CSX (CSX) Bank of America’s 33th Annual Industrials, Transportation and Airlines Key Leaders Conference summary

Strategic and operational outlook

• Leadership is focused on revenue growth, margin improvement, and capital efficiency, with a multi-year strategy to leverage data analytics and AI for better decision-making and maintenance planning.

• Emphasis on delivering value through improved service, pricing discipline, and cost control, aiming for 200-300 basis points of margin improvement annually.

• Growth plans include expanding volume, especially in energy, chemicals, and intermodal, with optimism for continued industrial development in the Southeast and Midwest.

• AI and technology are being deployed for crew management, vehicle fleet monitoring, and pricing optimization, with early results showing improved efficiency and safety.

• Capital expenditure is targeted at $2.3 billion, down 20% year-over-year, with a focus on maintenance efficiency and supporting free cash flow conversion.

Financial performance and guidance

• Revenue growth is currently driven by fuel surcharges, but core pricing is expected to improve year-over-year and outpace inflation.

• Operating margin gains are targeted at the top of the 200-300 basis point range, supported by cost initiatives and fuel efficiency improvements.

• Over 100 cost-saving projects are underway, with efficiencies expected to exceed $100 million this year.

• Leverage is at 3x but expected to decline toward a 2.5x-2.75x target, aided by higher free cash flow and disciplined CapEx.

• Share buybacks remain opportunistic, with continued market participation and a renewed board authorization.

Market and industry positioning

• Volume growth is trending in the mid-single digits, with carloads up 4.5% quarter-to-date and strong intermodal prospects from the Howard Street Tunnel project.

• The company is positioned to benefit from U.S. energy cost advantages, driving demand in chemicals and manufacturing, and expects further industrial investment in its network regions.

• Focus remains on growing market share by converting truck volumes and leveraging service quality, rather than competing solely on price.

• Network capacity is sufficient for growth across most corridors, with investments in yards and infrastructure to support future demand.

• The organization is undergoing a cultural shift under new leadership, emphasizing talent development, alignment, and a results-driven, collaborative environment.