SEC Form 10-Q filed by CSX Corporation

7/22/26 4:02:08 PM ET

$CSX

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Table of Contents

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 June 30, 2026

(☐) 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

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 1,852,474,917 shares of common stock outstanding on June 30, 2026 (the latest practicable date that is closest to the filing date).

CSX Q2 2026 Form 10-Q p.1

Table of Contents

CSX CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026

INDEX


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3

	Consolidated Income Statements (Unaudited) - Quarters and Six Months Ended June 30, 2026 and June 30, 2025	3

	Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Six Months Ended June 30, 2026 and June 30, 2025	3

	Consolidated Balance Sheets - At June 30, 2026 (Unaudited) and December 31, 2025	4

	Consolidated Cash Flow Statements (Unaudited) - Six Months Ended June 30, 2026 and June 30, 2025	5

	Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - Quarters and Six Months Ended June 30, 2026 and June 30, 2025	6

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4.	Controls and Procedures	45

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	CSX Purchases of Equity Securities	46

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

Signature		49

CSX Q2 2026 Form 10-Q p.2

Table of Contents

CSX CORPORATION

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(Dollars in Millions, Except Per Share Amounts)


	Second Quarters				Six Months
	2026		2025		2026		2025

Revenue	$	3,935	$	3,574	$	7,417	$	6,997
Expense
Labor and Fringe	831		791		1,643		1,612
Purchased Services and Other	644		710		1,260		1,484
Depreciation and Amortization	411		427		826		852
Fuel	446		269		748		544
Equipment and Other Rents	97		94		181		181
Total Expense	2,429		2,291		4,658		4,673

Operating Income	1,506		1,283		2,759		2,324

Interest Expense	(211)		(212)		(424)		(421)
Other Income - Net	25		22		48		48
Earnings Before Income Taxes	1,320		1,093		2,383		1,951

Income Tax Expense	(318)		(264)		(574)		(476)
Net Earnings	$	1,002	$	829	$	1,809	$	1,475

Per Common Share (Note 2)
Net Earnings Per Share, Basic	$	0.54	$	0.44	$	0.97	$	0.79
Net Earnings Per Share, Assuming Dilution	$	0.54	$	0.44	$	0.97	$	0.78


Average Shares Outstanding (In Millions)	1,855		1,867		1,858		1,878
Average Shares Outstanding, Assuming Dilution (In Millions)	1,859		1,869		1,860		1,881

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited)

(Dollars in Millions)


	Second Quarters				Six Months
	2026		2025		2026		2025
Total Comprehensive Earnings (Note 10)	$	1,005	$	832	$	1,813	$	1,483

See accompanying notes to consolidated financial statements.

CSX Q2 2026 Form 10-Q p.3

Table of Contents

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)


	(Unaudited)
	June 30, 2026		December 31, 2025
ASSETS
Current Assets:
Cash and Cash Equivalents	$	1,007	$	670
Short-term Investments (Note 9)	383		5
Accounts Receivable - Net (Note 8)	1,456		1,298
Materials and Supplies	406		390
Other Current Assets	156		187
Total Current Assets	3,408		2,550

Properties	54,464		53,816
Accumulated Depreciation	(17,518)		(17,005)
Properties - Net	36,946		36,811

Investment in Affiliates and Other Companies	2,675		2,634
Right-of-Use Lease Asset	478		464
Goodwill and Other Intangible Assets - Net	261		267
Other Long-term Assets	958		956
Total Assets	$	44,726	$	43,682

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	1,111	$	1,149
Labor and Fringe Benefits Payable	549		532
Casualty, Environmental and Other Reserves (Note 4)	182		184
Current Maturities of Long-term Debt (Note 7)	1,702		708
Income and Other Taxes Payable	188		118
Interest Payable	172		170
Other Current Liabilities	250		272
Total Current Liabilities	4,154		3,133

Casualty, Environmental and Other Reserves (Note 4)	300		295
Long-term Debt (Note 7)	17,162		18,165
Deferred Income Taxes - Net	8,000		7,914
Long-term Lease Liability	493		479
Other Long-term Liabilities	529		536
Total Liabilities	30,638		30,522

Shareholders' Equity:
Common Stock, $1 Par Value	1,852		1,860
Other Capital	1,087		948
Retained Earnings	11,352		10,560
Accumulated Other Comprehensive Loss (Note 10)	(209)		(213)
Non-controlling Minority Interest	6		5
Total Shareholders' Equity	14,088		13,160
Total Liabilities and Shareholders' Equity	$	44,726	$	43,682

See accompanying notes to consolidated financial statements.

CSX Q2 2026 Form 10-Q p.4

Table of Contents

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)

(Dollars in Millions)


	Six Months
	2026		2025

OPERATING ACTIVITIES
Net Earnings	$	1,809	$	1,475
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization	826		852
Deferred Income Taxes	84		(1)
Other Operating Activities	(71)		(50)
Changes in Operating Assets and Liabilities:
Accounts Receivable	(190)		(36)
Other Current Assets	15		(13)
Accounts Payable	54		14
Income and Other Taxes Payable	70		(362)
Other Current Liabilities	2		11
Net Cash Provided by Operating Activities	2,599		1,890

INVESTING ACTIVITIES
Property Additions	(1,119)		(1,495)
Purchases of Short-Term Investments	(515)		—
Proceeds from Sales of Short-term Investments	146		69
Proceeds and Advances from Property Dispositions	137		49
Business Acquisition, Net of Cash Acquired	—		(14)
Other Investing Activities	30		(63)
Net Cash Used In Investing Activities	(1,321)		(1,454)

FINANCING ACTIVITIES
Shares Repurchased	(518)		(1,172)
Dividends Paid	(520)		(488)
Long-term Debt Repaid (Note 7)	(9)		(3)
Long-term Debt Issued (Note 7)	—		600
Other Financing Activities	106		81
Net Cash Used in Financing Activities	(941)		(982)

Net Increase (Decrease) in Cash and Cash Equivalents	337		(546)

CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents at Beginning of Period	670		933
Cash and Cash Equivalents at End of Period	$	1,007	$	387

Certain prior year data has been reclassified to conform to the current presentation.

See accompanying notes to consolidated financial statements.

CSX Q2 2026 Form 10-Q p.5

Table of Contents

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in Millions)


Six Months 2026	Common Shares Outstanding (Thousands)	Common Stock and Other Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income(a)		Non-controlling Minority Interest		Total Shareholders' Equity

Balance December 31, 2025	1,859,659	$	2,808	$	10,560	$	(213)	$	5	$	13,160
Comprehensive Earnings:
Net Earnings	—	—		807		—		—		807
Other Comprehensive Income	—	—		—		1		—		1
Total Comprehensive Earnings										808

Common stock dividends, $0.14 per share	—	—		(260)		—		—		(260)
Share Repurchases	(5,686)	(6)		(216)		—		—		(222)
Excise Tax on Net Share Repurchases	—	—		(1)		—		—		(1)
Stock Option Exercises and Other	3,858	94		1		—		1		96
Balance March 31, 2026	1,857,831	$	2,896	$	10,891	$	(212)	$	6	$	13,581
Comprehensive Earnings:
Net Earnings	—	—		1,002		—		—		1,002
Other Comprehensive Income	—	—		—		3		—		3
Total Comprehensive Earnings										1,005

Common stock dividends, $0.14 per share	—	—		(260)		—		—		(260)
Share Repurchases	(6,269)	(6)		(278)		—		—		(284)
Excise Tax on Net Share Repurchases	—	—		(2)		—		—		(2)
Stock Option Exercises and Other	749	49		(1)		—		—		48
Balance June 30, 2026	1,852,311	$	2,939	$	11,352	$	(209)	$	6	$	14,088

(a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $58 million as of December 31, 2025, $57 million as of March 31, 2026, and $57 million as of June 30, 2026. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q2 2026 Form 10-Q p.6

Table of Contents

CSX CORPORATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS' EQUITY (Unaudited)

(Dollars in Millions)


Six Months 2025	Common Shares Outstanding (Thousands)	Common Stock and Other Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income(a)		Non-controlling Minority Interest		Total Shareholders' Equity

Balance December 31, 2024	1,900,190	$	2,746	$	9,988	$	(232)	$	5	$	12,507
Comprehensive Earnings:
Net Earnings	—	—		646		—		—		646
Other Comprehensive Income	—	—		—		5		—		5
Total Comprehensive Earnings										651

Common stock dividends, $0.13 per share	—	—		(245)		—		—		(245)
Share Repurchases	(23,707)	(24)		(727)		—		—		(751)
Excise Tax on Net Share Repurchases	—	—		(7)		—		—		(7)
Stock Option Exercises and Other	1,894	20		—		—		—		20
Balance March 31, 2025	1,878,377	$	2,742	$	9,655	$	(227)	$	5	$	12,175
Comprehensive Earnings:
Net Earnings	—	—		829		—		—		829
Other Comprehensive Income	—	—		—		3		—		3
Total Comprehensive Earnings										832

Common stock dividends, $0.13 per share	—	—		(243)		—		—		(243)
Share Repurchases	(14,209)	(14)		(387)		—		—		(401)
Excise Tax on Net Share Repurchases	—	—		(4)		—		—		(4)
Stock Option Exercises and Other	112	18		—		—		—		18
Balance June 30, 2025	1,864,280	$	2,746	$	9,850	$	(224)	$	5	$	12,377

(a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $61 million as of December 31, 2024, $59 million as of March 31, 2025 and $58 million as of June 30, 2025. For additional information, see Note 10, Other Comprehensive Income.

See accompanying notes to consolidated financial statements.

CSX Q2 2026 Form 10-Q p.7

Table of Contents

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 Q2 2026 Form 10-Q p.8

Table of Contents

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Basis of Presentation

The accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the consolidated financial statements and accompanying notes. Where applicable, prior year information has been reclassified to conform to the current presentation. Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted from these interim financial statements. CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent annual report on Form 10-K as well as any subsequently filed current reports on Form 8-K.

Fiscal Year

The Company's fiscal periods are based upon the calendar year. Except as otherwise specified, references to “second quarter(s)” or “six months” indicate CSX's fiscal periods ending June 30, 2026, and June 30, 2025, and references to "year-end" indicate the fiscal year ended December 31, 2025.

New Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This standard update requires additional disclosures about certain expenses in commonly presented expense captions. The Company is required to adopt the guidance for its 2027 annual report on Form 10-K, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its disclosures, but this standard update will not impact the Company's results of operations or financial position.

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This standard update modernizes the capitalization criteria for internal-use software, eliminating references to project stages and instead requiring that projects meet completion probability criteria before costs can be capitalized. This guidance is effective beginning first quarter 2028, though early adoption is permitted, and can be applied using a prospective, retrospective, or modified transition approach. The Company is currently evaluating the impact of these amendments but does not anticipate that adoption will have a material impact on the Company's results of operations or financial position.

In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants by Business Entities. This standard establishes the accounting for government grants received by a business entity, including guidance for both grants related to an asset and grants related to income. This guidance is effective beginning first quarter 2029, though early adoption is permitted, and can be applied using a modified prospective, modified retrospective, or full retrospective transition approach. The Company is currently evaluating the impact of this guidance but does not anticipate that adoption will have a material impact on the Company's results of operations or financial position.

CSX Q2 2026 Form 10-Q p.9

Table of Contents

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2. Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution.


	Second Quarters				Six Months
	2026		2025		2026		2025
Numerator (Dollars in Millions):
Net Earnings	$	1,002	$	829	$	1,809	$	1,475



Denominator (Units in Millions):
Average Common Shares Outstanding	1,855		1,867		1,858		1,878
Other Potentially Dilutive Common Shares	4		2		2		3
Average Common Shares Outstanding, Assuming Dilution	1,859		1,869		1,860		1,881

Net Earnings Per Share, Basic	$	0.54	$	0.44	$	0.97	$	0.79
Net Earnings Per Share, Assuming Dilution	$	0.54	$	0.44	$	0.97	$	0.78

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards including employee stock options, performance units and restricted stock units.

When calculating diluted earnings per share, the potential shares that would be outstanding if all in-the-money outstanding stock options were exercised are included, net of shares CSX could repurchase using the proceeds from these hypothetical exercises. The total average outstanding stock options that were excluded from the diluted earnings per share calculation because their effect was antidilutive is in the table below.


	Second Quarters		Six Months
	2026	2025	2026	2025
Antidilutive Stock Options Excluded from Diluted EPS (Units in Millions)	1	5	1	5

CSX Q2 2026 Form 10-Q p.10

Table of Contents

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2. Earnings Per Share, continued

Share Repurchases

Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings.

During second quarters and six months ended June 30, 2026, and June 30, 2025, the Company engaged in the following repurchase activities:


	Second Quarters				Six Months
	2026		2025		2026		2025
Shares Repurchased (Millions)	6		14		12		38
Cost of Shares (Dollars in Millions)	$	284	$	401	$	506	$	1,152
Average Price Paid per Share	$	45.30	$	28.28	$	42.31	$	30.39

Excise Taxes Paid for Net Share Repurchases (Dollars in Millions) (a)	$	12	$	20	$	12	$	20
(a) Excise tax payments made in 2026 were related to share repurchases in 2025. Excise tax payments made in 2025 were related to share repurchases in 2024.

The Inflation Reduction Act of 2022 imposes a nondeductible 1% excise tax on the net value of most share repurchases made after December 31, 2022. Excise tax commensurate with net share repurchases is reflected in equity and a corresponding liability for excise taxes payable is included in other current liabilities on the consolidated balance sheet. The cost of shares repurchased shown in the table above excludes the impact of this excise tax.

Dividend Increase

In February 2026, the Company's Board of Directors authorized an 8% increase in the quarterly cash dividend to $0.14 per common share effective March 2026.

CSX Q2 2026 Form 10-Q p.11

Table of Contents

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3. Stock Plans and Share-Based Compensation

Under CSX's share-based compensation plans, awards consist of performance units, stock options and restricted stock units for management and stock grants for directors. Share-based compensation expense for awards under share-based compensation plans is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Alternatively, expense is recognized upon death or over an accelerated service period for employees whose agreements allow for continued vesting upon retirement or separation. Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards.


	Second Quarters				Six Months
(Dollars in Millions)	2026		2025		2026		2025
Share-Based Compensation Expense:
Performance Units	$	16	$	2	$	18	$	2
Restricted Stock Units	4		7		8		13
Stock Options	4		3		7		6
Employee Stock Purchase Plan	3		3		5		5
Stock Awards for Directors	—		—		2		3
Total Share-Based Compensation Expense	$	27	$	15	$	40	$	29
Income Tax Benefit	$	5	$	3	$	12	$	6

Long-term Incentive Plan

In February 2026, the Company granted the following awards under a new long-term incentive plan ("LTIP") for the years 2026 through 2028, which was adopted under the CSX 2019 Stock and Incentive Award Plan.


	Granted (Thousands)	Weighted Avg. Fair Value



Performance Units	637	$	50.18
Restricted Stock Units	255	42.65
Stock Options	1,271	12.83

CSX Q2 2026 Form 10-Q p.12

Table of Contents

CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3. Stock Plans and Share-Based Compensation, continued

Performance Units

Units vest based on performance approximately three years after grant with payouts made in CSX common stock. The 2026-2028 plan's performance measures are Return on Invested Capital (“ROIC”) and relative Total Shareholder Return (“rTSR”). These measures are assessed independently of each other and weighted at 60% ROIC and 40% rTSR, respectively, for a total payout of 100% of the grant value. If the maximum ROIC and maximum rTSR are achieved, then the measures would generate a payout of 120% and 80%, respectively, for a total payout at 200%.

ROIC is calculated by dividing net operating profit after taxes, adjusting for certain items as defined in the Plan, by invested capital to measure how effectively the Company uses its capital to generate returns. Net operating profit after taxes is calculated as net income, adjusted to exclude the cost and tax impact of interest, including implied lease interest. Invested capital is composed of the average of the Company's debt, including financing and operating leases, and shareholders equity as of the end of the most recent five quarters.

The rTSR measure shows how the Company performed compared to its competitors by ranking the companies in the S&P 500 Industrials from highest to lowest according to their respective TSRs and calculating the percentile performance of CSX relative to the peer companies. The fair values of the rTSR component of performance units were calculated using a Monte-Carlo simulation model.

Stock Options

Stock options were granted with ten-year terms and vest over three years in equal installments each year on the anniversary of the grant date. These awards are time-based and are not based upon attainment of performance goals. The fair values of stock option awards were determined at the grant date using the Black-Scholes valuation model.

Restricted Stock Units

The restricted stock units awarded vest over three years in equal installments each year on the anniversary of the grant date and are settled in CSX common stock on a one-for-one basis. These awards are time-based and are not based upon CSX's attainment of performance goals.

Other Awards

Awards are periodically granted outside of the annual LTIP program, subject to approval by the Board of Directors, Compensation and Talent Management Committee, or Chief Executive Officer ("CEO") as appropriate. Immaterial awards outside of the annual LTIP program were granted to certain management employees during the second quarters and six months ended June 30, 2026, and June 30, 2025.

For more information related to the Company's outstanding long-term incentive compensation, including units granted under previous LTIPs, see CSX's most recent annual report on Form 10-K.

CSX Q2 2026 Form 10-Q p.13

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4. Casualty, Environmental and Other Reserves

Personal injury and environmental reserves are considered critical accounting estimates due to the need for management judgment. Casualty, environmental and other reserves are reflected in the consolidated balance sheets as shown in the table below.


	June 30, 2026						December 31, 2025
(Dollars in Millions)	Current		Long-term		Total		Current		Long-term		Total

Casualty:
Personal Injury	$	60	$	103	$	163	$	60	$	94	$	154
Occupational	6		52		58		6		53		59
Total Casualty	66		155		221		66		147		213
Environmental	50		98		148		49		107		156
Other	66		47		113		69		41		110
Total	$	182	$	300	$	482	$	184	$	295	$	479

These liabilities are accrued when probable and reasonably estimable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period.

Casualty

Casualty reserves represent accruals for personal injury, occupational disease and occupational injury claims primarily related to railroad operations. The Company's self-insured retention amount for casualty claims is $100 million per occurrence as discussed at Note 5, Commitments and Contingencies. Currently, no individual claim is expected to exceed the self-insured retention amount.

Personal Injury

Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to the Federal Employers’ Liability Act (“FELA”). CSXT retains an independent actuary to assist management in assessing the value of personal injury claims. An analysis is performed by the actuary quarterly and is reviewed by management. This analysis did not result in a material adjustment to the personal injury reserve in the quarters or six months ended June 30, 2026, or June 30, 2025.

CSX Q2 2026 Form 10-Q p.14

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4. Casualty, Environmental and Other Reserves, continued

Occupational

Occupational reserves represent liabilities arising from allegations of exposure to certain materials in the workplace (such as solvents, soaps, chemicals and diesel fumes), past exposure to asbestos or allegations of chronic physical injuries resulting from work conditions (such as repetitive stress injuries). The Company retains an independent actuary to analyze the Company’s historical claim filings, settlement amounts, and dismissal rates to assist in determining future anticipated claim filing rates and average settlement values. This analysis is performed by the actuary and reviewed by management quarterly. The analysis did not result in a material adjustment to the occupational reserve in the quarters or six months ended June 30, 2026, or June 30, 2025.

Environmental

The Company is a party to various proceedings related to environmental issues, including administrative and judicial proceedings involving private parties and regulatory agencies. The Company has been identified as a potentially responsible party at approximately 210 environmentally impaired sites. Many of these are, or may be, subject to remedial action under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), also known as the Superfund Law, or similar state statutes. Most of these proceedings arose from environmental conditions on properties used for ongoing or discontinued railroad operations. A number of these proceedings, however, are based on allegations that the Company, or its predecessors, sent hazardous substances to facilities owned or operated by others for treatment, recycling or disposal. In addition, some of the Company's land holdings were leased to others for commercial or industrial uses that may have resulted in releases of hazardous substances or other regulated materials onto the property and could give rise to proceedings against the Company.

In any such proceedings, the Company is subject to environmental clean-up and enforcement actions under the Superfund Law, as well as similar state laws that may impose joint and several liability for clean-up and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. These costs could be substantial.

The Company reviews its role with respect to each site identified at least quarterly. Based on management's review process, amounts have been recorded to cover contingent anticipated future environmental remediation costs with respect to each site to the extent such costs are reasonably estimable and probable. Payments related to these liabilities are expected to be made over the next several years. Environmental remediation costs are included in purchased services and other on the consolidated income statements.

Currently, the Company does not possess sufficient information to reasonably estimate the amounts of additional liabilities, if any, on some sites until completion of future environmental studies. In addition, conditions that are currently unknown could, at any given location, result in additional exposure, the amount and materiality of which cannot presently be reasonably estimated. Based upon information currently available, however, the Company believes its environmental reserves accurately reflect the estimated cost of remedial actions currently required.

Other

Other reserves include liabilities for various claims, such as automobile, property, general liability, workers' compensation and longshoremen disability claims.

CSX Q2 2026 Form 10-Q p.15

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5. Commitments and Contingencies

Insurance

The Company maintains insurance programs with substantial limits for property damage, including resulting business interruption, as well as casualty claims, which includes third-party liability. A certain amount of risk is retained by the Company on each insurance program. Under its property insurance program, the Company retains all risk up to $200 million per occurrence for losses from floods and named windstorms and up to $175 million per occurrence for other property losses. For casualty claims, the Company retains all risk up to $100 million per occurrence. CSX purchases insurance coverage above its full self-retention amounts and it retains a percentage of risk at various layers as well. While the Company believes its insurance coverage is adequate, future claims could exceed existing insurance coverage or insurance may not continue to be available at commercially reasonable rates.

Legal

The Company is involved in litigation incidental to its business and is a party to a number of legal actions and claims, various governmental proceedings and private civil lawsuits, including, but not limited to, those related to fuel surcharge practices, tax matters, environmental and hazardous material exposure matters, FELA and labor claims by current or former employees, other personal injury or property claims and disputes and complaints involving certain transportation rates and charges. Some of the legal proceedings include claims for compensatory as well as punitive damages and others are, or are purported to be, class actions. While the final outcomes of these matters cannot be predicted with certainty, considering, among other things, the legal defenses available and liabilities that have been recorded along with applicable insurance, it is currently the opinion of management that none of these pending items is likely to have a material adverse effect on the Company's financial condition, results of operations or liquidity. An unexpected adverse resolution of one or more of these items, however, could have a material adverse effect on the Company's financial condition, results of operations or liquidity in that particular period.

The Company is able to estimate a range of possible loss for certain matters for which a loss is reasonably possible in excess of reserves established. The Company has estimated this range to be $3 million to $87 million in the aggregate at June 30, 2026. This estimated aggregate range is based upon currently available information and is subject to significant judgment and a variety of assumptions. Accordingly, the Company's estimate will change from time to time, and actual losses may vary significantly from the current estimate.

Fuel Surcharge Antitrust Litigation

In May 2007, class action lawsuits were filed against CSXT and three other U.S.-based Class I railroads alleging that the defendants' fuel surcharge practices relating to contract and unregulated traffic resulted from an illegal conspiracy in violation of antitrust laws. The class action lawsuits were transferred to federal court in the District of Columbia for coordinated or consolidated pre-trial proceedings. In 2017, the District Court issued its decision denying class certification. On August 16, 2019, the U.S. Court of Appeals for the D.C. Circuit affirmed the District Court’s ruling.

CSX Q2 2026 Form 10-Q p.16

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5. Commitments and Contingencies, continued

Although the class was not certified, individual shippers have since brought claims against the railroads, which were also transferred to federal court in the District of Columbia for pre-trial proceedings but before a different judge. In March 2024, the original case was reassigned to the judge in the later-filed case. The railroads filed motions for summary judgment on July 17, 2024, with the briefing completed in December 2024. The judge held a hearing on the railroads' summary judgment motions on June 18, 2025, and granted summary judgment in favor of the railroads on June 24, 2025, ordering the cases closed. Most of the individual shippers have appealed the summary judgment ruling to the U.S. Court of Appeals for the D.C. Circuit. Briefing on the appeal is complete. Next, the court will schedule a date for oral argument.

Environmental

CSXT is indemnifying Pharmacia LLC, formerly known as Monsanto Company, ("Pharmacia") for certain liabilities associated with real estate located in Kearny, New Jersey along the Lower Passaic River (the “Property”). The Property, which was formerly owned by Pharmacia, is now owned by CSXT. CSXT's indemnification and defense duties arise with respect to several matters. The U.S. Environmental Protection Agency ("EPA"), using its CERCLA authority, seeks the investigation and cleanup of hazardous substances in the 17-mile Lower Passaic River Study Area (the "Study Area”). CSXT, on behalf of Pharmacia, and a significant number of other potentially responsible parties are together conducting a Remedial Investigation and Feasibility Study of the Study Area pursuant to an Administrative Settlement Agreement and Order on Consent with the EPA. Pharmacia’s share of responsibility, indemnified by CSXT, for the investigation and cleanup costs of the Study Area may be determined through various mechanisms including (a) an allocation and settlement with EPA; (b) litigation brought by EPA against non-settling parties; or (c) litigation among the responsible parties.

For the lower eight miles of the Study Area, EPA issued its Record of Decision detailing the agency’s mandated remedial process in March 2016. Occidental Chemical Corporation ("Occidental") performed the remedial design for the lower eight-mile portion of the Study Area pursuant to a consent order with EPA. EPA approved the design in May 2024.

For the remaining upper nine miles of the Study Area, EPA selected an interim remedy in a Record of Decision dated September 28, 2021. On March 2, 2023, EPA issued an administrative order requiring Occidental to design the interim remedy for the upper nine miles of the Study Area.

Potentially responsible parties, including Pharmacia, are participating in an EPA-directed allocation and settlement process to assign responsibility related to the lower river and the entire Study Area, respectively. CSXT participated in the EPA-directed allocation and settlement process on behalf of Pharmacia.

On March 2, 2022, EPA issued a Notice Letter to Pharmacia, Occidental and eight other parties, including Nokia of America Corporation (“Nokia”), alleging they are liable under Section 107(a) of CERCLA for releases or threatened releases of hazardous substances and requesting each party, individually or collectively, submit good faith offers to EPA in connection with the entire Study Area. CSXT, on behalf of Pharmacia, responded to the Notice Letter and submitted a good faith offer to EPA on June 27, 2022, following meetings with a mediator from EPA’s Conflict Prevention and Resolution Center.

CSX Q2 2026 Form 10-Q p.17

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5. Commitments and Contingencies, continued

On November 21, 2023, EPA notified the United States District Court for the District of New Jersey ("Court") that it intended to move to enter a Consent Decree ("CD") with a group of potentially responsible parties. On January 31, 2024, EPA filed a motion to enter a modified CD with 82 potentially responsible parties, not including Pharmacia, requiring payment of $150 million to resolve their liability with respect to the entire Study Area. On April 1, 2024, Occidental filed its opposition to EPA's motion to enter the CD. Several other non-settling parties, including Pharmacia, filed comments concerning (but not opposing) entry of the CD. On December 18, 2024, the Court entered and approved the CD, which is now under appeal. Negotiations with EPA and other parties to resolve Pharmacia's liability continue.

On October 2, 2025, Occidental Petroleum Corporation announced a definitive agreement for Berkshire Hathaway to acquire Occidental’s chemical business, which had been separated into its own entity as a result of Occidental having completed a divisive merger under Texas law that divided its overall business into two entities. A newly formed Texas corporation also called Occidental Chemical Corporation (“New Occidental”), now holds the company’s manufacturing assets, while Environmental Resource Holdings, also a Texas corporation (“ERH”), holds legacy environmental liabilities, including those related to the Lower Passaic River. This transaction, through which Occidental Petroleum Corporation sold all equity interests in New Occidental to Berkshire Hathaway, closed on January 2, 2026. On February 6, 2026, a group of parties, including Pharmacia, filed a complaint in New Jersey federal court seeking a declaratory judgment that New Occidental remains jointly and severally liable with ERH for CERCLA liability related to the Lower Passaic River.

On June 29, 2026, Nokia filed a complaint in the United States District Court for the District of Columbia against the United States, EPA, the U.S. Department of Justice, and related federal officials challenging EPA’s decision to exclude Nokia from the CD and its classification of Nokia as a party responsible for performing or funding the Lower Passaic River cleanup. The complaint seeks declaratory and injunctive relief relating to Nokia’s treatment in EPA’s enforcement and settlement process.

CSXT is also defending and indemnifying Pharmacia with regard to the Property in litigation filed by Occidental, which is seeking to recover its past and future costs associated with the remediation of the entire Study Area. Alternatively, Occidental seeks to compel some, or all, of the defendants to participate in the remediation of the Study Area. Pharmacia is one of approximately 110 defendants in a federal lawsuit filed by Occidental on June 30, 2018, and one of 37 defendants in a federal lawsuit filed by Occidental on March 24, 2023. Both of these lawsuits are stayed pending resolution of the CD action. CSXT is also defending and indemnifying Pharmacia in a cooperative natural resource damages assessment process related to the Property.

Based on currently available information, the Company does not believe its share of remediation costs as determined by the EPA-directed allocation with respect to the Property and the Study Area would be material to the Company's financial condition, results of operations or liquidity.

See Note 4, Casualty, Environmental and Other Reserves, for additional information on the Company's environmental liabilities.

CSX Q2 2026 Form 10-Q p.18

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6. Employee Benefit Plans

The Company sponsors defined benefit pension plans principally for salaried, management personnel. All plans are closed to new participants.

Independent actuaries compute the amounts of liabilities and expenses relating to these plans subject to the assumptions that the Company determines are appropriate based on historical trends, current market rates and future projections. These amounts are reviewed by management. Only the service cost component of net periodic benefit costs is included in labor and fringe expense on the consolidated income statement. All other components of net periodic benefit cost are included in other income - net.


	Pension Benefits Cost
	Second Quarters				Six Months
(Dollars in Millions)	2026		2025		2026		2025
Service Cost Included in Labor and Fringe	$	5	$	5	$	11	$	10

Interest Cost	25		28		50		55
Expected Return on Plan Assets	(37)		(40)		(74)		(80)
Amortization of Net Loss	6		5		12		11
Total Included in Other Income - Net	(6)		(7)		(12)		(14)

Net Periodic Benefit Credit	$	(1)	$	(2)	$	(1)	$	(4)

Qualified pension plan obligations are funded in accordance with regulatory requirements and with an objective of meeting or exceeding minimum funding requirements necessary to avoid restrictions on flexibility of plan operation and benefit payments. No contributions to the Company's qualified pension plans are expected in 2026.

CSX Q2 2026 Form 10-Q p.19

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7. Debt and Credit Agreements

Total activity related to long-term debt during the quarter ended June 30, 2026, is shown in the table below. For fair value information related to the Company's long-term debt, see Note 9, Fair Value Measurements.


(Dollars in Millions)	Current Portion		Long-term Portion		Total
Long-term Debt as of December 31, 2025	$	708	$	18,165	$	18,873
2026 Activity:

Long-term Debt Repaid	(9)		—		(9)
Reclassifications	1,002		(1,002)		—

Hedging, Discount, Premium and Other Activity	1		(1)		—

Long-term Debt as of June 30, 2026	$	1,702	$	17,162	$	18,864

Interest Rate Derivatives

Fair Value Hedges

In first quarter 2025, CSX entered into two fixed-to-floating interest rate swaps classified as fair value hedges. The swaps are designed to hedge 10 years of interest rate risk associated with market fluctuations attributable to the Secured Overnight Financing Rate ("SOFR") on a cumulative $250 million of fixed rate outstanding notes which are due in 2055. The cumulative fair value of these swaps, which is included in other long-term assets on the consolidated balance sheet, was an asset of $4 million and $9 million as of June 30, 2026, and December 31, 2025, respectively.

CSX has seven other fixed-to-floating interest rate swaps classified as fair value hedges. The swaps are designed to hedge 10 years of interest rate risk associated with market fluctuations attributable to SOFR on a cumulative $1.1 billion of fixed rate outstanding notes which are due between 2032 and 2040. These swaps are comprised of two swaps entered during 2023 (“2023 swaps”) and five swaps entered during 2022 (“2022 swaps”). The cumulative fair value of the 2023 swaps was an asset of $9 million and $14 million as of June 30, 2026, and December 31, 2025, respectively, and is included in other long-term assets on the consolidated balance sheet. The cumulative fair value of the 2022 swaps was a liability of $94 million and $87 million as of June 30, 2026, and December 31, 2025, respectively, and is included in other long-term liabilities on the consolidated balance sheet.

The swaps expire between 2032 and 2055. If settled early, the remaining cumulative fair value adjustment to the hedged notes will be amortized over the remaining life of the associated notes. The cumulative adjustment to the hedged notes is included in long-term debt on the consolidated balance sheet as shown in the following table below.


(Dollars in Millions)	June 30, 2026		December 31, 2025
Notional Value of Hedged Notes	$	1,300	$	1,300
Fair Value Asset Adjustment to Hedged Notes	13		23
Fair Value Liability Adjustment to Hedged Notes	(94)		(87)
Carrying Amount of Hedged Notes	$	1,219	$	1,236

CSX Q2 2026 Form 10-Q p.20

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7. Debt and Credit Agreements, continued

Gains and losses resulting from changes in fair value of the interest rate swaps offset changes in the fair value of the hedged portion of the underlying debt with no gain or loss recognized due to hedge ineffectiveness. The difference in the net fixed-to-float interest settlement on the derivatives is recognized in interest expense and is summarized as follows.


	Second Quarters				Six Months
(Dollars in Millions)	2026		2025		2026		2025
Interest Expense Impact (Increase)/ Decrease	$	(3)	$	(5)	$	(6)	$	(10)

Cash Flow Hedges

The Company had forward starting interest rate swaps, designated as cash flow hedges in accordance with the Derivatives and Hedging Topic in the ASC, that had an aggregate notional value of $500 million at inception. These swaps were effected to hedge the benchmark interest rate associated with future interest payments related to the anticipated refinancing of $850 million of 3.25% notes due in 2027, which is expected to occur no later than 36 months following the maturity of those 2027 notes. CSX executed a final settlement of the notional value of the cash flow hedges in second quarter 2024, so no unsettled aggregate notional value of these swaps remained and there is no related asset or liability as of June 30, 2026, and December 31, 2025.

The unrealized gain associated with the settled portion of the swaps is recorded net of tax in accumulated other comprehensive income ("AOCI") on the consolidated balance sheet. As these swaps were fully settled in 2024, subsequent gains or losses are only attributable to tax effects. The unrealized gain associated with the settled portion of the hedges will continue to be classified in AOCI until the associated debt instrument is issued in the future. The unrealized gain in AOCI will be recognized in earnings as an adjustment to interest expense over the same period during which the hedged transaction affects earnings.

See Note 9, Fair Value Measurements, and Note 10, Other Comprehensive Income (Loss), for additional information about the Company's swaps.

CSX Q2 2026 Form 10-Q p.21

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7. Debt and Credit Agreements, continued

Credit Facility

The Company has a $1.2 billion unsecured revolving credit facility backed by a diverse syndicate of banks. This facility allows same-day borrowings at floating interest rates, based on SOFR or an agreed-upon replacement reference rate, plus a spread that depends upon CSX's senior unsecured debt ratings. This facility expires in February 2028. As of June 30, 2026, the Company had no outstanding balances under this facility.

Commitment fees and interest rates payable under the facility were similar to fees and rates available to comparably rated investment-grade borrowers. As of second quarter 2026, CSX was in compliance with all covenant requirements under this facility.

Commercial Paper

Under its commercial paper program, which is backed by the revolving credit facility, the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $1.0 billion outstanding at any time. Proceeds from issuances of the notes are used for general corporate purposes. At June 30, 2026, the Company had no outstanding debt under the commercial paper program.

CSX Q2 2026 Form 10-Q p.22

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8. Revenues

The Company’s revenues are primarily derived from the transportation of freight as performance obligations that arise from its contracts with customers are satisfied. The below table presents the Company’s revenues disaggregated by market as this best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Fuel surcharge revenue is included in the individual markets.


	Second Quarters				Six Months
(Dollars in Millions)	2026		2025		2026		2025

Chemicals	$	774	$	701	$	1,496	$	1,399
Agricultural and Food Products	444		418		853		826
Automotive	332		320		607		591
Forest Products	266		250		495		499
Metals and Equipment	256		224		476		433
Minerals	242		218		434		399
Fertilizers	132		126		273		262
Total Merchandise	2,446		2,257		4,634		4,409

Intermodal	620		491		1,138		984
Coal	520		477		978		938
Trucking	226		211		428		413
Other	123		138		239		253
Total	$	3,935	$	3,574	$	7,417	$	6,997

The Company’s accounts receivable - net consists of freight and non-freight receivables, reduced by an allowance for credit losses. Freight receivables include amounts earned, billed and unbilled, and currently due from customers for transportation-related services. Non-freight receivables include amounts, billed and unbilled, currently due related to government reimbursement receivables and other non-revenue receivables.


(Dollars in Millions)	June 30, 2026		December 31, 2025

Freight Receivables	$	1,116	$	932
Freight Allowance for Credit Losses	(20)		(23)
Freight Receivables - Net	1,096		909

Non-Freight Receivables	378		404
Non-Freight Allowance for Credit Losses	(18)		(15)
Non-Freight Receivables - Net	360		389
Total Accounts Receivable - Net	$	1,456	$	1,298

The Company maintains an allowance for expected credit losses to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of risk characteristics, historical payment experience, and the age of outstanding receivables adjusted for forward-looking economic conditions as necessary. Credit losses recognized on the Company’s accounts receivable were not material in the second quarters or six months ended June 30, 2026, or 2025.

CSX Q2 2026 Form 10-Q p.23

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9. Fair Value Measurements

Investments

The Company's investment assets are carried at fair value on the consolidated balance sheet in accordance with the Fair Value Measurements and Disclosures Topic in the ASC. They are valued with assistance from a third-party trustee and consist of exchange-traded funds, corporate bonds, asset-backed securities, government securities, and short-term time deposits. The exchange-traded funds are valued at quoted market prices determined in an active market, which are Level 1 inputs.

The corporate bonds, asset-backed securities and government securities are valued using broker quotes that utilize observable market inputs, which are Level 2 inputs. The carrying amounts of time deposits, which are reported in the consolidated balance sheet using Level 2 inputs, approximate fair value due to their short-term nature. Unrealized losses as of June 30, 2026, and June 30, 2025, were not material. The Company believes any impairment of investments held with gross unrealized losses to be temporary and not the result of credit risk.

The Company's investment assets are carried at fair value on the consolidated balance sheets, within the line items short-term investments and other long-term assets, as summarized in the following table.


	June 30, 2026						December 31, 2025
(Dollars in Millions)	Level 1		Level 2		Total			Level 1		Level 2		Total

Exchange-traded Funds	$	6	$	—	$	6		$	5	$	—	$	5
Time Deposits	—		375		375			—		—		—
Corporate Bonds	—		75		75			—		82		82
Government Securities	—		72		72			—		71		71
Asset-backed Securities	—		23		23			—		29		29
Total Investments at Fair Value	$	6	$	545	$	551		$	5	$	182	$	187

The Company's debt securities include corporate bonds, government securities and asset-backed securities. The fair values of these securities totaled $170 million as of June 30, 2026, and $182 million as of December 31, 2025, and the amortized costs totaled $172 million and $181 million, respectively. All investment assets other than exchange-traded funds have stated contractual maturity dates as summarized in the following table:


(Dollars in Millions)	June 30, 2026		December 31, 2025
Less than 1 year	$	383	$	5
1 - 5 years	89		94
5 - 10 years	40		42
Greater than 10 years	33		41
Total Investments at Fair Value	$	545	$	182

CSX Q2 2026 Form 10-Q p.24

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9. Fair Value Measurements, continued

Long-term Debt

Long-term debt is reported at carrying amount on the consolidated balance sheets and is the Company's only financial instrument with a fair value significantly different from its carrying amount. The fair value of a company's debt is a measure of its current value under present market conditions, but does not impact the financial statements under current accounting rules. The majority of the Company's long-term debt is valued with assistance from a third party that utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the third party, the fair value has been estimated by applying market rates of similar instruments to the scheduled contractual debt payments and maturities. These market rates are provided by the same third party. All of the inputs used to determine the fair value of the Company's long-term debt are Level 2 inputs.

The fair value and carrying value of the Company's long-term debt is as follows:


(Dollars in Millions)	June 30, 2026		December 31, 2025
Long-term Debt (Including Current Maturities):
Fair Value	$	17,159	$	17,305
Carrying Value	18,864		18,873

Interest Rate Derivatives

The Company’s fixed-to-floating swaps are carried at fair value, which is determined with assistance from a third party based upon pricing models using inputs observed from actively quoted markets. All of the inputs used to determine the fair value of the fixed-to-floating interest rate swaps are Level 2 inputs. The fair value of the Company’s fixed-to-floating interest rate swaps was an asset of $13 million and $23 million (for swaps entered in 2025 and 2023), and a liability of $94 million and $87 million (for swaps entered in 2022) as of June 30, 2026, and December 31, 2025, respectively.

Changes in interest rates no longer impact the fair value of the Company’s forward starting interest rate swaps because they are fully settled. See Note 7, Debt and Credit Agreements, for further information.

CSX Q2 2026 Form 10-Q p.25

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 10. Other Comprehensive Income (Loss)

Total comprehensive earnings represents all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders (e.g. issuance of equity securities and dividends). Generally, for CSX, total comprehensive earnings equals net earnings plus or minus adjustments for pension and other post-retirement liabilities, derivative activity and other items. Total comprehensive earnings is presented net of tax and was $1.0 billion and $832 million for second quarters 2026 and 2025, respectively, and $1.8 billion and $1.5 billion for the six months ended June 30, 2026 and 2025, respectively

AOCI represents the cumulative balance of other comprehensive income, net of tax, as of the balance sheet date. Changes in the AOCI balance by component are shown in the following table. Amounts in pension and other post-employment benefits reclassified to net earnings relate to the amortization of actuarial losses and are included in other income - net on the consolidated income statements. See Note 6, Employee Benefit Plans, for further information. Interest rate derivatives consist of forward starting interest rate swaps classified as cash flow hedges, which are now fully settled. See Note 7, Debt and Credit Agreements, for further information. Other primarily represents CSX's share of AOCI of equity method investees. Amounts reclassified in other to net earnings are included in purchased services and other or equipment and other rents on the consolidated income statements.


	Pension and Other Post-Employment Benefits		Interest Rate Derivatives		Other		Accumulated Other Comprehensive (Loss) Income
(Dollars in Millions)
Balance December 31, 2025, Net of Tax	$	(337)	$	152	$	(28)	$	(213)
Other Comprehensive Income (Loss)

Amounts Reclassified to Net Earnings	9		—		(3)		6
Tax Expense	(2)		—		—		(2)
Total Other Comprehensive Income (Loss)	7		—		(3)		4
Balance June 30, 2026, Net of Tax	$	(330)	$	152	$	(31)	$	(209)

CSX Q2 2026 Form 10-Q p.26

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11. Segment Reporting and Significant Expenses

The Company has two operating segments: rail and trucking. Although the Company provides a breakdown of revenue by line of business, the overall financial and operational performance of the railroad is analyzed as one operating segment due to the integrated nature of the rail network. The Rail column in the table below includes the activities of all CSX entities other than the trucking company, Quality Carriers, and also includes the Company's equity in the net income of equity method investments. As the trucking segment is not material for separate disclosure as a reportable segment, the results of these operations are included as a reconciliation to the Company's consolidated results in the tables below.

The Company's chief operating decision maker ("CODM") is its CEO. The CODM reviews information presented on a consolidated basis, accompanied by supplemental information about the trucking segment separately, for purposes of allocating resources and evaluating financial performance. The Company has determined that operating income is the key measure of segment profit or loss as this measure is the focus of the CODM in developing financial plans, including resource allocation, and evaluating actual financial performance against plan. The CODM regularly reviews operating results broken out by significant expense.

CSX Q2 2026 Form 10-Q p.27

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11. Segment Reporting and Significant Expenses, continued

The table below presents information about the Company's significant expenses and the required reportable segment reconciliations for the quarters ended June 30, 2026, and June 30, 2025.


	Second Quarters
	2026				2025
(Dollars in Millions)	Rail		Reconciliation to Consolidated		Rail		Reconciliation to Consolidated
Revenue (a)	$	3,709			$	3,363

Reconciliation of Revenue
Trucking Revenue (a)			229				219
Elimination of intersegment revenues			(3)				(8)
Total Consolidated Revenue			$	3,935			$	3,574

Expense (b)
Labor and Fringe	$	782			$	736
Purchased Services and Other	535				605
Depreciation and Amortization	396				410
Fuel
Locomotive	379				226
Non-Locomotive	34				23
Equipment and Other Rents	92				90
Gain on Property Disposition	(2)				(4)
Segment Operating Income	$	1,493			$	1,277

Reconciliation of Operating Income
Trucking Expenses (b)			216				213
Elimination of intersegment expenses			(3)				(8)
Total Consolidated Operating Income			$	1,506			$	1,283

Interest Expense			(211)				(212)
Other Income - Net			25				22
Earnings Before Income Taxes			$	1,320			$	1,093

CSX Q2 2026 Form 10-Q p.28

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11. Segment Reporting and Significant Expenses, continued

The table below presents information about the Company's significant expenses and the required reportable segment reconciliations for the six months ended June 30, 2026, and June 30, 2025.



	Six Months
		2026	2025
(Dollars in Millions)			Rail		Reconciliation to Consolidated		Rail		Reconciliation to Consolidated
Revenue (a)			$	6,989			$	6,584

Reconciliation of Revenue
Trucking Revenue (a)					434				426
Elimination of intersegment revenues					(6)				(13)
Total Consolidated Revenue					$	7,417			$	6,997

Expense (b)
Labor and Fringe			$	1,544			$	1,510
Purchased Services and Other			1,084				1,269
Depreciation and Amortization			795				820
Fuel
Locomotive			630				451
Non-Locomotive			63				52
Equipment and Other Rents			171				172
Gain on Property Disposition			(46)				(5)
Segment Operating Income			$	2,748			$	2,315

Reconciliation of Operating Income
Trucking Expenses (b)					423				417
Elimination of intersegment expenses					(6)				(13)
Total Consolidated Operating Income					$	2,759			$	2,324

Interest Expense					(424)				(421)
Other Income - Net					48				48
Earnings Before Income Taxes					$	2,383			$	1,951

(a) Trucking revenue is comprised of revenue from Quality Carriers. Rail revenue represents revenue attributed to all CSX entities other than the trucking company, Quality Carriers.

(b) Trucking expenses include labor and fringe, purchased services and other, depreciation and amortization, fuel, equipment and other rents, and gains/losses on property dispositions from the operations of Quality Carriers. Rail expenses represent expenses attributable to all CSX entities other than the trucking company, Quality Carriers.

CSX Q2 2026 Form 10-Q p.29

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CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 11. Segment Reporting and Significant Expenses, continued

Capital expenditures made by the rail segment were $561 million and $766 million, for the second quarters 2026 and 2025, respectively, and $1,098 million and $1,457 million, for the six months ended June 30, 2026, and June 30, 2025, respectively. The total of the rail segment's reportable assets was $44.6 billion and $43.5 billion as of June 30, 2026, and December 31, 2025, respectively, out of total consolidated assets of $44.7 billion and $43.7 billion for the respective periods. The remaining non-rail assets are comprised of assets held by the trucking operating segment.

CSX Q2 2026 Form 10-Q p.30

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CSX CORPORATION

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

SECOND QUARTER 2026 RESULTS

•Revenue increased $361 million, or 10%, year over year.

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

•Operating income of $1.5 billion increased $223 million, or 17%, year over year.

•Operating margin of 38.3% improved 240 basis points versus the prior year.

•Earnings per diluted share of $0.54 increased $0.10, or 23%, year over year.


	Second Quarters										Six Months
	2026			2025			Fav / (Unfav)		% Change		2026			2025			Fav / (Unfav)		% Change
Volume (in Thousands)	1,676			1,580			96		6	%	3,235			3,098			137		4	%

(in Millions)
Revenue	$	3,935		$	3,574		$	361	10		$	7,417		$	6,997		$	420	6
Expense	2,429			2,291			(138)		(6)		4,658			4,673			15		—
Operating Income	$	1,506		$	1,283		$	223	17	%	$	2,759		$	2,324		$	435	19	%

Operating Margin	38.3		%	35.9		%	240		bps		37.2		%	33.2		%	400		bps

Earnings Per Diluted Share	$	0.54		$	0.44		$	0.10	23	%	$	0.97		$	0.78		$	0.19	24	%

CSX Q2 2026 Form 10-Q p.31

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CSX CORPORATION

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


Volume and Revenue (Unaudited)
Volume (Thousands of Units); Revenue (Dollars in Millions); Revenue Per Unit (Dollars)
Second Quarters
	Volume				Revenue						Revenue Per Unit
	2026	2025	% Change		2026		2025		% Change		2026		2025		% Change
Chemicals	177	164	8	%	$	774	$	701	10	%	$	4,373	$	4,274	2	%
Agricultural and Food Products	119	117	2		444		418		6		3,731		3,573		4
Minerals	105	99	6		242		218		11		2,305		2,202		5
Automotive	102	103	(1)		332		320		4		3,255		3,107		5
Metals and Equipment	72	70	3		256		224		14		3,556		3,200		11
Forest Products	70	70	—		266		250		6		3,800		3,571		6
Fertilizers	50	47	6		132		126		5		2,640		2,681		(2)
Total Merchandise	695	670	4		2,446		2,257		8		3,519		3,369		4
Intermodal	792	729	9		620		491		26		783		674		16
Coal	189	181	4		520		477		9		2,751		2,635		4
Trucking	—	—	—		226		211		7		—		—		—
Other	—	—	—		123		138		(11)		—		—		—
Total	1,676	1,580	6	%	$	3,935	$	3,574	10	%	$	2,348	$	2,262	4	%

Six Months
	Volume				Revenue						Revenue Per Unit
	2026	2025	% Change		2026		2025		% Change		2026		2025		% Change
Chemicals	345	330	5	%	$	1,496	$	1,399	7	%	$	4,336	$	4,239	2	%
Agricultural and Food Products	235	232	1		853		826		3		3,630		3,560		2
Minerals	187	178	5		434		399		9		2,321		2,242		4
Automotive	189	190	(1)		607		591		3		3,212		3,111		3
Metals and Equipment	137	135	1		476		433		10		3,474		3,207		8
Forest Products	134	140	(4)		495		499		(1)		3,694		3,564		4
Fertilizers	99	95	4		273		262		4		2,758		2,758		—
Total Merchandise	1,326	1,300	2		4,634		4,409		5		3,495		3,392		3
Intermodal	1,549	1,445	7		1,138		984		16		735		681		8
Coal	360	353	2		978		938		4		2,717		2,657		2
Trucking	—	—	—		428		413		4		—		—		—
Other	—	—	—		239		253		(6)		—		—		—
Total	3,235	3,098	4	%	$	7,417	$	6,997	6	%	$	2,293	$	2,259	2	%

CSX Q2 2026 Form 10-Q p.32

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CSX CORPORATION

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

Second Quarter 2026

Revenue

Total revenue increased 10% in second quarter 2026 when compared to second quarter 2025 primarily due to increased fuel surcharge revenue together with higher volume and pricing across merchandise, intermodal and coal.

Merchandise Volume

Chemicals - Increased due to higher shipments of plastics, waste, petcoke and sand.

Agricultural and Food Products - Increased due to higher shipments of export grains and domestic feed ingredients, partially offset by decreased shipments of domestic feed grain.

Minerals - Increased due to higher shipments of cement and aggregates.

Automotive - Decreased due to the impact of a temporary outage at a customer location associated with re-tooling efforts.

Metals and Equipment - Increased primarily due to higher pipe and scrap shipments, partially offset by lower steel shipments, which includes the impact of customer plant closures.

Forest Products - Flat as higher lumber shipments, including benefits from a tighter trucking environment, were offset by lower shipments of pulp and paper products, which include the impacts of both customer plant closures and temporary outages.

Fertilizers - Increased due to higher short-haul phosphates shipments.

Intermodal Volume

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

Coal Volume

Export coal increased due to higher shipments of metallurgical and thermal coal, including the benefits of increased production from re-opened mines. Domestic coal decreased due to lower shipments to utility plants, partially offset by higher shipments to steel manufacturing locations and lake terminals.

Trucking Revenue

Trucking revenue increased $15 million versus the prior year due to higher fuel surcharge.

Other Revenue

Other revenue decreased $15 million due to an increase in the reserve for freight in transit in the current year compared to a decrease in the prior year.

CSX Q2 2026 Form 10-Q p.33

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CSX CORPORATION

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

Expenses

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

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

•Incentive compensation increased $56 million driven by higher expected payouts.

•An increase of $32 million was due to inflation.

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

Purchased Services and Other expense decreased $66 million due to the following:

•Efficiency savings, net of inflation, of $54 million were driven by cost reductions across operating and support functions.

•A decrease of $14 million was due to the effects of network disruptions and congestion in the prior year, including rerouting impacts.

•Gains on property dispositions of $17 million in second quarter 2026 were primarily due to the sale of the Company's last remaining aircraft in the asset group. Gains were $8 million in the prior year.

•All other net costs increased $11 million, primarily due to intermodal volume increases and advisory expenses related to potential industry consolidation. These increases were partially offset by an insurance recovery related to 2024 property damage on the Blue Ridge subdivision.

Depreciation and Amortization expense decreased $16 million primarily as a result of an equipment depreciation study.

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

Equipment and Other Rents expense increased $3 million.

Interest Expense

Interest expense decreased $1 million.

Other Income - Net

Other income - net increased $3 million primarily due to higher interest income.

Income Tax Expense

Income tax expense increased $54 million primarily due to higher earnings before income taxes.

CSX Q2 2026 Form 10-Q p.34

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CSX CORPORATION

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

Six Months Results of Operations

Revenue increased $420 million primarily due to volume and price growth in merchandise, intermodal and coal as well as higher fuel recovery.

Total expense decreased $15 million as efficiency savings, gains on property dispositions and other decreases were largely offset by higher fuel prices, inflation and higher incentive compensation.

Interest expense increased $3 million.

Other income - net was flat.

Income tax expense increased $98 million primarily due to higher earnings before income taxes.

CSX Q2 2026 Form 10-Q p.35

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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.

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 increase in FCF before dividends of $1.2 billion from the prior year is primarily due to prior year payments of previously postponed taxes, decreased property additions driven by completion of the Blue Ridge subdivision rebuild, and higher cash-generating net earnings. Prior year property additions include approximately $295 million related to rebuilding the Blue Ridge subdivision, which was reopened in September 2025.

The following table reconciles cash provided by operating activities (GAAP measure) to FCF before dividends (non-GAAP measure).


	Six Months
(Dollars in Millions)	2026		2025
Net cash provided by operating activities	$	2,599	$	1,890
Property Additions	(1,119)		(1,495)
Proceeds and Advances from Property Dispositions	137		49
Free Cash Flow (before payment of dividends)	$	1,617	$	444

CSX Q2 2026 Form 10-Q p.36

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CSX CORPORATION

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

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 second quarter of 2026, velocity improved by 3% while dwell increased by 6% versus prior year. Carload trip plan performance decreased by 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 0.83 in second quarter 2026 improved 19% compared to prior year and the FRA train accident rate of 2.72 improved 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.


	Second Quarters						Six Months
	2026		2025		Improvement / (Deterioration)		2026		2025		Improvement / (Deterioration)
Operations Performance
Train Velocity (Miles Per Hour)	18.0		17.5		3	%	18.4		17.6		5	%
Dwell (Hours)	11.0		10.4		(6)	%	10.9		11.0		1	%
Cars Online	131,642		129,738		(1)	%	127,745		130,962		2	%

On-Time Originations	70	%	69	%	1	%	71	%	68	%	4	%
On-Time Arrivals	54	%	55	%	(2)	%	57	%	55	%	4	%
Carload Trip Plan Performance	71	%	75	%	(5)	%	73	%	72	%	1	%
Intermodal Trip Plan Performance	88	%	90	%	(2)	%	88	%	90	%	(2)	%

Fuel Efficiency	0.94		0.98		4	%	0.96		0.98		2	%

Revenue Ton-Miles (Billions)
Merchandise	34.4		33.2		4	%	67.0		65.5		2	%
Coal	9.1		9.3		(2)	%	17.6		17.7		(1)	%
Intermodal	7.9		7.5		5	%	15.4		14.6		5	%
Total Revenue Ton-Miles	51.4		50.0		3	%	100.0		97.8		2	%

Total Gross Ton-Miles (Billions)	99.7		99.6		—	%	193.2		193.5		—	%

Safety
FRA Personal Injury Frequency Index	0.83		1.03		19	%	0.79		0.98		19	%
FRA Train Accident Rate	2.72		3.88		30	%	2.68		3.76		29	%

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.

CSX Q2 2026 Form 10-Q p.37

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CSX CORPORATION

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

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 Q2 2026 Form 10-Q p.38

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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

The following chart highlights the operating, investing and financing components of the net increase of $337 million and decrease of $546 million in cash and cash equivalents for the six months ended June 30, 2026, and June 30, 2025, respectively.

•The Company generated $709 million more cash from operating activities primarily driven by higher cash-generating net earnings and 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 higher accounts receivable commensurate with higher revenues.

•CSX used $133 million less cash for investing activities primarily due to lower property additions following the completion of the rebuilding of the Blue Ridge subdivision in prior year and increased proceeds from property dispositions in the current year. The decrease was partially offset by net purchases of short-term investments in 2026.

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

CSX Q2 2026 Form 10-Q p.39

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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 second quarter 2026, CSX had $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 six months ended June 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 June 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 June 30, 2026, the Company had no debt outstanding under the commercial paper program.

Planned capital investments for 2026 are expected to be less than $2.4 billion. Spending to sustain core infrastructure with a focus on safety and reliability will 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 Q2 2026 Form 10-Q p.40

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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

Total assets increased $1.0 billion from year end primarily due to $715 million increase in cash and short-term investments, a $158 million increase in accounts receivable commensurate with increased revenue, and a $135 million increase in net property consistent with planned capital expenditures.

Total liabilities increased $116 million from year end primarily due to an $86 million increase in deferred income taxes primarily driven by bonus tax depreciation and a $70 million increase in income and other taxes payable due to increased earnings and the timing of tax payments. Total shareholders' equity increased $928 million from year end primarily driven by net earnings of $1.8 billion, partially offset by dividends paid of $520 million and share repurchases of $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 $746 million as of June 30, 2026, and $583 million as of December 31, 2025. This deficit increase of $163 million since year end was primarily driven by a $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 short-term investments as noted above and a $158 million increase in accounts 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.

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.

LABOR AGREEMENTS

Approximately 16,600 of the Company's approximately 22,200 employees are members of a rail labor union and covered by national agreements with the Class I railroads or CSX-specific agreements. Agreements with an effective date of January 1, 2025, have been fully ratified by most unions, representing nearly 75% of the Company's unionized workforce. The remaining unionized employees are covered under previous agreements while negotiations take place since collective agreements under the Railway Labor Act do not expire, but continue until amended or replaced.

CSX Q2 2026 Form 10-Q p.41

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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 Q2 2026 Form 10-Q p.42

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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 directly affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation, as well as the impact of international trade agreements and tariffs) and those affecting the level of demand for products carried by CSXT or by truck, including impacts to the performance and value of the Company's rail and trucking-related investments;

•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 CSX'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 and cybersecurity incidents compromising the security, stability, availability, or reliability of information technology systems or data;

•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;

CSX Q2 2026 Form 10-Q p.43

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CSX CORPORATION

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

•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;

•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 Q2 2026 Form 10-Q p.44

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CSX CORPORATION

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided under Part II, Item 7A (Quantitative and Qualitative Disclosures about Market Risk) of CSX's most recent annual report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

As of June 30, 2026, under the supervision and with the participation of CSX's Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO concluded that, as of June 30, 2026, the Company's disclosure controls and procedures were effective at the reasonable assurance level in timely alerting them to material information required to be included in CSX's periodic SEC reports. There were no changes in the Company's internal controls over financial reporting during the second quarter of 2026 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

CSX Q2 2026 Form 10-Q p.45

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CSX CORPORATION

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to SEC amendments to this Item, the Company will be using a threshold of $1 million for such proceedings. For further details, refer to Note 5, Commitments and Contingencies, of this quarterly report on Form 10-Q. Also refer to Part I, Item 3, Legal Proceedings in CSX's most recent annual report on Form 10-K.

Item 1A. Risk Factors

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed under Part I, Item 1A (Risk Factors) of CSX's most recent annual report on Form 10-K. See also Part I, Item 2 (Forward-Looking Statements) of this quarterly report on Form 10-Q.

Item 2. CSX Purchases of Equity Securities

During fourth quarter 2023, the Company began repurchasing shares under the $5 billion share repurchase program approved in October 2023. On May 12, 2026, the Board of Directors authorized a new share repurchase program, providing $5 billion of incremental authority to that remaining under the existing October 2023 share repurchase program. Total repurchase authority remaining as of June 30, 2026, was $5.7 billion. For more information about share repurchases, see Note 2, Earnings Per Share. Share repurchase activity for the second quarter 2026 is shown below. Amounts exclude the impact of excise tax on net share repurchases imposed as part of the Inflation Reduction Act of 2022.


	CSX Purchases of Equity Securities for the Quarter
Second Quarter	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Beginning Balance					$	988,639,327
April 1 - April 30, 2026	1,341,830	$	43.14	1,341,830	930,747,490
May 1 - May 31, 2026	2,380,111	45.30		2,380,111	5,822,917,820
June 1 - June 30, 2026	2,547,352	46.44		2,547,352	5,704,621,786
Ending Balance	6,269,293	$	45.30	6,269,293	$	5,704,621,786

CSX Q2 2026 Form 10-Q p.46

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CSX CORPORATION

PART II

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

During the second quarter of 2026, none of the Company's directors or officers adopted or terminated any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.

CSX Q2 2026 Form 10-Q p.47

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CSX CORPORATION

PART II

Item 6. Exhibits


Exhibit designation	Nature of exhibit	Previously filed as exhibit to



10.1* ***	Amendment to the CSX Executives’ Deferred Compensation Plan, effective as of June 1, 2026
10.2* ***	Employment Separation Agreement and Release, effective as of May 26, 2026, between CSX Corporation and Stephen Fortune

Officer certifications:
31*	Rule 13a-14(a) Certifications
32**	Section 1350 Certifications

Interactive data files:
101*	The following financial information from CSX Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed with the SEC on July 22, 2026, formatted in inline XBRL includes: (i) consolidated income statements for the quarters and six months ended June 30, 2026, and June 30, 2025, (ii) condensed consolidated comprehensive income statements for the quarters and six months ended June 30, 2026, and June 30, 2025, (iii) consolidated balance sheets at June 30, 2026, and December 31, 2025, (iv) consolidated cash flow statements for the six months ended June 30, 2026, and June 30, 2025, (v) consolidated statements of changes in shareholders' equity for the quarters and six months ended June 30, 2026, and June 30, 2025, and (vi) the notes to consolidated financial statements.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)




* Filed herewith
** Furnished herewith
*** Management contract or compensatory plan or arrangement

CSX Q2 2026 Form 10-Q p.48

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CSX CORPORATION

PART II

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CSX CORPORATION

(Registrant)

By: /s/ ANGELA C. WILLIAMS

Angela C. Williams

Vice President and

Chief Accounting Officer

(Principal Accounting Officer)

Dated: July 22, 2026

CSX Q2 2026 Form 10-Q p.49

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Date	Price Target	Rating	Analyst
7/15/2026		Mkt Perform	Citizens
7/14/2026	$58.00	Neutral → Positive	Susquehanna
7/8/2026	$57.00	Overweight	Stephens
4/23/2026	$30.00	Equal-Weight → Underweight	Morgan Stanley
4/23/2026	$44.00	Buy → Hold	Vertical Research
4/23/2026	$40.00 → $45.00	Buy	TD Cowen
4/7/2026	$44.00	Buy → Neutral	Citigroup
3/19/2026	$41.00	Outperform → In-line	Evercore ISI

SEC Form 10-Q filed by CSX Corporation

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