Slide 1: 2018 Fourth Quarter Earnings Conference Call
2018 FOURTH QUARTER EARNINGS CONFERENCE CALL James M. Foote President and Chief Executive Officer
Slide 2: Forward Looking Disclosure
FORWARD LOOKING DISCLOSURE 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: Non-GAAP Measures Disclosure
NON-GAAP MEASURES DISCLOSURE CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulati
Slide 4: Executive Summary
EXECUTIVE SUMMARY James M. Foote President and Chief Executive Officer
Slide 5: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS Volume 1,648K Revenue $3,143M Operating Income $1,249M Operating Ratio 60.3% EPS $1.01 Earnings Per Share Operating Ratio $4.62 65.1% $1.01 60.7% 60.3% $0.64 58% Growth 480 bps Improvement 2017 2017 Adjusted 2018 2017 2017 Adjusted 2018 Note: Adjusted financials exclude imp
Slide 6: Fourth Quarter Revenue Highlights
FOURTH QUARTER REVENUE HIGHLIGHTS Strong Freight Environment Fourth Quarter Revenue Yielding Volume and Pricing Gains Up 10% Percent Year over Year Chemicals increase driven by broad-based growth, partially offset by fly ash and sand shipment declines Chemicals 10% Auto driven by strength in Nor
Slide 7: Fourth Quarter Safety Highlights
FOURTH QUARTER SAFETY HIGHLIGHTS FRA Personal Injury Frequency Index Safety is a guiding principle at CSX 1.30 1.09 1.01 0.83 0.83 Year-over-year safety performance improvements in both FRA accidents and FRA injuries in Q4 4Q17 1Q18 2Q18 3Q18 4Q18 FRA Train Accident Rate Aiming to continue mom
Slide 8: Fourth Quarter Operating Highlights
FOURTH QUARTER OPERATING HIGHLIGHTS Train Velocity Cars Online (miles per hour) 18.9 137,167 17.3 17.4 17.9 131,733 129,685 16.2 123,495 122,873 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Terminal Car Dwell Locomotive Miles per Day (hours) 175 10.7 10.4 151 151 157 9.7 9.3 144 9.0 4Q17 1Q18 2
Slide 9: Financial Review
FINANCIAL REVIEW Frank A. Lonegro EVP and Chief Financial Officer
Slide 10: Fourth Quarter Earnings Summary
FOURTH QUARTER EARNINGS SUMMARY Fourth Quarter Income Statement Dollars in millions 2017 2017 2018 vs. 2017 2018 GAAP Adjusted Adjusted Variance Revenue $ 2,863 $ 2,863 $ 3,143 10% Expense Labor and Fringe 675 675 678 -- Materials, Supplies and Other 524 524 542 (3%) Depreciation 337 337 345 (2%) Fu
Slide 11: Full Year 2018 Financial Measures
FULL YEAR 2018 FINANCIAL MEASURES Adjusted Free Cash Flow Shareholder Capital Investments Before Dividends Distributions Dollars in Millions Dollars in Millions Dollars in Millions Dividends Buybacks $2,040 $3,199 $5,422 $1,745 $1,701 $4,671 $2,678 $1,970 14% Reduction 88% Growth 102% Growth $708 $7
Slide 12: Closing Remarks
CLOSING REMARKS James M. Foote President and Chief Executive Officer
Slide 13: 2019 Financial Outlook
2019 FINANCIAL OUTLOOK Expect low single-digit revenue growth Expect 2019 operating ratio to outperform 2020 target of 60% Free Cash Flow is trending ahead of 3-year guidance of $8.5 billion (2018 - 2020) Capital Expenditures to be between $1.6 billion and $1.7 billion New $5 billion share
Slide 14: Appendix
APPENDIX 2017 Non-GAAP Income Statement Reconciliation Non-GAAP Adjusted Free Cash Flow Reconciliation
Slide 15: 2017 Non-GAAP Income Statement Reconciliation
2017 NON-GAAP INCOME STATEMENT RECONCILIATION Fourth Quarter 2017 Income Statement Dollars in millions GAAP Adjustments Non-GAAP Revenue $ 2,863 $ - $ 2,863 Expense Labor and Fringe 675 - 675 Materials, Supplies and Other 524 - 524 Depreciation 337 - 337 Fuel 243 - 243 Equipment and Other Rents 116
Slide 16: Non-GAAP Adjusted Free Cash Flow Reconciliation
NON-GAAP ADJUSTED FREE CASH FLOW RECONCILIATION Adjusted Free Cash Flow Years Ended Dollars in millions December 31, 2018 December 31, 2017 Net Cash Provided by Operating Activities $ 4,641 $ 3,472 Property Additions (1,745) (2,040) Other Investing Activities 292 134 Free Cash Flow (before payment o
Slide 17: CSX.com / Investors
|, osx ] CSX.COM / INVESTORS