CSX 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(☒) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

(☐) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-8022

CSX CORPORATION

(Exact name of registrant as specified in its charter)
Virginia																											62-1051971
(State or other jurisdiction of incorporation or organization)																											(I.R.S. Employer Identification No.)
500 Water Street			15th Floor			Jacksonville			FL												32202						904			359-3200
(Address of principal executive offices)																					(Zip Code)						(Telephone number, including area code)
									No Change
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class															Trading Symbol(s)												Name of exchange on which registered
Common Stock, $1 Par Value															CSX												Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (X) No ( )

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes (X) No ( )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (as defined in Exchange Act Rule 12b-2).

Large Accelerated Filer (X) Accelerated Filer ( ) Non-accelerated Filer ( ) Smaller Reporting Company (☐) Emerging growth company (☐)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ( )

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (☐) No (X)

There were 1,954,927,162 shares of common stock outstanding on March 31, 2024 (the latest practicable date that is closest to the filing date).

CSX Q1 2024 Form 10-Q p.1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

INDEX

									Page
PART I.			FINANCIAL INFORMATION
Item 1.			Financial Statements						3
			Consolidated Income Statements (Unaudited) - Quarters Ended March 31, 2024 and March 31, 2023						3
			Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters Ended March 31, 2024 and March 31, 2023						3
			Consolidated Balance Sheets - At March 31, 2024 (Unaudited) and December 31, 2023						4
			Consolidated Cash Flow Statements (Unaudited) - Three Months Ended March 31, 2024 and March 31, 2023						5
			Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Quarters Ended March 31, 2024 and March 31, 2023						6
			Notes to Consolidated Financial Statements (Unaudited)						7
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations						26
Item 3.			Quantitative and Qualitative Disclosures about Market Risk						40
Item 4.			Controls and Procedures						40
PART II.			OTHER INFORMATION
Item 1.			Legal Proceedings						41
Item 1A.			Risk Factors						41
Item 2.			CSX Purchases of Equity Securities						41
Item 3.			Defaults Upon Senior Securities						42
Item 4.			Mine Safety Disclosures						42
Item 5.			Other Information						42
Item 6.			Exhibits						43
Signature									44

CSX Q1 2024 Form 10-Q p.2

CSX CORPORATION

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(Dollars in Millions, Except Per Share Amounts)

			First Quarters
			2024			2023
Revenue			$	3,681		$	3,706
Expense
Labor and Fringe			798			723
Purchased Services and Other			711			688
Depreciation and Amortization			410			393
Fuel			325			364
Equipment and Other Rents			84			82
Gains on Property Dispositions			(1)			(8)
Total Expense			2,327			2,242
Operating Income			1,354			1,464
Interest Expense			(210)			(201)
Other Income - Net			41			41
Earnings Before Income Taxes			1,185			1,304
Income Tax Expense			(292)			(317)
Net Earnings			$	893		$	987
Per Common Share (Note 2)
Net Earnings Per Share, Basic			$	0.46		$	0.48
Net Earnings Per Share, Assuming Dilution			$	0.46		$	0.48
Average Shares Outstanding (In Millions)			1,958			2,054
Average Shares Outstanding, Assuming Dilution (In Millions)			1,962			2,058

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in Millions)

			First Quarters
			2024			2023
Total Comprehensive Earnings (Note 10)			$	899		$	989

See accompanying notes to consolidated financial statements.

CSX Q1 2024 Form 10-Q p.3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)

			(Unaudited)
			March 31, 2024			December 31, 2023
ASSETS
Current Assets:
Cash and Cash Equivalents			$	1,483		$	1,353
Short-term Investments (Note 9)			2			83
Accounts Receivable - Net (Note 8)			1,400			1,393
Materials and Supplies			451			446
Other Current Assets			136			109
Total Current Assets			3,472			3,384
Properties			50,661			50,320
Accumulated Depreciation			(15,605)			(15,385)
Properties - Net			35,056			34,935
Investment in Affiliates and Other Companies			2,424			2,397
Right-of-Use Lease Asset			507			498
Goodwill and Other Intangible Assets - Net			520			506
Other Long-term Assets			716			688
Total Assets			$	42,695		$	42,408
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable			$	1,306		$	1,237
Labor and Fringe Benefits Payable			387			517
Casualty, Environmental and Other Reserves (Note 4)			140			144
Current Maturities of Long-term Debt (Note 7)			557			558
Income and Other Taxes Payable			382			525
Other Current Liabilities			252			243
Total Current Liabilities			3,024			3,224
Casualty, Environmental and Other Reserves (Note 4)			308			296
Long-term Debt (Note 7)			17,944			17,975
Deferred Income Taxes - Net			7,759			7,746
Long-term Lease Liability			501			491
Other Long-term Liabilities			557			543
Total Liabilities			30,093			30,275
Shareholders' Equity:
Common Stock, $1 Par Value			1,955			1,959
Other Capital			743			691
Retained Earnings			10,205			9,790
Accumulated Other Comprehensive Loss (Note 10)			(306)			(312)
Non-controlling Minority Interest			5			5
Total Shareholders' Equity			12,602			12,133
Total Liabilities and Shareholders' Equity			$	42,695		$	42,408

See accompanying notes to consolidated financial statements.

CSX Q1 2024 Form 10-Q p.4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in Millions)

			Three Months
			2024			2023
OPERATING ACTIVITIES
Net Earnings			$	893		$	987
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization			410			393
Deferred Income Taxes			11			35
Gains on Property Dispositions			(1)			(8)
Other Operating Activities			(15)			(31)
Changes in Operating Assets and Liabilities:
Accounts Receivable			5			(63)
Other Current Assets			(29)			(72)
Accounts Payable			72			70
Income and Other Taxes Payable			(143)			266
Other Current Liabilities			(119)			(326)
Net Cash Provided by Operating Activities			1,084			1,251
INVESTING ACTIVITIES
Property Additions			(524)			(443)
Purchases of Short-term Investments			—			(101)
Proceeds from Sales of Short-term Investments			81			53
Proceeds and Advances from Property Dispositions			—			8
Business Acquisition, Net of Cash Acquired			(26)			(2)
Other Investing Activities			(35)			5
Net Cash Used In Investing Activities			(504)			(480)
FINANCING ACTIVITIES
Shares Repurchased			(247)			(1,067)
Dividends Paid			(235)			(226)
Long-term Debt Repaid (Note 7)			(2)			(142)
Other Financing Activities			34			(3)
Net Cash Used in Financing Activities			(450)			(1,438)
Net Increase (Decrease) in Cash and Cash Equivalents			130			(667)
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period			1,353			1,958
Cash and Cash Equivalents at End of Period			$	1,483		$	1,291

See accompanying notes to consolidated financial statements.

CSX Q1 2024 Form 10-Q p.5

CSX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in Millions)

Three Months 2024			Common Shares Outstanding (Thousands)			Common Stock and Other Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income**(a)**			Non-controlling Minority Interest			Total Shareholders' Equity
Balance December 31, 2023			1,958,757			$	2,650		$	9,790		$	(312)		$	5		$	12,133
Comprehensive Earnings:
Net Earnings			—			—			893			—			—			893
Other Comprehensive Income			—			—			—			6			—			6
Total Comprehensive Earnings																		899
Common stock dividends, $0.12 per share			—			—			(235)			—			—			(235)
Share Repurchases			(6,789)			(7)			(240)			—			—			(247)
Excise Tax on Net Share Repurchases			—			—			(1)			—			—			(1)
Stock Option Exercises and Other			2,961			55			(2)			—			—			53
Balance March 31, 2024			1,954,929			$	2,698		$	10,205		$	(306)		$	5		$	12,602

Three Months 2023			Common Shares Outstanding (Thousands)			Common Stock and Other Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income**(a)**			Non-controlling Minority Interest			Total Shareholders' Equity
Balance December 31, 2022			2,066,367			$	2,640		$	10,363		$	(388)		$	10		$	12,625
Comprehensive Earnings:
Net Earnings			—			—			987			—			—			987
Other Comprehensive Income			—			—			—			2			—			2
Total Comprehensive Earnings																		989
Common stock dividends, $0.11 per share			—			—			(226)			—			—			(226)
Share Repurchases			(35,157)			(35)			(1,032)			—			—			(1,067)
Stock Option Exercises and Other			1,865			15			—			—			(2)			13
Balance March 31, 2023			2,033,075			$	2,620		$	10,092		$	(386)		$	8		$	12,334

(a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $82 million and $121 million as of March 31, 2024 and March 31, 2023, respectively. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q1 2024 Form 10-Q p.6

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies

Background

CSX Corporation together with its subsidiaries ("CSX" or the “Company”), based in Jacksonville, Florida, is one of the nation's leading transportation companies. The Company provides rail-based transportation services including traditional rail service, the transport of intermodal containers and trailers, as well as other transportation services such as rail-to-truck t

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Volume and Revenue (Unaudited)
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
First Quarters
			Volume																		Revenue																		Revenue Per Unit
			2024						2023						% Change						2024						2023						% Change						2024						2023						% Change
Chemicals			167						160						4		%				$	693					$	650					7		%				$	4,150					$	4,063					2		%
Agricultural and Food Products			114						122						(7)						407						437						(7)						3,570						3,582						—
Automotive			94						86						9						293						274						7						3,117						3,186						(2)
Minerals			80						83						(4)						174						173						1						2,175						2,084						4
Forest Products			73						73						—						262						261						—						3,589						3,575						—
Metals and Equipment			70						73						(4)						220						239						(8)						3,143						3,274						(4)
Fertilizers			47						50						(6)						136						129						5						2,894						2,580						12
Total Merchandise			645						647						—						2,185						2,163						1						3,388						3,343						1
Intermodal			701						654						7						506						499						1						722						763						(5)
Coal			188						185						2						632						633						—						3,362						3,422						(2)
Trucking			—						—						—						215						233						(8)						—						—						—
Other			—						—						—						143						178						(20)						—						—						—
Total			1,534						1,486						3		%				$	3,681					$	3,706					(1)		%				$	2,400					$	2,494					(4)		%

CSX Q1 2024 Form 10-Q p.27

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

First Quarter 2024

Revenue

Total revenue decreased 1% in the first quarter 2024 when compared to first quarter 2023 primarily due to lower fuel recovery, decreases in other revenue, lower trucking revenue, and pricing declines in export coal due to the impact of lower benchmark rates. These decreases were partially offset by pricing gains in merchandise as well as higher intermodal and coal volumes.

Merchandise Volume

Chemicals - Increased due to higher shipments of plastics, crude oil, and natural gas liquids, partially offset by lower shipments of frac sand.

Agricultural and Food Products - Decreased primarily due to lower domestic and export shipments of grain, partially offset by higher shipments of vegetable oils.

Automotive - Increased due to higher North American vehicle production as well as new business wins.

Minerals - Decreased due to lower shipments of aggregates, partially offset by increased shipments of cement.

Forest Products - Increased shipments of pulpboard were offset by lower shipments of woodpulp and paper.

Metals and Equipment - Decreased due to lower steel and scrap shipments. Equipment was relatively flat to prior year as increased volume for repositioning empty railcars was offset by reduced loaded shipments.

Fertilizers - Decreased due to declines in short-haul shipments, which were partially offset by increases in long-haul phosphate and potash shipments.

Intermodal Volume

Intermodal volume increased primarily due to international shipments driven by higher imports through east coast ports and inventory replenishments. Domestic shipments also increased due to growth with key customers despite a soft trucking environment.

Coal Volume

Export coal increased due to higher shipments of thermal and metallurgical coal. Domestic coal decreased primarily due to lower shipments of coal to utility plants, as well as lower shipments to river and lake terminals.

Trucking Revenue

Trucking revenue decreased $18 million versus the prior year due to lower fuel and capacity surcharges.

Other Revenue

Other revenue was $35 million lower, primarily resulting from lower carload demurrage as well as lower intermodal storage and equipment usage.

CSX Q1 2024 Form 10-Q p.28

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Expenses

Expenses of $2.3 billion increased $85 million, or 4%, in first quarter 2024 when compared to the first quarter 2023.

Labor and Fringe expense increased $75 million due to the following:

• An increase of $26 million was due to cost increases attributed to higher headcount and union employee sick benefits.

• An increase of $23 million was driven by inflation.

• Other costs, including incentive compensation and other employee-related items, increased $26 million.

Purchased Services and Other expense increased $23 million due to the following:

▪Prior year amounts included a $46 million insurance recovery.

• An increase of $13 million was due to inflation and higher volume.

• Other costs decreased $36 million, about half of which resulted from efficiency savings across the organization.

Depreciation and Amortization expense increased $17 million as a result of a larger asset base.

Fuel costs decreased $39 million primarily resulting from a 10% decrease in locomotive fuel prices.

Equipment and Other Rents expense increased $2 million driven by higher volume.

Gains on Property Dispositions decreased to $1 million from $8 million in the prior year.

Interest Expense

Interest expense increased $9 million primarily due to higher average debt balances.

Other Income - Net

Other income - net was flat when compared to prior year.

Income Tax Expense

Income tax expense decreased $25 million mostly due to lower earnings before income taxes.

CSX Q1 2024 Form 10-Q p.29

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Measures - Unaudited

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

Economic Profit

Management believes Economic Profit (also referred to as CSX Cash Earnings or CCE) provides an additional perspective to investors about financial returns generated by the business by representing a measure showing profit generated over and above the cost of capital used by the business to generate that profit. Economic Profit is designed to incentivize strategic investments that earn more than management’s desired minimum required return and is broadly utilized by management to make investment decisions. Therefore, disclosing Economic Profit on how management performs in this regard provides additional useful information to investors regarding the Company’s performance compared to its goals.

Economic Profit should be considered in addition to, rather than a substitute for, operating income, which is the most directly comparable GAAP measure. Economic Profit is defined by the Company as Gross Cash Earnings (“GCE”) minus the Capital Charge on Gross Operating Assets (“GOA”). Increases in Economic Profit indicate that the Company is effectively allocating capital and rewarding shareholders by generating returns in excess of the incremental cost of capital associated with reinvestment in the business.

GCE is calculated as operating income plus depreciation, amortization and operating lease expense, less unusual items and taxes. The Capital Charge uses a minimum required return multiplied by the GOA. CSX's GOAs include gross properties and other non-cash assets, net of non-interest bearing liabilities. The Company used a 15% tax rate and an 8% required return, for both periods presented, which is consistent with rates used for investment decisions and performance evaluation within those same periods. The tax rate is the approximate equivalent of the Company’s actual income tax expense as a percentage of pre-tax GCE. The required return rate represents management’s desired minimum return on any investment. CSX annually re-evaluates these rates to ensure they accurately represent taxes and a required return in light of internal and external factors and would adjust the rate if the annual review resulted in a preset deviation from the current rates. This focuses the Economic Profit measure on value generated by management instead of external factors, such as legislative tax policy or interest rate volatility.

CSX Q1 2024 Form 10-Q p.30

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table reconciles operating income (the most directly comparable GAAP measure) to Economic Profit (non-GAAP measure).

			Three Months
(Dollars in Millions)			2024			2023
Operating Income			$	1,354		$	1,464
Add: Depreciation, Amortization, and Operating Lease Expense			438			419
Remove: Unusual Items (a)			—			—
Taxes (b)			(269)			(282)
Gross Cash Earnings or "GCE"			1,523			1,601
Operating Assets
Current Assets (Less Cash and Short-term Investments)			(1,987)			(1,886)
Gross Properties			(50,661)			(48,441)
Other Assets			(4,167)			(3,830)
Operating Liabilities
Non-Interest Bearing Liabilities			11,091			10,744
Gross Operating Assets or "GOA" (c)			(45,724)			(43,413)
Capital Charge (d)			(914)			(868)
Economic Profit (Non-GAAP) calculated as GCE less Capital Charge			$	609		$	733

(a) Unusual items are defined by management as unique events with greater than $100 million full year operating income impact, consistent with the terms of the Company's long-term incentive plan agreements. There were no unusual items for either period presented.

(b) The tax percentage rate was 15% for both periods presented. This rate is applied to the sum of operating income, depreciation, amortization and operating lease expense, and unusual items.

(c) Gross operating assets reflects an average of the year-to-date quarters reported for each year presented. Averages are not applicable for the first quarter of each year.

(d) The capital charge of 8% for both years is calculated as the minimum return multiplied by gross operating assets. This is an annualized rate equivalent to 2% per quarter.

Free Cash Flow

Management believes that Free Cash Flow ("FCF") is supplemental information useful to investors as it is important in evaluating the Company’s financial performance. More specifically, FCF 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. FCF is calculated by using net cash from operations and adjusting for property additions and proceeds and advances from property dispositions. FCF should be considered in addition to, rather than a substitute for, cash provided by operating activities. The decrease in FCF before dividends from the prior year of $256 million is primarily due to less cash from operating activities and higher property additions. Cash from operating activities in the three months ended March 31, 2024 includes the impact of $387 million of federal tax payments related to the 2023 tax year that were previously postponed under an Internal Revenue Service tax relief announcement for those impacted by Hurricane Idalia. Cash from operating activities in the prior year period includes the payment of $232 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

CSX Q1 2024 Form 10-Q p.31

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table reconciles cash provided by operating activities (GAAP measure) to FCF before dividends (non-GAAP measure).

			Three Months
(Dollars in Millions)			2024			2023
Net cash provided by operating activities			$	1,084		$	1,251
Property Additions			(524)			(443)
Proceeds and Advances from Property Dispositions			—			8
Free Cash Flow or "FCF" (before payment of dividends)			$	560		$	816

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 2024, velocity decreased by 2% and dwell increased by 8% versus prior year. Carload trip plan performance was 82% compared to 86% in the prior year while intermodal trip plan performance was 94% compared to 96% in the prior year. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

The personal injury frequency of 1.27 in first quarter 2024 increased by 17% compared to prior year. The FRA train accident rate of 3.81 decreased by 5% 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 the Company operates.

CSX Q1 2024 Form 10-Q p.32

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

			First Quarters
			2024			2023			Improvement / (Deterioration)
Operations Performance (a)
Train Velocity (Miles Per Hour)			18.2			18.5			(2)		%
Dwell (Hours)			9.7			9.0			(8)		%
Cars Online			124,720			126,293			1		%
On-Time Originations			75		%	84		%	(11)		%
On-Time Arrivals			70		%	77		%	(9)		%
Carload Trip Plan Performance			82		%	86		%	(5)		%
Intermodal Trip Plan Performance			94		%	96		%	(2)		%
Fuel Efficiency			1.01			1.02			1		%
Revenue Ton-Miles (Billions)
Merchandise			32.0			32.3			(1)		%
Coal			9.4			9.2			2		%
Intermodal			7.1			6.9			3		%
Total Revenue Ton-Miles			48.5			48.4			—		%
Total Gross Ton-Miles (Billions)			95.8			94.4			1		%
Safety (b)
FRA Personal Injury Frequency Index			1.27			1.09			(17)		%
FRA Train Accident Rate			3.81			4.03			5		%

(a) Beginning second quarter 2023, all operations performance metrics include results from the network acquired from Pan Am. The impact of including Pan Am data was insignificant.

(b) Effective January 1, 2024, safety metrics include results from the Pan Am network. The impact was insignificant.

Certain operating statistics are estimated and can continue to be updated as actuals settle. The methodology for calculating train velocity, dwell, cars online and trip plan performance differs from that used by the Surface Transportation Board. The Company will continue to report these metrics to the Surface Transportation Board using the prescribed methodology.

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 actual train miles and times of a train movement on CSX's network.

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 (excludes unit trains and other non-scheduled service as well as empty automotive shipments) destined for a customer that complete their scheduled plan at or ahead of the original estimated time of arrival or interchange (as applicable).

Intermodal Trip Plan Performance - Percent of measured containers (excludes port shipments along with empty containers and other non-scheduled service) destined for a customer that complete their scheduled plan 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.

CSX Q1 2024 Form 10-Q p.33

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 increase of $130 million and decrease of $667 million in cash and cash equivalents for the three months ended March 31, 2024 and March 31, 2023, respectively.

• The Company generated $167 million less cash from operating activities primarily driven by lower cash-generating net earnings and the payment of $387 million of previously postponed federal taxes related to the 2023 tax year. These decreases were partially offset by the impact of prior year payments of $232 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

• CSX used $24 million more cash for investing activities primarily as a result of higher property additions consistent with planned capital expenditures, increased acquisition spending and lower proceeds and advances from property dispositions, partially offset by lower net purchases of investments.

• The Company used $988 million less cash for financing activities primarily due to lower share repurchases and lower debt repayments.

CSX Q1 2024 Form 10-Q p.34

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Sources of Cash and Liquidity and Uses of Cash

As of the end of first quarter 2024, CSX had $1.5 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 the SEC on February 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 three months ended March 31, 2024, CSX did not issue any long-term debt.

CSX has a $1.2 billion unsecured, revolving credit facility backed by a diverse syndicate of banks that expires in February 2028. At March 31, 2024, 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, 2024, the Company had no outstanding debt under the commercial paper program.

Planned capital investments for 2024 are expected to be approximately $2.5 billion. Spending to sustain core infrastructure with a focus on safety and reliability will be a top priority. In addition, management is committed to investments that promote profitable growth, including projects supporting service enhancements and productivity initiatives, which includes investments in locomotives and freight cars. CSX intends to fund capital investments primarily through cash generated from operations.

CSX Q1 2024 Form 10-Q p.35

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Material Changes in the Consolidated Balance Sheets and Working Capital

Consolidated Balance Sheets

Total assets increased $287 million from year end primarily due to a $121 million increase in net property consistent with planned capital expenditures and a $49 million increase in cash and short-term investments.

Total liabilities decreased $182 million from year end primarily due a $143 million decrease in income and other taxes payable driven by payments of previously postponed federal taxes and a $130 million decrease in labor and fringe benefits payable driven by payouts of accrued incentive compensation. These decreases were partially offset by a $69 million increase in accounts payable due to the timing of payments. Total shareholders' equity increased $469 million from year end primarily driven by net earnings of $893 million, partially offset by share repurchases of $247 million and dividends paid of $235 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 $448 million as of March 31, 2024, and $160 million as of December 31, 2023. This increase of $288 million since year end is primarily due to cash earned from operations of $1.1 billion, partially offset by cash paid for property additions of $524 million and payments for share repurchases and dividend payments as mentioned above. 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.

LABOR AGREEMENTS

Approximately 17,800 of the Company's approximately 23,400 employees are members of a rail labor union. As of December 2, 2022, all 12 rail unions at CSX that participated in national bargaining were covered by national agreements with the Class I railroads and CSX-specific agreements that will remain in effect through December 31, 2024. Collective agreements under the Railway Labor Act do not expire, but continue until amended, and formal notices to amend these agreements may be served as early as November 1, 2024.

CSX Q1 2024 Form 10-Q p.36

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 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.

CSX Q1 2024 Form 10-Q p.37

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 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;

• 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;

CSX Q1 2024 Form 10-Q p.38

CSX CORPORATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

• 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 impacts of a public health crisis and any policies or initiatives instituted in response; 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.

CSX Q1 2024 Form 10-Q p.39

CSX CORPORATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK