CSX CORP

Previous wording

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

Current wording

•Revenue increased $47 million, or 1%, year over year.

Previous wording

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

Current wording

•Operating income of $1.4 billion increased $83 million, or 7%, year over year.

Previous wording

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

Current wording

•Operating margin of 37.4% increased 180 basis points versus prior year.

Previous wording

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

Current wording

•Earnings per diluted share of $0.46 increased $0.05, or 12%, year over year.

Previous 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.

Current wording

Total revenue increased 1% in the third quarter 2024 when compared to third quarter 2023, primarily due to higher merchandise and intermodal volumes as well as pricing gains in merchandise. These increases were partially offset by lower coal revenue, which includes the impact of lower global benchmark rates, as well as lower fuel recovery and decreases in other revenue.

Previous wording

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

Current wording

Chemicals - Increased due to higher shipments of plastics, crude oil, natural gas liquids and other industrial chemicals.

Previous wording

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

Current wording

Agricultural and Food Products - Increased due to higher shipments of domestic and export grain, as well as higher ethanol shipments.

Previous wording

Automotive - Increased due to higher North American vehicle production as well as new business wins.

Current wording

Automotive - Decreased due to lower North American vehicle production.

Previous wording

Forest Products - Increased due to higher shipments of pulpboard and building products.

Current wording

Forest Products - Increased due to higher shipments of pulpboard and paper.

Previous wording

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

Current wording

Metals and Equipment - Decreased primarily due to lower steel and scrap shipments.

Previous wording

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

Current wording

Fertilizers - Decreased primarily due to declines in long-haul phosphates shipments.

Previous 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.

Current wording

Intermodal volume increased due to international shipments driven by higher east coast port volumes. Domestic shipments were relatively flat as increased transcontinental shipments were offset by the impacts of a continued soft trucking environment.

Previous 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.

Current 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.

Previous wording

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

Current wording

Trucking revenue decreased $4 million versus the prior year due to lower fuel and capacity surcharges.

Previous wording

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

Current wording

Other revenue was $19 million lower, primarily resulting from lower carload demurrage and other items.

Previous wording

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

Current wording

Expenses of $2.3 billion decreased $36 million, or 2%, in third quarter 2024 when compared to the third quarter 2023.

Previous wording

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

Current wording

Labor and Fringe expense increased $45 million due to the following:

Previous wording

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

Current wording

•An increase of $25 million was driven by inflation.

Previous wording

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

Current wording

Purchased Services and Other expense decreased $25 million due to the following:

Previous wording

•All other net costs decreased $5 million.

Current wording

▪All other net costs increased $1 million as inflation was partially offset by efficiency savings and other items.

Previous wording

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

Current wording

Depreciation and Amortization expense increased $13 million as a result of a larger asset base.

Previous wording

Equipment and Other Rents expense decreased $5 million due to several non-significant items.

Current wording

Equipment and Other Rents expense decreased $3 million due to several non-significant items.

Previous wording

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

Current wording

Gains/Losses on Property Dispositions decreased to a $1 million loss from a $6 million gain in the prior year.

Previous wording

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

Current wording

Interest expense increased $3 million primarily due to higher average debt balances.

Previous wording

Other income - net decreased $3 million due to non-significant items.

Current wording

Other income - net increased $2 million due to non-significant items.

Previous wording

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

Current wording

Income tax expense increased $16 million primarily due to higher earnings before income taxes.

Previous wording

Total expense increased $105 million primarily due to inflation, higher headcount and lower insurance recoveries compared to the prior year, partially offset by lower fuel prices.

Current wording

Total expense increased $69 million primarily due to inflation, higher headcount, higher depreciation and lower insurance recoveries compared to the prior year, partially offset by lower fuel prices and efficiency savings.

Previous wording

Interest expense increased $17 million primarily as a result of higher average debt balances and higher effective interest rates.

Current wording

Interest expense increased $20 million primarily as a result of higher average debt balances.

Previous wording

Income tax expense decreased $33 million primarily due to lower earnings before income taxes and favorable state legislative changes.

Current wording

Income tax expense decreased $17 million primarily due to lower earnings before income taxes.

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 $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.

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. FCFshould 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 $301 million is primarily due to less cash from operating activities and higher property additions. Cash from operating activities in the nine months ended September 30, 2024 includes the impact of $387 million of federal and state tax payments related to the 2023 tax year that were previously postponed under tax relief announcements 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 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.

Current wording

In the third quarter of 2024, velocity increased by 6% while dwell increased by 7% versus prior year. Carload trip plan performance and intermodal trip plan performance decreased by 2%. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

Previous 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.

Current wording

While the personal injury frequency increased in third 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 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.

Current wording

The following chart highlights the operating, investing and financing components of the net increase of $291 million and decrease of $573 million in cash and cash equivalents for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Previous 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.

Current wording

•The Company generated $166 million less cash from operating activities primarily driven by $387 million of federal and state tax payments related to the 2023 tax year, which were previously postponed under tax relief announcements for those impacted by Hurricane Idalia. This decrease was 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 $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.

Current wording

•CSX used $216 million more cash for investing activities primarily as a result of higher property additions consistent with planned capital expenditures and increased acquisition spending, partially offset by higher net sales of short-term investments.

Previous wording

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

Current wording

•The Company used $1.2 billion less cash for financing activities primarily due to lower share repurchases, partially offset by lower net proceeds from debt transactions.

Previous 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.

Current wording

As of the end of third quarter 2024, CSX had $1.7 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 six months ended June 30, 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 nine months ended September 30, 2024, CSX issued a total of $550 million of long-term debt.

Previous wording

Planned capital investments for 2024 are expected to be approximately $2.5 billion. Spending to sustain core infrastructure with a focus on safety and reliability will be a top priority. In addition, management is committed to investments that promote profitable growth, including projects supporting service enhancements and productivity initiatives, which includes investments in locomotives and freight cars. CSX intends to fund capital investments primarily through cash generated from operations.

Current wording

Planned capital investments for 2024 are expected to be approximately $2.5 billion, excluding spending to rebuild parts of the network damaged by hurricanes in late September and early October 2024. This damage as well as related costs and recoveries are still being assessed as of the date of the filing of this Form 10-Q. Spending to sustain core infrastructure with a focus on safety and reliability will also remain a top priority. In addition, management is committed to investments that promote profitable growth, including projects supporting service enhancements and productivity initiatives, which includes investments in locomotives and freight cars. CSX intends to fund capital investments primarily through cash generated from operations.

Previous 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.

Current wording

Total assets increased $857 million from year end primarily due to a $449 million increase in net property consistent with planned capital expenditures and a $291 million increase in cash and cash equivalents.