector Volume Percent of Sector Volume Percent of Sector Volume 52% 65% 44% 37% 11% 35%
Slide 12: Automotive volume growth is expected in 2010
Automotive volume growth is expected in 2010 North American Light Vehicle Production in 2009 was the Production in Millions lowest level since 1961 Production Replacement Level — CSX shipments declined 32% 15.0 12.6 Production is forecasted to 10.8 partially recover in 2010 8.6 — Still below rep
Slide 13: New UMAX intermodal service formed by CSX-UNP
New UMAX intermodal service formed by CSX-UNP UMAX offers international and New jointly marketed interline domestic service on all core lanes container program — More than 600 service lanes across North America Truck competitive service levels in key lanes — Ramp-to-ramp and door-to-door service
Slide 14: Overview of the affects of the new agreement
Overview of the affects of the new agreement . . . New agreement replaces previous contracts — Prior contracts dated back to Southern Pacific and expired in 2011 and 2016 Prior contracts allowed CSX to market off-core moves — Generated additional foreign line-haul revenue and inland transportati
Slide 15: Strong margin expansion expected in 2010
Strong margin expansion expected in 2010 Labor and fringe inflation is expected to reach $160 million in 2010 Inflation Higher union wages, management salaries and health care costs drive inflationary pressures Stronger growth in lower margin businesses, Intermodal and Automotive, is expected
Slide 16: Operating leverage will drive margin expansion
Operating leverage will drive margin expansion Volume is up 3% year-to-date, with crew starts down . . . Weekly Weekly Road Weekly Local Weekly Yard Volume(000) Crew Starts Crew Starts Crew Starts 110 9,127 2,771 5,364 107 8,908 5,179 Up Up 3% 3% 2,633 Down Down 2% 2% Down Down 5% 5% Down Down 3% 3%
Slide 17: Operating leverage is helping improve productivity
Operating leverage is helping improve productivity Gross Ton Miles Train length is increasing Per Active T&E Employee — Intermodal trains still have 20-30% excess capacity 8,477 — Merchandise trains still have 10-15% excess capacity 7,223 — Total Service Integration 17% 17% Improvement Improvement
Slide 18: CSX is well prepared as volume continues to build
CSX is well prepared as volume continues to build Furloughed employees Resources Available — Generally available within a few weeks T&E Employees furloughed 1,529 Newly-hired employees Percent of total 14% — Training of new employees takes four to six months Locomotives stored 407 Percent of tot
Slide 19: Wrap up
Wrap up . . . Economic environment continues to improve — Macro and industrial economy expected to grow 3.0% and 4.3% respectively Operating leverage will drive further margin expansion — Bringing resources back on a less than one-for-one basis Double-digit earnings growth expected for 2010 —
Slide 20: How tomorrow moves
How tomorrow moves ee eo" J.P. MORGAN AVIATION, TRANSPORTATION AND DEFENSE CONFERENCE
Slide 21: Appendix
Appendix
Slide 22: GAAP Reconciliation Disclosure
GAAP Reconciliation Disclosure CSX reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures used to manage the company’s business that fall within the meaning of Regulation G (Disclosure
Slide 23: GAAP Reconciliation
GAAP Reconciliation Full-year Results Dollars in millions 2006 2007 2008 2009 Operating Income $ 2,149 $ 2,260 $ 2,768 $ 2,285 Gain on Insurance Recoveries (168) - - - Comparable Operating Income $ 1,981 $ 2,260 $ 2,768 $ 2,285 Operating Margin 22.5% 22.5% 24.6% 25.3% Gain on Insurance Recoveries 1.
Slide 24: How tomorrow moves
How tomorrow moves ee eo" J.P. MORGAN AVIATION, TRANSPORTATION AND DEFENSE CONFERENCE
CSX — J.P. Morgan Aviation, Transportation and Defense Conference 2010 on 6ix