Upload
finance27
View
88
Download
0
Embed Size (px)
Citation preview
CSX CorporationCSX CorporationCSX CorporationThird-Quarter Earnings
October 26, 2005
CSX CorporationThird-Quarter Earnings
October 26, 2005
Forward-looking Disclosure StatementThis presentation and other statements by the Company contain forward looking statements within the
Forward-looking Disclosure StatementThis presentation and other statements by the Company contain forward looking statements within the 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 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
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 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 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
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 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.
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
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 g ( ) p y p goperational 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
g ( ) p y p goperational 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 y y ( ) g g gthe 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.
y y ( ) g g gthe 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.
Michael WardMichael WardMichael WardMichael WardMichael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
Michael WardMichael WardChairman, President andChairman, President andChief Executive OfficerChief Executive Officer
Clarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer
Clarence GoodenClarence GoodenExecutive Vice PresidentExecutive Vice PresidentChief Commercial OfficerChief Commercial Officer
Th t i tl k tiTh t i tl k tiThe strong economic outlook continuesThe strong economic outlook continues
•• Overall transportation Overall transportation •• Overall transportation Overall transportation Transportation Services Index
•• Overall transportation Overall transportation demand near record levelsdemand near record levels
•• Overall transportation Overall transportation demand near record levelsdemand near record levels
Indexed: 2000 = 100
110
120
•• GDP remains strongGDP remains strong
•• Manufacturing index reflects Manufacturing index reflects
•• GDP remains strongGDP remains strong
•• Manufacturing index reflects Manufacturing index reflects 90
100
110
•• Manufacturing index reflects Manufacturing index reflects continued growthcontinued growth
•• Manufacturing index reflects Manufacturing index reflects continued growthcontinued growth
70
80
90
601990 1993 1996 1999 2002 2005
5555Source: Bureau of Transportation StatisticsSource: Bureau of Transportation Statistics
Surface Transportation revenue increased $182 illi 9 4% i th thi d t
Surface Transportation revenue increased $182 illi 9 4% i th thi d tmillion or 9.4% in the third quartermillion or 9.4% in the third quarter
Third QuarterSurface Transportation Revenue
Dollars in millions$2,125
$1,943
2004 2005
6666
Surface Transportation revenue per car i d 9 3% i th thi d tSurface Transportation revenue per car i d 9 3% i th thi d tincreased 9.3% in the third quarterincreased 9.3% in the third quarter•• Yields improved across Yields improved across •• Yields improved across Yields improved across Third Quarter
all marketsall markets
•• More than half of the RPU More than half of the RPU
all marketsall markets
•• More than half of the RPU More than half of the RPU
Year-Over-Year Change9.4% 9.3%
More than half of the RPU More than half of the RPU improvement is from priceimprovement is from price
F l h h l d ff t F l h h l d ff t
More than half of the RPU More than half of the RPU improvement is from priceimprovement is from price
F l h h l d ff t F l h h l d ff t •• Fuel surcharge helped offset Fuel surcharge helped offset rising fuel costsrising fuel costs
•• Fuel surcharge helped offset Fuel surcharge helped offset rising fuel costsrising fuel costs
0.1%
Revenue Volume RPU
7777
Coal revenues of $512 million increased$74 illi t i ld d lCoal revenues of $512 million increased$74 illi t i ld d l$74 million on strong yield and volume$74 million on strong yield and volume•• Strong demand across Strong demand across •• Strong demand across Strong demand across Third Quarter
all markets all markets
•• Favorable pricing environmentFavorable pricing environment
all markets all markets
•• Favorable pricing environmentFavorable pricing environment
Year-Over-Year Change16.9%
Favorable pricing environmentFavorable pricing environment
•• Stockpiles remain below targetStockpiles remain below target
Favorable pricing environmentFavorable pricing environment
•• Stockpiles remain below targetStockpiles remain below target11.9%
•• Outlook remains favorableOutlook remains favorable•• Outlook remains favorableOutlook remains favorable 4.5%
Revenue Volume RPU
8888
Automotive revenues of $200 million increased $15 illi t i ld d lAutomotive revenues of $200 million increased $15 illi t i ld d l$15 million on strong yield and volume$15 million on strong yield and volume•• Price and fuel surcharge Price and fuel surcharge •• Price and fuel surcharge Price and fuel surcharge Third Quarter
increasesincreases
•• Production increase and Production increase and
increasesincreases
•• Production increase and Production increase and
Year-Over-Year Change
8.1%
Production increase and Production increase and reduced downtimereduced downtimeProduction increase and Production increase and reduced downtimereduced downtime 6.2%
•• Overall inventory levels at Overall inventory levels at target levelstarget levels
•• Overall inventory levels at Overall inventory levels at target levelstarget levels 1.8%
•• Outlook is unfavorableOutlook is unfavorable•• Outlook is unfavorableOutlook is unfavorableRevenue Volume RPU
9999
Intermodal revenues of $337 million increased $10 illi i d i ldIntermodal revenues of $337 million increased $10 illi i d i ld$10 million on improved yield$10 million on improved yield•• Elimination of low margin trafficElimination of low margin traffic•• Elimination of low margin trafficElimination of low margin traffic Third Quarter
•• Reduction in offReduction in off--core volumescore volumes•• Reduction in offReduction in off--core volumescore volumesYear-Over-Year Change
5.8%
•• Continued yield management Continued yield management successsuccess
•• Continued yield management Continued yield management successsuccess
3.1%
•• Outlook remains favorableOutlook remains favorable•• Outlook remains favorableOutlook remains favorable
(2.7%)
Revenue Volume RPU
10101010
Intermodal operating income more than d bl d ti ti i d t 79 8%Intermodal operating income more than d bl d ti ti i d t 79 8%doubled; operating ratio improved to 79.8% doubled; operating ratio improved to 79.8%
Third Quarter Third QuarterThird QuarterIntermodal Operating Income
(Dollars in Millions)
Third QuarterIntermodal Operating Ratio
90.5%
$68 79.8%
$31
2004 2005 2004 2005
11111111
Merchandise revenues exceed $1 billion, i i $78 illi t i ldMerchandise revenues exceed $1 billion, i i $78 illi t i ldincreasing $78 million on stronger yieldincreasing $78 million on stronger yield
•• Revenue gains in all marketsRevenue gains in all markets•• Revenue gains in all marketsRevenue gains in all markets Third Quartergg
•• Volume impact mixedVolume impact mixed
gg
•• Volume impact mixedVolume impact mixed
Year-Over-Year Change
8 0%8.6%
•• Chemicals volume down Chemicals volume down •• Chemicals volume down Chemicals volume down
8.0%
•• Outlook favorable across Outlook favorable across most marketsmost markets
•• Outlook favorable across Outlook favorable across most marketsmost marketsmost marketsmost marketsmost marketsmost markets
(0.6%)Revenue Volume RPU
12121212
M h di i ld i i ll k tM h di i ld i i ll k tMerchandise yield gains in all marketsMerchandise yield gains in all marketsThird Quarter
Year-Over-Year Change
18.9%
12.6% 11.2%7.5% 7.3% 6.7% 5.9%5.1% 4.8% 3.7%
7.3%
(7.4%) (7.0%) (5.8%)Metals Food &
ConsumerForest
ProductsEmergingMarkets
Chemicals Phosphates& Fertilizers
AgriculturalProducts
RPU Volume
13131313
L ki f dL ki f dLooking forward . . .Looking forward . . .
•• Demand remains strongDemand remains strong•• Demand remains strongDemand remains strongDemand remains strongDemand remains strong
•• Favorable pricing environment continuesFavorable pricing environment continues
Demand remains strongDemand remains strong
•• Favorable pricing environment continuesFavorable pricing environment continues
•• Yield management focus will continueYield management focus will continue
•• Contract renewals are steadyContract renewals are steady
•• Yield management focus will continueYield management focus will continue
•• Contract renewals are steadyContract renewals are steadyyy
•• Continued emphasis on fuel efficiency and surcharge coverageContinued emphasis on fuel efficiency and surcharge coverage
yy
•• Continued emphasis on fuel efficiency and surcharge coverageContinued emphasis on fuel efficiency and surcharge coverage
14141414
Tony IngramTony IngramTony IngramTony IngramTony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer
Tony IngramTony IngramExecutive Vice PresidentExecutive Vice PresidentChief Operating OfficerChief Operating Officer
Infrastructure damaged by Hurricane Katrina ill b l l i d b d
Infrastructure damaged by Hurricane Katrina ill b l l i d b dwill be largely repaired by year-endwill be largely repaired by year-end
Gautier BridgeGautier BridgeTarget Date: Q4 2005Target Date: Q4 2005
Bay St. Louis BridgeBay St. Louis BridgeT t D t Q1 2006T t D t Q1 2006 Target Date: Q4, 2005Target Date: Q4, 2005Target Date: Q1, 2006Target Date: Q1, 2006
GulfportGulfportGulfportGulfportMobileMobileMobileMobile
PascagoulaPascagoulaPascagoulaPascagoula
Biloxi Bay BridgeBiloxi Bay BridgeTarget Date: Q4, 2005Target Date: Q4, 2005
New OrleansNew OrleansNew OrleansNew Orleans
Little Rigolets BridgeLittle Rigolets Bridge Rigolets Pass BridgeRigolets Pass Bridge
16161616
Target Date: Q4, 2005Target Date: Q4, 2005 Target Date: Q4, 2005Target Date: Q4, 2005
New Orleans interchange volumes continuet b t d th h lt ti tNew Orleans interchange volumes continuet b t d th h lt ti tto be routed through alternative gatewaysto be routed through alternative gateways
ChicagoChicagoNew YorkNew York
East St LouisEast St Louis
SoutheasternCorridor
SoutheasternCorridor
BirminghamBirminghamMemphisMemphis
N O lN O l
JacksonvilleJacksonville
ggMontgomeryMontgomeryMobileMobile
17171717
New OrleansNew OrleansMiamiMiami
Service levels have stabilized, hil f t ti t i
Service levels have stabilized, hil f t ti t iwhile safety continues to improvewhile safety continues to improve
Third QuarterThird Quarter20052005 20042004
FRA Personal Injury Frequency IndexFRA Personal Injury Frequency Index 1 911 91 2 422 42FRA Personal Injury Frequency IndexFRA Personal Injury Frequency IndexFRA Train Accident RateFRA Train Accident Rate
1.911.913.853.85
2.422.424.434.43
Velocity (miles per hour)Velocity (miles per hour)Terminal Dwell Time (hours)Terminal Dwell Time (hours)CarsCars onon lineline
19.719.729.029.0
232 324232 324
20.120.128.828.8
233 469233 469CarsCars--onon--lineline
OnOn--time Originationstime Originations
232,324232,324
51.1%51.1%
233,469233,469
50.9%50.9%
18181818
OnOn--time Arrivalstime Arrivals 43.1%43.1% 40.6%40.6%
Steady progressi id t i f t fSteady progressi id t i f t fis evident in safety performanceis evident in safety performance
FRA Personal Injury FRA Train Accident Twelve Month Rolling Average
Injuries / 200,000 Man HoursTwelve Month Rolling AverageAccidents / Million Train Miles
4 83 4 802.372.29
2.132.04
1 91
4.83 4.804.71
4.394 261.91 4.26
Q32004
Q42004
Q12005
Q22005
Q32005
Q32004
Q42004
Q12005
Q22005
Q32005
19191919
L ki f dL ki f dLooking forward . . .Looking forward . . .
S f t t tiS f t t tiS f t t tiS f t t ti•• Safety momentum continuesSafety momentum continues
•• Productivity gains evidentProductivity gains evident
•• Safety momentum continuesSafety momentum continues
•• Productivity gains evidentProductivity gains evident R li blProductivity gains evidentProductivity gains evident
•• Service has stabilizedService has stabilized
Productivity gains evidentProductivity gains evident
•• Service has stabilizedService has stabilized ServiceService ExecutionExecution
ReliablePerformance
SafetySafety
ProductivityProductivity
LeadershipLeadership
DisciplineDiscipline
SafetySafety LeadershipLeadership
20202020
Oscar MunozOscar MunozOscar MunozOscar MunozOscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President
Chief Financial OfficerChief Financial Officer
Oscar MunozOscar MunozExecutive Vice PresidentExecutive Vice President
Chief Financial OfficerChief Financial Officer
H i K t i i tH i K t i i tHurricane Katrina impacts . . .Hurricane Katrina impacts . . .•• Hurricane Katrina impact assessment of $250 million includes:Hurricane Katrina impact assessment of $250 million includes:•• Hurricane Katrina impact assessment of $250 million includes:Hurricane Katrina impact assessment of $250 million includes:
–– Capital costs of rebuilding the rail infrastructureCapital costs of rebuilding the rail infrastructure
–– Lost profits from business interruptionLost profits from business interruption
–– Capital costs of rebuilding the rail infrastructureCapital costs of rebuilding the rail infrastructure
–– Lost profits from business interruptionLost profits from business interruption
–– Other expenses associated with storm damageOther expenses associated with storm damage
•• Self insured retention is $25 million Self insured retention is $25 million
–– Other expenses associated with storm damageOther expenses associated with storm damage
•• Self insured retention is $25 million Self insured retention is $25 million Self insured retention is $25 million Self insured retention is $25 million
•• Timing of insurance recoveries will impact income recognitionTiming of insurance recoveries will impact income recognition
Third quarter preThird quarter pre tax impact was approximately $19 milliontax impact was approximately $19 million
Self insured retention is $25 million Self insured retention is $25 million
•• Timing of insurance recoveries will impact income recognitionTiming of insurance recoveries will impact income recognition
Third quarter preThird quarter pre tax impact was approximately $19 milliontax impact was approximately $19 million–– Third quarter preThird quarter pre--tax impact was approximately $19 milliontax impact was approximately $19 million
–– Fourth quarter preFourth quarter pre--tax impact is estimated at $15 milliontax impact is estimated at $15 million
–– Third quarter preThird quarter pre--tax impact was approximately $19 milliontax impact was approximately $19 million
–– Fourth quarter preFourth quarter pre--tax impact is estimated at $15 milliontax impact is estimated at $15 million
22222222
CSX earnings per share increased 31% to $0.72 d it H i K t i i tCSX earnings per share increased 31% to $0.72 d it H i K t i i tdespite Hurricane Katrina impactdespite Hurricane Katrina impact
Third QuarterThird Quarter
D ll i illi t E i ShD ll i illi t E i Sh 20052005 20042004 V iV iDollars in millions, except Earnings per ShareDollars in millions, except Earnings per Share 20052005 20042004 VarianceVariance
Surface Transportation Operating IncomeSurface Transportation Operating IncomeOth O ti IOth O ti I
$ 361$ 361( 8)( 8)
$ 247$ 24733
$ 114$ 114( 11)( 11)Other Operating IncomeOther Operating Income ( 8)( 8) 33 ( 11)( 11)
Consolidated Operating IncomeConsolidated Operating Income 353353 250250 103103
All Other IncomeAll Other IncomeInterest ExpenseInterest ExpenseIncome TaxesIncome Taxes
1111100100100100
4141106106
6262
( 30)( 30)66
( 38)( 38)Income TaxesIncome Taxes 100100 6262 ( 38)( 38)
Net EarningsNet Earnings $ 164$ 164 $ 123$ 123 $ 41$ 41
23232323
Earnings per ShareEarnings per Share $ 0.72$ 0.72 $ 0.55$ 0.55 $ 0.17$ 0.17
Surface Transportation earnings increased 46% d ti ti i d 4 3 i t
Surface Transportation earnings increased 46% d ti ti i d 4 3 i t
Surface TransportationO ti I i Milli
and operating ratio improved 4.3 points and operating ratio improved 4.3 points Surface Transportation
O ti R tiOperating Income in Millions
$361
Operating Ratio
87.3%
$247 83.0%46%46% 4.34.3
PtsPts
2004 Q3 2005 Q3 2004 Q3 2005 Q3
24242424
E i d 4% iE i d 4% iExpenses increased 4% over prior yearExpenses increased 4% over prior yearSurface Transportation Operating Expenses
Thi d Q t Y O Y V iThird Quarter Year-Over-Year Variance(Dollars in Millions)
$9
($8)($2)
$
($28)
($8)
($39)
Fuel Price Volume andInflation
TrainOperations
OperationsProductivity
All Other
25252525
Inflation Operations Productivity
CSX raised its dividend 30%, reflectingt i d h fl t ti
CSX raised its dividend 30%, reflectingt i d h fl t tistrong earnings and cash flow expectationsstrong earnings and cash flow expectations
•• Core earning power has improvedCore earning power has improved•• Core earning power has improvedCore earning power has improvedg p pg p p
•• Double digit growth rates expected over the next five yearsDouble digit growth rates expected over the next five years
g p pg p p
•• Double digit growth rates expected over the next five yearsDouble digit growth rates expected over the next five years
–– Operating IncomeOperating Income
–– Earnings per shareEarnings per share
–– Operating IncomeOperating Income
–– Earnings per shareEarnings per share
–– Core Free Cash FlowCore Free Cash Flow
Yi ld i bl t Yi ld i bl t
–– Core Free Cash FlowCore Free Cash Flow
Yi ld i bl t Yi ld i bl t •• Yield is now comparable to peersYield is now comparable to peers•• Yield is now comparable to peersYield is now comparable to peers
26262626
L ki f dL ki f dLooking forward . . .Looking forward . . .•• Full year guidance raised to a range of $3.20 ― $3.30Full year guidance raised to a range of $3.20 ― $3.30•• Full year guidance raised to a range of $3.20 ― $3.30Full year guidance raised to a range of $3.20 ― $3.30
–– On a consistent basis with previous guidanceOn a consistent basis with previous guidance–– Includes the third and fourth quarter hurricane impactIncludes the third and fourth quarter hurricane impact–– On a consistent basis with previous guidanceOn a consistent basis with previous guidance–– Includes the third and fourth quarter hurricane impactIncludes the third and fourth quarter hurricane impact
•• Fourth quarter of 2004 included 53Fourth quarter of 2004 included 53rdrd week for Fiscal Calendarweek for Fiscal Calendar•• Fourth quarter of 2004 included 53Fourth quarter of 2004 included 53rdrd week for Fiscal Calendarweek for Fiscal Calendarou t qua te o 00 c uded 53ou t qua te o 00 c uded 53 ee o sca Ca e daee o sca Ca e daou t qua te o 00 c uded 53ou t qua te o 00 c uded 53 ee o sca Ca e daee o sca Ca e da
•• On track to achieve fullOn track to achieve full--year core Free Cash Flow of $450 millionyear core Free Cash Flow of $450 million•• On track to achieve fullOn track to achieve full--year core Free Cash Flow of $450 millionyear core Free Cash Flow of $450 million
27272727
CSX CorporationCSX CorporationCSX CorporationThird-Quarter Earnings
October 26, 2005
CSX CorporationThird-Quarter Earnings
October 26, 2005