CSX CORP

Previous wording

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

Current wording

•Revenue decreased $258 million, or 7%, year over year.

Previous wording

•Expenses decreased $36 million, or 2%, year over year.

Current wording

•Expenses increased $38 million, or 2%, year over year.

Previous wording

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

Current wording

•Operating margin of 30.4% decreased 590 basis points versus prior year.

Previous wording

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

Current wording

•Earnings per diluted share of $0.34 decreased $0.11, or 24%, year over year.

Previous wording

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

Current wording

Agricultural and Food Products - Increased due to higher shipments of domestic feed grain and ethanol.

Previous 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.

Current wording

International shipments increased driven by higher port volumes and growth with key customers. Domestic shipments were relatively flat as increased transcontinental shipments were offset by the impacts of a continued soft trucking environment.

Previous wording

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

Current wording

Trucking revenue decreased $13 million versus the prior year due to lower rates and fuel surcharge.

Previous wording

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

Current wording

Expenses of $2.4 billion increased $38 million, or 2%, in first quarter 2025 when compared to the first quarter 2024.

Previous wording

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

Current wording

Labor and Fringe expense increased $16 million, primarily resulting from inflation. Other items largely offset and included higher union employee benefits for sick leave and vacation, increased labor costs associated with network disruptions and lower incentive compensation expense.

Previous wording

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

Current wording

Purchased Services and Other expense increased $54 million due to the following:

Previous wording

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

Current wording

Depreciation and Amortization expense increased $15 million as a result of a larger asset base.

Previous wording

Fuel costs decreased $73 million as a result of a 17% decrease in locomotive fuel prices and improved efficiency.

Current wording

Fuel costs decreased $50 million primarily as a result of a 15% decrease in locomotive fuel prices, as well as efficiency and volume savings despite additional gross ton-miles associated with reroutes.

Previous wording

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

Current wording

Equipment and Other Rents expense increased $3 million due to several non-significant items, including the impact of reroutes on car cycle times.

Previous wording

Other income - net decreased $1 million primarily because lower income related to customer finance charges was offset by increases in net pension benefit credits.

Current wording

Other income - net decreased $15 million primarily due to lower interest income and a decrease in net pension benefit credits.

Previous wording

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

Current wording

Income tax expense decreased $76 million primarily due to lower earnings before income taxes.

Previous wording

Management believes Economic Profit (also referred to as CSX Cash Earnings or CCE) provides an additional perspective to investors about financial returns generated by the business by representing a measure showing profit generated over and above the cost of capital used by the business to generate that profit. Economic Profit is designed to incentivize strategic investments that earn more than management’s desired minimum required return and is broadly utilized by management to make investment decisions. Therefore, disclosing Economic Profit on how management performs in this regard provides additional useful information to investors regarding the Company’s performance compared to its goals.

Current wording

Management believes Economic Profit provides an additional perspective to investors about financial returns generated by the business by representing a measure showing profit generated over and above the cost of capital used by the business to generate that profit. Economic Profit is designed to incentivize strategic investments that earn more than management’s desired minimum required return and is broadly utilized by management to make investment decisions. Therefore, disclosing Economic Profit on how management performs in this regard provides additional useful information to investors regarding the Company’s performance compared to its goals.

Previous wording

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

Current wording

(d) Gross operating assets reflects an average of the year-to-date quarter-end amounts reported for each period presented. Accordingly, averages are not applicable for the first quarter of each year.

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. 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.

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.

Previous 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.

Current wording

In the first quarter of 2025, velocity decreased by 3% and dwell increased by 19% versus prior year. Carload trip plan performance decreased by 16% and intermodal trip plan performance decreased by 4%. 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 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.

Current wording

The personal injury frequency index of 0.95 improved 22% compared to prior year. The FRA train accident rate of 3.43 improved 16% 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 it operates.

Previous 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.

Current wording

The following chart highlights the operating, investing and financing components of the net increase of $206 million and $130 million in cash and cash equivalents for the three months ended March 31, 2025, and March 31, 2024, respectively.

Previous 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.

Current wording

As of the end of first quarter 2025, CSX had $1.1 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 nine months ended September 30, 2024, CSX issued a total of $550 million of 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 27, 2025, 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, 2025, CSX issued a total of $600 million of long-term debt.

Previous 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.

Current wording

Planned capital investments for 2025 are expected to be consistent with 2024 spending at approximately $2.5 billion, except for additional costs to rebuild the Blue Ridge subdivision as a result of impacts from Hurricane Helene. Spending on the Blue Ridge rebuild is currently estimated to exceed $400 million in total, including approximately $50 million spent in 2024. 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 $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.

Current wording

Total assets increased $435 million from year end primarily due to a $206 million increase in cash and cash equivalents as noted above and a $200 million increase in net property consistent with planned capital expenditures, including $133 million related to rebuilding the Blue Ridge subdivision.

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 $1.0 billion as of September 30, 2024, and $136 million as of December 31, 2023. This increase of $872 million since year end is primarily due to cash-generating net earnings and debt issuance proceeds, partially offset by cash paid for property additions, 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 deficit of $401 million as of March 31, 2025, and $456 million as of December 31, 2024. This improvement of $55 million since year end was primarily driven by a $206 million increase in cash as noted above, partially offset by a $177 million increase in income and other taxes payable. 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

This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document. We revised certain prior period financial statements for misstatements between the balance sheet and expense that were determined to be immaterial to previously issued financial statements. See Note 11, Revision of Prior Period Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

Current wording

This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document. The Company revised certain prior period financial statements for misstatements between the balance sheet and expense that were determined to be immaterial to previously issued financial statements. See Note 20, Revision of Prior Period Financial Statements, in Item 8 of the filed 2024 Form 10-K.

Previous wording

Approximately 17,600 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 notexpire, but continue until amended. Prior to the current agreements becoming amendable, CSX worked with several rail unions on new five-year labor agreements. As of the date of this filing, new agreements have been fully ratified by three rail unions and CSX has one other tentative agreement pending ratification votes.

Current wording

Approximately 17,600 of the Company's approximately 23,400 employees are members of a rail labor union and covered by national agreements with the Class I railroads or CSX-specific agreements. As of the date of this filing, new agreements with an effective date of January 1, 2025, have been fully ratified by several unions, representing approximately 45% of the Company's unionized workforce, and tentative agreements have been reached with additional unions. The remaining unionized employees are covered under previous agreements while negotiations take place since collective agreements under the Railway Labor Act do not expire, but continue until amended or replaced.

Previous wording

•changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation) and the level of demand for products carried by CSXT;

Current wording

•changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation, as well as the impact of international trade agreements and tariffs) and the level of demand for products carried by CSXT;

Previous wording

•the impact of global supply and price of seaborne coal on CSXT's export coal market;

Current wording

•the impact of global supply and price of seaborne coal on CSX's export coal market;

Previous wording

•the inherent business risks associated with safety and security, including the transportation of hazardous materials or a cybersecurity attack which would threaten the availability and vulnerability of information technology;

Current wording

•the inherent business risks associated with safety and security, including the transportation of hazardous materials or a cybersecurity attack which would threaten the availability and reliability of information technology;