csx 2007_JP_Morgan_Conference-REF23640

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<ul><li> 1. JP Morgan Aviation and Transportation Conference March 20071 1 </li></ul> <p> 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 managements plans, strategies and objectives for future operation, and managements 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 Companys 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 Companys SEC reports, accessible on the SECs website at www.sec.gov and the Companys website at www.csx.com.22 3. CSX has created significant shareholder valueStock Performance Indexed: Year-end 2003 = 100 250200150100 50 Dec-2003 Dec-2004 Dec-2005Dec-2006 CSXS&amp;P 500 Dow Jones Transports33 4. Recent actions reinforce shareholder focusIncreased Annual Initiated $2.0 Billion Dividend 20%Share Repurchase Consistent with capital$0.48structure objectives $0.40 20%Builds on the $465 million 20% Increase $0.26 Increaserepurchased in 2006 $0.20Represents over 10% ofoutstanding shares Targeting year-end 2008Q3Q4Q3 Q1completion 200520052006 200744 5. Record earnings with momentum to mid-70sSurface TransportationSurface Transportation Operating Income Operating Ratio 87.9% $1,958M $1,549M 84.6% 82.0% $1,064M$902M 79.5% 2003 2004 2005200620032004 2005 2006 Notes: Excludes provision for casualty claims, management restructuring and insurance recoveries55 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 forlong-term growth remain in place 6 6 7. On track for delivering double-digit growth 20062010 Set goalsSet goalsCAGR Surface Transport 10%12%ConsistentExecute Execute Operating Incomecontinuousand andMonitor Monitor improvementProgressProgress Earnings Per Share12%14%CreateCreateplans plansFree Cash Flow10%12%CSXs long-term strategy and new financial targets to be outlined September 6th7 7 8. Rail Renaissance environment remains strong 2005 &amp; 20062007Strong ModeratingEconomyEconomy Tight Transportation Tight Transportation Capacity Capacity PricingPricingStrength StrengthExtendingExtendingSupply ChainsSupply Chains 8 8 9. Moderating economy continues to grow GDP and Industrial ProductionYear-Over-Year Change4.1%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%) 20012002 2003200420052006 2007 Gross Domestic Product Industrial ProductionSource: Global Insight99 10. Highways are constrained and getting worseToday 2020CSX Territory Source: USDOT FHWA Freight Analysis Framework1010 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%Q1Q2Q3 Q4Q1Q2Q3 Q4200520052005 2005200620062006 2006 Price Increase on 'Same Store Sales'Total Revenue per UnitNote: Price increases on a Same Store Sales basis exclude fuel surcharge and mix impacts 11 11 12. Long-term growth focused at the major ports15.87.03.6 4.5CSX Intermodal NetworkCSX Intermodal NetworkSeattle/Tacoma 59.4NY/NJ3.4 OaklandVirginia 6.61.9Charleston 9.413.1 TEU in Millions1.7 6.2 20041.4Savannah 2020Houston LA/LBSource: Containerization International and TranSystems. 12 12 13. Increasing port volumes will drive rail volumesToday 2020CSX Territory Source: TranSystems and USDOT Federal Railroad Administration Office of Policy1313 14. Capacity projects leverage growth potential Strategic sidings total 120miles of new trackAlbany ChicagoNearly half are on-line New Yorkwith the balance targetedfor 2007 completion Strengthens position innortheastern markets Leverages fast growingJacksonville southeastern markets 1414 15. Capital philosophy supports long-term growth Increased productivity orself help Public-private partnerships ChicagoNorthern VARedeployment of proceedsfrom asset salesImprovements: On-time departuresCapital targets returns Terminal efficiencyabove cost of capital Train velocity2007 Capital Budget12% $1.4 BillionCentral FL Infrastructure 12% New Capacity Public FundingLocomotives58%18% Frt Cars &amp; Other Asset Redeployment1515 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 1616 17. JP Morgan Aviation and Transportation Conference March 200717 17 </p>