CSX CORPORATION FIRST QUARTER 2022 HIGHLIGHTS
•Revenue increased$600 million , or 21% year over year. •Expenses increased$419 million , or 24% year over year. •Operating income of$1.3 billion increased$181 million , or 16%, year over year. •Operating ratio of 62.4% increased 150 basis points versus prior year. •Earnings per diluted share of$0.39 increased$0.08 , or 26% year over year. First Quarters 2022 2021 Fav/(Unfav) % Change Volume (in thousands) 1,498 1,529 (31) (2)% (in millions) Revenue$ 3,413 $ 2,813 $ 600 21 Expense 2,131 1,712 (419) (24) Operating Income$ 1,282 $ 1,101 $ 181 16% Operating Ratio 62.4 % 60.9 % (150) bps Earnings Per Diluted Share$ 0.39 $ 0.31 $ 0.08 26% Acquisition ofQuality Carriers, Inc. OnJuly 1, 2021 , CSX acquiredQuality Carriers, Inc. fromQuality Distribution, Inc. for a purchase price of$541 million in cash, net of$3 million cash acquired. This transaction was funded by cash on hand. For further details, refer to Note 12, Business Combinations. COVID-19 Update The COVID-19 global pandemic continues to disrupt global manufacturing, supply chains and consumer spending. Future impacts of the pandemic on the Company's financial and operating results will be determined by its duration, effects on the demand for the Company's transportation services and the supply chain, as well as the effect of governmental regulations imposed and legislative stimulus packages passed in response to the pandemic. The duration of the pandemic is dependent on several factors, including the impacts of virus mutations and case resurgences across the country. CSX employees that provide efficient and reliable rail service are essential to keeping supply chains fluid in response to this challenge. Accordingly, business operations have been modified to ensure the safety of employees across the network while continuing to provide a high level of service to customers. The Company is strongly encouraging employees to get vaccinated. A cross-functional task force continues to monitor and coordinate the Company's response to COVID-19. CSX Q1 2022 Form 10-Q p.28
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONSVolume and Revenue (Unaudited)
Volume (Thousands of units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
First Quarters
Volume Revenue Revenue Per Unit
2022 2021 % Change 2022 2021 % Change 2022 2021 % Change
Chemicals 161 163 (1) % $ 618 $ 580 7 % $ 3,839 $ 3,558 8 %
Agricultural and Food Products 118 116 2 387 349 11 3,280 3,009 9
Automotive 78 87 (10) 227 236 (4) 2,910 2,713 7
Minerals 72 67 7 144 125 15 2,000 1,866 7
Forest Products 70 73 (4) 228 220 4 3,257 3,014 8
Metals and Equipment 66 68 (3) 197 186 6 2,985 2,735 9
Fertilizers 56 57 (2) 120 122 (2) 2,143 2,140 -
Total Merchandise 621 631 (2) 1,921 1,818 6 3,093 2,881 7
Intermodal 722 726 (1) 527 468 13 730 645 13
Coal 155 172 (10) 533 384 39 3,439 2,233 54
Trucking (a) - - - 230 - NM - - -
Other - - - 202 143 41 - - -
Total 1,498 1,529 (2) % $ 3,413 $ 2,813 21 % $ 2,278 $ 1,840 24 %
NM - not meaningful
(a) Effective third quarter 2021, Trucking revenue is comprised of revenue from
the operations of Quality Carriers, which was acquired by CSX effective July 1,
2021 .
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
First Quarter 2022
Revenue
Total revenue increased 21% in first quarter 2022 when compared to first quarter 2021 due to the inclusion of Quality Carriers' results, pricing gains that include the benefit of higher export coal benchmark rates, higher fuel recovery and increases in other revenue.
Merchandise Volume Chemicals - Decreased due to lower shipments of crude oil and other energy-related commodities, partially offset by higher shipments of core chemicals.
Agricultural and Food Products - Increased as a result of higher shipments of ethanol, vegetable oils, and food and consumer products.
Automotive - Decreased due to lower North American vehicle production, which continues to be impacted by shortages of semiconductors and other parts.
Minerals - Increased as a result of higher shipments of aggregates and cement.
Forest Products - Decreased primarily due to lower shipments of building products.
Metals and Equipment - Decreased primarily due to lower steel shipments, partially offset by higher scrap shipments.
Fertilizers - Decreased as declines in long-haul fertilizer shipments were partially offset by increased short-haul phosphate shipments.
Intermodal Volume Decreased international shipments due to supply-side constraints were partially offset by higher domestic shipments driven by truck conversions. Coal Volume Domestic coal decreased due to lower shipments of utility coal as well as lower steel and industrial shipments. Export coal decreased due to lower international shipments of thermal coal, partially driven by reduced capacity atCurtis Bay coal pier due to the continued outage at a portion of the facility. Trucking Revenue Trucking revenue increased$230 million versus prior year due to the inclusion of Quality Carriers' results. Other Revenue Other revenue increased$59 million versus prior year due to increases in revenue for intermodal storage and equipment usage, partially offset by lower payments from customers that did not meet volume commitments. CSX Q1 2022 Form 10-Q p.30
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONSExpenses
Expenses of
Labor and Fringe expense increased$72 million due to the following: •The acquisition of Quality Carriers resulted in increased costs of$34 million . •Expenses related to hiring and new retention programs increased$10 million . •Incentive compensation increased$6 million primarily due to higher expected payouts. •Other expenses increased$22 million primarily driven by inflation, partially offset by lower volume-related costs. Purchased Services and Other expense increased$203 million due to the following: •The inclusion of Quality Carriers' operations drove$139 million of additional costs. •Adjustments to environmental reserves resulted in$17 million higher expense. •Operating support costs were$47 million higher, driven by inflation and a larger active locomotive fleet, as well as increased intermodal terminal costs.
Depreciation and Amortization expense increased
Fuel expense increased
Equipment and Other Rents expense was
Gains on Property Dispositions increased
Interest Expense
Interest expense decreased
Other Income - Net
Other income - net increased
Income Tax Expense Income tax expense increased$39 million primarily due to higher earnings before income taxes, partially offset by the impacts of an unfavorable state legislative change in 2021. CSX Q1 2022 Form 10-Q p.31
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONSNon-GAAP Measures - Unaudited
CSX reports its financial results in accordance with accounting principles generally accepted inthe 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 byU.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 below.
Free Cash Flow
Management believes that free cash flow is supplemental information useful to investors as it is important in evaluating the Company's financial performance. More specifically, free cash flow 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. Free cash flow is calculated by using net cash from operations and adjusting for property additions and proceeds and advances from property dispositions. Free cash flow should be considered in addition to, rather than a substitute for, cash provided by operating activities. The increase in free cash flow before dividends from the prior year of$42 million is primarily due to an increase in cash from operating activities, partially offset by higher property additions.
The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow, before dividends (non-GAAP measure).
Three Months
(Dollars in millions) 2022 2021
Net cash provided by operating activities $ 1,299 $ 1,232
Property Additions (331) (306)
Proceeds and Advances from Property Dispositions 8 -
Other Investing Activities (a) n/a 8
Free Cash Flow (before payment of dividends) $ 976 $ 934
(a) Effective first quarter 2022, the results of other investing activities are
no longer included in free cash flow. Prior year has not been restated as the
change is immaterial.
Operating Statistics (Estimated)
The Company is committed to continuous improvement in safety and service
performance through training, innovation and investment. Training and safety
programs are designed to prevent incidents that can adversely impact employees,
customers and communities. Technological innovations that can detect and avoid
many types of human factor incidents are designed to serve as an additional
layer of protection for the Company's employees. Continued capital investment in
the Company's assets, including track, bridges, signals, equipment and detection
technology also supports safety performance.
Safety metrics improved versus the first quarter 2021, with the number of both
train accidents and personal injuries declining to near record lows. The FRA
train accident rate of 2.75 in first quarter 2022 improved 15% compared to prior
year. The personal injury frequency index of 0.78 improved 18% 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 CSX operates.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In first quarter 2022, velocity decreased by 15% and dwell increased by 4%
versus prior year. Carload trip plan performance decreased by 4% while
intermodal trip plan performance improved 2%. The Company expects operating
metrics to improve commensurate with hiring and training, and remains focused on
executing the operating plan to deliver safe, reliable and efficient service to
customers.
First Quarters
Improvement/
2022 2021 (Deterioration)
Operations Performance
Train Velocity (Miles per hour)(a) 16.0 18.9 (15) %
Dwell (Hours)(a) 11.2 10.8 (4) %
Cars Online(a) 138,466 128,856 (7) %
On-Time Originations 65 % 79 % (18) %
On-Time Arrivals 57 % 69 % (17) %
Carload Trip Plan Performance 64 % 67 % (4) %
Intermodal Trip Plan Performance 87 % 85 % 2 %
Fuel Efficiency 1.01 0.98 (3) %
Revenue Ton-Miles (Billions)
Merchandise 31.2 31.3 - %
Coal 7.6 8.8 (14) %
Intermodal 7.6 7.7 (1) %
Total Revenue Ton-Miles 46.4 47.8 (3) %
Total Gross Ton-Miles (Billions) 91.4 93.4 (2) %
Safety
FRA Personal Injury Frequency Index 0.78 0.95 18 % FRA Train Accident Rate 2.75 3.24 15 % (a) The methodologies for calculating train velocity, dwell and cars online differ from those prescribed by the STB as the Company believes these numbers more accurately reflect railroad performance. CSXT will continue to report these metrics, using the prescribed methodology, to the STB on a weekly basis. See additional discussion on the Company's website.
Certain operating statistics are estimated and can continue to be updated as actuals settle.
Key Performance Measures Definitions
Train Velocity - Average train speed between origin and destination in miles per
hour (does not include locals, yard jobs, work trains or passenger trains).
Train velocity measures the profiled schedule of trains (from departure to
arrival and all interim time), and train profiles are periodically updated to
align with a changing operation.
Dwell - Average amount of time in hours between car arrival to and departure
from the yard.
Cars Online - Average number of active freight rail cars on lines operated by
CSX, excluding rail cars that are being repaired, in storage, those that have
been sold, or private cars dwelling at a customer location more than one day.
On-Time Originations - Percent of scheduled road trains that depart the origin
yard on-time or ahead of schedule.
On-Time Arrivals - Percent of scheduled road trains that arrive at the
destination yard on-time to within two hours of scheduled arrival. Carload Trip
Plan Performance - Percent of measured cars destined for a customer that arrive
at or ahead of the original estimated time of arrival, notification or
interchange (as applicable).
Intermodal Trip Plan Performance - Percent of measured containers destined for a
customer that arrive at or ahead of the original estimated time of arrival,
notification or interchange (as applicable).
Fuel Efficiency - Gallons of locomotive fuel per 1,000 gross ton-miles.
Revenue Ton-Miles (RTM's) - The movement of one revenue-producing ton of freight
over a distance of one mile.
Gross Ton-Miles (GTM's) - The movement of one ton of train weight over one mile.
GTM's are calculated by multiplying total train weight by distance the train
moved. Total train weight is comprised of the weight of the freight cars and
their contents.
FRA Personal Injury Frequency Index - Number of FRA-reportable injuries per
200,000 man-hours.
FRA Train Accident Rate - Number of FRA-reportable train accidents per million
train-miles.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The following are material changes in the significant cash flows, sources of
cash and liquidity, capital investments, consolidated balance sheets and working
capital, which provide an update to the discussion included in CSX's most recent
annual report on Form 10-K.
Material Changes in Significant Cash Flows
Significant Cash Flows
The following chart highlights the operating, investing and financing
components of the net decrease of
[[Image Removed: csx-20220331_g2.jpg]] [[Image Removed: csx-20220331_g3.jpg]] [[Image Removed: csx-20220331_g4.jpg]]
•Cash provided by operating activities increased$67 million primarily driven by higher cash-generating income, partially offset by lower net favorable working capital activities.
•Cash used in investing activities increased
•Cash used in financing activities increased
Sources of Cash and Liquidity and Uses of Cash As of the end of first quarter 2022, CSX had more than$2.0 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. The Company has multiple sources of liquidity, including cash generated from operations and financing sources. The Company filed a shelf registration statement with theSEC onFebruary 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 first quarter 2022, CSX did not issue any new long-term debt. CSX Q1 2022 Form 10-Q p.34
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CSX has a $1.2 billion unsecured, revolving credit facility backed by a diverse
syndicate of banks that expires in March 2024 . At March 31, 2022 , the Company
had no outstanding balances under this facility. The Company also has a
commercial paper program, backed by the revolving credit facility, under which
the Company may issue unsecured commercial paper notes up to a maximum aggregate
principal amount of $1.0 billion outstanding at any one time. At March 31, 2022 ,
the Company had no outstanding debt under the commercial paper program.
Planned capital investments for 2022 are expected to be approximately $2.0
billion . Of the 2022 investment, over 80% is expected to be used to sustain the
core infrastructure and operating equipment. The remaining amounts will be used
to promote profitable growth, including projects supporting service enhancements
and productivity initiatives. CSX intends to fund capital investments through
cash generated from operations.
Material Changes in the Consolidated Balance Sheets and Working Capital Consolidated Balance Sheets
Total assets decreased$79 million from year end primarily due to the$303 million decrease in cash described above which was partially offset by a$129 million increase in accounts receivable and a$44 million increase in investments in affiliates and other companies. The increase in accounts receivable was driven by an increase in trade accounts receivable due to the timing of billing and cash receipts. Total liabilities increased$226 million from year end primarily due to an increase in income and other taxes payable of$225 million driven by the timing of estimated income tax payments. Total shareholders' equity decreased$305 million from year end primarily driven by share repurchases of$1.0 billion and dividends paid of$219 million , partially offset by net earnings of$859 million . Working capital is considered a measure of a company's ability to meet its short-term needs. CSX had a working capital surplus of$1.2 billion as ofMarch 31, 2022 and$1.6 billion as ofDecember 31, 2021 , a decrease of$458 million since year end. The decrease in current assets was primarily due to the decrease in cash of$303 million , partially offset by an increase in accounts receivable of$129 million as described above. The increase in current liabilities was primarily the result of a$225 million increase in income and other taxes payable and a$136 million increase in current maturities of long term debt. 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. CSX is committed to returning cash to shareholders and maintaining an investment-grade credit profile. Capital structure, capital investments and cash distributions, including dividends and share repurchases, are reviewed at least annually by the Board of Directors. Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. CSX Q1 2022 Form 10-Q p.35
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Completed and Pending Transactions
Acquisition of Quality Carriers, Inc.
On July 1, 2021 , CSX acquired Quality Carriers, Inc. from Quality Distribution,
Inc. for a purchase price of $541 million in cash, net of $3 million cash
acquired. This transaction was funded by cash on hand. For further details,
refer to Note 12, Business Combinations.
Pending Acquisition of Pan Am Systems, Inc.
On November 30, 2020 , CSX signed a definitive agreement to acquire Pan Am
Systems, Inc. ("Pan Am") which is the parent company of Pan Am Railways, Inc.
who jointly owns Pan Am Southern, LLC with a subsidiary of Norfolk Southern
Corporation. Pan Am owns and operates a highly integrated, nearly 1,200-mile
rail network and has a joint interest in the more than 600-mile Pan Am Southern
system. This acquisition will expand CSX's reach in the Northeastern United
States . Assets and facilities to be acquired as part of the proposed transaction
include road and track assets, work equipment, land, buildings and other assets.
On February 25, 2021 , the Company began the process of seeking approval from the
STB. The STB approved the acquisition on April 14, 2022 , and closing is
anticipated on June 1, 2022 . This acquisition is not expected to be material
with respect to the Company's financial statements when reviewed under the
quantitative and qualitative considerations of Regulation S-X Article 11 and ASC
Topic 805.
Sale of Property Rights to the Commonwealth of Virginia
On March 26, 2021 , the Company entered into a comprehensive agreement to sell
certain property rights in three CSX-owned line segments to the Commonwealth of
Virginia ("Commonwealth") over three phases for a total of $525 million . The
timing and amount of gains recognized are based on the allocation of fair value
to each conveyance, the timing of future conveyances and collectability. In
April 2021 , upon closing of the first phase of the agreement, the Company
collected $200 million in proceeds and recognized a $349 million gain. In fourth
quarter 2021, the Company collected additional proceeds of $200 million , a
portion of which was attributable to the first phase with the remainder
attributable to the second phase. The second phase closed on January 10, 2022 ,
resulting in a $20 million gain in first quarter 2022.
The Company anticipates closing on the remaining conveyances by the end of 2022,
which will result in future cash proceeds and gains. As of March 31, 2022 , the
carrying values of the remaining assets subject to this transaction were not
material.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Guaranteed Notes Issued By CSXT
In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation , issued in a
registered public offering $381 million of secured equipment notes maturing in
2023. CSX Corporation has fully and unconditionally guaranteed the notes. At
CSXT's option, CSXT may redeem any or all of the notes, in whole or in part, at
any time, at the redemption price including premium. In the case of loss or
destruction of any item of equipment securing the notes, if CSXT does not
substitute another item of equipment for the item suffering such loss or
destruction, CSXT will be required to redeem the notes in part at par. The
guarantee of the notes will rank equally in right of payment with all existing
and future senior obligations of CSX Corporation and will be effectively
subordinated to all future secured indebtedness of CSX Corporation to the extent
of the assets securing such indebtedness. The guarantee is subject to release in
limited circumstances only upon the occurrence of certain customary conditions.
As of March 31, 2022 , the principal balance of these secured equipment notes was
$149 million .
In accordance with SEC rules, including amendments adopted in 2020, CSX is not
required to present separate condensed consolidating financial information for
wholly-owned subsidiaries who issued or guaranteed notes. Additionally,
presentation of combined summary financial information regarding subsidiary
issuers and guarantors is not required because the assets, liabilities and
results of operations of the combined issuers and guarantors of the notes are
not materially different from the corresponding amounts presented in the
consolidated financial statements.
LABOR AGREEMENTS
Approximately 16,000 of the Company's approximately 21,000 employees are
members of a labor union. For the 13 rail unions that participate in national
bargaining, a round of negotiations for benefits, wages and work rules is
underway. Typically, these negotiations take several years. Current agreements
remain in place until modified by new agreements.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires that management make estimates
in reporting the amounts of certain assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
certain revenues and expenses during the reporting period. Actual results may
differ from those estimates. These estimates and assumptions are discussed with
the Audit Committee of the Board of Directors on a regular basis. Consistent
with the prior year, significant estimates using management judgment are made
for the areas below. For further discussion of CSX's critical accounting
estimates, see the Company's most recent annual report on Form 10-K.
•personal injury and environmental reserves;
•pension and post-retirement medical plan accounting;
•depreciation policies for assets under the group-life method; and
•goodwill and other intangible assets.
FORWARD-LOOKING STATEMENTS
Certain statements in this report and in other materials filed with the
Securities and Exchange Commission , as well as information included in oral
statements or other written statements made by the Company, are forward-looking
statements. The Company intends for all such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and the
provisions of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements within the
meaning of the Private Securities Litigation Reform Act may contain, among
others, statements regarding:
•projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes or other financial items;
•expectations as to results of operations and operational initiatives;
•expectations as to the effect of claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements on the Company's financial condition, results of operations or liquidity;
•management's plans, strategies and objectives for future operations, capital expenditures, workforce levels, dividends, share repurchases, safety and service performance, proposed new services and other matters that are not historical facts, and management's expectations as to future performance and operations and the time by which objectives will be achieved; and
•future economic, industry or market conditions or performance and their effect on the Company's financial condition, results of operations or liquidity.
Forward-looking statements are typically identified by words or phrases such
as "will," "should," "believe," "expect," "anticipate," "project," "estimate,"
"preliminary" and similar expressions. The Company cautions against placing
undue reliance on forward-looking statements, which reflect its good faith
beliefs with respect to future events and are based on information currently
available to it as of the date the forward-looking statement is made.
Forward-looking statements should not be read as a guarantee of future
performance or results and will not necessarily be accurate indications of the
timing when, or by which, such performance or results will be achieved.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-looking statements are subject to a number of risks and uncertainties
and actual performance or results could differ materially from those anticipated
by any forward-looking statements. 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. The following important factors, in addition to
those discussed in Part I, Item 1A Risk Factors of CSX's most recent annual
report on Form 10-K and elsewhere in this report, may cause actual results to
differ materially from those contemplated by any forward-looking statements:
•legislative, regulatory or legal developments involving transportation, including rail or intermodal transportation, the environment, hazardous materials, taxation, international trade and initiatives to further regulate the rail industry;
•the outcome of litigation, claims and other contingent liabilities, including, but not limited to, those related to fuel surcharge, environmental matters, taxes, shipper and rate claims subject to adjudication, personal injuries and occupational illnesses; •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; •natural events such as severe weather conditions, including floods, fire, hurricanes and earthquakes, a pandemic crisis, including the outbreak of COVID-19, affecting the health of the Company's employees, its shippers or the consumers of goods, or other unforeseen disruptions of the Company's operations, systems, property, equipment or supply chain; •competition from other modes of freight transportation, such as trucking and competition and consolidation or financial distress within the transportation industry generally; •the cost of compliance with laws and regulations that differ from expectations as well as costs, penalties and operational and liquidity impacts associated with noncompliance with applicable laws or regulations;
•the impact of increased passenger activities in capacity-constrained areas, including potential effects of high speed rail initiatives, or regulatory changes affecting when CSXT can transport freight or service routes;
•unanticipated conditions in the financial markets that may affect timely access to capital markets and the cost of capital, as well as management's decisions regarding share repurchases;
•changes in fuel prices, surcharges for fuel and the availability of fuel;
•the impact of natural gas prices on coal-fired electricity generation;
•the impact of global supply and price of seaborne coal on CSXT's export coal market;
CSX Q1 2022 Form 10-Q p.39
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS•availability of insurance coverage at commercially reasonable rates or insufficient insurance coverage to cover claims or damages;
•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;
•adverse economic or operational effects from actual or threatened war or terrorist activities and any governmental response;
•loss of key personnel or the inability to hire and retain qualified employees;
•labor and benefit costs and labor difficulties, including stoppages affecting either the Company's operations or customers' ability to deliver goods to the Company for shipment;
•the Company's success in implementing its strategic, financial and operational initiatives, including acquisitions;
•the impact of conditions in the real estate market on the Company's ability to sell assets;
•changes in operating conditions and costs, including the impacts of inflation, or commodity concentrations;
•the continued and uncertain impact of the COVID-19 pandemic; and
•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 elsewhere in this report and in CSX's otherSEC reports, which are accessible on theSEC's website at www.sec.gov and the Company's website at www.csx.com. The information on the CSX website is not part of this quarterly report on Form 10-Q. CSX Q1 2022 Form 10-Q p.40
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