csx Q1_2007

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<ul><li><p>11</p><p>First Quarter 2007Earnings Presentation</p><p>First Quarter 2007Earnings Presentation</p><p>22</p><p>Forward Looking DisclosureThis 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.</p><p>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.</p></li><li><p>33</p><p>Executive Summary</p><p>Michael WardChairman, President andChief Executive Officer</p><p>44</p><p>First quarter overview . . .</p><p> Core earnings power reflects secular strength</p><p> Strong pricing momentum continues</p><p> Sustained operational performance</p><p>First Quarter Earnings Per Share</p><p>$0.53 $0.53$0.52$0.50</p><p>Reported Comparable</p><p>2006 2007</p><p>Note: Comparable 2007 earnings per share excludes insurance recoveries</p></li><li><p>55</p><p>Sales and Marketing Review</p><p>Clarence GoodenExecutive Vice PresidentSales and Marketing</p><p>66</p><p>Total revenue increased 4% to $2.4 billion</p><p>First QuarterRevenue in Millions</p><p>$2,331</p><p>$2,422($90)$181</p><p>2006 RPU Volume 2007</p><p> Record quarterly revenues</p><p> 20th consecutive quarter of revenue growth</p><p> Strong yield environment offsetting lower volumes</p></li><li><p>77</p><p>Price continues to drive RPU growth</p><p>Year-Over-Year Change</p><p>7.1%6.6%6.7%6.8%6.2%6.3%5.6%6.0%4.8%</p><p>8.6%9.6% 9.0%</p><p>11.0% 11.7%12.6%</p><p>11.8%</p><p>8.4% 8.1%</p><p>Q12005</p><p>Q22005</p><p>Q32005</p><p>Q42005</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>Price Increase on 'Same Store Sales' Total Revenue per Unit</p><p>Note: Price increases on a Same Store Sales basis excludes fuel surcharge and mix impacts</p><p>88</p><p>Surface Transportation VolumeYear-Over-Year Percentage Change</p><p>(7.9%)</p><p>(3.8%)(4.9%)</p><p>(0.6%)</p><p>(5.5%)</p><p>(10.3%)</p><p>(6.1%)(4.5%)</p><p>(1.8%) (1.7%)(0.6%)</p><p>(1.5%) (1.6%)</p><p>1 2 3 4 5 6 7 8 9 10 11 12 13</p><p>Volumes reflect a combination of factors</p><p>Week</p><p> Construction softness Automotive softness</p><p>(4.2%)</p><p> Construction softness Automotive softness Weather impact</p><p> Construction softness Automotive softness Weather impact</p><p>(6.6%)(6.6%)</p><p> Construction/Auto softness New intermodal service Growth in MT, CH, PF</p><p> Construction/Auto softness New intermodal service Growth in MT, CH, PF</p><p>(1.4%)(1.4%)</p></li><li><p>99</p><p>Merchandise revenue increased 5%</p><p>First Quarter2007 versus 2006</p><p>5%</p><p>(5%)</p><p>10%</p><p>Revenue</p><p>Volume</p><p>RPU</p><p>$ 1,209$ 60$ 1,149Revenue</p><p>(millions)</p><p>675(32)707Volume</p><p>(thousands)</p><p>$ 1,791$ 166$ 1,625RPU</p><p>2007Change2006</p><p> 20th consecutive quarter of revenue growth</p><p> Continued favorable pricing environment</p><p> Volume challenges in construction-related markets</p><p> Strength in ethanoland fertilizers </p><p>1010</p><p>Coal revenue increased 9%</p><p>First Quarter2007 versus 2006</p><p>9%</p><p>(3%)</p><p>13%</p><p>Revenue</p><p>Volume</p><p>RPU</p><p>$ 633$ 54$ 579Revenue</p><p>(millions)</p><p>462(14)476Volume</p><p>(thousands)</p><p>$ 1,370$ 154$ 1,216RPU</p><p>2007Change2006</p><p> Record quarterly revenue and revenue per unit</p><p> Utility volumes declined as inventories have reached target levels</p><p> Strong demand continues in export coal</p><p> Pricing environment remains strong</p></li><li><p>1111</p><p>Intermodal revenue decreased 5%</p><p>First Quarter2007 versus 2006</p><p>(5%)</p><p>(1%)</p><p>(3%)</p><p>Revenue</p><p>Volume</p><p>RPU</p><p>$ 318($ 16)$ 334Revenue</p><p>(millions)</p><p>509(7)516Volume</p><p>(thousands)</p><p>$ 625($ 22)$ 647RPU</p><p>2007Change2006</p><p> Reduction in otherrevenue impacted profits</p><p> Price gains offset by mix</p><p> Domestic volume grew on new services</p><p>1212</p><p>Automotive revenue decreased 12%</p><p>First Quarter2007 versus 2006</p><p>(12%)</p><p>(14%)</p><p>2%</p><p>Revenue</p><p>Volume</p><p>RPU</p><p>$ 203($ 28)$ 231Revenue</p><p>(millions)</p><p>109(18)127Volume</p><p>(thousands)</p><p>$ 1,862$ 43$ 1,819RPU</p><p>2007Change2006</p><p> Volume down on production declines</p><p> New Domestics continue to gain market share</p><p> Pricing opportunities continue</p></li><li><p>1313</p><p>Second quarter revenue outlook positive</p><p>AutomotiveEmerging Markets</p><p>Forest Products</p><p>Agricultural Products</p><p>Chemicals</p><p>Coal, Coke &amp; Iron Ore</p><p>Food &amp; Consumer </p><p>Intermodal</p><p>Metals</p><p>Phosphate &amp; Fertilizer</p><p>UnfavorableNeutralFavorable</p><p>1414</p><p>Sales and Marketing wrap-up . . .</p><p> GDP and IDP forecasted to trend upward</p><p> Continued strong pricing environment</p><p> Overall volume outlook improving</p><p> Service and capacity improvements will support growth</p><p>Economic Forecast2007-2008</p><p>2.2%</p><p>2.8%</p><p>1.8%</p><p>2.3%</p><p>2007 2008</p><p>GDP Industrial Production</p><p>Source: Global Insight</p></li><li><p>1515</p><p>Operations Review</p><p>Tony IngramExecutive Vice PresidentChief Operating Officer</p><p>1616</p><p>Leadership, discipline and execution</p><p> Safety performance continues to improve</p><p> Service levels sustained in challenging conditions</p><p> Productivity and asset utilization improving </p><p>SafetySafety</p><p>ProductivityProductivity</p><p>ServiceService</p><p>LeadershipLeadership</p><p>DisciplineDiscipline</p><p>ExecutionExecution</p><p>ReliablePerformance</p></li><li><p>1717</p><p>Safety performance remains strong</p><p>Rolling 12-month Averages</p><p>FRA Personal Injury</p><p>1.691.55 1.44 1.41 1.38</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>FRA Train Accidents</p><p>4.03 3.913.57 3.40 3.17</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>13 WeekAverage</p><p>1.35</p><p>13 WeekAverage</p><p>2.84</p><p>1818</p><p>On-time performance consistent</p><p>Rolling 12-month Averages</p><p>On-Time Originations</p><p>57%65%</p><p>71% 76% 76%</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>On-Time Arrivals</p><p>46%52%</p><p>57%63% 63%</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>13 WeekAverage</p><p>74%</p><p>13 WeekAverage</p><p>64%</p></li><li><p>1919</p><p>Asset utilization improving</p><p>Rolling 12-month Averages</p><p>Cars-On-Line (000)</p><p>231228 226 225 225</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>Dwell Time (hours)</p><p>28.927.7 26.8</p><p>25.6 25.2</p><p>Q12006</p><p>Q22006</p><p>Q32006</p><p>Q42006</p><p>Q12007</p><p>13 WeekAverage24.9 hrs</p><p>13 WeekAverage</p><p>225K</p><p>2020</p><p>Train velocity remains stable</p><p>Velocity (mph)</p><p>19.4 19.5 19.519.8 19.7</p><p>Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007</p><p>13 WeekAverage</p><p>19.9 mph</p><p>Rolling 12-month Averages</p></li><li><p>2121</p><p>Looking forward . . .</p><p> Safety performance momentum continues</p><p> Continuous improvement in service reliability</p><p> Productivity and asset utilization gains</p><p>2222</p><p>Financial Results</p><p>Oscar MunozExecutive Vice PresidentChief Financial Officer</p></li><li><p>2323</p><p>CSX reports strong first quarter results</p><p>)$ (5$ 245$ 240Net Earnings</p><p>)($ 0.01$ 0.53$ 0.52Earnings Per Share</p><p>))</p><p>(8(112</p><p>)))</p><p>(3(98</p><p>(150</p><p>)))</p><p>(11(99</p><p>(138</p><p>Other Income (net)Interest ExpenseIncome Taxes</p><p>)$ (8$ 496$ 488Consolidated Operating Income</p><p>)(891Other Operating Income</p><p>$ 0$ 487$ 487Surface Transportation Operating Income</p><p>Variance20062007Dollars in millions, except EPS</p><p>First Quarter Results</p><p>2424</p><p>Comparable EPS is $0.50</p><p>)(18-)(18Less Gain on Insurance Recoveries</p><p>)($ 18$ 487$ 469Comparable Operating Income</p><p>$ 0$ 487$ 487Surface Transportation Operating Income</p><p>)($ 0.03$ 0.53$ 0.50Comparable Earnings Per Share</p><p>)(0.02-)(0.02Less Gain on Insurance Recoveries</p><p>)($ 0.01$ 0.53$ 0.52Earnings Per Share</p><p>Variance20062007Dollars in millions, except EPS</p><p>First Quarter Results</p></li><li><p>2525</p><p>First-quarter results near all-time high</p><p>First Quarter Surface TransportationOperating Income in Millions</p><p>$169$204</p><p>$351</p><p>$469</p><p>2003 2004 2005 2006 2007</p><p>Note: 2004 excludes management restructuring charges</p><p>$487</p><p>2626</p><p>Core earnings momentum remains strong</p><p>Surface TransportationOperating Income in Millions</p><p>$469$487</p><p>$45($28)</p><p>($35)</p><p> Q1 2006</p><p>2006 FuelHedge</p><p>Brooks, KYDerailment</p><p>EarningsMomentum</p><p> Q1 2007</p></li><li><p>2727</p><p>Operating Income of $469 million</p><p>)(4%$ 487 $ 469Operating Income</p><p>)(1.5 pts79.1%80.6%Operating Ratio</p><p>)(6%1,8441,953Operating Expenses</p><p>))))</p><p>)</p><p>4%</p><p>(2%(17%(2%(5%2%</p><p>(2%</p><p>$ 2,331</p><p>71848225321112456</p><p>$ 2,422</p><p>73256325922112157</p><p>RevenueExpenses</p><p>Labor and FringeMaterials, Supplies and OtherFuelDepreciationEquipment and Other RentsInland Transportation</p><p>Variance20062007Surface Transportation ($s in millions)</p><p>First Quarter Results</p><p>Note: 2006 results exclude insurance recoveries</p><p>2828</p><p>Labor and fringe increased 2%</p><p>First QuarterDollars in Millions</p><p>$732$718 $14</p><p>2006 Variance 2007</p><p> Primarily due to wage and benefit inflation</p><p> Partially offset by productivity gains</p></li><li><p>2929</p><p>MS&amp;O increased 17%</p><p>First QuarterDollars in Millions</p><p>$563</p><p>$482</p><p>$81</p><p>2006 Variance 2007</p><p> Primarily driven by an increase in derailment related expenses</p><p> Continued higher than historical inflation levels</p><p>3030</p><p>Fuel increased 2%</p><p>First QuarterDollars in Millions</p><p>$259$253 $6</p><p>2006 Variance 2007</p><p> Consumed 150 million gallons at average gross price of $1.73</p><p> Comparison impacted by $35 million in lower hedge</p></li><li><p>3131</p><p>Rents decreased 2%</p><p>First QuarterDollars in Millions</p><p>$121$124 ($3)</p><p>2006 Variance 2007</p><p> Primarily due to lower volumes</p><p> Improved productivity offset inflation</p><p>3232</p><p>All other expenses increased 4%</p><p>First QuarterDollars in Millions</p><p>$211 $221</p><p>$56$57</p><p>$11</p><p>2006 Variance 2007</p><p>$267 $278</p><p>Depreciation Inland Transportation</p></li><li><p>3333</p><p>Dividend and share buyback update . . .</p><p>Annual Dividend Rate</p><p>$0.20</p><p>$0.26</p><p>$0.40</p><p>$0.48</p><p>Q32005</p><p>Q42005</p><p>Q22006</p><p>Q12007</p><p>Share RepurchaseDollars in Millions</p><p>$465</p><p>$1,000$1,050</p><p>2006 2007E 2008E</p><p>3434</p><p>Financial Wrap-up . . .</p><p> Earnings power continues to improve despite softer economy</p><p> Dynamic environment propelling long-term financials above 2006-2010 targets</p><p> Maintaining double-digit growth on higher base</p><p> Stronger results creating new investing opportunities</p><p> Continue balanced use of cash with higher returns</p></li><li><p>3535</p><p>Concluding Remarks</p><p>Michael WardChairman, President andChief Executive Officer</p><p>3636</p><p>Looking forward . . .</p><p> Producing strong results for shareholders</p><p> Industry positioned to continue its renaissance</p><p> Leveraging better service for long-term growth</p><p> Targeting greatest success in our 180th year</p></li><li><p>3737</p><p>First Quarter 2007Earnings Presentation</p><p>First Quarter 2007Earnings Presentation</p></li></ul>