CSX 10-Q 2024-09-30

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 September 30, 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 1,928,419,153 shares of common stock outstanding on September 30, 2024 (the latest practicable date that is closest to the filing date).

CSX Q3 2024 Form 10-Q p.1

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

INDEX

									Page
PART I.			FINANCIAL INFORMATION
Item 1.			Financial Statements						3
			Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023						3
			Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023						3
			Consolidated Balance Sheets (Unaudited) - At September 30, 2024 and December 31, 2023						4
			Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 30, 2024 and September 30, 2023						5
			Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Quarters and Nine Months Ended September 30, 2024 and September 30, 2023						6
			Notes to Consolidated Financial Statements (Unaudited)						8
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations						33
Item 3.			Quantitative and Qualitative Disclosures about Market Risk						48
Item 4.			Controls and Procedures						48
PART II.			OTHER INFORMATION
Item 1.			Legal Proceedings						49
Item 1A.			Risk Factors						49
Item 2.			CSX Purchases of Equity Securities						49
Item 3.			Defaults Upon Senior Securities						50
Item 4.			Mine Safety Disclosures						50
Item 5.			Other Information						50
Item 6.			Exhibits						51
Signature									52

CSX Q3 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)

			Third Quarters									Nine Months
			2024			2023 (a)						2024 (a)			2023 (a)
Revenue			$	3,619		$	3,572					$	11,001		$	10,977
Expense
Labor and Fringe			806			761						2,377			2,238
Purchased Services and Other			675			700						2,095			2,088
Depreciation and Amortization			416			403						1,236			1,202
Fuel			276			349						902			1,025
Equipment and Other Rents			91			94						260			266
Losses (Gains) on Property Dispositions			1			(6)						(8)			(26)
Total Expense			2,265			2,301						6,862			6,793
Operating Income			1,354			1,271						4,139			4,184
Interest Expense			(206)			(203)						(625)			(605)
Other Income - Net			36			34						105			106
Earnings Before Income Taxes			1,184			1,102						3,619			3,685
Income Tax Expense			(290)			(274)						(882)			(899)
Net Earnings			$	894		$	828					$	2,737		$	2,786
Per Common Share (Note 2)
Net Earnings Per Share, Basic			$	0.46		$	0.42					$	1.41		$	1.38
Net Earnings Per Share, Assuming Dilution			$	0.46		$	0.41					$	1.40		$	1.37
Average Shares Outstanding (In Millions)			1,936			1,994						1,946			2,022
Average Shares Outstanding, Assuming Dilution (In Millions)			1,940			1,999						1,950			2,027

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in Millions)

			Third Quarters									Nine Months
			2024			2023 (a)						2024 (a)			2023 (a)
Total Comprehensive Earnings (Note 10)			$	895		$	846					$	2,747		$	2,802

(a) See Note 11, Revision of Prior Period Financial Statements.

See accompanying notes to consolidated financial statements.

CSX Q3 2024 Form 10-Q p.3

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in Millions)

			September 30, 2024			December 31, 2023 (a)
ASSETS
Current Assets:
Cash and Cash Equivalents			$	1,644		$	1,353
Short-term Investments (Note 9)			12			83
Accounts Receivable - Net (Note 8)			1,413			1,393
Materials and Supplies			415			440
Other Current Assets			93			90
Total Current Assets			3,577			3,359
Properties			51,503			50,281
Accumulated Depreciation			(16,333)			(15,560)
Properties - Net			35,170			34,721
Investment in Affiliates and Other Companies			2,485			2,397
Right-of-Use Lease Asset			498			498
Goodwill and Other Intangible Assets - Net			544			506
Other Long-term Assets			795			731
Total Assets			$	43,069		$	42,212
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable			$	1,301		$	1,237
Labor and Fringe Benefits Payable			470			517
Casualty, Environmental and Other Reserves (Note 4)			147			144
Current Maturities of Long-term Debt (Note 7)			6			558
Income and Other Taxes Payable			379			524
Other Current Liabilities			266			243
Total Current Liabilities			2,569			3,223
Casualty, Environmental and Other Reserves (Note 4)			309			296
Long-term Debt (Note 7)			18,535			17,975
Deferred Income Taxes - Net			7,721			7,699
Long-term Lease Liability			494			491
Other Long-term Liabilities			505			543
Total Liabilities			30,133			30,227
Shareholders' Equity:
Common Stock, $1 Par Value			1,928			1,959
Other Capital			815			691
Retained Earnings			10,457			9,609
Accumulated Other Comprehensive Loss (Note 10)			(269)			(279)
Non-controlling Minority Interest			5			5
Total Shareholders' Equity			12,936			11,985
Total Liabilities and Shareholders' Equity			$	43,069		$	42,212

(a) See Note 11, Revision of Prior Period Financial Statements.

See accompanying notes to consolidated financial statements.

CSX Q3 2024 Form 10-Q p.4

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in Millions)

			Nine Months
			2024 (a)			2023 (a)
OPERATING ACTIVITIES
Net Earnings			$	2,737		$	2,786
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization			1,236			1,202
Deferred Income Taxes			19			97
Gains on Property Dispositions			(8)			(26)
Other Operating Activities			(35)			67
Changes in Operating Assets and Liabilities:
Accounts Receivable			7			(65)
Other Current Assets			27			(84)
Accounts Payable			57			52
Income and Other Taxes Payable			(148)			267
Other Current Liabilities			(33)			(271)
Net Cash Provided by Operating Activities			3,859			4,025
INVESTING ACTIVITIES
Property Additions			(1,691)			(1,571)
Purchases of Short-term Investments			—			(103)
Proceeds from Sales of Short-term Investments			81			153
Proceeds and Advances from Property Dispositions			50			65
Business Acquisition, Net of Cash Acquired			(68)			(31)
Other Investing Activities			(94)			(19)
Net Cash Used In Investing Activities			(1,722)			(1,506)
FINANCING ACTIVITIES
Shares Repurchased			(1,212)			(2,901)
Dividends Paid			(700)			(666)
Long-term Debt Repaid (Note 7)			(556)			(150)
Long-term Debt Issued (Note 7)			550			600
Other Financing Activities			72			25
Net Cash Used in Financing Activities			(1,846)			(3,092)
Net Increase (Decrease) in Cash and Cash Equivalents			291			(573)
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period			1,353			1,933
Cash and Cash Equivalents at End of Period			$	1,644		$	1,360

(a) See Note 11, Revision of Prior Period Financial Statements.

See accompanying notes to consolidated financial statements.

CSX Q3 2024 Form 10-Q p.5

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in Millions)

Nine Months 2024			Common Shares Outstanding (Thousands)			Common Stock and Other Capital			Retained Earnings (a)			Accumulated Other Comprehensive (Loss) Income**(a,b)**			Non-controlling Minority Interest			Total Shareholders' Equity (a)
Balance December 31, 2023			1,958,757			$	2,650		$	9,609		$	(279)		$	5		$	11,985
Comprehensive Earnings:
Net Earnings			—			—			880			—			—			880
Other Comprehensive Income			—			—			—			6			—			6
Total Comprehensive Earnings																		886
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		$	10,011		$	(273)		$	5		$	12,441
Comprehensive Earnings:
Net Earnings			—			—			963			—			—			963
Other Comprehensive Income			—			—			—			3			—			3
Total Comprehensive Earnings																		966
Common stock dividends, $0.12 per share			—			—			(233)			—			—			(233)
Share Repurchases			(16,308)			(16)			(547)			—			—			(563)
Excise Tax on Net Share Repurchases									(6)									(6)
Stock Option Exercises and Other			124			15			1			—			(1)			15
Balance June 30, 2024			1,938,745			$	2,697		$	10,189		$	(270)		$	4		$	12,620
Comprehensive Earnings:
Net Earnings			—			—			894			—			—			894
Other Comprehensive Income			—			—			—			1			—			1
Total Comprehensive Earnings																		895
Common stock dividends, $0.12 per share			—			—			(232)			—			—			(232)
Share Repurchases			(11,925)			(12)			(390)			—			—			(402)
Excise Tax on Net Share Repurchases			—			—			(4)			—			—			(4)
Stock Option Exercises and Other			1,603			58			—			—			1			59
Balance September 30, 2024			1,928,423			$	2,743		$	10,457		$	(269)		$	5		$	12,936

(a) See Note 11, Revision of Prior Period Financial Statements.

(b) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $74 million as of December 31, 2023, $72 million as of March 31, 2024, $72 million as of June 30, 2024 and $71 million as of September 30, 2024. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q3 2024 Form 10-Q p.6

CSX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in Millions)

Nine Months 2023			Common Shares Outstanding (Thousands)			Common Stock and Other Capital			Retained Earnings (a)			Accumulated Other Comprehensive (Loss) Income**(a,b)**			Non-controlling Minority Interest			Total Shareholders' Equity (a)
Balance December 31, 2022			2,066,367			$	2,640		$	10,229		$	(410)		$	10		$	12,469
Comprehensive Earnings:
Net Earnings			—			—			974			—			—			974
Other Comprehensive Income			—			—			—			2			—			2
Total Comprehensive Earnings																		976
Common stock dividends, $0.11 per share			—			—			(226)			—			—			(226)
Share Repurchases			(35,157)			(35)			(1,032)			—			—			(1,067)
Excise Tax on Net Share Repurchases			—			—			(10)			—			—			(10)
Stock Option Exercises and Other			1,865			15			—			—			(2)			13
Balance March 31, 2023			2,033,075			$	2,620		$	9,935		$	(408)		$	8		$	12,155
Comprehensive Earnings:
Net Earnings			—			—			984			—			—			984
Other Comprehensive Income			—			—			—			(4)			—			(4)
Total Comprehensive Earnings																		980
Common stock dividends, $0.11 per share			—			—			(222)			—			—			(222)
Share Repurchases			(27,434)			(28)			(835)			—			—			(863)
Excise Tax on Net Share Repurchases			—			—			(9)			—			—			(9)
Stock Option Exercises and Other			712			38			(1)			—			(4)			33
Balance June 30, 2023			2,006,353			$	2,630		$	9,852		$	(412)		$	4		$	12,074
Comprehensive Earnings:
Net Earnings			—			—			828			—			—			828
Other Comprehensive Income			—			—			—			18			—			18
Total Comprehensive Earnings																		846
Common stock dividends, $0.11 per share			—			—			(218)			—			—			(218)
Share Repurchases			(31,018)			(31)			(940)			—			—			(971)
Excise Tax on Net Share Repurchases			—			—			(9)			—			—			(9)
Stock Option Exercises and Other			797			34			—			—			—			34
Balance September 30, 2023			1,976,132			$	2,633		$	9,513		$	(394)		$	4		$	11,756

(a) See Note 11, Revision of Prior Period Financial Statements.

(b) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $129 million as of December 31, 2022, $128 million as of March 31, 2023, $114 million as of June 30, 2023 and $108 million as of September 30, 2023. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q3 2024 Form 10-Q p.7

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 transfers and bulk commodity operations.

CSX's principal operating subsidiary, CSX Transportation, Inc. (“CSXT”), provides an important link to the transportation supply chain through its approximately 20,000 route-mile rail network and serves major population centers in 26 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The Company's intermodal business links customers to railroads via trucks and terminals. CSXT is also responsible for the Company's real estate sales, leasing, acquisition and management and development activities, substantially all of which are focused on supporting railroad operations.

Other entities

In addition to CSXT, the Company’s subsidiaries include Quality Carriers, Inc. ("Quality Carriers"), CSX Intermodal Terminals, Inc. (“CSX Intermodal Terminals”), Total Distribution Services, Inc. (“TDSI”), Transflo Terminal Services, Inc. (“Transflo”), CSX Technology, Inc. (“CSX Technology”) and other subsidiaries. Quality Carriers is the largest provider of bulk liquid chemicals truck transportation in North America. CSX Intermodal Terminals owns and operates a system of intermodal terminals, predominantly in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments) for certain customers. TDSI serves the automotive industry with distribution centers and storage locations. Transflo connects non-rail served customers to the many benefits of rail by transferring products from rail to trucks. The biggest Transflo markets are chemicals and agriculture, which includes shipments of plastics and ethanol. CSX Technology and other subsidiaries provide support services for the Company.

CSX Q3 2024 Form 10-Q p.8

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Nature of Operations and Significant Accounting Policies, continued

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all normal

Showing the first 8K of 119K characters. Open the full section

Volume and Revenue (Unaudited)
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
Third Quarters
			Volume																		Revenue																		Revenue Per Unit
			2024						2023						% Change						2024						2023						% Change						2024						2023						% Change
Chemicals			176						161						9		%				$	727					$	646					13		%				$	4,131					$	4,012					3		%
Agricultural and Food Products			118						108						9						416						376						11						3,525						3,481						1
Automotive			98						101						(3)						301						308						(2)						3,071						3,050						1
Minerals			96						95						1						202						190						6						2,104						2,000						5
Forest Products			73						67						9						259						243						7						3,548						3,627						(2)
Metals and Equipment			64						70						(9)						208						225						(8)						3,250						3,214						1
Fertilizers			45						47						(4)						118						124						(5)						2,622						2,638						(1)
Total Merchandise			670						649						3						2,231						2,112						6						3,330						3,254						2
Intermodal			730						708						3						509						517						(2)						697						730						(5)
Coal			190						193						(2)						553						594						(7)						2,911						3,078						(5)
Trucking			—						—						—						214						218						(2)						—						—						—
Other			—						—						—						112						131						(15)						—						—						—
Total			1,590						1,550						3		%				$	3,619					$	3,572					1		%				$	2,276					$	2,305					(1)		%
Nine Months
			Volume																		Revenue																		Revenue Per Unit
			2024						2023						% Change						2024						2023						% Change						2024						2023						% Change
Chemicals			517						481						7		%				$	2,142					$	1,938					11		%				$	4,143					$	4,029					3		%
Agricultural and Food Products			347						348						—						1,229						1,228						—						3,542						3,529						—
Automotive			297						290						2						930						905						3						3,131						3,121						—
Minerals			273						273						—						583						554						5						2,136						2,029						5
Forest Products			220						212						4						790						761						4						3,591						3,590						—
Metals and Equipment			202						217						(7)						658						704						(7)						3,257						3,244						—
Fertilizers			142						152						(7)						380						381						—						2,676						2,507						7
Total Merchandise			1,998						1,973						1						6,712						6,471						4						3,359						3,280						2
Intermodal			2,147						2,046						5						1,521						1,508						1						708						737						(4)
Coal			557						563						(1)						1,748						1,864						(6)						3,138						3,311						(5)
Trucking			—						—						—						650						678						(4)						—						—						—
Other			—						—						—						370						456						(19)						—						—						—
Total			4,702						4,582						3		%				$	11,001					$	10,977					—		%				$	2,340					$	2,396					(2)		%

CSX Q3 2024 Form 10-Q p.34

CSX CORPORATION

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

Third Quarter 2024

Revenue

Total revenue increased 1% in the third quarter 2024 when compared to third quarter 2023, primarily due to higher merchandise and intermodal volumes as well as pricing gains in merchandise. These increases were partially offset by lower coal revenue, which includes the impact of lower global benchmark rates, as well as lower fuel recovery and decreases in other revenue.

Merchandise Volume

Chemicals - Increased due to higher shipments of plastics, crude oil, natural gas liquids and other industrial chemicals.

Agricultural and Food Products - Increased due to higher shipments of domestic and export grain, as well as higher ethanol shipments.

Automotive - Decreased due to lower North American vehicle production.

Minerals - Increased primarily due to higher shipments of cement.

Forest Products - Increased due to higher shipments of pulpboard and paper.

Metals and Equipment - Decreased primarily due to lower steel and scrap shipments.

Fertilizers - Decreased primarily due to declines in long-haul phosphates shipments.

Intermodal Volume

Intermodal volume increased due to international shipments driven by higher east coast port volumes. Domestic shipments were relatively flat as increased transcontinental shipments were offset by the impacts of a continued 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 $4 million versus the prior year due to lower fuel and capacity surcharges.

Other Revenue

Other revenue was $19 million lower, primarily resulting from lower carload demurrage and other items.

CSX Q3 2024 Form 10-Q p.35

CSX CORPORATION

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

Expenses

Expenses of $2.3 billion decreased $36 million, or 2%, in third quarter 2024 when compared to the third quarter 2023.

Labor and Fringe expense increased $45 million due to the following:

• An increase of $25 million was driven by inflation.

• Other items increased $20 million, including the impact of higher headcount.

Purchased Services and Other expense decreased $25 million due to the following:

• A decrease of $26 million was due to lower casualty-related costs and favorable inventory adjustments.

▪All other net costs increased $1 million as inflation was partially offset by efficiency savings and other items.

Depreciation and Amortization expense increased $13 million as a result of a larger asset base.

Fuel costs decreased $73 million as a result of a 17% decrease in locomotive fuel prices and improved efficiency.

Equipment and Other Rents expense decreased $3 million due to several non-significant items.

Gains/Losses on Property Dispositions decreased to a $1 million loss from a $6 million gain in the prior year.

Interest Expense

Interest expense increased $3 million primarily due to higher average debt balances.

Other Income - Net

Other income - net increased $2 million due to non-significant items.

Income Tax Expense

Income tax expense increased $16 million primarily due to higher earnings before income taxes.

CSX Q3 2024 Form 10-Q p.36

CSX CORPORATION

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

Nine Months Results of Operations

Revenue increased $24 million primarily due to higher merchandise revenue, driven by pricing and volume gains, as well as higher intermodal volume. These increases were partially offset by lower fuel recovery, lower coal revenue, which includes the impact of lower global benchmark rates, as well as decreases in other revenue.

Total expense increased $69 million primarily due to inflation, higher headcount, higher depreciation and lower insurance recoveries compared to the prior year, partially offset by lower fuel prices and efficiency savings.

Interest expense increased $20 million primarily as a result of higher average debt balances.

Other income - net decreased $1 million primarily because lower income related to customer finance charges was offset by increases in net pension benefit credits.

Income tax expense decreased $17 million primarily due to lower earnings before income taxes.

CSX Q3 2024 Form 10-Q p.37

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 Q3 2024 Form 10-Q p.38

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).

			Nine Months
(Dollars in Millions)			2024 (a)			2023 (a)
Operating Income			$	4,139		$	4,184
Add: Depreciation, Amortization, and Operating Lease Expense			1,323			1,283
Remove: Unusual Items (b)			—			—
Taxes (c)			(819)			(820)
Gross Cash Earnings or "GCE"			4,643			4,647
Operating Assets
Current Assets (Less Cash and Short-term Investments)			(1,940)			(1,877)
Gross Properties			(51,062)			(49,237)
Other Assets			(4,255)			(3,814)
Operating Liabilities
Non-Interest Bearing Liabilities			10,957			10,699
Gross Operating Assets or "GOA" (d)			(46,300)			(44,229)
Capital Charge (e)			(2,778)			(2,654)
Economic Profit (Non-GAAP) calculated as GCE less Capital Charge			$	1,865		$	1,993

(a) See Note 11, Revision of Prior Period Financial Statements.

(b) 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.

(c) 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.

(d) Gross operating assets reflects an average of the year-to-date quarters reported for each year presented.

(e) 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 $301 million is primarily due to less cash from operating activities and higher property additions. Cash from operating activities in the nine months ended September 30, 2024 includes the impact of $387 million of federal and state tax payments related to the 2023 tax year that were previously postponed under tax relief announcements for those impacted by Hurricane Idalia. Cash from operating activities in the prior year period includes the payment of $238 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

CSX Q3 2024 Form 10-Q p.39

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).

			Nine Months
(Dollars in Millions)			2024 (a)			2023 (a)
Net cash provided by operating activities			$	3,859		$	4,025
Property Additions			(1,691)			(1,571)
Proceeds and Advances from Property Dispositions			50			65
Free Cash Flow or "FCF" (before payment of dividends)			$	2,218		$	2,519

(a) See Note 11, Revision of Prior Period Financial Statements.

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 the third quarter of 2024, velocity increased by 6% while dwell increased by 7% versus prior year. Carload trip plan performance and intermodal trip plan performance decreased by 2%. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

While the personal injury frequency increased in third quarter 2024 compared to the prior year, the FRA train accident rate decreased. 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 Q3 2024 Form 10-Q p.40

CSX CORPORATION

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

			Third Quarters												Nine Months
			2024			2023			Improvement / (Deterioration)						2024			2023			Improvement / (Deterioration)
Operations Performance (a)
Train Velocity (Miles Per Hour)			18.6			17.6			6		%				18.3			17.9			2		%
Dwell (Hours)			10.3			9.6			(7)		%				10.0			9.3			(8)		%
Cars Online			126,623			125,318			(1)		%				125,839			126,195			—		%
On-Time Originations			72		%	74		%	(3)		%				74		%	79		%	(6)		%
On-Time Arrivals			66		%	67		%	(1)		%				67		%	72		%	(7)		%
Carload Trip Plan Performance			80		%	82		%	(2)		%				81		%	84		%	(4)		%
Intermodal Trip Plan Performance			92		%	94		%	(2)		%				94		%	95		%	(1)		%
Fuel Efficiency			0.95			1.06			10		%				0.98			1.03			5		%
Revenue Ton-Miles (Billions)
Merchandise			32.5			31.3			4		%				97.2			95.9			1		%
Coal			9.1			9.4			(3)		%				27.3			27.8			(2)		%
Intermodal			7.2			7.1			1		%				21.5			21.0			2		%
Total Revenue Ton-Miles			48.8			47.8			2		%				146.0			144.7			1		%
Total Gross Ton-Miles (Billions)			95.7			94.5			1		%				288.3			284.6			1		%
Safety (b)
FRA Personal Injury Frequency Index			1.22			1.05			(16)		%				1.24			1.02			(22)		%
FRA Train Accident Rate			2.92			3.91			25		%				3.27			3.78			13		%

(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 Q3 2024 Form 10-Q p.41

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 $291 million and decrease of $573 million in cash and cash equivalents for the nine months ended September 30, 2024 and September 30, 2023, respectively.

• The Company generated $166 million less cash from operating activities primarily driven by $387 million of federal and state tax payments related to the 2023 tax year, which were previously postponed under tax relief announcements for those impacted by Hurricane Idalia. This decrease was partially offset by the impact of prior year payments of $238 million for retroactive wages and bonuses, and associated taxes, related to finalized labor agreements.

• CSX used $216 million more cash for investing activities primarily as a result of higher property additions consistent with planned capital expenditures and increased acquisition spending, partially offset by higher net sales of short-term investments.

• The Company used $1.2 billion less cash for financing activities primarily due to lower share repurchases, partially offset by lower net proceeds from debt transactions.

CSX Q3 2024 Form 10-Q p.42

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 third quarter 2024, CSX had $1.7 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 nine months ended September 30, 2024, CSX issued a total of $550 million of 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 September 30, 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 September 30, 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, excluding spending to rebuild parts of the network damaged by hurricanes in late September and early October 2024. This damage as well as related costs and recoveries are still being assessed as of the date of the filing of this Form 10-Q. Spending to sustain core infrastructure with a focus on safety and reliability will also remain 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 Q3 2024 Form 10-Q p.43

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 $857 million from year end primarily due to a $449 million increase in net property consistent with planned capital expenditures and a $291 million increase in cash and cash equivalents.

Total liabilities decreased $94 million from year end primarily due to debt repayments of $550 million and $387 million of federal and state tax payments related to the 2023 tax year that were previously postponed under tax relief announcements for those impacted by Hurricane Idalia. These decreases were partially offset by the issuance of $550 million in long-term debt and $226 million of deferred federal and state estimated tax payments related to the 2024 tax year, which were postponed under tax relief announcements for those impacted by Hurricane Debby. Total shareholders' equity increased $951 million from year end primarily driven by net earnings of $2.7 billion, partially offset by share repurchases of $1.2 billion and dividends paid of $700 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 $1.0 billion as of September 30, 2024, and $136 million as of December 31, 2023. This increase of $872 million since year end is primarily due to cash-generating net earnings and debt issuance proceeds, partially offset by cash paid for property additions, 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.

This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document. We revised certain prior period financial statements for misstatements between the balance sheet and expense that were determined to be immaterial to previously issued financial statements. See Note 11, Revision of Prior Period Financial Statements in Item 1 of Part I of this report, which is incorporated herein by reference.

LABOR AGREEMENTS

Approximately 17,600 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. Prior to the current agreements becoming amendable, CSX worked with several rail unions on new five-year labor agreements. As of the date of this filing, new agreements have been fully ratified by three rail unions and CSX has one other tentative agreement pending ratification votes.

CSX Q3 2024 Form 10-Q p.44

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 Q3 2024 Form 10-Q p.45

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 Q3 2024 Form 10-Q p.46

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 Q3 2024 Form 10-Q p.47

CSX CORPORATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK