Slides
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2024 FOURTH QUARTER CONFERENCE CALL 1.23.2025
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Forward Looking Disclosure This information and other statements by the company may contain forward -looking statements within the meaning of the Private Se curities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost -savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management’s pla ns, strategies and objectives for future operations, and management’s expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market condition s or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipa te,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company under takes no obligation to update or revise any forward-looking statement. If the company updates 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 any forward-looking statements. Factors that may cause actual results to differ materially from those contemplate d by any 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, political or business conditions, including those affecting the transportation industry (such as t he impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions. 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. 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL
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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 Regulation S -K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP . Therefore, CSX’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP. Reconciliations of non-GAAP measures to corresponding GAAP measures are attached hereto in the Appendix of this presentation. 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL
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EXECUTIVE SUMMARY Joe Hinrichs President and Chief Executive Officer
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Remaining focused on long-term, profitable growth 1 Total volume growth of 2%, ahead of Industrial Production Merchandise revenue up 3%, driven by positive volumes and favorable pricing Customer recognition for consistent service, leading to business gains and broadening opportunities for profitable growth Capacity and efficiency improvements initiated through effective network optimization projects and a successful, supportive culture 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL Key 2024 Achievements
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Fourth Quarter Operational and Financial Highlights 2 Total Volume 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL 1,560k 1,575k Q4 23 Q4 24 +1% Increase Intermodal Volume Total Revenue 720k 746k Q4 23 Q4 24 $3,680M $3,539M Q4 23 Q4 24 +4% Increase (4%) Decrease Earnings Per Share* $0.45 GAAP $0.38 Adjusted $0.42 Q4 23 Q4 24 Q4 24 (7%) Decrease Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details * See Appendix for Non-GAAP reconciliation
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OPERATIONS REVIEW Mike Cory Executive Vice President and Chief Operating Officer
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Fourth Quarter and Full Year Safety Results 4 FRA Personal Injury Frequency Index FRA Train Accident Rate 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL 0.71 1.22 1.33 1.19 1.01 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 2.45 4.09 2.92 3.03 3.58 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Safety remains a core principle at CSX Personal injury rates continued to improve sequentially in Q4 but remained higher than the previous year Data show most injuries are low severity; for FY24, CSX recorded the fewest lost work-days for injury in company history Q4 train accidents were up year-over- year but declined slightly for FY24, with clear opportunities to improve, especially in yards and terminals Safe CSX initiative is ongoing, focused on reducing exposure and developing safety leadership 0.94 1.19 FY23 FY24 3.44 3.40 FY23 FY24 Quarterly Annual AnnualQuarterly
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Q4 Service Metrics affected by hurricane recovery 5 80% 85% 90% 95% 100% 4Q23 1Q24 2Q24 3Q24 4Q24 Intermodal Trip Plan Performance 50% 60% 70% 80% 90% 100% 4Q23 1Q24 2Q24 3Q24 4Q24 Carload Trip Plan Performance Customer Switch Data 4Q24 Avg: 84.9% 4Q23 Avg: 94.7% 4Q24 Avg: 75.5%4Q23 Avg: 84.7% 80% 85% 90% 95% 100% 4Q23 1Q24 2Q24 3Q24 4Q24 4Q24 Avg: 92.6% 4Q23 Avg: 95.2% 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL
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Operations continues to balance fluidity, cost, and efficiency goals 6 14 16 18 20 4Q23 1Q24 2Q24 3Q24 4Q24 8 9 10 11 12 13 4Q23 1Q24 2Q24 3Q24 4Q24 Train Velocity Dwell MPH Hours 4Q24 Avg: 18.3 4Q23 Avg: 18.3 4Q24 Avg: 11.2 4Q23 Avg: 9.6 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL 0.90 0.95 1.00 1.05 1.10 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 4Q 24 Fuel Efficiency (Gal/kGTM) Better 1.10 1.15 1.20 1.25 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 4Q 24 HP per Trailing Ton Better
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SALES & MARKETING REVIEW Kevin Boone Executive Vice President and Chief Commercial Officer
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Merchandise Volume & Revenue Summary 82024 FOURTH QUARTER EARNINGS CONFERENCE CALL $2,182M $2,191M Q4 23 Q4 24 Flat Q4 Merchandise Revenue 648k 650k Q4 23 Q4 24 Q4 Merchandise Volume Flat Growth momentum continuing to develop across emerging customer partnerships, modal conversions, and industrial development project ramp-ups Constructive market demand anticipated across Ag & Food, Fertilizers, and Minerals Challenging conditions likely to persist for Automotive and Metals & Equipment $8,653M $8,903M FY 23 FY 24 +3% 2,621k 2,648k FY 23 FY 24 FY Merchandise Revenue FY Merchandise Volume Flat +1% 2025 Expectations
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Coal Volume & Revenue Summary 92024 FOURTH QUARTER EARNINGS CONFERENCE CALL $620M $499M Q4 23 Q4 24 Q4 Coal Revenue 192k 179k Q4 23 Q4 24 Q4 Coal Volume Flat Export volumes affected by coal producer issues in the near-term – Strong CSX operational flexibility limited by mine outages over 1Q – FY shipments and pricing determined by direction of global steel markets Domestic coal volumes expected to decline y/y due to planned plant closures – Near-term utility restocking opportunity due to winter weather – Favorable US power demand trends, potential policy shifts may provide market support $2,484M $2,247M FY 23 FY 24 (10%) 755k 736k FY 23 FY 24 FY Coal Revenue FY Coal Volume (7%) (3%) 2025 Expectations (20%)
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Intermodal Volume & Revenue Summary 102024 FOURTH QUARTER EARNINGS CONFERENCE CALL $552M $526M Q4 23 Q4 24 (5%) Q4 Intermodal Revenue 720k 746k Q4 23 Q4 24 Q4 Intermodal Volume Flat Encouraging trends supportive for domestic growth – CSX driving volumes through consistent service, new customer alignments, modal conversions International volume growth to moderate after robust FY24 – Shipping partners optimistic but cautious on tariff, policy uncertainty $2,060M $2,047M FY 23 FY 24 (1%) 2,766k 2,893k FY 23 FY 24 FY Intermodal Revenue FY Intermodal Volume +4% +5% 2025 Expectations
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FINANCIAL REVIEW Sean Pelkey Executive Vice President and Chief Financial Officer
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Fourth Quarter Earnings Summary 12 Dollars in Millions Q4 2024 GAAP Goodwill Impairment Q4 2024 Adjusted Q4 2023 GAAP Variance Adjusted Variance Revenue $3,539 - $3,539 $3,680 (4%) (4%) Expense 2,433 (108) 2,325 2,365 (3%) 2% Operating Income $1,106 108 $1,214 $1,315 (16%) (8%) Interest Expense & Other Income - Net (170) - (170) (171) - - Income Tax Expense (203) (26) (229) (262) 23% 13% Net Earnings $733 $82 $815 $882 (17%) (8%) Earnings Per Share $0.38 $0.04 $0.42 $0.45 (16%) (7%) Operating Margin 31.3% 3.0% 34.3% 35.7% (440 bps) (140 bps) Income Tax Rate 21.7% 0.3% 21.9% 22.9% 120 bps 100 bps Average Shares Outstanding, Assuming Dilution (Millions) 1,921 - 1,921 1,969 2% 2% 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL Fourth Quarter Income Statement* Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details * See Appendix for Non-GAAP reconciliation
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($8) $0 $88 $352 $405 $714 $814 ($3) $108 $95 $266 $422 $757 $788 Gains on Property Dispositions Goodwill Impairment Equipment & Other Rents Fuel Depreciation Purchased Services & Other Labor & Fringe Q4 24 Q4 23Change in Expense Fourth Quarter Expense 13 Labor & Fringe Purchased Services & Other Fuel Depreciation & Amortization Equipment & Other Rents Gains on Property Dispositions Costs from labor inflation were more than offset by lower incentive compensation and other items PS&O increase driven by inflation, locomotive modernizations, and storm recovery costs, while a favorable legal settlement was offset by other asset impairment charges Depreciation expense up due to a larger asset base Reduced fuel expense driven by a lower diesel price per gallon and improved efficiency 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details Goodwill Impairment
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Full Year Results 14 6,142 6,277 FY 23 FY 24 Volume (K) 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL * See Appendix for Non-GAAP reconciliation $14,657 $14,540 FY 23 FY 24 Revenue ($M) $5,499 GAAP $5,245 Adj. $5,353 FY 23 FY 24 FY 24 Operating Income* ($M) $1.82 GAAP $1.79 Adj. $1.83 FY 23 FY 24 FY 24 Earnings Per Share* Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details +2% Increase (1%) Decrease (3%) Decrease Stable Growing Volume Ahead of the Industrial Economy – Consistent service enabled y/y volume growth across all four quarters, with continued Merchandise/Intermodal pricing above inflation Absorbed Substantial Discrete Challenges – Declines in export coal benchmarks, net fuel prices, other revenue, and insurance recoveries, as well as hurricane and Key Bridge events, impacted FY2024 operating income Continued Cost Control – >$40M Fuel efficiency savings – PS&O expense discipline – Second half y/y volume growth exceeded headcount growth
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Anticipating ~$350M Net Impact from Discrete Items in 2025 15 ▪ Impact of lower export coal benchmarks, fuel prices, and cycling of favorable fuel surcharge lag, assuming prices remain stable at current levels ▪ Cycling of lost business and recovery costs related to hurricanes and the Key bridge collapse, net of higher expected incentive compensation expense in 2025 ▪ Estimated operating income loss into Q4 associated with major construction projects on the Howard Street Tunnel and Blue Ridge Subdivision Commodity Prices Cycling 2024 Items Network Disruption ($300M) Unfavorable vs. 2024 Net ~$50M Favorable vs. 2024 ~($10M) Unfavorable Per Month + + 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL
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Full Year Cash Flow and Distributions 16 * See Appendix for Non-GAAP reconciliation **FY 24 Property Additions includes ~$50M in Blue Ridge rebuild capital Property Additions In Billions $3,482 $2,237 $882 $930 FY 23 FY 24 Buybacks Dividends Shareholder Distributions In Millions $2,577 $2,341 FY 23 FY 24 Economic Profit* In Millions $1.7 $1.8 $0.6 $0.7 FY 23 FY 24** Infrastructure Strategic & Rolling Stock 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details
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CLOSING REMARKS Joe Hinrichs President and Chief Executive Officer
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2025 Guidance 18 ▪ Low to mid single-digit total volume growth for FY2025 – Intermodal, Merchandise momentum supported by conversions, industrial development – Coal volume lower on facility shutdowns and mine production issues ▪ FY revenue impacted by lower coal benchmarks, diesel prices, volume mix, particularly in 1H ▪ Continued emphasis on efficiency initiatives, labor productivity – Hurricane recovery, Howard Street Tunnel project expected to impact operating income ▪ Capex roughly flat year/year excluding hurricane rebuild spending ▪ Balanced and opportunistic approach to capital returns 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL
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APPENDIX Non-GAAP Reconciliations
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Non-GAAP Reconciliation of Adjusted Operating Results 202024 FOURTH QUARTER EARNINGS CONFERENCE CALL Dollars in millions, except per share amounts Operating Income Operating Margin Net Earnings Net Earnings Per Share, Assuming Dilution GAAP Operating Results $ 1,106 31.3% $ 733 $ 0.38 Goodwill Impairment 108 3.0% 82 0.04 Adjusted Operating Results (non-GAAP) 1,214 34.3% $ 815 $ 0.42 Quarter Ended Dec. 31, 2024 Dollars in millions, except per share amounts Operating Income Operating Margin Net Earnings Net Earnings Per Share, Assuming Dilution GAAP Operating Results $ 5,245 36.1% $ 3,470 $ 1.79 Goodwill Impairment 108 0.7% 82 0.04 Adjusted Operating Results (non-GAAP) 5,353 36.8% $ 3,552 $ 1.83 Year Ended Dec. 31, 2024 Note: Immaterial revisions have been made to prior period amounts. See Quarterly Financial Report for details
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Non-GAAP Economic Profit Reconciliation 21 Year Ended Dollars in millions Dec 31, 2024(a) Dec 31, 2023(a) Operating Income $ 5,245 $ 5,499 Add: Depreciation, Amortization, and Operating Lease Expense 1,775 1,716 Remove: Unusual Items (b) 108 - Taxes (c) (1,069) (1,082) Gross Cash Earnings or “GCE” $ 6,059 $ 6,133 Operating Assets Current Assets (Less Cash and Short-term Investments) ($ 1,909) ($ 1,889) Gross Properties (51,344) (49,498) Other Assets (4,263) (3,894) Operating Liabilities Non-Interest Bearing Liabilities 11,035 10,825 Gross Operating Assets or “GOA” (d) ($ 46,481) ($ 44,456) Capital Charge (e) ($ 3,718) ($ 3,556) Economic Profit (Non-GAAP) calculated as GCE less Capital Charge $ 2,341 $ 2,577 Economic Profit (a) Reflects adjustment of prior period financial statements; see Q2 2024 form 10-Q for details. (b) Unusual items are defined by management as unique events with greater than $100 million full year operating income impact, consistent with the terms of the Company’s long-term incentive plan agreements. The Quality Carriers goodwill impairment was an unusual item for 2024. (c) The tax percentage rate was 15% for both periods presented. This rate is applied to the sum of operating income, depreciation, amortization and operating lease expense, and unusual items. (d) Gross operating assets reflects an average of the year-to-date quarters reported for each year presented. (e) The capital charge of 8% for both years is calculated as the minimum return multiplied by gross operating assets. 2024 FOURTH QUARTER EARNINGS CONFERENCE CALL