Download - csx 2007_JP_Morgan_Conference-REF23640
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JP Morgan Aviation andTransportation Conference
March 2007
JP Morgan Aviation andTransportation Conference
March 2007
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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 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.
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CSX has created significant shareholder value
Stock PerformanceIndexed: Year-end 2003 = 100
50
100
150
200
250
Dec-2003 Dec-2004 Dec-2005 Dec-2006
CSX S&P 500 Dow Jones Transports
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Recent actions reinforce shareholder focus
Initiated $2.0 BillionShare Repurchase
Consistent with capital structure objectives
Builds on the $465 million repurchased in 2006
Represents over 10% of outstanding shares
Targeting year-end 2008 completion
Increased Annual Dividend 20%
$0.20$0.26
$0.40
$0.48
Q32005
Q42005
Q32006
Q12007
20%Increase
20%Increase
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Record earnings with momentum to mid-70’s
$902M$1,064M
$1,549M
$1,958M
Surface Transportation Operating Income
2003 2004 2005 2006
Surface Transportation Operating Ratio
87.9%
84.6%
82.0%
79.5%
2003 2004 2005 2006
Notes: Excludes provision for casualty claims, management restructuring and insurance recoveries
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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
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On track for delivering double-digit growth
2006–2010CAGR
Surface TransportOperating Income
10%–12%
Earnings Per Share 12%–14%
Free Cash Flow 10%–12%
Execute and
MonitorProgress
Execute and
MonitorProgress
Set goalsSet goals
Create plans
Create plans
Consistent Consistent continuous continuous
improvementimprovement
CSX’s long-term strategy and new financial targets to be outlined September 6th
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Rail Renaissance environment remains strong
Tight Transportation Tight Transportation CapacityCapacity
2005 & 2006
StrongStrongEconomyEconomy
PricingPricingStrengthStrength
2007
Tight Transportation Tight Transportation CapacityCapacity
ModeratingEconomy
PricingPricingStrengthStrength
ExtendingExtendingSupply ChainsSupply Chains
ExtendingExtendingSupply ChainsSupply Chains
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Moderating economy continues to grow
GDP and Industrial ProductionYear-Over-Year Change
1.6%2.5%
3.9%3.2% 3.3%
2.7%0.8%
4.1%3.2%
4.1%
2.2%
(3.6%)
0.0%(0.3%)
2001 2002 2003 2004 2005 2006 2007
Gross Domestic Product Industrial Production
Source: Global Insight
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Highways are constrained and getting worse
Today 2020
CSX Territory
Source: USDOT FHWA Freight Analysis Framework
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Rail Renaissance is driving improving yields
Year-Over-Year Change
6.6%6.7%6.8%6.2%6.3%5.6%6.0%4.8%
8.6%9.6% 9.0%
11.0% 11.7%12.6%
11.8%
8.4%
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
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
Same pricing momentum expected in 2007
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Long-term growth focused at the major ports
4.5
15.8
NY/NJ
1.85.6
Virginia
1.9
6.6
Charleston
1.7
9.4
Savannah1.4
6.2
Houston
TEU in Millions
2020
2004
Source: Containerization International and TranSystems.
CSX Intermodal NetworkCSX Intermodal Network
13.1
LA/LB
59.4
3.67.0
Seattle/Tacoma
2.0 3.4
Oakland
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Increasing port volumes will drive rail volumes
Today 2020
CSX Territory
Source: TranSystems and USDOT Federal Railroad Administration Office of Policy
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Capacity projects leverage growth potential
Jacksonville
Chicago
New York
Albany
Strategic sidings total 120 miles of new track
Nearly half are on-line with the balance targeted for 2007 completion
Strengthens position in northeastern markets
Leverages fast growing southeastern markets
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Capital philosophy supports long-term growth
Increased productivity or “self help”
Public-private partnerships
Redeployment of proceeds from asset sales
Capital targets returns above cost of capital
Chicago
Northern VA
Public Funding
Central FL
Asset Redeployment
Improvements:
On-time departures
Terminal efficiency
Train velocity
58%18%
12%
12%2007 Capital Budget
$1.4 Billion
Infrastructure
New Capacity
Locomotives
Frt Cars & Other
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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
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JP Morgan Aviation andTransportation Conference
March 2007
JP Morgan Aviation andTransportation Conference
March 2007