2020 SECOND QUARTER EARNINGS CONFERENCE CALL · words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary”

2020 SECOND QUARTEREARNINGS CONFERENCE CALL

James M. Foote

President and Chief Executive Officer

FORWARD LOOKING DISCLOSURE

This information and other statements by the company may 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, margins, volumes, rates, cost-savings, expenses, taxes, liquidity,

capital expenditures, dividends, share repurchases or other financial items, statements of management’s plans, strategies and objectives for future operations,

and management’s expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed

new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by

words or phrases such as “will,” “should,” “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 updates

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

any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any 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, political or

business conditions, including those affecting the transportation 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; (v) the outcome of claims and litigation involving or

affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with

projecting economic and business conditions.

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 0 2 0 C S X S E C O N D Q U A R T E R E A R N I N G S C O N F E R E N C E C A L L

http://www.csx.com/

NON-GAAP MEASURES DISCLOSURE

CSX reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP). CSX also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G

and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior

reported results.

Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, CSX’s non-GAAP measures

are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should

not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP.

Reconciliations of non-GAAP measures to corresponding GAAP measures are attached hereto in the Appendix of this presentation.


EXECUTIVE SUMMARY

James M. Foote


SECOND QUARTER HIGHLIGHTS

5

Volume 1,257K Revenue $2,255M Operating Income $828M Operating Ratio 63.3% EPS $0.65

$1.08

$0.65

2019 2020

Earnings Per Share

40% Decline

57.4%

63.3%

2019 2020

Operating Ratio

590 bps Increase

2 0 2 0 C S X S E C O N D Q U A R T E R E A R N I N G S C O N F E R E N C E C A L L

SECOND QUARTER REVENUE HIGHLIGHTS

6

(19%)

(18%)

(48%)

(72%)

(24%)

(8%)

(11%)

(9%)

(13%)

(10%)

Other

Intermodal

Coal

Automotive

Metals and Equipment

Fertilizers

Forest Products

Minerals

Ag & Food Products

Chemicals

Second Quarter Revenue

Down 26% Percent Year over Year

All Markets Negatively Impacted by

Economic Effects of COVID-19 Chemicals decreased due to lower shipments of industrial chemicals, energy,

and waste

Agricultural & Food Products declined due to lower shipments of food and

consumer products, grain and feed, and ethanol

Minerals decreased on lower cement, lime and limestone volumes, other

minerals

Forest Products declined due to lower shipments of building products and

printing paper, partially offset by growth in pulpboard

Fertilizers declined due to lower long-haul fertilizer volumes, partially offset by

growth in short-haul phosphate shipments

Metals and Equipment declined due to reduced metals volumes driven by

reduced automotive and industrial production

Automotive declined due to lower North American vehicle production

primarily associated with plant closures resulting from COVID-19

Coal decreased as domestic utility coal demand was negatively impacted by

low natural gas prices and reduced electrical demand, and export coal was

impacted by lower global benchmark prices

Intermodal decreased as both domestic and international shipments were

negatively impacted by the global economic impacts from COVID-19


SECOND QUARTER SAFETY HIGHLIGHTS

7

Safety statistics are estimated and can continue to be updated as actuals settle


Safety is a guiding principle at CSX

Frequency rates increased on lower volumes;

lowest total number of train accidents in a quarter

Remain focused on continued improvement

Undertaking company-wide safety engagement

initiative in Q3

2.132.37 2.32

2.072.33

2Q19 3Q19 4Q19 1Q20 2Q20

FRA Train Accident Rate

0.83 0.85

1.13

0.59

1.16

2Q19 3Q19 4Q19 1Q20 2Q20

FRA Personal Injury Frequency Index

SECOND QUARTER OPERATING HIGHLIGHTS

8

8.7 8.98.4 8.3

8.9

2Q19 3Q19 4Q19 1Q20 2Q20

Terminal Car Dwell(hours)

20.0 20.321.3 21.2 21.2

2Q19 3Q19 4Q19 1Q20 2Q20

Train Velocity(miles per hour)

The methodology for calculating train velocity and dwell differs from that prescribed by the Surface Transportation Board. The Company will continue to

report train velocity and dwell to the Surface Transportation Board using the prescribed methodology. See additional discussion on the Company’s website.

0.990.98

0.99

1.01

0.96

2Q19 3Q19 4Q19 1Q20 2Q20

Gallons of Fuel per kGTM

10.810.5 10.5

11.1

11.6

2Q19 3Q19 4Q19 1Q20 2Q20

Cars Processed per Hour Worked


ADJUSTED RESOURCES IN RESPONSE TO LOWER VOLUMES


(35%)

(30%)

(25%)

(20%)

(15%)

(10%)

(5%)

0%

5%

3/1 3/8 3/15 3/22 3/29 4/5 4/12 4/19 4/26 5/3 5/10 5/17 5/24 5/31 6/7 6/14 6/21 6/28 7/5 7/12 7/19

Change in Volume and Key Resources Since March 1, 2020Rolling 7-Day Averages

Volume Active Locos Total Starts Road Starts

SECOND QUARTER SERVICE HIGHLIGHTS

10

*Trip Plan Performance measures success in meeting end-to-end customer commitments based on a specific time of arrival. CSX measures Trip Plan

Performance for every car and container, loaded and empty, on its network that is destined for a customer.

74.4% 75.7%

82.5%80.7%

80.5%

2Q19 3Q19 4Q19 1Q20 2Q20

Carload Trip Plan Performance*

Carload

89.8%

94.2% 95.5% 96.2%94.0%

2Q19 3Q19 4Q19 1Q20 2Q20

Intermodal Trip Plan Performance*

Intermodal


FINANCIAL REVIEW

Kevin S. Boone

EVP and Chief Financial Officer

SECOND QUARTER EARNINGS SUMMARY

12

Second Quarter Income StatementDollars in millions 2020 2019 Variance

Revenue

Expense

Labor and Fringe

Materials, Supplies and Other

Depreciation

Fuel

Equipment and Other Rents

$ 2,255

507

407

344

91

78

$ 3,061

648

445

337

234

92

(26%

22%

9%

(2%

61%

15%

)

)

Total Expense

Operating Income

Interest Expense

Other Income – Net

Income Tax Expense\

1,427

828

(191

15

(153

)

)

1,756

1,305

(184

25

(276

)

)

19%

(37%

(4%

(40%

45%

)

)

)

Net Earnings

Earnings Per Share

Operating Ratio

$ 499

$ 0.65

63.3%

$ 870

$ 1.08

57.4%

(43%

(40%

(590 bps

)

)

)


SECOND QUARTER YEAR TO DATE FINANCIAL MEASURES

13

Q2 2019YTD

Q2 2020YTD

Jun 30, 2019 Jun 30, 2020Q2 2019YTD

Q2 2020YTD

$1,628

$1,386

Free Cash Flow

Before Dividends*Dollars in Millions

Cash and Short-Term

Investments BalanceDollars in Millions

Capital InvestmentsDollars in Millions

$769$801

*See Appendix for Non-GAAP reconciliation


$1,731

$2,594

CLOSING REMARKS

James M. Foote


LOOKING FORWARD


Continue to monitor pace of recovery from May trough

Adjust resources as needed to optimize network to prevailing economic environment

― Deliver high quality service product to customers

― Leverage structural cost savings created in the second quarter

Expect capital expenditures at low end of initial $1.6-1.7 billion guidance

― Continue to invest in core network infrastructure

― Driving capital spend efficiencies and prioritizing high-return projects

Industry-leading free cash flow profile and maintain strong liquidity position

APPENDIX

Non-GAAP Free Cash Flow Reconciliation

NON-GAAP FREE CASH FLOW RECONCILIATION

17

Free Cash Flow

Six Months Ended

Dollars in millions June 30, 2020 June 30, 2019

Net Cash Provided by Operating Activities

Property Additions

Other Investing Activities

$ 2,184

(801

3

)

$ 2,267

(769

130

)

Free Cash Flow Before Dividends (non-GAAP) $ 1,386 $ 1,628


I N V E S T O R S . C S X . C O M

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2020 SECOND QUARTER EARNINGS CONFERENCE CALL · words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary”