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csx 2007_JP_Morgan_Conference-REF23640

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This presentation discusses CSX Corporation's performance and outlook. It notes that CSX has created significant shareholder value in recent years. The company is focused on delivering double-digit growth through 2010 by executing its long-term strategy and meeting new financial targets. The rail renaissance environment remains strong due to tight transportation capacity and pricing power, though the economy is moderating. CSX is making capacity investments to leverage growth around major ports and intermodal volumes. The company aims to continue its financial and operational momentum while delivering value for shareholders.

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JP Morgan Aviation and Transportation Conference March 2007 1 1
Forward Looking Disclosure This presentation and other statements by the Company 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, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operation, and management’s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the Company’s success in implementing its financial and operational initiatives, (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the Company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the Company’s website at www.csx.com. 2 2
CSX has created significant shareholder value Stock Performance Indexed: Year-end 2003 = 100 250 200 150 100 50 Dec-2003 Dec-2004 Dec-2005 Dec-2006 CSX S&P 500 Dow Jones Transports 3 3
Recent actions reinforce shareholder focus Increased Annual Initiated $2.0 Billion Dividend 20% Share Repurchase Consistent with capital $0.48 structure objectives $0.40 20% Builds on the $465 million 20% Increase $0.26 Increase repurchased in 2006 $0.20 Represents over 10% of outstanding shares Targeting year-end 2008 Q3 Q4 Q3 Q1 completion 2005 2005 2006 2007 4 4
Record earnings with momentum to mid-70’s Surface Transportation Surface Transportation Operating Income Operating Ratio 87.9% $1,958M $1,549M 84.6% 82.0% $1,064M $902M 79.5% 2003 2004 2005 2006 2003 2004 2005 2006 Notes: Excludes provision for casualty claims, management restructuring and insurance recoveries 5 5
Temporal headwinds affecting first quarter Softer volume environment – housing and auto — Pent-up demand drove 2006 volume Winter season in 2007 more typical — Mild 2006 winter benefit was $25 million Fuel hedge benefit in 2006 was $35 million Brooks, KY costs approaching $30 million Strong pricing and foundation for long-term growth remain in place 6 6
On track for delivering double-digit growth 2006–2010 Set goals Set goals CAGR Surface Transport 10%–12% Consistent Execute Execute Operating Income continuous and and Monitor Monitor improvement Progress Progress Earnings Per Share 12%–14% Create Create plans plans Free Cash Flow 10%–12% CSX’s long-term strategy and new financial targets to be outlined September 6th 7 7
Rail Renaissance environment remains strong 2005 & 2006 2007 Strong Moderating Economy Economy Tight Transportation Tight Transportation Capacity Capacity Pricing Pricing Strength Strength Extending Extending Supply Chains Supply Chains 8 8
Moderating economy continues to grow GDP and Industrial Production Year-Over-Year Change 4.1% 4.1% 3.2% 2.2% 3.9% 3.3% 3.2% 2.7% 2.5% 0.8% 1.6% 0.0% (0.3%) (3.6%) 2001 2002 2003 2004 2005 2006 2007 Gross Domestic Product Industrial Production Source: Global Insight 9 9
Highways are constrained and getting worse Today 2020 CSX Territory Source: USDOT FHWA Freight Analysis Framework 10 10
Rail Renaissance is driving improving yields Year-Over-Year Change 12.6% 11.8% 11.7% 11.0% Same pricing momentum expected in 2007 9.6% 9.0% 8.6% 8.4% 6.8% 6.7% 6.6% 6.3% 6.2% 6.0% 5.6% 4.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2005 2005 2005 2006 2006 2006 2006 Price Increase on 'Same Store Sales' Total Revenue per Unit Note: Price increases on a ‘Same Store Sales’ basis exclude fuel surcharge and mix impacts 11 11
Long-term growth focused at the major ports 15.8 7.0 3.6 4.5 CSX Intermodal Network CSX Intermodal Network Seattle/Tacoma 59.4 NY/NJ 3.4 5.6 2.0 1.8 Oakland Virginia 6.6 1.9 Charleston 9.4 13.1 TEU in Millions 1.7 6.2 2004 1.4 Savannah 2020 Houston LA/LB Source: Containerization International and TranSystems. 12 12
Increasing port volumes will drive rail volumes Today 2020 CSX Territory Source: TranSystems and USDOT Federal Railroad Administration Office of Policy 13 13
Capacity projects leverage growth potential Strategic sidings total 120 miles of new track Albany Chicago Nearly half are on-line New York with the balance targeted for 2007 completion Strengthens position in northeastern markets Leverages fast growing Jacksonville southeastern markets 14 14
Capital philosophy supports long-term growth Increased productivity or “self help” Public-private partnerships Chicago Northern VA Redeployment of proceeds from asset sales Improvements: On-time departures Capital targets returns Terminal efficiency above cost of capital Train velocity 2007 Capital Budget 12% $1.4 Billion Central FL Infrastructure 12% New Capacity Public Funding Locomotives 58% 18% Frt Cars & Other Asset Redeployment 15 15
Looking forward . . . Rail renaissance environment remains strong Financial and operational momentum continues In our 180th year, targeting record results again Capitalizing on long-term growth trends Delivering value for shareholders 16 16
JP Morgan Aviation and Transportation Conference March 2007 17 17

More Related Content

csx 2007_JP_Morgan_Conference-REF23640

  • 1. JP Morgan Aviation and Transportation Conference March 2007 1 1
  • 2. Forward Looking Disclosure This presentation and other statements by the Company 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, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operation, and management’s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” and similar expressions. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the Company’s success in implementing its financial and operational initiatives, (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the Company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the Company’s website at www.csx.com. 2 2
  • 3. CSX has created significant shareholder value Stock Performance Indexed: Year-end 2003 = 100 250 200 150 100 50 Dec-2003 Dec-2004 Dec-2005 Dec-2006 CSX S&P 500 Dow Jones Transports 3 3
  • 4. Recent actions reinforce shareholder focus Increased Annual Initiated $2.0 Billion Dividend 20% Share Repurchase Consistent with capital $0.48 structure objectives $0.40 20% Builds on the $465 million 20% Increase $0.26 Increase repurchased in 2006 $0.20 Represents over 10% of outstanding shares Targeting year-end 2008 Q3 Q4 Q3 Q1 completion 2005 2005 2006 2007 4 4
  • 5. Record earnings with momentum to mid-70’s Surface Transportation Surface Transportation Operating Income Operating Ratio 87.9% $1,958M $1,549M 84.6% 82.0% $1,064M $902M 79.5% 2003 2004 2005 2006 2003 2004 2005 2006 Notes: Excludes provision for casualty claims, management restructuring and insurance recoveries 5 5
  • 6. Temporal headwinds affecting first quarter Softer volume environment – housing and auto — Pent-up demand drove 2006 volume Winter season in 2007 more typical — Mild 2006 winter benefit was $25 million Fuel hedge benefit in 2006 was $35 million Brooks, KY costs approaching $30 million Strong pricing and foundation for long-term growth remain in place 6 6
  • 7. On track for delivering double-digit growth 2006–2010 Set goals Set goals CAGR Surface Transport 10%–12% Consistent Execute Execute Operating Income continuous and and Monitor Monitor improvement Progress Progress Earnings Per Share 12%–14% Create Create plans plans Free Cash Flow 10%–12% CSX’s long-term strategy and new financial targets to be outlined September 6th 7 7
  • 8. Rail Renaissance environment remains strong 2005 & 2006 2007 Strong Moderating Economy Economy Tight Transportation Tight Transportation Capacity Capacity Pricing Pricing Strength Strength Extending Extending Supply Chains Supply Chains 8 8
  • 9. Moderating economy continues to grow GDP and Industrial Production Year-Over-Year Change 4.1% 4.1% 3.2% 2.2% 3.9% 3.3% 3.2% 2.7% 2.5% 0.8% 1.6% 0.0% (0.3%) (3.6%) 2001 2002 2003 2004 2005 2006 2007 Gross Domestic Product Industrial Production Source: Global Insight 9 9
  • 10. Highways are constrained and getting worse Today 2020 CSX Territory Source: USDOT FHWA Freight Analysis Framework 10 10
  • 11. Rail Renaissance is driving improving yields Year-Over-Year Change 12.6% 11.8% 11.7% 11.0% Same pricing momentum expected in 2007 9.6% 9.0% 8.6% 8.4% 6.8% 6.7% 6.6% 6.3% 6.2% 6.0% 5.6% 4.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2005 2005 2005 2006 2006 2006 2006 Price Increase on 'Same Store Sales' Total Revenue per Unit Note: Price increases on a ‘Same Store Sales’ basis exclude fuel surcharge and mix impacts 11 11
  • 12. Long-term growth focused at the major ports 15.8 7.0 3.6 4.5 CSX Intermodal Network CSX Intermodal Network Seattle/Tacoma 59.4 NY/NJ 3.4 5.6 2.0 1.8 Oakland Virginia 6.6 1.9 Charleston 9.4 13.1 TEU in Millions 1.7 6.2 2004 1.4 Savannah 2020 Houston LA/LB Source: Containerization International and TranSystems. 12 12
  • 13. Increasing port volumes will drive rail volumes Today 2020 CSX Territory Source: TranSystems and USDOT Federal Railroad Administration Office of Policy 13 13
  • 14. Capacity projects leverage growth potential Strategic sidings total 120 miles of new track Albany Chicago Nearly half are on-line New York with the balance targeted for 2007 completion Strengthens position in northeastern markets Leverages fast growing Jacksonville southeastern markets 14 14
  • 15. Capital philosophy supports long-term growth Increased productivity or “self help” Public-private partnerships Chicago Northern VA Redeployment of proceeds from asset sales Improvements: On-time departures Capital targets returns Terminal efficiency above cost of capital Train velocity 2007 Capital Budget 12% $1.4 Billion Central FL Infrastructure 12% New Capacity Public Funding Locomotives 58% 18% Frt Cars & Other Asset Redeployment 15 15
  • 16. Looking forward . . . Rail renaissance environment remains strong Financial and operational momentum continues In our 180th year, targeting record results again Capitalizing on long-term growth trends Delivering value for shareholders 16 16
  • 17. JP Morgan Aviation and Transportation Conference March 2007 17 17