Slide 1: Second Quarter Earnings Conference Call
7 F. | | [ How tomorrow moves ] ee eo" P01 SECOND 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: Second quarter performance
Second quarter performance . . . Volume 1,598K Revenue $2,663M Operating Income $768M Operating Ratio 71.2% EPS $1.07 Earnings Per Share From Revenue growth Continuing Operations — Driven by 13% volume increase, core pricing and fuel surcharge $1.07 Operating leverage $0.71 51% 51% — Safety, ser
Slide 5: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing
Slide 6: Economic recovery continues
Economic recovery continues . . . Industrial economy expanding . . . . . . and inventories remain low ISM Manufacturing ISM Manufacturing Purchasing Managers Index Customer Inventories Index 70 70 60 60 50 50 40 40 30 30 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08
Slide 7: Revenue increases 22% to nearly $2.7 billion
Revenue increases 22% to nearly $2.7 billion Revenue $2,663M Volume 1,598K RPU $1,666 Revenue in Millions $80 $2,663 $108 $290 $2,185 Q2 2009 Volume Rate/Mix Fuel Price Q2 2010 Impact Note: See Fuel Surcharge Reconciliation 77
Slide 8: Improving economy drives 13% volume increase
Improving economy drives 13% volume increase Revenue $2,663M Volume 1,598K RPU $1,666 Year-Over-Year Volume Growth First Quarter Second Quarter 18% 14% 14% 13% 12% 7% 5% (13%) Intermodal Merchandise Coal Total 34% 41% 25% 100% of total of total of total 88
Slide 9: Core pricing and revenue per unit increase
Core pricing and revenue per unit increase Revenue $2,663M Volume 1,598K RPU $1,666 Year-Over-Year Change Same Store Sales Price Increase Total Revenue per Unit 21.2% 18.3% 14.5% 14.0% 7.6% 5.9% 6.8% 6.4% 6.2% 6.5% 6.5% 6.6% 6.3% 5.3% 5.0% 6.5% 0.2% (5.4%) (8.7%) (7.1%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 10: Coal revenue increases 26%
Coal revenue increases 26% Revenue $835M Volume 401K RPU $2,082 Second Quarter Second quarter summary Year-Over-Year Change — Increased export demand driven by the Asian market Revenue 26% — Higher industrial demand driven Volume 7% by strong steel production RPU 18% — Above normal stockpiles cont
Slide 11: Second half utility coal volumes are less challenged
Second half utility coal volumes are less challenged Weekly Utility Coal Shipments (tons) 2009 Weekly Volume 2009 Quarterly Average Weekly Volume 2010 Weekly Volume 3.5M 3.0M 2.5M 2.0M 1.5M 1.0M First Second Third Fourth Quarter Quarter Quarter Quarter Note: Data for 2010 is through June 25, 2010 11
Slide 12: Merchandise revenue increases 24%
Merchandise revenue increases 24% Revenue $1,456M Volume 659K RPU $2,209 Second Quarter Second quarter summary Year-Over-Year Change — Agricultural sector driven by phosphates and ethanol Revenue 24% — Industrial sector expanding with Volume 14% auto sales and economy RPU 9% — Housing sector still
Slide 13: Merchandise markets show broad-based strength
Merchandise markets show broad-based strength Revenue $1,456M Volume 659K RPU $2,209 Housing and Agriculture Sector Industrial Sector Construction Sector Revenue 10% Revenue 41% Revenue 13% Volume 3% Volume 32% Volume 5% RPU 6% RPU 7% RPU 8% 12% 38% 43% 37% 50% 33% 24% 63% Agricultural Products Auto
Slide 14: Intermodal revenue increases 7%
Intermodal revenue increases 7% Revenue $304M Volume 538K RPU $565 Second Quarter Second quarter summary Year-Over-Year Change — International growth with inventory replenishments and exports Revenue 7% — Domestic up on truck conversions Volume 18% and new service offerings RPU (9%) — Increase in
Slide 15: Sales and Marketing wrap-up
Sales and Marketing wrap-up . . . Second Quarter Volume Economic recovery expected Units in Thousands to continue driving growth 1,870 15% Below Peak Third quarter volume and 1,827 1,775 revenue outlook favorable 1,598 CSX well positioned for near 1,411 and long-term growth Business developm
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: 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 1.38 1.32 2.73 2.81 2.78 1.13 2.59 1.06 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2007 Q2 2008 Q2 2009 Q2 2010 18 18
Slide 19: Year-over-year performance stable at high levels
Year-over-year performance stable at high levels Service Reliability Network Performance On-time Originations Train Velocity (mph) 80% 83% 78% 21.7 75% 20.9 20.4 20.0 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2007 Q2 2008 Q2 2009 Q2 2010 On-time Arrivals Terminal Dwell (hours) 81% 69% 65% 71% 23.5 24.1 23.
Slide 20: Resource utilization remains strong
Resource utilization remains strong Year-Over-Year Change in Volume and Resources Amount Volume (000) 1,598 13% Road Crew Starts 124,976 9% Local Crew Starts 35,475 2% Yard Crew Starts 70,097 4% Total Crew Starts 230,548 6% Active T&E Employees 11,225 4% Active Locomotives 3,559 7% 20 20
Slide 21: Capacity available to support further growth
Capacity available to support further growth Active T&E Employees Active Locomotives 13,828 13,765 4,088 3,966 3,997 12,884 3,559 11,225 10,758 3,323 Down Down 2,603 2,603 from from 2006 2006 levels levels Down Down 529 529 from from 2006 2006 levels levels Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 2006 2007 20
Slide 22: Operations wrap-up
Operations wrap-up . . . Safety performance continues favorable trend — Working towards goal of zero injuries and train accidents Resources continue to return slower than volume — Scheduled train networks absorbing volume growth Network operations and service levels are strong — Fluidity and r
Slide 23: Financial Review
Financial Review Oscar Munoz Executive Vice President Chief Financial Officer
Slide 24: Second quarter earnings summary
Second quarter earnings summary . . . Second Quarter Results Dollars in millions, except EPS 2010 2009 Variance Revenue $ 2,663 $ 2,185 22% Expense 1,895 1,608 (18%) Operating Income $ 768 $ 577 33% Interest Expense (135) (139) Other Income (net) 9 10 Income Taxes (228) (166) Earnings from Continuin
Slide 25: Labor and Fringe expense increases 10%
Labor and Fringe expense increases 10% Employee Headcount Second Quarter Labor Analysis in Millions 34,166 33,082 2009 Labor Expense $ 654 30,052 Variance 29,878 Inflation (42) 1% 1% Increase Increase Incentive Compensation (22) Hiring and Other Costs (3) Subtotal (67) 2010 Labor Expense $ 721 Q2 20
Slide 26: MS&O expense increases 24%
MS&O expense increases 24% MS&O Expense Second Quarter Dollars in Millions MS&O Analysis in Millions $588 2009 MS&O Expense $ 444 $535 $551 Variance $444 YOY Casualty Reserve (76) 2010 Property Transaction (30) Volume and Other (44) Inland Transportation 43 Subtotal (107) 2010 MS&O Expense $ 551 Q2
Slide 27: Fuel expense increases 64%
Fuel expense increases 64% Gallons Per Thousand Second Quarter Gross Ton Miles Fuel Analysis in Millions 1.22 2009 Fuel Expense $ 185 1.18 Variance 1.14 1.13 Price (90) Volume (19) Non-Locomotive (8) 1% 1% Increase Efficiency (2) Increase Subtotal (119) 2010 Fuel Expense $ 304 Q2 2007 Q2 2008 Q2 200
Slide 28: Depreciation increases 1% and rents decrease 9%
Depreciation increases 1% and rents decrease 9% Depreciation Rent Expense Dollars in Millions Dollars in Millions $230 $112 $227 $107 $226 $98 $221 $89 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2007 Q2 2008 Q2 2009 Q2 2010 28 28
Slide 29: Productivity continues to drive cost efficiency
Productivity continues to drive cost efficiency Second Quarter Cost Structure Dollars in Millions $134 $1,895 $76 $30 ($43) $90 $1,608 Up 8% to support 13% volume gain Q2 2009 Fuel Price Casualty 2010 Inland Core Q2 2010 Reserves Property Transp. Expenses Sale 29 29
Slide 30: Financial wrap-up
Financial wrap-up . . . Year-over-year volume comparisons will remain strong — CSX is well positioned to take advantage of a rebounding economy Operating leverage continues to drive efficiency — Productivity gains helping to deliver margin expansion and bottom-line results First half results c
Slide 31: Concluding Remarks
Concluding Remarks Michael Ward Chairman, President and Chief Executive Officer
Slide 32: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 32 32
Slide 33: Appendix
Appendix
Slide 34: Fuel Surcharge Reconciliation
Fuel Surcharge Reconciliation Second Quarter Dollars in millions 2010 2009 Variance Total Rail and Intermodal Fuel Surcharge Recovery $ 156 $ 67 $ 89 Portion of year-over-year variance that is volume-related $9 Portion of year-over-year variance that is fuel price-related $ 80 Since total fuel surch
Slide 35: How tomorrow moves
7 F. | | [ How tomorrow moves ] ee eo" P01 SECOND QUARTER EARNINGS CONFERENCE CALL