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CSX announces dividend increase, new share repurchase program and full-year guidance

(Source: CSX press release, April 20, 2017)

JACKSONVILLE, Fla. — CSX Corporation today announced an 11 percent increase in its quarterly dividend, a new $1 billion share repurchase program, and strong financial guidance as it applies the Precision Scheduled Railroading model to its operations.

“Although we are just in the beginning phase of making changes to our network, we are off to a great start,” said E. Hunter Harrison, president and chief executive officer. “These changes are critical to driving strong, sustainable service for our customers and superior value for our shareholders.”

By focusing on these principles, CSX expects to realize record efficiency gains and a step-function improvement in its key financial measures for the year given continued economic growth and stable coal markets. Adjusting for restructuring charges in 2017, these actions are expected to drive a full-year operating ratio in the mid-60s, earnings per share growth of around 25 percent off the 2016 reported base of $1.81, and free cash flow before dividends of around $1.5 billion (see non-GAAP statements below).

Recent changes to the company’s operations have already begun to deliver strong returns and are expected to accelerate in the coming quarters. Given this momentum, the CSX Board of Directors approved an increase in the quarterly dividend from $0.18 to $0.20. The new $0.20 quarterly dividend is payable on June 15, 2017 to shareholders of record at the close of business on May 31, 2017.

In addition, the Board also approved a new $1 billion share repurchase program, which management expects to complete by the end of the first quarter of 2018. This follows the successful completion of CSX’s previous repurchase plan, during which the company bought back $2 billion worth of shares since April 2015.

In line with the company’s balanced approach in deploying capital, CSX now expects to invest $2.1 billion in 2017, including approximately $270 million for Positive Train Control. Of the 2017 investment, more than half will be used to sustain core infrastructure with the balance allocated to projects supporting profitable growth, efficiency initiatives and service improvements.

Thursday, April 20, 2017

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