CSX CORP

Previous wording

•Revenue decreased $25 million, or 1%, year over year.

Current wording

•Expenses increased $20 million, or 1%, year over year.

Previous wording

•Operating income of $1.4 billion decreased $110 million, or 8%, year over year.

Current wording

•Operating income of $1.4 billion decreased $18 million, or 1%, year over year.

Previous wording

•Operating margin of 36.8% decreased 270 basis points versus prior year.

Current wording

•Operating margin of 39.1% decreased 50 basis points versus prior year.

Previous wording

•Earnings per diluted share of $0.46 decreased $0.02, or 4%, year over year.

Current wording

•Earnings per diluted share of $0.49 was flat year over year.

Previous wording

Total revenue decreased 1% in the first quarter 2024 when compared to first quarter 2023 primarily due to lower fuel recovery, decreases in other revenue, lower trucking revenue, and pricing declines in export coal due to the impact of lower benchmark rates. These decreases were partially offset by pricing gains in merchandise as well as higher intermodal and coal volumes.

Current wording

Total revenue was flat for second quarter 2024 when compared to second quarter 2023, as pricing gains in merchandise, as well as higher intermodal and merchandise volumes, were offset by pricing declines in export coal due to the impact of lower benchmark rates, decreases in other revenue, and lower fuel recovery.

Previous wording

Chemicals - Increased due to higher shipments of plastics, crude oil, and natural gas liquids, partially offset by lower shipments of frac sand.

Current wording

Chemicals - Increased due to higher shipments of plastics, crude oil, petroleum products and natural gas liquids.

Previous wording

Agricultural and Food Products - Decreased primarily due to lower domestic and export shipments of grain, partially offset by higher shipments of vegetable oils.

Current wording

Agricultural and Food Products - Decreased primarily due to lower shipments of domestic grain and ethanol.

Previous wording

Minerals- Decreased due to lower shipments of aggregates, partially offset by increased shipments of cement.

Current wording

Minerals- Increased due to higher shipments of cement, partially offset by lower shipments of aggregates.

Previous wording

Metals and Equipment - Decreased due to lower steel and scrap shipments. Equipment was relatively flat to prior year as increased volume for repositioning empty railcars was offset by reduced loaded shipments.

Current wording

Metals and Equipment - Decreased due to lower steel and scrap shipments, partially offset by increased pipe shipments.

Previous wording

Fertilizers - Decreased due to declines in short-haul shipments, which were partially offset by increases in long-haul phosphate and potash shipments.

Current wording

Fertilizers - Decreased due to declines in short-haul phosphates and lower potash shipments.

Previous wording

Intermodal volume increased primarily due to international shipments driven by higher imports through east coast ports and inventory replenishments. Domestic shipments also increased due to growth with key customers despite a soft trucking environment.

Current wording

Intermodal volume increased due to international shipments driven by higher imports through east coast ports and inventory replenishments. Domestic shipments decreased due to the impacts of a soft trucking environment.

Previous wording

Export coal increased due to higher shipments of thermal and metallurgical coal. Domestic coal decreased primarily due to lower shipments of coal to utility plants, as well as lower shipments to river and lake terminals.

Current wording

Export coal shipments increased despite the impacts associated with the Francis Scott Key Bridge collapse in Baltimore as CSX shipped more metallurgical coal through other locations. Domestic coal decreased primarily due to lower shipments of coal to utility plants, as well as lower shipments to river and lake terminals.

Previous wording

Trucking revenue decreased $18 million versus the prior year due to lower fuel and capacity surcharges.

Current wording

Trucking revenue decreased $6 million versus the prior year due to lower fuel and capacity surcharges.

Previous wording

Other revenue was $35 million lower, primarily resulting from lower carload demurrage as well as lower intermodal storage and equipment usage.

Current wording

Other revenue was $32 million lower, resulting from lower carload demurrage, as well as reduced intermodal storage and equipment usage, and other items.

Previous wording

Expenses of $2.3 billion increased $85 million, or 4%, in first quarter 2024 when compared to the first quarter 2023.

Current wording

Expenses of $2.3 billion increased $20 million, or 1%, in second quarter 2024 when compared to the second quarter 2023.

Previous wording

Labor and Fringe expense increased $75 million due to the following:

Current wording

Labor and Fringe expense increased $18 million due to the following:

Previous wording

•An increase of $26 million was due to cost increases attributed to higher headcount and union employee sick benefits.

Current wording

•An increase of $23 million was due to higher headcount.

Previous wording

•An increase of $23 million was driven by inflation.

Current wording

•An increase of $18 million was driven by inflation.

Previous wording

Purchased Services and Other expense increased $23 million due to the following:

Current wording

Purchased Services and Other expense increased $8 million due to the following:

Previous wording

•An increase of $13 million was due to inflation and higher volume.

Current wording

▪An increase of $13 million was due to inflation.

Previous wording

Depreciation and Amortization expense increased $17 million as a result of a larger asset base.

Current wording

Depreciation and Amortization expense increased $6 million as a result of a larger asset base.

Previous wording

Fuel costs decreased $39 million primarily resulting from a 10% decrease in locomotive fuel prices.

Current wording

Fuel costs decreased $11 million primarily resulting from a 4% decrease in locomotive fuel prices, as efficiency gains were largely offset by the impact of higher volume.

Previous wording

Gains on Property Dispositions decreased to $1 million from $8 million in the prior year.

Current wording

Gains on Property Dispositions decreased to $8 million from $12 million in the prior year.

Previous wording

Interest expense increased $9 million primarily due to higher average debt balances.

Current wording

Interest expense increased $8 million primarily due to higher average debt balances.

Previous wording

Income tax expense decreased $25 million mostly due to lower earnings before income taxes.

Current wording

Income tax expense decreased $8 million due to favorable state legislative changes and lower earnings before income taxes.

Previous wording

(c) Gross operating assets reflects an average of the year-to-date quarters reported for each year presented. Averages are not applicable for the first quarter of each year.

Current wording

(d) Gross operating assets reflects an average of the year-to-date quarters reported for each year presented.

Previous wording

Management believes that Free Cash Flow ("FCF") is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, FCF measures cash generated by the business after reinvestment. This measure represents cash available for both equity and bond investors to be used for dividends, share repurchases or principal reduction on outstanding debt. FCF is calculated by using net cash from operations and adjusting for property additions and proceeds and advances from property dispositions. FCF should be considered in addition to, rather than a substitute for, cash provided by operating activities. The decrease in FCF before dividends from the prior year of $256 million is primarily due to less cash from operating activities and higher property additions. Cash from operating activities in the three months ended March 31, 2024 includes the impact of $387 million of federal tax payments related to the 2023 tax year that were previously postponed under an Internal Revenue Service tax relief announcement for those impacted by Hurricane Idalia. Cash from operating activities in the prior year period includes the payment of $232 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

Current wording

Management believes that Free Cash Flow ("FCF") is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, FCF measures cash generated by the business after reinvestment. This measure represents cash available for both equity and bond investors to be used for dividends, share repurchases or principal reduction on outstanding debt. FCF is calculated by using net cash from operations and adjusting for property additions and proceeds and advances from property dispositions. FCF should be considered in addition to, rather than a substitute for, cash provided by operating activities. The decrease in FCF before dividends from the prior year of $378 million is primarily due to less cash from operating activities and higher property additions. Cash from operating activities in the six months ended June 30, 2024 includes the impact of $387 million of federal tax payments related to the 2023 tax year that were previously postponed under an Internal Revenue Service tax relief announcement for those impacted by Hurricane Idalia. Cash from operating activities in the prior year period includes the payment of $238 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

Previous wording

In first quarter 2024, velocity decreased by 2% and dwell increased by 8% versus prior year. Carload trip plan performance was 82% compared to 86% in the prior year while intermodal trip plan performance was 94% compared to 96% in the prior year. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

Current wording

In the second quarter of 2024, velocity increased by 3% while dwell increased by 10% versus prior year. Carload trip plan performance was 80% compared to 84% in the prior year while intermodal trip plan performance was 94% compared to 96% in the prior year. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

Previous wording

The personal injury frequency of 1.27 in first quarter 2024 increased by 17% compared to prior year. The FRA train accident rate of 3.81 decreased by 5% compared to prior year. Safety is a top priority at CSX, and the Company is committed to reducing risk and enhancing the overall safety of its employees, customers, and communities in which the Company operates.

Current wording

While the personal injury frequency increased in second quarter 2024 compared to the prior year, the FRA train accident rate decreased. Safety is a top priority at CSX, and the Company is committed to reducing risk and enhancing the overall safety of its employees, customers, and communities in which the Company operates.

Previous wording

The following chart highlights the operating, investing and financing components of the net increase of $130 million and decrease of $667 million in cash and cash equivalents for the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

The following chart highlights the operating, investing and financing components of the net decrease of $115 million and $977 million in cash and cash equivalents for the six months ended June 30, 2024 and June 30, 2023, respectively.

Previous wording

•The Company generated $167 million less cash from operating activities primarily driven by lower cash-generating net earnings and the payment of $387 million of previously postponed federal taxes related to the 2023 tax year. These decreases were partially offset by the impact of prior year payments of $232 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

Current wording

•The Company generated $300 million less cash from operating activities primarily driven by the payment of $387 million of previously postponed federal taxes related to the 2023 tax year and lower cash-generating net earnings. These decreases were partially offset by the impact of prior year payments of $238 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

Previous wording

•CSX used $24 million more cash for investing activities primarily as a result of higher property additions consistent with planned capital expenditures, increased acquisition spending and lower proceeds and advances from property dispositions, partially offset by lower net purchases of investments.

Current wording

•CSX used $103 million more cash for investing activities primarily as a result of higher property additions consistent with planned capital expenditures, partially offset by higher net sales of short-term investments.

Previous wording

•The Company used $988 million less cash for financing activities primarily due to lower share repurchases and lower debt repayments.

Current wording

•The Company used $1,265 million less cash for financing activities primarily due to lower share repurchases and lower debt repayments.

Previous wording

As of the end of first quarter 2024, CSX had $1.5 billion of cash, cash equivalents and short-term investments. CSX uses current cash balances for general corporate purposes, which may include capital expenditures, working capital requirements, reduction or refinancing of outstanding indebtedness, redemptions and repurchases of CSX common stock, dividends to shareholders, acquisitions and other business opportunities, and contributions to the Company's qualified pension plan. See Note 7, Debt and Credit Agreements.

Current wording

As of the end of second quarter 2024, CSX had $1.2 billion of cash, cash equivalents and short-term investments. CSX uses current cash balances for general corporate purposes, which may include capital expenditures, working capital requirements, reduction or refinancing of outstanding indebtedness, redemptions and repurchases of CSX common stock, dividends to shareholders, acquisitions and other business opportunities, and contributions to the Company's qualified pension plan. See Note 7, Debt and Credit Agreements.

Previous wording

The Company has multiple sources of liquidity, including cash generated from operations and financing sources. The Company filed a shelf registration statement with the SEC on February 16, 2022, which may be used to issue debt or equity securities at CSX’s discretion, subject to market conditions and CSX Board authorization. While CSX seeks to give itself flexibility with respect to cash requirements, there can be no assurance that market conditions would permit CSX to sell such securities on acceptable terms at any given time, or at all. During the three months ended March 31, 2024, CSX did not issue any long-term debt.

Current wording

The Company has multiple sources of liquidity, including cash generated from operations and financing sources. The Company filed a shelf registration statement with the SEC on February 16, 2022, which may be used to issue debt or equity securities at CSX’s discretion, subject to market conditions and CSX Board authorization. While CSX seeks to give itself flexibility with respect to cash requirements, there can be no assurance that market conditions would permit CSX to sell such securities on acceptable terms at any given time, or at all. During the six months ended June 30, 2024, CSX did not issue any long-term debt.

Previous wording

Total assets increased $287 million from year end primarily due to a $121 million increase in net property consistent with planned capital expenditures and a $49 million increase in cash and short-term investments.

Current wording

Total assets increased $150 million from year end primarily due to a $228 million increase in net property consistent with planned capital expenditures as well as a $58 million increase in investments in affiliates, partially offset by a $194 million decrease in cash and short-term investments.

Previous wording

Total liabilities decreased $182 million from year end primarily due a $143 million decrease in income and other taxes payable driven by payments of previously postponed federal taxes and a $130 million decrease in labor and fringe benefits payable driven by payouts of accrued incentive compensation. These decreases were partially offset by a $69 million increase in accounts payable due to the timing of payments. Total shareholders' equity increased $469 million from year end primarily driven by net earnings of $893 million, partially offset by share repurchases of $247 million and dividends paid of $235 million.

Current wording

Total liabilities decreased $485 million from year end primarily due to a $387 million payment of previously postponed federal taxes. Total shareholders' equity increased $635 million from year end primarily driven by net earnings of $1.8 billion, partially offset by share repurchases of $810 million and dividends paid of $468 million.

Previous wording

Working capital is considered a measure of a company's ability to meet its short-term needs. CSX had a working capital surplus of $448 million as of March 31, 2024, and $160 million as of December 31, 2023. This increase of $288 million since year end is primarily due to cash earned from operations of $1.1 billion, partially offset by cash paid for property additions of $524 million and payments for share repurchases and dividend payments as mentioned above. The Company's working capital balance varies due to factors such as the timing of scheduled debt payments and changes in cash and cash equivalent balances as discussed above. The Company continues to maintain adequate liquidity to satisfy current liabilities and maturing obligations when they come due. CSX has sufficient financial capacity, including its revolving credit facility, commercial paper program and shelf registration statement to manage its day-to-day cash requirements and any anticipated obligations. The Company from time to time accesses the credit markets for additional liquidity.

Current wording

Working capital is considered a measure of a company's ability to meet its short-term needs. CSX had a working capital surplus of $441 million as of June 30, 2024, and $136 million as of December 31, 2023. This increase of $305 million since year end is primarily due to cash-generating net earnings, partially offset by cash paid for property additions and payments for share repurchases and dividend payments as mentioned above. The Company's working capital balance varies due to factors such as the timing of scheduled debt payments and changes in cash and cash equivalent balances as discussed above. The Company continues to maintain adequate liquidity to satisfy current liabilities and maturing obligations when they come due. CSX has sufficient financial capacity, including its revolving credit facility, commercial paper program and shelf registration statement to manage its day-to-day cash requirements and any anticipated obligations. The Company from time to time accesses the credit markets for additional liquidity.

Previous wording

Approximately 17,800 of the Company's approximately 23,400 employees are members of a rail labor union. As of December 2, 2022, all 12 rail unions at CSX that participated in national bargaining were covered by national agreements with the Class I railroads and CSX-specific agreements that will remain in effect through December 31, 2024. Collective agreements under the Railway Labor Act do not expire, but continue until amended, and formal notices to amend these agreements may be served as early as November 1, 2024.

Current wording

Approximately 17,600 of the Company's approximately 23,300 employees are members of a rail labor union. As of December 2, 2022, all 12 rail unions at CSX that participated in national bargaining were covered by national agreements with the Class I railroads and CSX-specific agreements that will remain in effect through December 31, 2024. Collective agreements under the Railway Labor Act do not expire, but continue until amended, and formal notices to amend these agreements may be served as early as November 1, 2024.