CSX CORPORATION FIRST QUARTER 2021 HIGHLIGHTS
•Revenue decreased$42 million , or 1% year over year. •Expenses increased$35 million , or 2% year over year. •Operating income of$1.1 billion decreased$77 million , or 7% year over year. •Operating ratio of 60.9% increased 220 basis points versus last year's quarter. •Earnings per diluted share of$0.93 decreased$0.07 , or 7% year over year. First Quarters Fav / 2021 2020 (Unfav) % Change Volume (in thousands) 1,529 1,514 15 1% (in millions) Revenue$ 2,813 $ 2,855 $ (42) (1) Expense 1,712 1,677 (35) (2) Operating Income$ 1,101 $ 1,178 $ (77) (7)% Operating Ratio 60.9 % 58.7 % (220) bps Earnings Per Diluted Share$ 0.93 $ 1.00 $ (0.07) (7)% Demand for rail services has improved from steep declines in the first half of 2020, but the effects of the disruption of global manufacturing, supply chains and consumer spending as a result of the COVID-19 global pandemic are ongoing. As this continues to be a dynamic situation, it is difficult to determine the lasting impacts of the pandemic, including the extent of its impact on the Company's financial and operating results. The full implications of COVID-19 will be determined by the length of time that the pandemic continues, its effect 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 timing of vaccine production and distribution as well as 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. A cross-functional task force monitors and coordinates the Company's response to COVID-19. Policies and procedures established to protect the health and safety of employees and customers and to safeguard CSX operations include rigorous cleaning regimens for equipment and facilities, provision of sanitation supplies, distribution of disposable face coverings, facilitation of social distancing measures and administration of temperature testing at certain facilities. These precautions remain in place despite the easing of pandemic restrictions by state and local governments across the network. CSX Q1 2021 Form 10-Q p.26
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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
2021 2020 % Change 2021 2020 % Change 2021 2020 % Change
Chemicals 163 178 (8) % $ 580 $ 626 (7) % $ 3,558 $ 3,517 1 %
Agricultural and Food Products 116 121 (4) 349 365 (4) 3,009 3,017 -
Automotive 87 104 (16) 236 281 (16) 2,713 2,702 -
Forest Products(a) 73 73 - 220 219 - 3,014 3,000 -
Metals and Equipment 68 67 1 186 199 (7) 2,735 2,970 (8)
Minerals 67 74 (9) 125 127 (2) 1,866 1,716 9
Fertilizers(a) 57 56 2 122 110 11 2,140 1,964 9
Total Merchandise 631 673 (6) 1,818 1,927 (6) 2,881 2,863 1
Intermodal 726 660 10 468 422 11 645 639 1
Coal 172 181 (5) 384 405 (5) 2,233 2,238 -
Other - - - 143 101 42 - - -
Total 1,529 1,514 1 % $ 2,813 $ 2,855 (1) % $ 1,840 $ 1,886 (2) %
(a) In first quarter 2021, changes were made in the categorization of certain
lines of business, impacting Forest Products and Fertilizers. The impacts were
not material and prior periods have been reclassified to conform to the current
presentation.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
First Quarter 2021
Revenue
Total revenue decreased 1% in first quarter 2021 when compared to first quarter 2020 due to lower merchandise volume and decreases in fuel recovery that were partially offset by increases in other revenue, higher intermodal volume and pricing gains. Volume was unfavorably impacted by challenging weather conditions in first quarter 2021. Merchandise Volume Chemicals - Decreased primarily due to lower shipments within the energy-related markets, specifically crude oil and frac sand, partially offset by higher shipments of plastics.
Agricultural and Food Products - Decreased as a result of lower shipments of ethanol, food and consumer products, and domestic grain.
Automotive - Declined primarily due to lower North American vehicle production, including the impact of increased plant downtime as a result of materials shortages.
Forest Products - Increased shipments of building products and pulpboard were offset by declines in printing paper.
Metals and Equipment - Increased due to higher steel shipments, mostly offset by reduced equipment shipments.
Minerals - Decreased as a result of lower shipments of aggregates, partially offset by higher shipments of limestone and salt.
Fertilizers - Increased due to higher long-haul fertilizer shipments, partially offset by lower short-haul phosphate shipments.
Intermodal Volume Increases in both domestic and international shipments resulted from tight truck capacity, inventory replenishments and growth in rail volumes from east coast ports.
Coal Volume The decline in export coal was primarily driven by reduced international shipments of thermal coal. Domestic coal increased as higher shipments of utility coal were partially offset by lower steel and industrial shipments.
Other Revenue Other revenue increased$42 million versus prior year due to increases in revenue for storage at intermodal facilities and higher payments from customers that did not meet volume commitments. CSX Q1 2021 Form 10-Q p.28
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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$14 million due to the following: •Total incentive compensation increased$29 million primarily due to higher expected annual incentive award payouts. •Other costs increased$14 million primarily due to inflation. •Partially offsetting these increases, savings of$29 million were primarily attributable to efficiencies from changes to the train plan that resulted in reduced crew starts and lower headcount across operating departments. Materials, Supplies and Other expense increased$15 million due to the following: •Gains from real estate sales of$3 million in 2021 were lower than gains of$18 million in 2020. •Other costs increased$12 million primarily driven by inflation and other non-significant items. •Partially offsetting these increases, savings of$12 million primarily resulted from increased efficiency within asset maintenance and operating support functions, despite challenging weather.
Depreciation expense increased
Fuel expense decreased$2 million primarily resulting from record first quarter fuel efficiency and lower ton-miles, partially offset by a 4% increase in fuel prices. Equipment and Other Rents expense increased$7 million as higher days per load resulted in increased car hire costs, which were partially offset by higher net earnings at TTX. Interest Expense Interest expense decreased$3 million primarily due to lower average interest rates, partially offset by higher average debt balances. Other Income - Net Other income - net decreased$2 million primarily due to lower interest income, partially offset by an increase in net pension benefit credits. Income Tax Expense Income tax expense decreased$12 million primarily due to lower earnings before income taxes, partially offset by the impacts of an unfavorable state legislative change. CSX Q1 2021 Form 10-Q p.29
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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 certain other investing activities, which includes proceeds 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$122 million is primarily due to lower property additions and higher cash from net favorable working capital activities, despite lower net earnings.
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) 2021 2020
Net cash provided by operating activities $ 1,232 $ 1,178
Property Additions (306) (381)
Other Investing Activities 8 15
Free Cash Flow (before payment of dividends) $ 934 $ 812
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.
In first quarter 2021, operations were unfavorably impacted by challenging
winter weather conditions and lingering impacts of the COVID-19 pandemic on crew
availability. Train velocity and car dwell remained similar to fourth quarter
2020 levels, but these impacts resulted in degradation of train velocity and
dwell compared to the pre-pandemic conditions of first quarter 2020. CSX expects
these measures to improve throughout the year and is taking the necessary steps
to provide customers increased reliability and faster transit times in the
improving demand environment.
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The FRA train accident rate of 2.92 in first quarter 2021 increased compared to
prior year results due to a higher number of train accidents combined with a
reduction in train miles. The personal injury frequency index of 1.02 increased
versus the prior year's record low first quarter results due to an increased
number of injuries as well as lower hours worked. Safety remains 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.
First Quarters
Improvement/
2021 2020 (Deterioration)
Operations Performance
Train Velocity (Miles per hour)(a) 18.9 21.2 (11) %
Dwell (Hours)(a) 10.8 8.3 (30) %
Cars Online(a) 128,856 110,801 (16) %
On-Time Originations 79 % 91 % (13) %
On-Time Arrivals 69 % 84 % (18) %
Carload Trip Plan Performance 67 % 81 % (17) %
Intermodal Trip Plan Performance 85 % 96 % (11) %
Fuel Efficiency 0.98 1.01 3 %
Revenue Ton-Miles (Billions)
Merchandise 31.3 33.1 (5) %
Coal 8.8 8.6 2 %
Intermodal 7.7 6.8 13 %
Total Revenue Ton-Miles 47.8 48.5 (1) %
Total Gross Ton-Miles (Billions) 93.4 95.3 (2) %
Safety
FRA Personal Injury Frequency Index 1.02 0.61 (67) %
FRA Train Accident Rate 2.92 2.24 (30) %
(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-20210331_g2.jpg]] [[Image Removed: csx-20210331_g3.jpg]] [[Image Removed: csx-20210331_g4.jpg]] •Despite lower net earnings, cash provided by operating activities increased$54 million primarily driven by higher cash from net favorable working capital activities, none of which were individually significant.
•Cash used in investing activities was
•Cash used in financing activities increased
Sources of Cash and Liquidity and Uses of Cash As of the end of first quarter 2021, CSX had approximately$3.0 billion of cash, cash equivalents and short-term investments. CSX uses current cash balances for general corporate purposes, which may include reduction or refinancing of outstanding indebtedness, capital expenditures, working capital requirements, contributions to the Company's qualified pension plan, redemptions and repurchases of CSX common stock and dividends to shareholders. 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 12, 2019 , which is unlimited as to amount and 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 three months ended 2021, CSX did not issue any new long-term debt. CSX Q1 2021 Form 10-Q p.32
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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, 2021 , 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, 2021 ,
the Company had no outstanding debt under the commercial paper program.
Planned capital investments for 2021 are expected to be between $1.7 billion
and $1.8 billion . Of the total 2021 investment, the majority will be used to
sustain the core infrastructure and the remaining amounts will be allocated to
projects supporting service enhancements, productivity initiatives and
profitable growth. 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$101 million from year end primarily due to the net decrease in cash of$174 million . This decrease was driven by cash from operations of$1.2 billion , partially offset by share repurchases of$551 million , debt repayments of$360 million , property additions of$306 million and dividends paid of$213 million . Total liabilities decreased$151 million from year end primarily due to debt repayments of$360 million , partially offset by an increase in income and other taxes payable of$164 million . Total shareholders' equity increased$50 million from year end primarily driven by comprehensive earnings of$774 million , mostly offset by share repurchases of$551 million and dividends paid of$213 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$2.5 billion and$2.4 billion as ofMarch 31, 2021 andDecember 31, 2020 , respectively. The increase in working capital since year end of$83 million was primarily driven by a decrease in current maturities of long-term debt of$360 million , partially offset by a$174 million net reduction of cash and cash equivalents described above and an increase in income and other taxes payable of$164 million . 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 2021 Form 10-Q p.33
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CSX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Pending Transactions
On November 30, 2020 , CSX signed a definitive agreement to acquire Pan Am
Systems, Inc. ("Pan Am") and certain of its subsidiaries and affiliates, which
own and operate a highly integrated, nearly 1,200-mile rail network and have a
partial interest in the more than 600-mile Pan Am Southern system. This
acquisition, if approved, will expand CSX's reach in Connecticut , New York and
Massachusetts while adding Vermont , New Hampshire and Maine to its existing
network. On February 25, 2021 , the Company began the process, which can take up
to a year or more, of seeking approval from the Surface Transportation Board .
On March 26, 2021 , the Company entered into a comprehensive rail agreement to
sell certain interests in three CSX-owned line segments to the Commonwealth of
Virginia ("Commonwealth") over three phases for a total of $525 million . On
April 14, 2021 , in the first phase of the transaction, the Company closed on the
sale of a permanent land easement for passenger rail operations. In second
quarter 2021, the gain on this sale will be recognized in materials, supplies
and other on the consolidated income statement. The Company anticipates closing
on the remaining sales over the next two years. Funding for a portion of the
transaction price remains subject to approval by the Virginia General Assembly
and the Commonwealth.
Guaranteed Notes Issued By CSXT
In 2007, CSXT, a wholly-owned subsidiary of CSX Corporation , issued $381 million
of secured equipment notes maturing in 2023 in a registered public offering. 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.
At March 31, 2021 , the principal balance of these secured equipment notes was
$160 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 15,500 of the Company's approximately 19,000 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, environmental and legal reserves; •pension and post-retirement medical plan accounting; and •depreciation policies for assets under the group-life method.
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;
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CSX CORPORATION
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;
•the impact of conditions in the real estate market on the Company's ability to
sell assets;
•changes in operating conditions and costs 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 other SEC reports, which are accessible on
the SEC'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.
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CSX CORPORATION
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