Second Quarter 2009 Second Quarter 2009 Earnings Conference Call Earnings Conference Call 1 1
Forward-Looking Disclosure Forward-Looking Disclosure This information 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,” “estimate,” “preliminary” 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. 2 2
Executive Summary Executive Summary Michael Ward Chairman, President and Chief Executive Officer
Second quarter performance . . . Second quarter performance . . . � Revenue declines 25% Second Quarter EPS from Continuing Operations — Significant declines in both volume and fuel recovery — Core pricing momentum intact $0.95 � Operating strength intact $0.72 $0.71 — Rightsizing resources to the current volume environment — Safety and service levels strong — Operating ratio at 73.4% � Earnings at 2007 levels 2007 2008 2009 4 4
Sales and Marketing Review Sales and Marketing Review Clarence Gooden Executive Vice President Sales and Marketing
Revenue declines 25% to $2.2 billion Revenue declines 25% to $2.2 billion Volume 1,411K RPU $1,549 Revenue $2,185M Revenue in Millions $97 ($223) $2,907 ($596) $2,185 Q2 2008 Rate/Mix Fuel Price Volume Q2 2009 Note: See Fuel Surcharge Reconciliation 6 6
Economic environment drives 21% volume decline Economic environment drives 21% volume decline Revenue $2,185M RPU $1,549 Volume 1,411K Year-Over-Year Volume Change First Quarter Second Quarter (7%) (13%) (14%) (21%) (22%) (23%) (41%) (53%) % of 27% 37% 32% 4% Total Coal Merchandise Intermodal Automotive 7 7
Core pricing stable; RPU lower on fuel surcharge Core pricing stable; RPU lower on fuel surcharge Revenue $2,185M Volume 1,411K RPU $1,549 Year-Over-Year Change Same Store Sales Price Increase Total Revenue per Unit 21.2% 18.3% 14.5% 14.0% 10.5% 8.0% 6.9% 6.8% 6.7% 6.5% 6.5% 6.4% 6.5% 6.5% 6.6% 6.2% 0.2% (5.4%) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2007 2007 2008 2008 2008 2008 2009 2009 Note: “Same Store Sales” price increases exclude impacts from fuel and mix 8 8
Coal revenue declines 20% Coal revenue declines 20% Revenue $662M Volume 375K RPU $1,765 Second Quarter � Second quarter summary Year-Over-Year Change — Export declines on lower global demand RPU 2% — Utility down on low demand, high inventories and low gas prices Volume (21%) Revenue (20%) � Ongoing drivers — Domestic and global demand Coal expected to remain low Categories 9% 12% 12% — Utility stockpiles remain above target levels 79% 79% Utility Export — Natural gas prices expected to remain at low levels near-term Other Second Quarter Volume 9 9
Merchandise revenue declines 26% Merchandise revenue declines 26% Revenue $1,061M Volume 525K RPU $2,021 Second Quarter � Second quarter summary Year-Over-Year Change — Steel production cut by half — Housing starts and overall RPU (5%) construction remain weak Volume (22%) — Phosphates decline significantly Revenue (26%) � Ongoing drivers Merchandise — Several merchandise markets Categories appear to have stabilized 39% 39% — Industrial sector, housing and Agriculture 29% 32% 32% construction likely remain weak Housing — Impacts in agricultural sector Industrial expected to be less severe Second Quarter Volume 10 10 10 10
Automotive revenue declines 45% Automotive revenue declines 45% Revenue $113M Volume 54K RPU $2,093 Second Quarter � Second quarter summary Year-Over-Year Change — Consumer demand and inventory correction drives volume RPU (6%) — Bankruptcy filings and plant shutdowns also impact business Volume (41%) Revenue (45%) � Ongoing drivers — Volume impacts to moderate Automotive further in third quarter Categories — Production changes: 47% 53% 47% 53% Big-3 Industry restructurings New Domestics Growth of foreign brands, imports New plant start-ups Second Quarter Volume 11 11 11 11
Intermodal revenue declines 24% Intermodal revenue declines 24% Revenue $291M Volume 457K RPU $637 Second Quarter � Second quarter summary Year-Over-Year Change — International volume down on lower imports and exports RPU (12%) — Domestic volume growth on truckload conversion Volume (14%) — RPU lower due to fuel recovery Revenue (24%) and competitive truck prices Intermodal � Ongoing drivers Categories — Low global trade and 40% 60% 40% 60% consumption levels Domestic International — Highly challenging truck market Second Quarter Volume 12 12 12 12
Sales and Marketing wrap-up . . . Sales and Marketing wrap-up . . . � Markets appear to have stabilized at current levels — Year-over-year decline in non-coal markets moderated slightly in the quarter � Double-digit volume declines expected for third quarter — Linehaul revenue for eight of ten markets expected to be unfavorable � Maintaining reliable service product for our customers — Coordinating with customers to further right-size our resources � Selling the value of rail transportation — Preparing for the eventual economic recovery 13 13 13 13
Operations Review Operations Review Tony Ingram Executive Vice President Chief Operating Officer
Responding to challenging business conditions Responding to challenging business conditions Leadership Leadership Leadership � Safety performance remains strong Performance Discipline Discipline Discipline Excellence Service Execution Service Execution � Rightsizing producing savings and Productivity Discipline helping offset impact of lower volume Productivity Discipline Safety Leadership Safety Leadership Execution Execution Execution � Network operations and service reliability strong 15 15 15 15
Helping lead one of the Nation’s safest industries Helping lead one of the Nation’s safest industries FRA Personal Injury Rate FRA Train Accident Rate 1.45 3.53 1.30 1.22 2.73 2.63 1.04 2.22 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2006 Q2 2007 Q2 2008 Q2 2009 16 16 16 16
Train network continues to track lower volume . . . Train network continues to track lower volume . . . Year-Over-Year Change in Volume and Crew Starts Q1 2009 Q2 2009 10% (0%) (10%) (20%) (30%) (40%) Volume down 21% Volume down 17% Volume down 21% Volume down 17% (50%) Crew starts down 20% Crew starts down 15% Crew starts down 20% Crew starts down 15% (60%) 1 6 11 16 21 26 Week Carloads Road Crew Starts 17 17 17 17
. . . with key resources being rightsized accordingly . . . with key resources being rightsized accordingly Active T&E Employees Active Locomotives Q1 2009 Q2 2009 Q1 2009 Q2 2009 13,500 4,100 12,800 3,900 12,100 3,700 11,400 3,500 10,700 3,300 10,000 Down 10% YOY Down 17% YOY 3,100 Down 9% YOY Down 17% YOY Down 10% YOY Down 17% YOY Down 9% YOY Down 17% YOY 9,300 2,900 1 6 11 16 21 26 1 6 11 16 21 26 2009 2008 2009 2008 18 18 18 18
Broader rightsizing efforts are gaining traction Broader rightsizing efforts are gaining traction Year-Over-Year Change in Volume and Resources (21%) Volume Road Crew Starts (20%) Active Locomotives (17%) Active T&E Employees (17%) (16%) Local Crew Starts (12%) Yard Crew Starts Active Mechanical Employees (9%) 19 19 19 19
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