CSX Corp (NASDAQ:CSX) Q2 2019 Earnings Conference Call - Final Transcript

Jul 16, 2019 • 04:30 pm ET

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CSX Corp (NASDAQ:CSX) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Kevin Boone

PTC spending has also come down significantly in the last two years. Both of CSX's core operating cash flow, including improvements in working capital to have a 22% increase in adjusted free cash flow to $1.6 billion through the second quarter. Year-to-date we have returned approximately of $2 billion to shareholders, winning $1.6 billion in buybacks and $400 million in dividends. Dividend payments in the quarter reflect a 9% increase from $0.22 to $0.24 per share we announced in February of this year. Our ability to convert earnings into cash remains a key differentiator for CSX and its significant driver of shareholder value.

With that, let me turn it back to Jim for his closing remarks.

Executive
James M. Foote

Thanks, Kevin. Turning to Slide 13, I want to wrap things up by discussing our guidance for the year. We started this year expecting revenue to be up approximately 1% to 2%. Both global and US economic conditions have been unusual this year to say the least and have impacted our volumes. You see it every week in our reported Carlos, the present economic backdrop is one of the most puzzling I have experienced in my career. With natural gas prices expected to continue to impact both domestic and export coal, intermodal showings little seasonal recovery and many of our industrial customers volumes continuing to show weakness with no concrete signs of these trends changing and adding in the impact on crude by rail shipment of last month's Philadelphia refinery explosion. We are now expecting revenues to be down 1% to 2% for the full year.

We are not necessarily being pessimistic about the second half of the year. But in as much as we need to adjust guidance, we're just setting out the obvious. This outlook is based on the current business levels and there is upside to this forecast if conditions improve in the second half. We are seeing a range of conflicting data points and economic indicators and regularly speak with customers, who despite the recent downtime slowdown remain cautiously optimistic about the second half. Markets here in can I add some color to this in the Q&A session. We feel it is most prudent to actively manage expenses today to today's volumes, rather than take a wait and see approach. We still expect a sub-60 operating ratio for the year. Our planned cost reduction initiatives will not impact safety service and will ensure the business is positioned to handle any additional volumes when things pick up.

Lastly, we are maintaining a $1.6 billion to $1.7 billion CapEx outlook for the year. Even though the air is off to a slower start than we had hoped, we still see significant opportunities ahead. We have a service product that is resonating with customers and a long list of opportunities to reduce expenses, decrease asset intensity and improve efficiency by eliminating the unnecessary touches that add cost and slow us down. We are very proud of the progress to date and there is