Slide 1: CSX Corporation 2017 Third Quarter Earnings Conference Call
CSX CORPORATION 2017 THIRD QUARTER EARNINGS CONFERENCE CALL
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 E. Hunter Harrison President and Chief Executive Officer
Slide 5: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS Volume 1,587K Revenue $2,743M Operating Income $876M Operating Ratio 68.1% EPS $0.51 Operating Ratio Earnings Per Share 69.0% $0.51 $0.51 68.1% 68.0% $0.48 100 bps Improvement 6% Growth 2016 2017 2017 Adjusted 2016 2017 2017 Adjusted Note: See Appendix for Non-GAAP reconcili
Slide 6: Financial Review
FINANCIAL REVIEW Frank A. Lonegro EVP and Chief Financial Officer
Slide 7: Third Quarter Operating Highlights
THIRD QUARTER OPERATING HIGHLIGHTS Service Efficiency Train Velocity Train Length (miles per hour) (feet) 6,808 6,897 6,792 16.2 14.2 14.1 13.3 14.7 6,560 6,430 Q3 Avg. = 14.0 Q3 Avg. = 6,833 Q1 Q2 Jul. Aug. Sep. Q1 Q2 Jul. Aug. Sep. Terminal Car Dwell Total Employees (hours) 26,504 11.6 12.6 12.3 2
Slide 8: Third Quarter Earnings Summary
THIRD QUARTER EARNINGS SUMMARY Third Quarter Income Statement Dollars in millions 2017 2016 Variance Revenue $ 2,743 $ 2,710 1% Expense Labor and Fringe 717 762 6% Materials, Supplies and Other 516 507 (2%) Fuel 205 174 (18%) Depreciation 331 321 (3%) Equipment and Other Rents 97 105 8% Restructurin
Slide 9: Key Third Quarter Financial Measures
KEY THIRD QUARTER FINANCIAL MEASURES Year-to-date Free Cash Flow Before Dividends Dollars in millions 2017 2016 Variance Cash Provided by Operating Activities $ 2,861 $ 2,488 $ 373 Property Additions (1,462) (1,590) 128 Other Investing Activities 71 37 34 Free Cash Flow Before Dividends $ 1,470 $ 93
Slide 10: Fourth Quarter Volume Outlook Is Neutral
FOURTH QUARTER VOLUME OUTLOOK IS NEUTRAL Key indicators support growth Favorable Outlook in a few markets (50%) ― U.S. export coal demand remains strong Export Coal Intermodal ― Consumer sentiment at high levels; improving truck market fundamentals Neutral Outlook (11%) Agriculture & Food
Slide 11: Financial Outlook
FINANCIAL OUTLOOK . . . Reaffirm 2017 adjusted expectations (excludes restructuring charges) ― Operating ratio to be around high end of mid-60s, supported by record efficiency ― Earnings per share growth to be 20% – 25% off 2016 reported base of $1.81 ― Free Cash Flow before dividends to be around
Slide 12: CSX Corporation 2017 Third Quarter Earnings Conference Call
CSX CORPORATION 2017 THIRD QUARTER EARNINGS CONFERENCE CALL
Slide 13: Appendices
APPENDICES Non-GAAP Reconciliations Calculations of Other Key Financial Measures
Slide 14: Non-GAAP Income Statement Reconciliation
NON-GAAP INCOME STATEMENT RECONCILIATION Third Quarter Income Statement Dollars in millions GAAP Adjustments Non-GAAP Revenue $ 2,743 $ - $ 2,743 Expense Labor and Fringe 717 - 717 Materials, Supplies and Other 516 - 516 Fuel 205 - 205 Depreciation 331 - 331 Equipment and Other Rents 97 - 97 Restruc
Slide 15: Calculations of Other Key Financial Measures
CALCULATIONS OF OTHER KEY FINANCIAL MEASURES Return on Invested Capital Debt-to-EBITDA Last twelve month basis through third quarter Last twelve month basis through third quarter Dollars in millions 2017 2016 Dollars in millions 2017 2016 Operating Income $ 3,550 $ 3,176 Net Earnings $ 1,789 $ 1,722
Slide 16: CSX Corporation 2017 Third Quarter Earnings Conference Call
CSX CORPORATION 2017 THIRD QUARTER EARNINGS CONFERENCE CALL