CSX 10-K & 10-Q changes, risk factors and insider trading

Legislation passed by Congress or state or local assemblies; new regulations issued by federal, state or local agencies; executive orders issued by the President of the United States or governors; or other governmental actions could significantly affect the revenues, costs (including income taxes), and profitability of the Company's business. In addition, statutes, regulations, orders or other governmental actions that, among other things, impose price constraints, restrict access to government funding, or affectingaffect rail-to-rail competition could adversely affect the Company's profitability.

The Company experiences competition in pricing, service, reliability and other factors from various transportation providers including railroads and motor carriers that operate similar routes across its service area and, to a less significant extent, barges, ships and pipelines. Other transportation providers generally use public rights-of-way that are built and maintained by governmental entities, while CSXT and other railroads must build and maintain rail networks largely using internal resources. Any future improvements or expenditures materially increasing the quality or reducing the cost of alternative modes of transportation such as through the use of automation, autonomy or electrification, or legislation providing for less stringent size or weight restrictions on trucks, could negatively impact the Company's competitive position. Additionally, any currently proposed or other future consolidation in the rail industry could materially affect the regulatory and competitive environment in which the Company operates.

This discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this Form 10-K. The Company 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 20, Revision of Prior Period Financial Statements in Item 8 of this Form 10-K.

Total revenue decreased by $117$448 million in 2024,2025, or 1%,3%, when compared to the previous year primarily due to lowerdeclines fuelin recovery and lowerexport coal revenue, which includes the impact of lower global benchmark rates.rates, lower merchandise volume, and lower fuel recovery. These decreases were partially offset by pricing gains in merchandise as well asand higher merchandise and intermodal volumes.volume.

Chemicals - IncreasedDecreased primarily due to higherlower shipments of plastics, crude oil, naturalplastics, gaspetroleum liquids,products, and other industrial chemicals.

Agricultural and Food Products – Decreased due to lower shipments of food and consumer products, as well as wheat and export grains,soybeans, partially offset by higher shipments of domestic feed grain and its ingredients, and ethanol.ingredients.

Automotive - IncreasedDecreased due to new business wins, which were partially offset by lower North American vehicle production.

Minerals - Increased primarily due to higher shipments of cement,aggregates partiallyand offset by lower shipments of aggregates.cement.

Fertilizers - Decreased primarilyIncreased due to declines inhigher short-haul phosphates shipments.

Intermodal volume increased primarily due to international shipments driven by higher importsport through east coast portsvolumes and inventorygrowth replenishments.with key customers. Domestic shipments also increasedincreased, despite the impacts of a continued soft trucking environment, due to growthwins with key customers despiteand anew softservice trucking environment.offerings.

Export coal decreased due to lower shipments of metallurgical and thermal coal, which includes the impacts from outages at customer facilities. Domestic coal increased due to higher shipments ofto metallurgicalutility andplants, thermalpartially coal.offset Domestic coal decreased primarily due toby lower shipments of coal to utilitysteel plants,manufacturing locations, as well as lower shipments to river and lake terminals.

Trucking revenue decreased $38$28 million versus the prior year due to lower fuelrates and capacityfuel surcharges.surcharge.

Other revenue was $79$31 million lower,higher primarily resultingdue fromto lowerincreased carload demurrage and other items.demurrage.

Labor and Fringe expenses include employee wages and related payroll taxes, health and welfare costs, pension,incentive compensation, and the costs of other post-retirement benefits and incentive compensation.benefits. These expenses increased $113$97 million due to the following items:

•NetEmployee otherseparation costs increased by$51 $1 million due to non-significant items.million.

•An increase of $17$14 million was due to impairmentshigher ofincentive technologycompensation andcosts, non-raildriven equipment, partially offsetmostly by downward accrual adjustments in the prior year inventory adjustments.year.

•An increase of $17$53 million was due to higherthe operatingeffects supportof costs,network whichdisruptions wereand congestion, primarily duedriven toby inflationwork on the Howard Street tunnel and highersevere intermodalwinter volumes.weather. These increasesimpacts wereinclude partiallyrerouting offset by efficiency savings.costs.

Depreciation expense primarily relates to recognizing the costs of capital assets, such as locomotives,track railcarsstructure, locomotives and track structure,railcars, over their respective useful lives, which are reviewed periodically as part of depreciation studies. This expense is impacted primarily by the capital expenditures made each year. Depreciation expense increased $51$22 million primarily due to aincreases largerto netthe asset base.base, partially offset by asset retirements and impairments.

Fuel expense includes locomotive diesel fuel as well as non-locomotive fuel. This expense is largely driven by the market price and locomotive consumption of diesel fuel. Fuel expense decreased $209$73 million primarily due to a 13%7% decrease in locomotive fuel prices and improved efficiency.prices.

Equipment and Other Rents expense includes rent paid for freight cars owned by other railroads or private companies, net of rents received by CSXT for use of its equipment. This category of expenses also includes expenses for short-term and long-term leases of locomotives, railcars, containers, tractors and trailers, offices and other rentals. These expenses increased $1$2 million primarily due toas increased net car hire costs were largely offset by otherincreased non-significantancillary items.income.

Goodwill Impairment expense for Quality Carriers was $164 million in 2025 compared to $108 million forin 2024.

Interest Expense includes interest on long-term debt and related fair value hedges, equipment obligations and finance leases. Interest expense increased $23$12 million primarily asdue a result ofto higher average debt balances.

Other Income - Net includes investment gains, losses, interest income, components of net periodic pension and post-retirement benefit cost and other non-operating activities. Other income increaseddecreased $3$50 million primarily due to increaseslower ininterest income and lower net pension benefit credits partially offset by lower income related to customer finance charges and a decrease in investment gains.credits.

Management believes that adjusted operating income, adjusted operating margin, adjusted net earnings, and adjusted net earnings per share, assuming dilution are important in evaluating the Company's performance and for planning and forecasting future business operations and future profitability. These non-GAAP measures provide meaningful supplemental information regarding operating results because they exclude the fourth quarter 2024 non-cash impairment of Quality Carriers' goodwill, which was fully impaired as of September 30, 2025. This is a significant item that is not considered indicative of future financial trends. The goodwill impairment was tax effected using rates reflective of the applicable tax amounts related to the impairment charge. These adjusted results should be considered in addition to, rather than as a substitute for, the Company's GAAP operating results.

The following tables reconcile the Company's GAAP operating results for the yearyears ended December 31, 20242025, and December 31, 2024, to adjusted operating results (non-GAAP measures).

(ba) 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. TheImpairments of the goodwill of Quality Carriers goodwill impairment was anwere unusual itemitems for 2025 and 2024.

(cb) 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.

Management believes free cash flow ("FCF") is 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. This measure should be considered in addition to, rather than a substitute for, cash provided by operating activities. FCF before dividends decreased $561 million year-over-year to $2.8 billion primarily due to higher property additions and less cash from operating activities. Cash from operating activities in 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. 2024 results also reflect non-cash impacts of $429 million of federal and state tax payments postponed to 2025 under tax relief announcements for those impacted by the 2024 hurricane season. 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.

The Company remains focused on safety, service, and controlling costs. VelocityCompared to 2024, velocity improved by 2%1% whileand dwell increasedwas by 10%, respectively, relative to 2023.flat. Carload trip plan performance decreased to1% 79% compared to 84%, whileand intermodal trip plan performance decreasedwas to 91% compared to 95%,flat relative to 2023.2024. The Company continues to focus on operational improvements and executing the operating plan to deliver safe, reliable and efficient service to customers.

While theThe personal injury frequency increasedindex of 0.94 in 20242025 improved 24% compared to the prior year,year and the FRA train accident rate decreased.of 3.08 improved 13%. 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 Companyit operates.

In 2024,2025, the Company generated $267$634 million less cash from operating activities compared to prior year, primarily driven by lower cash-generating net earnings, the previously-discussedpayment of $429 million of previously postponed taxes with no postponements available in 2025, and a $96 million prepayment for locomotive maintenance services. These decreases were partially offset by the impact of bonus depreciation and other changes in working capital. In 2024, the payment of $387 million of federalpreviously-postponed and state tax paymentstaxes related to the 2023 tax year.year Thewas 2024more resultsthan alsooffset reflectby lower cash-generating net earnings as well as non-cash impactspostponement of $429 million of federal and state tax payments postponed to 2025, as previously discussed. Cash from operating activities in the prior year includes the payment of $238 million for retroactive wages and bonuses, and associated taxes,taxes related to finalizedthe labor2024 agreements.tax year. CSX used $378$246 million more cash for investing activities in 20242025 compared to 2023,2024, primarily asdue a result ofto higher property additions consistent with planned capital expendituresexpenditures, asincluding wellapproximately as$470 themillion beginningrelated ofto rebuilding the Blue Ridge subdivision rebuildas resultinga fromresult of impacts offrom Hurricane Helene. The Company$1.0 usedbillion $805decrease millionin lessnet cashspending foron financing activities compared to the prior year primarilywas duedriven toby lowerfewer share repurchases,repurchases partially offset byand higher netproceeds debtfrom repayments.the issuance of long-term debt.

The Company has multiple sources of liquidity, including cash generated from operations and financing sources. The Company intends to filefiled a shelf registration statement with the SEC,SEC on February 27, 2025, 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. In 2024,2025, CSX issued $550$900 million of long-term debt. See Note 10, Debt and Credit Agreements for more information.

Capital expenditures above include approximately $470 million and $50 million in 20242025 and 2024, respectively, related to rebuilding the Blue Ridge subdivision as a result of impacts from Hurricane Helene. Planned capital investments for 20252026 are expected to be consistentless withthan 2024,$2.4 except for additional costs to rebuild the Blue Ridge subdivision. Spending on the Blue Ridge rebuild is currently estimated to exceed $400 million in total.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, including investments in locomotives and freight cars. CSX intends to fund capital investments primarily through cash generated from operations.

CSX is committed to returning cash to shareholders. Capital structure, capital investments and cash distributions, including dividends and share repurchases, are reviewed at least annually by the Board of Directors. On February 12, 2025, the Company's Board of Directors authorized an 8% increase in the quarterly cash dividend to $0.13 per common share effective March 2025. The 2025 dividend increase iswas the 21st consecutive increase in CSX's annual dividend. Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances.

CSX's balance sheet reflects its strong capital base and the impact of CSX's balanced approach in deploying capital for the benefit of its shareholders, which includes investments in infrastructure, dividend payments and share repurchases. Further, CSX is well positioned from a liquidity standpoint. The Company ended the year with $1.0$675 billionmillion of cash, cash equivalents and short-term investments.

Total assets as well as total liabilities and shareholders' equity increased $552$918 million from prior year end. The increase in total assets was primarily due to a $937$1.2 millionbillion increase in net properties consistent with planned capital expendituresexpenditures, andincluding aadditions $123related millionto increaserebuilding inthe Blue Ridge subdivision. Additionally, investments in affiliates and other companies.companies increased $114 million driven by affiliate earnings and other current assets increased due to a $96 million prepayment of locomotive maintenance expenses. These increases were partially offset by a $420$263 million decrease in cash and cash equivalents as noted above and a $108$164 million impairment of Quality Carriers' goodwill.

Total liabilities increased $30$265 million from prior year end primarily due to the issuance of $550$900 million in long-term debt and thea deferral of $429$189 million ofincrease federalin anddeferred stateincome taxes primarily driven by bonus tax paymentsdepreciation relatedenacted tointo thelaw 2024on taxJuly year4, postponed under tax relief announcements for those impacted by the 2024 hurricane season.2025. These increases were partially offset by debt repayments of $558$613 million and $387a decrease in income and other taxes payable primarily resulting from payments of $429 million offor previously postponed federal and state taxincome payments related to the 2023 tax year that were previously postponed under tax relief announcements for those impacted by Hurricane Idalia.taxes. Total shareholders' equity increased $522$653 million from prior year end primarily driven by net earnings of $3.5$2.9 billion, partially offset by share repurchases of $2.2$1.4 billion and dividends paid of $930$972 million.

FIRSTSECOND QUARTER 2026 RESULTS

•Expenses decreasedincreased $153$138 million, or 6%, year over year.

FirstSecond Quarter 2026

MineralsChemicals - Increased due to higher shipments of cementplastics, waste, petcoke and salt.sand.

FertilizersAgricultural and Food Products - Increased due to higher short-haulshipments phosphatesof shipments,export grains and domestic feed ingredients, partially offset by decreasesdecreased inshipments long-haulof shipments.domestic feed grain.

Domestic shipments increased due to wins with key customers andcustomers, new service offerings.offerings and a tightening truck environment. International shipments were relatively flat to prior year levels.

Trucking revenue wasincreased flat$15 tomillion versus the prior year results.due to higher fuel surcharge.

Expenses of $2.2$2.4 billion decreasedincreased $153$138 million, or 6%, in firstsecond quarter 2026 when compared to the firstsecond quarter 2025. Fuel expense increased $177 million compared to prior year while total non-fuel expense decreased $39 million.

Labor and Fringe expense decreasedincreased $9$40 million due to the following:

•All other net costs decreased $10$48 million.million primarily due to lower headcount.

•Efficiency savingssavings, net of inflationinflation, of $54 million were $50 million, driven by cost reductions across operating and support functions.

•A decrease of $20$14 million was due to the effects of network disruptions and congestion in the prior year, which included higher locomotive usage costs andincluding rerouting charges associated with the Howard Street Tunnel project.impacts.

Fuel costs increased $27$177 million primarily due to a 14%74% increase in locomotive fuel prices.prices as well as higher non-locomotive fuel prices, partially offset by efficiency savings.

Equipment and Other Rents expense decreasedincreased $3 million.

Interest expense increaseddecreased $4$1 million primarily due to higher average debt balances.million.

Other income - net decreasedincreased $3 million primarily due to lowerhigher interest income.

The increase in FCF before dividends of $1.2 billion from the prior year of $234 million is primarily due to higherprior netyear earningspayments andof previously postponed taxes, decreased property additions,additions partially offsetdriven by unfavorablecompletion workingof capitalthe activities.Blue Ridge subdivision rebuild, and higher cash-generating net earnings. Prior year property additions include $133approximately $295 million related to rebuilding the Blue Ridge subdivision, which was reopened in September 2025.

In the firstsecond quarter of 2026, velocity and dwell both improved by 7%3% while dwell increased by 6% versus prior year. Carload trip plan performance improveddecreased by 7%5% 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.

The Federal Railroad Administration (“FRA”) personal injury frequency index of 0.810.83 in firstsecond quarter 2026 improved 13%19% compared to prior year and the FRA train accident rate of 2.442.72 improved 31%.30%. 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 it operates.

The following chart highlights the operating, investing and financing components of the net increasesincrease of $294$337 million and $206decrease of $546 million in cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025, respectively.

•The Company generated $17$709 million more cash from operating activities primarily resultingdriven fromby higher cash-generating net earnings,earnings mostlyand favorable working capital activities, which included the impact of the prior year payment of $429 million in previously postponed taxes that was partially offset by unfavorablehigher workingaccounts capitalreceivable activity.commensurate with higher revenues.

•CSX used $80$133 million less cash for investing activities primarily due to lower property additions consistentfollowing withthe plannedcompletion capitalof expenditures, as prior year included $133 million related tothe rebuilding of the Blue Ridge subdivision.subdivision Partiallyin offsettingprior thisyear decrease,and increased proceeds from property dispositions in the Companycurrent purchasedyear. The decrease was partially offset by net purchases of short-term investments in 2026.

•The Company used $9$41 million moreless cash for financing activities as lower share repurchases were mostly offset by reduced cash from debt issuance was mostly offset by lower share repurchases.issuance.

As of the end of firstsecond quarter 2026, CSX had $1.1$1.4 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 27, 2025, 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 threesix months ended MarchJune 31,30, 2026, 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 MarchJune 31,30, 2026, 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 short-term commercial paper notes up to a maximum aggregate principal amount of $1.0 billion outstanding at any time. At MarchJune 31,30, 2026, the Company had no debt outstanding under the commercial paper program.

Total assets increased $550$1.0 millionbillion from year end primarily due to the $434$715 million increase in cash and short-term investmentsinvestments, anda an $89$158 million increase in accounts receivable commensurate with increased revenuerevenue, atand thea end$135 ofmillion theincrease quarter.in net property consistent with planned capital expenditures.

Total liabilities increased $129$116 million from year end primarily due to an $86 million increase in deferred income taxes primarily driven by bonus tax depreciation and a $176$70 million increase in income and other taxes payable due to increased earnings and a $73 million increase in interest payable on long-term debt, both driven by the timing of tax payments. These increases were partially offset by a $118 million decrease in labor and fringe benefits payable, which includes the payout of incentive compensation. Total shareholders' equity increased $421$928 million from year end primarily driven by net earnings of $807$1.8 million,billion, partially offset by dividends paid of $260$520 million and share repurchases of $222$506 million.

Working capital is considered a measure of a company's ability to meet its short-term needs. CSX had a working capital deficit of $110$746 million as of MarchJune 31,30, 2026, and $583 million as of December 31, 2025. This workingdeficit capital improvementincrease of $473$163 million since year end was primarily driven by a $294$1.0 billion reclass of long-term debt to current and a $70 million increase in income and other taxes payable. These increases were partially offset by a $715 million increase in cash and cashshort-term equivalents,investments as noted above,above and a $140$158 million increase in short-termaccounts investments.receivable. 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.