Slide 1: 2023 Second Quarter Earnings Conference Call
2023 SECOND QUARTER EARNINGS CONFERENCE CALL 7.20.2023
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 Regulat
Slide 4: Executive Summary
EXECUTIVE SUMMARY Joe Hinrichs President and Chief Executive Officer
Slide 5: Second Quarter Financial Highlights
Second Quarter Financial Highlights 1,546K +3% +4% 59.9% Volume Merch. Volume Coal Volume Operating Ratio Revenue Operating Income Earnings Per Share $0.54 $3,815M $1,703M $0.49 $3,699M $0.04 $122M $1,482M Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 3% Decrease 13% Decrease 9% Decrease Impact of VA property
Slide 6: New ESG Report Features Environmental, Community Leadership
New ESG Report Features Environmental, Community leadership Environmental Highlights 38 Million 50 Gallons of fuel saved through Trip Suppliers engaged - representing 75% of Optimizer use in 2022 spending - to take part in CDP Supply Chain 20% ~180 Biodiesel fuel blend used in pilot real- Locomotive
Slide 7: Operations Review
OPERATIONS REVIEW Jamie Boychuk Executive Vice President of Operations
Slide 8: Second Quarter Safety Highlights
Second Quarter Safety Highlights FRA Personal Injury Frequency Index Safety is a guiding principle at CSX 1.07 1.11 1.07 0.97 0.81 Reinforcing our safety principles, especially in new hires, and eliminating life-changing events continue to be our key priorities Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Notable
Slide 9: Second Quarter Operating Highlights
Second Quarter Operating Highlights MPH Train Velocity Dwell Hours 20 13 2Q23 Avg: 17.7 12 18 11 2Q22 Avg: 11.8 16 10 9 14 2Q22 2Q23 Avg: Avg: 15.3 8 9.3 12 7 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Intermodal Trip Plan Performance Carload Trip Plan Performance 100% 100% 2Q23 95% 90% Avg:
Slide 10: Sales & Marketing Review
SALES & MARKETING REVIEW Kevin Boone Executive Vice President of Sales and Marketing
Slide 11: Merchandise Volume & Revenue Summary
Merchandise Volume & Revenue Summary Q2 Merchandise Revenue 2H23 Expectations $2,196M Steady volume performance supported by $2,101M momentum in marketplace wins +5% – Automotive, minerals, and metals markets remain strong sources of demand – Chemicals and forest products reflecting soft Q2 22 Q2 23
Slide 12: Coal Volume & Revenue Summary
Coal Volume & Revenue Summary Q2 Coal Revenue 2H23 Expectations $651M $637M Solid export coal volume in both metallurgical and thermal markets (2%) – International met benchmarks stabilizing at lower levels – New mine on network ramping up in late 2023 Q2 22 Q2 23 – Coal producers partnering with CS
Slide 13: Intermodal Volume & Revenue Summary
Intermodal Volume & Revenue Summary Q2 Intermodal Revenue 2H23 Expectations $602M International intermodal volumes continue to $492M reflect soft imports and retailer destocking – Customers, channel partners remain hopeful for (18%) improvement into fall – New shipper agreements, lane opportunities
Slide 14: Financial Review
FINANCIAL REVIEW Sean Pelkey Executive Vice President and Chief Financial Officer
Slide 15: Second Quarter Earnings Summary
Second Quarter Earnings Summary Second Quarter Income Statement Dollars in Millions 2023 2022 Variance x Revenue $ 3,699 $ 3,815 (3%) Expense 2,217 2,112 (5%) Operating Income $ 1,482 $ 1,703 (13%) Interest Expense & Other Income – Net (170) (145) (17%) Income Tax Expense (316) (380) 17% Net Earning
Slide 16: Second Quarter Expense Up $105M
Second Quarter Expense Up $105M Q2 23 Labor increase driven by inflation and Change in Expense Q2 22 higher headcount Labor & $741 PS&O higher as maintenance and repair Labor & Fringe Fringe $684 costs and other inflation more than offset Purchased Purchased $684 the reduction in Pan Am acquisition
Slide 17: Second Quarter Cash Flow and Distributions
Second Quarter Cash Flow and Distributions Free Cash Flow Shareholder CSX Cash Before Dividends* Distributions Earnings (CCE)* In Millions In Millions In Millions Retroactive Payouts Buybacks Dividends $433 $1,748 $238 $1,473 $2,515 $1,392 $1,503 $448 $1,930 Q2 22 YTD Q2 23 YTD Q2 22 YTD Q2 23 YTD Q
Slide 18: Closing Remarks
CLOSING REMARKS Joe Hinrichs President and Chief Executive Officer
Slide 19: 2023 Guidance Update
2023 Guidance Update Low single digit revenue ton-mile growth for the full year, driven by merchandise and export coal – Merchandise volume growth supported by service recovery, strength in automotive and minerals, customer wins – Full year coal volume up on higher export shipments; domestic coal so
Slide 20: Appendix: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations
Slide 21: Non-GAAP Free Cash Flow Reconciliation
Non-GAAP Free Cash Flow Reconciliation Free Cash Flow Six Months Ended Dollars in millions Jun 30, 2023 Jun 30, 2022 Net Cash Provided by Operating Activities(a) $ 2,483 $ 2,530 Property Additions (1,015) (811) Proceeds and Advances from Property Dispositions 35 29 Free Cash Flow Before Dividends (n
Slide 22: Non-GAAP CSX Cash Earnings Reconciliation
Non-GAAP CSX Cash Earnings Reconciliation CSX Cash Earnings (CCE) Six Months Ended Dollars in millions Jun 30, 2023 Jun 30, 2022 Operating Income $ 2,946 $ 2,985 Add: Depreciation, Amortization, and Operating Lease Expense 847 781 Remove: Extraordinary Items(a) - (142) Earnings before Interest, Taxe
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