csx BBT_White_background-REF22571

Download csx  BBT_White_background-REF22571

Post on 29-May-2015



Economy & Finance

0 download

Embed Size (px)


<ul><li> 1. CSX CorporationBB&amp;T Transportation Conference February 15, 2006 </li></ul> <p> 2. Forward Looking Disclosure Statement 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. 2 3. For 2006, our core strategies remain intact as the foundation for delivering valueShareholder Value CreationProfitable Growth Margin ExpansionRevenueOperationalPerformance Impact DisciplineCultureCore Strategies3 4. Those strategies have improved the companys earning power significantlySurface Transportation Operating Income in Billions Rolling Twelve Months$1.5$1.4$1.3$1.2$1.1$1.0$1.0$0.9Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005Q4 2005 Note: Excludes 2003 provision for casualty claims, and 2003 and 2004 management restructuring charge4 5. The strong pricing environment and contribution focus have improved yields Revenue Per UnitYear-Over-Year Improvement11.1% 9.7%9.3% 8.6%7.8%6.6%2.4%0.1%Q1 2004Q2 2004 Q3 2004 Q4 2004Q1 2005 Q2 2005Q3 2005 Q4 2005Note: Second quarter 2005 excludes a benefit from a rate case settlement5 6. Yields, productivity and an improving culture have driven the operating ratioSurface Transportation Operating Ratio89.3% 87.1% 85.5% 85.2% 83.3%83.0% 81.3%80.5% Q1 2004Q2 2004 Q3 2004 Q4 2004Q1 2005 Q2 2005 Q3 2005 Q4 2005Note: The first three quarters of 2004 exclude management restructuring charges 6 7. Going forward, CSX expects steady double-digit growth through 2010 2006 2010 CAGROperating Income10% 12% Earnings12% 14%Free Cash Flow10% 12%Operating RatioMid 70sReturn on Invested CapitalMeet or Exceed COC 7 8. Safety momentum remains strong FRA Personal InjuryFRA Train AccidentRolling 12-Month Average Rolling 12-Month Average Injuries / 200,000 Man HoursAccidents / MM Train Miles 1.163.42 Six WeekSix Week2.294.79 Average Average 4.72 1.914.321.71 1.65 3.99 3.78Q4 Q1 Q2 Q3 Q4 1QTDQ4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 20062004 2005 2005 2005 2005 2006 8 9. ONE Plan is gaining traction; on-time performance is improving On-Time Originations On-Time Arrivals Rolling 12-Month AverageRolling 12-Month Average 43.0% 54.3% 40.9% 40.1% 51.1% 39.6% 50.3% 50.3% 38.9% 38.4% 49.0% 75% 62% 48.2% Six WeekSix Week Average AverageQ4 Q1 Q2 Q3 Q4 1QTD Q4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 2006 2004 2005 2005 2005 2005 2006 9 10. ONE Plan is gaining traction; Dwell and cars-on-line are stableDwell Time (Hours) Cars-On-Line Rolling 12-Month AverageRolling 12-Month Average 27.1 225K Six Week Six Week AverageAverage234,132 233,876 29.7 29.729.6 29.4 29.328.7232,172234,165233,271 233,118Q4 Q1 Q2 Q3 Q4 1QTDQ4 Q1 Q2 Q3 Q4 1QTD 2004 2005 2005 2005 2005 20062004 2005 2005 2005 2005 200610 11. ONE Plan is gaining traction; velocity to improve with Gulf restored Velocity (mph) 20.1Six Week Rolling Twelve MonthsAverage 20.319.919.8 19.7 19.319.2 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 1QTD 200611 12. Competitor yields are accelerating, implying continued opportunity Year-Over-Year Growth in Revenue Per Unit 18%16% 15% 13% 11% 11% 12% 9% 6% 3% 0%CSXNSC BNIUNP3Q 2004 4Q 2004 1Q 2005 2Q 2005 3Q 2005 Q4 200512 13. Volume growth will reflect continued focus on higher margin traffic 2006 Volume Growth and ContributionIntermodalCoalMerchandiseAuto Volume Growth Long-term Contribution13 14. That focus drove a 63% increase in intermodal operating income in 2005 2003-2005 Intermodal ProfitabilityDollars in Millions 91.2%$24888.7% $152 $110 81.8% 2003 20042005 Operating Income Operating Ratio 14 15. Intermodal volume growth will be concentrated in key service lanes On-time performance providesfoundation for growthSyracuseBuffaloBoston Chicago-Florida 80%Detroit Chicago-Northeast 90%New York ChicagoCleveland Philadelphia Northeast-Florida 90% ColumbiaBaltimore CincinnatiSt LouisEvansville Portsmouth Key service lanes have trainCharlottecapacity to handle growthNashville MemphisAtlanta Charleston Trucking capacity is expectedSavannahto remain tight MobileJacksonvilleNew OrleansTampa Intermodal TerminalsMiamiPriority Intermodal Corridors 15 16. Coal volume growth is expected to remain strong Stockpiles remain low Syracuse Utility demand remains strongBuffaloBoston New York Chicago Cleveland Car utilization is improving Philadelphia Baltimore New plants being servedSt Louis Portsmouth Western coal use to increase Memphis CharlestonSavannahJacksonvilleNew Orleans TampaCoal-fired UtilitiesCoal Reserves Miami16 17. The strong economy is expected to drive Merchandise growthMerchandise Revenue Manufacturing remains strong$4.2 Billion Plastics production increasing 10%26% Customer service is improving13% Supports long-term growth Drives increased utilization 14%12%8%17%ChemicalsEmerging Markets Metals Forest Products Phosphates &amp; Fertilizers AgricultureFood &amp; Consumer17 18. Automotive volume growth will be limited near-term Light vehicle production expected to be flat Syracuse BuffaloBoston Traditional Big-3 expected to Detroit continue losing market share New York Chicago ClevelandPhiladelphiaColumbiaBaltimoreCincinnati Production at the CSX-servedSt Louis Evansville Portsmouth Hyundai plant is increasing Charlotte Nashville Memphis Long-term strategy continues AtlantaCharleston to focus on new domestics Savannah JacksonvilleNew Orleans Big-3 Assembly Plants Tampa New Domestics Assembly Plants Miami Distribution Centers 18 19. Industrial development will further drive long-term growthMerchandise Ethanol facilities Feed mills Syracuse Buffalo BostonAggregates facilities Detroit Plastics plantsNew York Chicago ClevelandPhiladelphiaCoalColumbiaBaltimore New projectsSt LouisPortsmouthIntermodal Nashville Port developments Memphis Atlanta Logistics centers Charleston SavannahAutomotive JacksonvilleNew Orleans Assembly plant Tampa Supplier facility Miami 19 20. To support growth, increased capital expands capacity along key corridors Surface Transportation2006 Capital Spending Capital Spending in Millions 53%$1,420$1,055 $96015%14% 18% Infrastructure New Capacity20042005*2006* Locomotive Cars &amp; OtherNote: 2005 and 2006 excludes capital spending relating to Katrina20 21. The investment will leverage the rich northeast and growing southeast markets 1994-2004 Income Growth 2004 IncomeChicago ChicagoNew YorkNew YorkJacksonvilleJacksonvilleNew Orleans New OrleansLT 5% LT $50BMiamiMiami5.0% 5.5% $51B $150B5.6% 6.0% $151 $250BGT 6.0% GT $250B21 Source: Bureau of Economic Analysis 22. Sixty projects are scheduled through 2007; first twenty are already underway Albany toAlbanyNew York Chicago New York 2 LocationsTerre Haute Terre HauteTo Nashville Nashville10 LocationsWaycross AtlantaTo Atlanta Waycross 8 Locations New Orleans22 Miami 23. Of the first twenty, eight are focused between Atlanta and WaycrossCapacity Expansion Projects Lily, GAAtlanta, GA Waycross, GARock Spur, GARock Spur, GA Upton, GAUpton, GA Third Quarter 2006Woodbury, GAWoodbury, GAFourth Quarter 2006 Bartlett, GAAmbrose, GAAmbrose, GAJacksonville Haywood, GAHaywood, GAWaycross, GA23 24. Another ten will be completed this year between Terre Haute and Nashville Capacity Expansion ProjectsTerre Haute, IN Nashville, TN ChicagoThird Quarter 2006Carlisle, INCarlisle, INSmith, IN Fourth Quarter 2006 Hazelton, IN Hazelton, INRankin, KYRankin, KY Rankin, KYCasky,, KY Casky Staughters, KY Staughters, KYCedar Hill, TN Trenton, KY Trenton, KY Goodlettsville, TN Goodlettsville, TN 24 25. In addition, two projects will be completed between Albany and New York Capacity Expansion ProjectsAlbany, NY New York, NYThird Quarter 2006Fourth Quarter 2006 Albany West Park, NY Fort Montgomery, NY Newark / New York 25 26. Transportation demand is at record levels, with further growth expected Transportation Services IndexTransportation DemandIndexed: 2000=100 Indexed: 2000=100 120 125 110 115 100 10590 95 80 85 70 75 60 652000 2002 2004 2006 2008 20101990 1993 1996 1999 2002 2005 Sources: Bureau of Transportation Statistics and Association of State Highway and Transportation Officials 26 27. More consumption is being sourced through imports, extending the supply chain U.S. ConsumptionU.S. Production and Imports 2000 Dollars in TrillionsIndexed: 2000=100 $10 180 U.S. Imports$9 160 U.S. Industrial Production$8 140 $7 120100$6 80$5 60$4 2000 2002 2004 2006 2008 2010 2000 2002 2004 2006 2008 2010 Source: Global Insights27 28. The competitive environment supports the Rail Renaissance Intercity Freight Revenue The trucking industry is faced Dollars in Billions with several challenges$525$450 Congested highways$375 Labor shortages $300 New hour of service laws$225 Rising fuel costs $150 $75$0 Rail-truck partnerships bridge '60 '70 '75 '80 '85 '90 '95 '00 '05 those challenges, creating value Est for bothRail Truck Source: Eno Transportation 28 29. Yet rail stocks continue to trade at a discount to the S&amp;P 500Price-to-Earnings Ratios by Industry 23.1Healthcare19.4 Industrials 18.7Transportation 17.9 S&amp;P 50017.4Utilities17.0Telecom 15.9 Railroads Note: Reflects closing January stock prices and LTM earnings per share 29 30. CSXs price-to-earnings ratio has room for improvement Price-to-Earnings Ratios18.4 16.916.7 15.315.214.4 CSXNSC CPCNIBNI UNPNote: Reflects closing January stock prices and 2006 First Call earnings estimate30 31. CSXs commitment towards achieving its targets will drive that improvement Evolving Investment Thesis2006-2010 Targets Operating ratioCommitment Mid 70s Economic cycle Commitment Grow through the cycle Cost of capitalCommitment Meet or exceed COC Long-term growth Commitment Double-digit growth31 32. CSX CorporationBB&amp;T Transportation Conference February 15, 2006 </p>