csx q3_2006
Post on 10-Jul-2015
115 Views
Preview:
TRANSCRIPT
11
`
Third Quarter 2006Earnings Presentation
Third Quarter 2006Earnings Presentation
22
Forward Looking DisclosureThis presentation 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,” 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.
33
Executive Summary
Michael WardChairman, President andChief Executive Officer
44
Third quarter overview . . .
Third QuarterEarnings Per Share
$0.36 $0.36
$0.54
$0.71
Reported Comparable
2005 2006
Surface Transportation produces record results
Pricing environment remains strong
ONE Plan sustains strong momentum
Economic environment remains positive
Note: Comparable 2006 earnings per share exclude Katrina insurance recoveries and income tax benefits
55
Sales and Marketing Review
Clarence GoodenExecutive Vice PresidentSales and Marketing
66
Revenues increased 14%
Record revenues of $2.4 billion, up $293 million
Overall volumes increased nearly 2%
Renewed growth in Intermodal
Yield environment remains strong
Third QuarterRevenue in Millions
2005 2006
$2,125
$2,418
77
Revenue per unit increased 12%
Third Quarter Revenue Per Unit2006 versus 2005
4%
4%
9%
17%
12%
Intermodal
Automotive
Coal
Merchandise
Surface Transportation
88
Merchandise revenue increased 16%
Third Quarter2006 versus 2005
16%
(1%)
17%
Revenue Volume RPU
Pricing remains strong
Impact of prior phosphate plant closures continues
Housing market softening
Outlook favorable
99
Merchandise volume was mixed
Third Quarter Volume2006 versus 2005
16%
3%
2%
1%
(2%)
(7%)
(16%)
Agriculture
Metals
Chemicals
Emerging Markets
Food and Consumer
Forest Products
Phosphates & Fertilizers
1010
Coal revenue increased 18%
Third Quarter2006 versus 2005
18%
9%7%
Revenue Volume RPU
Utility demand strong
Coal production strong
Pricing strength continues
Outlook favorable
1111
Automotive revenue decreased 9%
Third Quarter2006 versus 2005
(9%)
(12%)
4%
Revenue Volume RPU
“Big 3” volume down on production decline
New Domestics continue to gain market share
Continued contract renewal opportunities
Outlook unfavorable
1212
Intermodal revenue increased 8%
Third Quarter2006 versus 2005
8%
4% 4%
Revenue Volume RPU
Volume favorable
Pricing strength continues
Income improvement for ten quarters
Outlook favorable
1313
Economic forecasts remain positive
Economic Forecast2006-2008
3.4%
2.2%
3.1%
4.3%
2.3% 2.1%
2006 2007 2008
GDP Industrial ProductionSource: Global Insight
1414
Looking forward . . .
Service improvements supporting growth
Favorable pricing environment continues
Remain focused on profitable growth
Surface Transportation 2006 Volume Growth
(1.0%)
0.1%
1.8%
Q1 Q2 Q3 Q4Fcst
2%–3%
1515
Operations Review
Tony IngramExecutive Vice PresidentChief Operating Officer
1616
Leadership, discipline and execution
Safety performance continues to improve
Operating momentum sustained
Capacity projectson schedule
SafetySafety
ProductivityProductivity
ServiceService
LeadershipLeadership
DisciplineDiscipline
ExecutionExecution
ReliablePerformance
ReliablePerformance
1717
Safety performance remains strong
Rolling 12-month Averages
FRA Personal Injury
1.921.71 1.64 1.51
1.37
Q32005
Q42005
Q12006
Q22006
Q32006
FRA Train Accident
4.413.98 3.85
4.65
3.52
Q32005
Q42005
Q12006
Q22006
Q32006
13 WeekAverage
1.37
13 WeekAverage
3.14
1818
On-time performance is improving
Rolling 12-month Averages
On-Time Originations
50% 51%57%
65%71%
Q32005
Q42005
Q12006
Q22006
Q32006
On-Time Arrivals
40% 40%46%
52%57%
Q32005
Q42005
Q12006
Q22006
Q32006
13 WeekAverage
77%
13 WeekAverage
63%
1919
The network is more fluid
Rolling 12-month Averages
Cars-On-Line (000)
233.9 233.1230.7
227.6225.8
Q32005
Q42005
Q12006
Q22006
Q32006
Dwell Time (hours)
29.7 29.728.9
27.726.8
Q32005
Q42005
Q12006
Q22006
Q32006
13 WeekAverage25.5 hrs
13 WeekAverage
225K
2020
Train velocity is stable
Consistent plan execution
Improved recoverability
Increased asset utilization
Improving service reliability
Rolling 12-month Averages
Velocity (mph)
19.719.2 19.4 19.5 19.5
Q32005
Q42005
Q12006
Q22006
Q32006
13 WeekAverage
19.8 mph
2121
Looking forward . . .
Safety momentum will be sustained
Continue to build on operating improvement
Capacity projects will remain on schedule
SafetySafety
ProductivityProductivity
ServiceService
LeadershipLeadership
DisciplineDiscipline
ExecutionExecution
ReliablePerformance
ReliablePerformance
2222
Financial Results
Oscar MunozExecutive Vice PresidentChief Financial Officer
2323
CSX reports strong third quarter results
$ 164$ 164$ 328Net Earnings
$ 0.35$ 0.36$ 0.71Earnings Per Share
143
11))
11(100(100
))
25(97(89
Other Income (net)Interest ExpenseIncome Taxes
$ 136$ 353$ 489Consolidated Operating Income
8)(8-Other Operating Income
$ 128$ 361$ 489Surface Transportation Operating Income
Variance20052006Dollars in millions, except EPS
Third Quarter Results
2424
Comparable EPS increased 50%
))
(0.02(0.15
--
))
(0.02(0.15
Less Gain on Insurance RecoveriesLess Income Tax Benefit
$ 0.18$ 0.36$ 0.54Comparable Earnings Per Share
$ 0.35$ 0.36$ 0.71Earnings Per Share
$ 113$ 361$ 474Comparable Operating Income
)(15-)(15Less Gain on Insurance Recoveries
$ 128$ 361$ 489Surface Transportation Operating Income
Variance20052006Dollars in millions, except EPS
Third Quarter Results
2525
Surface Transportation income up 31%
31%$ 361 $ 474Operating Income
2.6 pts83.0%80.4%Operating Ratio
)(10%1,7641,944Operating Expenses
)))))))
14%
(2%(5%(4%
(60%(5%
(17%(111%
$ 2,125
725455204188129549
$ 2,418
7364782133001356319
RevenueExpenses
Labor and FringeMaterials, Supplies and OtherDepreciationFuelBuilding and Equipment RentInland TransportationConrail Rents, Fees and Services
Variance20052006Dollars in millions
Third Quarter Results
Note: 2006 results exclude Katrina-related gain on insurance recoveries
2626
Labor and fringe increased 2%
Third QuarterDollars in Millions
$736$725
$11
2005 Variance 2006
Primarily due to wage and benefit inflation
T&E employees increased by over 400 primarily due to advanced hiring
Partially offset by lower incentive compensation
2727
MS&O increased 5%
Third QuarterDollars in Millions
$478
$455
$23
2005 Variance 2006
Primarily driven by inflation and costs related to higher business volumes
Partially offset by continued improvementin locomotive productivity
2828
Fuel increased 60%
Third QuarterDollars in Millions
$300
$188
$112
2005 Variance 2006
Consumed 144 million gallons at average gross price of $2.09 a gallon
Comparison impacted by $76 million lower hedge
CSX has no hedge positions going forward
2929
Rents increased 5%
Third QuarterDollars in Millions
$135
$129$6
2005 Variance 2006
Current year expenses moving with volumes
Year-over-year change primarily due to prior year item
3030
All other expenses increased 10%
Third QuarterDollars in Millions
$204 $213
$54$63
$28
2005 Variance 2006
$267$295
Depreciation Inland Transportation Conrail Fees
$9$19
3131
Looking forward . . .
$500 million share buyback program initiated, with $272 million repurchased
— Shares repurchased year-to-date total$422 million, including prior programs
On track to deliver $300+ million Free Cash Flow in 2006
— Including Katrina insurance recoveries
3232
Concluding Remarks
Michael WardChairman, President andChief Executive Officer
3333
Looking forward . . .
Core strategies sustaining solid momentum
Team delivering consistent, strong results
Rail and intermodal environment remains strong
Volume growth is building further momentum
RevenueRevenueImpactImpact
OperationalOperationalDisciplineDiscipline
PerformancePerformanceCultureCulture
3434
Third Quarter 2006Earnings Presentation
Third Quarter 2006Earnings Presentation
top related