Slide 1: 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, margins, volumes, rates, cost
Slide 2: Executive Summary
Executive Summary Michael Ward Chairman, President and Chief Executive Officer Second quarter performance . . . Volume 1,781K Revenue $3,244M Operating Income $997M Operating Ratio 69.3% EPS $0.53 Earnings Per Share Revenue increases 7% — Driven by broad-based volume $0.53 growth across most marke
Slide 3: Sales and Marketing Review
Sales and Marketing Review Clarence Gooden Executive Vice President Chief Sales and Marketing Officer Economy expands in second quarter ISM Manufacturing ISM Manufacturing Purchasing Managers Index Customer Inventory Index 57 56 56 57 57 55 55 55 55 54 53 51 Above 50 = Expansion Below 50 = Inventori
Slide 4: Sales and Marketing summary
Sales and Marketing summary . . . Volume (000) Revenue (millions) Revenue per Unit All-in Core Pricing 1,781 $3,244 $1,839 $1,821 2.3% 1,656 $3,046 (0.6%) Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Market Split Market Split Market Split Core Merchandise Merchandise Coal Merchand
Slide 5: Intermodal revenue increases 6%; Coal revenue decreases 3%
Intermodal revenue increases 6% Revenue $449M Volume 691K RPU $650 Second Quarter Second Quarter Summary Year-Over-Year Change Domestic and international Revenue 6% growth drives all-time record Volume 7% — Highway-to-rail conversions and expanding economy driving growth RPU (2%) Core pricing ga
Slide 6: Overall outlook for the third quarter is favorable
Overall outlook for the third quarter is favorable Outlook Markets Drivers Agricultural Products Low corn prices support continued growth Food & Consumer Increase in food and beverage shipments Phosphate & Fertilizer Increase in short-haul phosphate rock Favorable Chemicals Strength
Slide 7: CSX a leader in one of the nation's safest industries
CSX a leader in one of the nation’s safest industries FRA Personal Injury Rate FRA Train Accident Rate 1.00 2.28 2.18 0.90 0.90 2.07 1.95 0.68 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2011 Q2 2012 Q2 2013 Q2 2014 13 Network performance still below expectations . . . On-time Originations Train Velocity (mp
Slide 8: Network stable with sequential growth; capacity additions underway
. . . but stable with significant sequential growth 2014 YTD Weekly 2014 YTD Growth Velocity versus Volume Strongest in North Velocity (mph) Carloads (in 000s) Buffalo Albany 30 150 Boston 28 144 Chicago New York 26 138 Philadelphia Week 12-26 Average Baltimore 24 132 Volume Up 14% St Louis 22 126 S
Slide 9: Increasing resources to meet customer demand
Increasing resources to meet customer demand T&E Employees Available Locomotives Active Employees Employees in Training Units in Thousands 13,000 Up 10% 3.7 3.7 3.7 12,500 3.6 3.5 3.5 3.5 12,000 3.4 3.4 3.3 11,500 11,000 10,500 10,000 2013 2014 Sep-13 Dec-13 Mar-14 Jun-14 17 Costs still above normal
Slide 10: Operations wrap-up
Operations wrap-up . . . Network performance remains stable — Handling additional volume, though service remains below normal levels Northern tier has seen disproportionate volume gains — Shifting resources to meet increased customer demand Taking actions to restore service and support growth
Slide 11: Second quarter earnings summary
Second quarter earnings summary . . . Second Quarter Results Dollars in millions, except EPS 2014 2013 Variance Revenue $ 3,244 $ 3,046 7% Expense 2,247 2,106 (7%) Operating Income $ 997 $ 940 6% Interest Expense (135) (140) Other Income (net) (12) 9 Income Taxes (321) (288) Net Earnings $ 529 $ 521
Slide 12: Total expense increases 7% overall
Total expense increases 7% overall Second Quarter Operating Expenses and Year-Over-Year Percentage Change Labor and Fringe $ 809 4% Material, Supplies, and Other 621 11% Fuel 416 5% Depreciation 287 4% Equipment Rent 114 19% Total Expenses $ 2,247 7% 23 Second quarter expense analysis . . . Labor An
Slide 13: Core earnings strength and margins more evident
Core earnings strength and margins more evident Operating Income and Drivers of Change Dollars in Millions 47% Incremental Operating Margin $198 ($105) $997 $940 ($36) Q2 2013 Q2 2013 Revenue Expense Q2 2014 Real Estate Growth Increase Gains 25 Capital investment increasing to $2.4 billion 2014 Capi
Slide 14: Financial wrap-up
Financial wrap-up . . . Core earnings improvement becoming more apparent — Broad-based strength across nearly all markets will drive long-term growth Still expect modest earnings growth for full-year 2014 — Building on second quarter momentum with continued strength in second half Sustainable
Slide 15: Relentless pursuit of excellence
Relentless pursuit of excellence . . . 29