CSX Corporation (CSX) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by. Welcome to the CSX Corporation Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session and instructions will follow at that time. Bill Slater: Thank you and good afternoon, everyone. Joining me on today's call are Jim Foote, President and Chief Executive Officer; Kevin Boone, Executive Vice President of Sales and Marketing; Jamie Boychuk, Executive Vice President of Operations; and Sean Pelkey, Acting Chief Financial Officer. On Slide 2 is our forward-looking disclosure, followed by our non-GAAP disclosure on Slide 3. With that, it is my pleasure to introduce President and Chief Executive Officer, Jim Foote. James Foote: Great, thanks Bill, and thank you for joining us on the call today. This quarter's results highlight just how quickly volumes have rebounded as each of our three lines of business experienced record growth as we lapped the most severe economic impacts of the pandemic. I want to first thank all of the CSX's railroaders for their unwavering commitment to our customers as they worked very hard to deliver service in a very difficult operating environment. As we enter the second half of the year, our focus is squarely on continuing this growth. We have kept our yards and terminals open and freight moving throughout the recovery and we will continue taking the necessary steps to add resources and increase fluidity in order to help customers meet their own growth targets this year despite the ongoing supply chain disruptions. Let's begin with Slide 5 in the presentation and an overview of our second quarter financial results. Operating income increased to $1.69 billion and earnings per share rose to $0.52. These figures include $349 million and $0.12 per share impact from the sale of property rights to the Commonwealth of Virginia. Our operating ratio was 43.4 including an 11.7 percentage point impact from the Virginia transaction. Excluding these impacts, operating income increased 62%, earnings per share increased 82%, and the operating ratio improved 820 basis points. Turning to Slide 6, revenue increased 33% on 27% volume growth. Merchandise revenue increased 26% on 21% higher volumes led by automotive, metals and equipment and Ag improved markets. Intermodal revenue increased 42% on 28% volume growth setting a new record for average daily volume. Both domestic and international volumes increased significantly and continued to benefit from strong demand for transportation services as well as growth from East Coast ports. Coal revenue increased 47% on 44% higher volumes with growth across all core markets. Domestic coal benefited from higher utility and industrial demand in both export net and thermal coal volumes rebounded meaningfully. Other revenue growth was driven by increased intermodal storage and equipment usage as well as higher revenue from affiliates. Sean Pelkey: Thank you, Jim. I'm pleased to be here today and I'm excited for the opportunity to continue serving this company at an important time in our history as we focus on culture, innovation and growth. Looking at the second quarter financial results on Slide 12, revenue increased $735 million or 33% versus the prior year. This reflects growth across every market as we cycle the impacts of COVID-19. Revenue per unit growth of 5% includes a 2% impact from higher fuel surcharge revenue, combined with favorable pricing and higher other revenue. Total expenses were 9% lower in the quarter. These results included a $349 million gain related to the sale of property rights to Virginia which was partially offset by the impact of higher fuel price. Excluding the property gain and the impact of fuel price, expenses would have been up 9% on a volume increase of 27%. James Foote: Great, thanks, Sean. Concluding with Slide 15, we are maintaining a full year revenue outlook. Excluding the impact from Quality Carriers, we continue to project double-digit revenue growth for the year. As Sean mentioned, the acquisition will add approximately 6% incremental revenue growth on an annualized basis, and we expect the impact this year to be about half of that. We will achieve these growth targets by providing our customers with a high quality service product. As I said, we are taking necessary steps to ensure we deliver on this commitment. Our capital expenditure outlook remains at $1.7 to $1.8 billion for the year and we will continue returning cash to shareholders. Demand remains strong and so does our commitment to customers. We are resourcing the network for growth. We are driving operational improvements to add capacity through increased asset utilization. We are investing in our business for the long-term and we continue to design new and creative solutions through our customers to move more freight with CSX today, and for years to come. Now back to Bill for the Q&A. Bill Slater: Thank you, Jim. In the interest of time, I would ask everyone to please limit themselves to one question. With that, we will now take questions. Operator: Your first question comes from Allison Landry with Credit Suisse. Your line is now open. Allison Landry: Good afternoon and thanks. I was hoping you could maybe talk about the underlying pricing environment specifically what you're seeing on contract renewals even if just directionally from Q1? And then just, given the myriad of inflationary pressures and very tight truck capacity, do you think there is scope for a more rapid acceleration in core price when you see the cost cycle? Thank you. Kevin Boone: Hey Allison, this is Kevin. In terms of price inflation today, and cost inflation what we are seeing and I'm keeping close with Sean and staying close to that so we can be transparent with our customers and explain to them what we're seeing in the market, none of that is a surprise to them. They're seeing it in their business. They certainly understand the pressures that are out there in terms of labor and other material costs. What we're really trying to do is see if some of these things are transitory or whether they're really here for the long term and we'll continue to evaluate that throughout the year. When you look at generally our contracts we have a lot of those renewals that occur in the fourth and first quarter. They're concentrated in those quarters and really it represents about 70% of our annual contract renewal activity, so we'll continue to look at that. We're communicating transparent with our customers and expect to obviously achieve that cost inflation through our pricing. Allison Landry: Okay, thank you. Operator: Your next question comes from Amit Mehrotra with Deutsche Bank. Your line is now open. Amit Mehrotra: Thank you, operator. Hi everyone and congrats on the on the great performance. Sean, if I look at the underlying operating ratio in the second quarter of 55.1%, is there any reason that that moderates in the back half? I guess you have to add that, we have to add the Quality Carriers into the mix, that looks like it's maybe 100 bps of negative impact this year given it's half of the $600 million or so in revenue. But I would just, if you just take that and table it for a second, mix is getting better hopefully in the back half. Kevin just talked about 70% repricing towards the end of this year and maybe half of that towards the end of this year. I would just expect that the underlying OR ex-the Quality Carriers acquisition gets better in the second half versus the stellar performance in the second quarter, if you can just help us think about that? Thank you. Sean Pelkey: Yes, thanks Amit. So, when you think about the second quarter, not a whole lot of unique items in there other than Virginia transaction, and then I talked about the impact of the fuel tax settlement there. So strip those out and carry it forward to the second half of the year, what's going to impact the operating ratio in the second half of the year Quality, you're right, I think you're doing the math correctly there. We've got some hiring to do, so we're going to be bringing on some crews. If we bring on the crews and network fluidity improves and we're able to move the volume that will be a positive, but there'll be a cost to bringing those crews on. We'll also going to have some incentives here to increase the availability of crews. So that will be an impact. And then, probably the biggest variable is what does volume look like in the second half. We've been able to demonstrate here, albeit on a relatively easy comp that the drop through is pretty good, but the margins in the second half will be highly dependent on what the volume looks like. Amit Mehrotra: Right, but then on the labor side, I think they're 6% to 7% of the workforce that it fits every year. So, when you're talking about growth in sequential labor or headcount, is that a net number or gross number net of attrition if you can just provide a little bit color on that as well? Sean Pelkey: Yes, so I mean, we're going to continue hiring through the rest of the year and as long as we need to in order to move the volume and increase fluidity. I would expect sequential headcount is probably going to go up a little bit on a net basis, both in the third quarter and the fourth quarter. Amit Mehrotra: Okay, makes sense. Thank you very much, I appreciate it. Operator: Your next question comes from Chris Wetherbee with Citi. Your line is now open. Christian Wetherbee: Yes, hey thanks. Good afternoon everybody. Just may be a question on the revenue outlook for the back half of the year. It sounds you are maintaining your outlook and I think, I guess when we think about volumes, do you feel like the network is at all constrained in order to take on incremental volume? I mean, do you think you're running kind of below what the demand environment would be able to sort of provide you? And then in that context, how do you feel about sort of service, are there some improvements that need to be made whether those heads coming back on or otherwise you are going to reach maybe full potential from the volume growth perspective in the back half? Kevin Boone: Yes Chris. Look, when you look at the transportation sector as a whole, we're not unique. Everyone is having their challenges. The fluidity out there is not very good right now when you look across all modes of transportation and those challenges we're facing the same challenges, getting trucks to pick up the boxes out of our yards, all those things create challenges for us so. Yes I'd say there was opportunity that we weren't able to move in the second quarter, that's probably a fair assessment. As we get more fluid, as we bring on crews, I suspect that that will generate opportunity. We're certainly having those conversations with our customers today. They want additional capacity and we're committed to do everything we can to react as quickly as we can to bring on more people, more capacity to serve those customer needs. We're already starting to have conversations around next year. So I'm communicating every day with Jamie when I'm having discussions with customers and what they need and so we can get out ahead of it with our resources. We can plan ahead, we can commit to delivering any other service that we expect to do. Christian Wetherbee: Got it, thank you. Operator: Your next question comes from Ken Hoexter with Bank of America. Your line is now open. Ken Hoexter: Hey, great, good afternoon and congrats on the solid results. I just wanted to talk a little bit about the congestion that's going on, so obviously you just had a couple questions on employees and ability to handle it. I believe we've seen the two Western rails kind of do embargoes on traffic. Maybe talk a bit about, we've seen your metrics kind of come down in terms of on time performance, talk about if you're starting to see any of that spread to the Eastern network, is there different congestion points that especially what's going on in Chicago that you fear is starting to create any larger backlogs? And then just on that note, your cost per employee really scaled, can you address kind of, if there's anything in that that we should look at going forward? Thanks. James Foote: Yes Ken it's Jim. I'll make a quick comment and then I'll let Jamie follow up with any details if things are necessary. We've been very, very, very committed to making sure that this railroad runs well. It has been an unbelievable challenge. I've never seen any kind of a thing like this in the transportation environment in my entire career where everything seems to be going sideways at the same time. Despite all that, we have been able to keep our terminals open in Chicago, and I hope we can continue to do that. In January when I got on this call, I said we were hiring because we anticipated growth. I fully expected that by now we would have about 500 new T&E employees on the property. No way did I or anybody else in the last six months realize how difficult it was going to be to try and get people to come to work these days. It is an enormous challenge for us to go out and find people that want to be conductors on the railroad, just like it's hard to find people that want to be baristas or anything else, it's very, very difficult. Nor did we anticipate that a lot of the people were going to decide they didn’t want to work anymore. So attrition was much higher in the first half of the year than what we had expected. So even though we brought on 200 new employees, we fell short of where we thought we would be by now going into the year because we anticipated that there was going to be strong demand. We continue to expect there to be strong demand, and as long as there continues to be the forecast for demand, we are going to continue to hire employees, because you need employees to run a railroad. That's what we're managing this company to do, is to serve our customers needs, and we'll bring on the assets and put them into places where they need to be, so that we can move our customers' freight, simple as that. Jamie Boychuk: I mean, I think Jim's comments really nailed it with respect to some of the headwinds that we've faced here with respect to the metrics and where they sit. I'm proud of what this team has been able to do under the environment we've been at, quite confident that in the environment we're in that Kevin and his team is providing us with some great numbers of what we need to look for going forward into the next six to eight months, as far as we can in this industry, but we know we can do better on these metrics and that's what I think is the great opportunity as an operating team as we look forward. We've got the rolling stock that we need. We've got the assets that are sitting there. It's people to Jim's point and I think it was mentioned by Amit it was 8% is what we look at for our attrition, which means we're going to be hiring for attrition, but we're going to be hiring for above attrition as well. We need to get 200 trainees out there, we mentioned that our T&E count is up a couple 100. You know there's more numbers. We know what our number is and we're going to go after that and for us it's all about the reliability to the customer. So as the fluidity picks up, as dwell continues to drop, yes we see some benefits there with costs and the rest of it as we move along, but ultimately, we look at our trip plan performance which is getting better and better, particularly on the intermodal side. On the carload side the reliability is where we need it to be. So we're going to take the steps required in order to get that reliability where it has to be and Kevin and his team are able to go out there and sell the product, which is service, and that's key for us. Without service we're not any different than anybody else, so we've got to continue to capture that which allows us to grow and continue to push forward. So maybe I'll let Sean really touch on the cost per employee. Sean Pelkey: Yes Ken, just quickly on that. So if you're looking year-over-year there's a few things to think about, first is the incentive comp I called out. We've got inflation on the labor side and then we've got a little bit higher over time versus last year as we were obviously scaling down over time with the plummeting volumes. Just the other factor from last year, you remember we had those emergency reserve boards, so we had about 300 employees who didn't have significant wages along with their emergency status there. So looking from the first quarter we're actually down a little bit sequentially reflecting some normal seasonal trends. Ken Hoexter: Great, thanks Jim, Sean, and Kevin, I appreciate it. Operator: Your next question comes from Tom Wadewitz from UBS. Your line is now open. Tom Wadewitz: Yes, good afternoon. This is a question I think for Jim, maybe Kevin as well. You've talked about, I think for a couple of years about the opportunity with carload shippers to gain wallet share versus truck. And I think you were developing some good momentum or had some good momentum in that before COVID. I am wondering, it's an unusual circumstance, but does it hurt your ability to continue that program and to kind of gain further share from these shippers given that the rail network is having these challenges? I mean, they're not, a lot of it's not in your control, but how do you think that affects the ability to gain share? And when do you think you kind of get back on track with that share gain for carload shippers? James Foote: Sure Tom. Many times we tried to explain why we're so confident in our ability to grow above traditional rates in our car load merchandise business was because we have if we can develop a product that's truck like we will have a cost advantage that gives the customer lower cost transportation solution, and it would be similar level of reliability. And as we were moving along as you said coming in starting in 2017 getting into the 2019, our reliability was significantly better than where it had been in 2017. Our car load trip plan compliance number was in the high 80%, mid to high 80% range. And so going in and having conversations with a customer who number one was skeptical about switching from truck to rail. We had a very good track record, and interesting product for him to look at. It's unfortunate and I now I have to sit here, much to my disillusionment and say our trip plan compliance number is 69. Is the 69 trip plan compliance much better than it was in 2017? Yes, so we still have the ability to have a good narrative with our customer base, about why it makes sense for them to switch, but it's just simply not as compelling as it was 18 months ago or 15 months ago, or just before the world went sideways on this, so but we're going to get back. That number would be much higher. As I said, the 500 employees that we hoped we would have had here by now, new conductors here by now, that number would have been much higher and we're hiring and doing whatever we possibly can do to run and improve the speed and velocity and reliability of our service and as we do we'll get back to having -- being in a position to having similar conversations with our customers as we did before. At the same time, and it ain't easy to find a truck right now. So it's unfortunate that we're not really, on the one hand we're not as good as we work, but on the other hand, if we -- when we get back to where we were, the opportunity right there is tremendous for us. So nothing has really changed about our optimism at all in terms of this strategy that will drive outsized growth for us as we move forward. It's just unfortunate, that as I said, the world went sideways on us here for a while. But we're coming back, we're coming back strong, and we'll be even better than where we were as we get more time to get things running right. Tom Wadewitz: Is that something that bounces back quickly, like you could be on track and 2022 or do you think the shippers have some kind of readjustment period to reengage on that, that share gain discussion again? James Foote: Again, I hope that our service metrics, as I said, I kind of said on the last call, we'd be in great shape by now, so yes, I expect those numbers to get back by the end of the year. And we position ourselves in the transportation community as it has an extremely good service product. So going into next year, again we're getting truck conversions now. Our intermodal growth to a large degree is coming from converting long haul over the road trucking to intermodal. Our growth in certain segments with certain customers in the car load side is coming at the expense of the truck. So we're still seeing that. I just think that the, again, we are not in, it's not as easy for themselves, the man or woman to go in and talk to a customer today about how great we are and why they should convert more traffic to rail than it was in the fall of 2019. It doesn't mean it's not achievable. It just means it's not as easy and we'll just have to work harder. Tom Wadewitz: Okay, great. Thanks for all the perspective. I appreciate it. Operator: Your next question comes from Scott Group with Wolfe Research. Your line is now open. Scott Group: Hey, thanks, good afternoon, guys. So, Kevin, it feels like for now we've got a favorable environment for coal. Maybe just talk about what you're expecting from the volume and RPU standpoint on coal going forward. And then just separately, Jim, just any thoughts on the executive order and how you guys think about reacting responding in any way? Kevin Boone: Yes, the coal market is similar to a lot of the other markets that we're, we talked about today is the same. Its demand is outstripping supply. You're having the coal mines trying to catch up. They've under invested, so they are catching up on some of their investments. They are having some of the same struggles we are on the people side. So we're seeing all that today. You see the underlying commodity prices, whether it's natural gas here in the U.S. or met coal prices internationally, and thermal coal prices internationally, they're all supportive of an uptick in volume and will start to lapse and continue to lapse some very easy comps into the back half of the year. So we do expect growth, but not back to the levels that we saw in 2019 and a lot of that is based on the supply chain continue to try to catch up with the demand. So we're already having discussions with our customers and what does it look like for next year and how do we continue to replenish inventories, particularly here on the domestic side, where inventory levels are very low. We're in a situation right now, where we're trying to keep inventory levels to above those critical levels, so they can continue to burn and serve their customers. But, the environment is quickly turned up, I had discussions last week, they didn't see this coming. They were surprised about how quickly the market recovered. And so we're all communicating and really trying to understand how they can do better, how they can on the supply side, and how we can deliver the transportation services so they can deliver to their end customer. But, very good outlook, when you look at RPU is a little bit on the international side that we'll see favorability, particularly on the met side, where our price follows the commodity price and domestic will be relatively similar kind of dynamics that you saw in the second quarter going forward, so good market there. James Foote: Yes, Scott on the executive order, I guess when we first heard about it, before it had actually been released, it seemed like the administration had for some reason sitting out the railroads and steamship businesses. Once the full information got out, and we were able to digest it, and find out that it covered everything and everybody, and especially tech, we got a little better viewpoint of what it was all about. And it appears to be pretty much not a lot of new items in it, but if any, but the agenda as it relates to railroads, the agenda that has been moving for a long at the Surface Transportation Board for years. So it was kind of like, what are the other things that’s going on at the Surface Transportation Board, and we're just kind of listed along with every other regulatory move afoot in all industries. And, it's really my personal opinion, it's really unfortunate, when the supply chain, all of these essential workers who have been doing an amazing job now in during a pandemic, are kind of singled out as, our railroad is made up of all these employees that are out there working, and all of these regulatory ideas, which are really pushed forward by industry lobbyists, who want to change the rules and regulations, decided at this point in time when everybody's working so hard, that we should suddenly upend and take advantage of a difficult time to try and push forward a regulatory agenda. So it's not much new. I was somewhat disillusioned about what it really was but we're used to handling it in and then we'll move forward. Scott Group: Thank you for the time guys. Operator: Your next question comes from Fadi Chamoun with BMO. Your line is now open. Fadi Chamoun: Yes, hi. I was on mute I'm sorry. A question on Quality Carriers, if you can give us maybe your first impression, if we had some communication with clients, how are they perceiving this combination? And secondly, as we go into 2022, I think you mentioned for this year, it's going to breakeven on an operating income basis. But as we go into 2022, how are you thinking about the contribution of that business to operating income? Kevin Boone: This is Kevin. The quality integration of July 01 you could imagine we got our teams together and quickly after that our sales team along with Quality sales team, and their feedback so far from the customer has been overwhelmingly positive. They're looking for capacity in the market. We have several ongoing initiatives currently with customers that will offer that capacity that they're looking for. We're doing all of our diligence, making sure when we bring on the service, we communicate with Jamie and his team and that we can service that business to the standard that we expect. So there's -- we'll do it very carefully and very methodically, particularly in this market today. But this is a product that we knew that's going in because we did our diligence ahead of that, we surveyed our customers and we surveyed their customers and we asked them this is something that they feel is needed in the market. And the overwhelming response was, yes, we would like this in the market, they see the value. We will be thoughtful on how we bring it on. We have a lot of inbound customers calling us, looking to come up with additional solutions. And we'll bring those on. But it's been great so far. Our teams are working very, very closely together and we're working closely with others. And so they can understand the opportunities in ways that we're thinking about bringing in a lot more into the network. And I'll let Sean handle the financial side of it. Sean Pelkey: Yes, and Fadi, so in terms of the financial impact as we get into next year, the core trucking business has truck like margins. So you can expect to see that next year, but it's about the conversion that Kevin has been talking about, when we're able to drive some of that business that's moving over the road today over to the rail, and do it on existing trains, the incrementals on that growth should be pretty significant. We've got to ramp that up over time. We need to make sure we've got the equipment and all the piping in place, but you should see a ramp up in that next year. Fadi Chamoun: Okay, thanks. Operator: Your next question comes from Justin Long with Stephens. Your line is now open. Justin Long: Thanks and good afternoon. Jim, I wanted to clarify the comment you made earlier on the progression of car load trip plan compliance going forward. Are you saying that getting back to the mid to high 80s was possible by year end? And then from a resource perspective, we've talked a lot about headcount, but can you talk about your plans for redeploying locomotives in the back half of the year as well? James Foote: Yes, I'll let Jamie talk about locomotives, but in terms of my goal to get back to where we were, yes we hope that we could. Where we are right now would be challenging associated with being able to hire people, I don't know if that's achievable. That's my goal. That's what I'd like to see happen. And then I'd like to see us get better from there. I can't say right now whether or not until something changes dramatically in the hiring situation, whether or not we'll be able to achieve that. Jamie Boychuk: On the locomotive side, as we get faster, and we can improve our fluidity out there from even where we are now, we're going to need less locomotives. So the question isn't necessarily where our numbers at now. We are good with what we have for our locomotives. We still got hundreds of locomotives in storage. We've got a great rebuild program that we're continuing to do. We've got 60 rebuilt locomotives coming out here over the next three months, which will allow us to put down some more locomotives that aren't as fuel efficient. So we'll continue along that track and, nothing but continued opportunities, particularly on the technology side, as we continue to work with our zero-to-zero program through Trip Optimizer and Vitronics . There's a lot to gain as we continue to move forward on that front. Justin Long: Okay, great. I appreciate the time. Operator: Your next question comes from Brian Ossenbeck with JPMorgan. Your line is now open. Brian Ossenbeck: Hi, thanks. Good afternoon. Just wanted to ask Kevin for you just for an update on the land portfolio, the industrial pipeline, how you think those things are trending? If those conversations have really changed, given the demand backdrop, what's I guess your timeline expectations for site development or something like that that would come from those efforts it would be more noticeable. And then just to follow up on the question of labor and resources, it sounds like that's the key getting labor, but it also sounds like it's pretty hard for you and for everybody. So maybe you can just give us a sense of your confidence in that. And then if there's any other levers you can pull across the network the different asset deployments that will help you get there if the labor doesn't -- ends up being as hard as it looks right now. Kevin Boone: Well, let me touch on the industrial development and how we're thinking about it. The pandemic really has changed the way how customers are viewing the supply chains and we're really what I'm posing the team to do is we need to be in our that conversation that they're reevaluating it. Are there new facilities, are there new warehousing, is there new production that they're going to want to onshore and how do we sell the opportunity to put that on CSX rail and they get well served. I think the customers understand the opportunity that that gives them in terms of options and be able to move their freight, particularly in an environment where our global supply chain can be challenged, that the freight, the railroads have been reliable and have continued to move freight throughout the pandemic. And they are increasingly seeing the value of that. So I'm excited about leveraging our real estate portfolio, we have a lot of ready sites that they can build on today. We're marketing that along with the real estate team closely and, seeing some traction there. So it's exciting. I think it's early, but I'm hopeful that we'll start to see a little bit more opportunity over the next 12 months as we get out and get in front of our customers there. James Foote: On the labor side, I've been working really closely with our HR department, Diana Sorfleet and her crew. Really the last eight months it's been difficult, there's no question about it. We've gone through some ebbs and flows with our applications have come forward, making sure we get the right people to work in new jobs. Just recently, there's a couple of things that we've done that's helped us. We've come up with a deal with our conductor SMART-TD for an availability agreement, which allows us to work closely with our conductors and make sure that their availability is better than it has been. So that agreement has been successful here over the past couple of weeks, since it's kicked in. And believe it or not, being a fourth generation railroader, I'm a believer that sometimes the best people you get for railroads that stick around are actual people from railroad families. I think there's a few others around this table in the same situation. We have put a referral program together, offering incentives to our employees to refer people to our railroad to work for CSX, and we went from a application of just a few 100 people to I would say, within a two-week period, well over 1000 applicants that we're going through right now to bring on as conductors. So the pipeline has gotten very strong and this program has helped out and of course the referrals will then help people stick around until they understand the job is, they know what it's about, and understand the lifestyle. So this program is really going to help us move forward as we continue to do our hiring. Brian Ossenbeck: All right, thanks for the time. I appreciate it. Operator: Your next question comes from Jordan Alliger with Goldman Sachs. Your line is now open. Jordan Alliger: Yes. Hi, I was just wondering if you could talk a little about the international intermodal front, the issues that are out on the west coast and some of the gating procedures in Chicago. Do you think that's, is that or will that lead as we move towards peak season, retailers and others, perhaps diverting more traffic to the ports in the East Coast and could that lead to additional opportunity for you again, assuming your service could keep up. Thanks. James Foote: Yes, I think, you really identified a trend here. The West Coast ports have struggled, particularly through the pandemic and as freight demand has really picked up here and, the secular trend that we continue to see more freight moving to the East Coast. This is another reason why I think the shippers are going to look for that option and that's the, that's a very good thing for our franchise in the east. We remained fluid. Jamie and his team have done a great job, working with all of our partner port partners to continue to move freight and so the intermodal terminals remain open. We continue to move freight and we want more of it. We're continuing to invest in inland ports and other areas to make sure that we can serve it. Jordan Alliger: Thank you. Operator: Your next question comes from David Vernon with Sanford. Your line is now open. David Vernon: Hey, guys, thanks for taking the time. Jamie, it's still unclear to me whether the resource initiatives you're having are a function of having custom deep kind of on the way down, or whether this is just sort of sand in the restart recruiting gears trying to get guys off of the item boards or whatever. Could you talk more specifically to what the core issue is here? And then as a follow up, Jim or Kevin, when do you start getting worried that the service relations you're having now are going to impact your ability to make hey on the -- be a pretty good market next year? James Foote: A little fuzzy, but I think your question is, the issues associated with the employees and we're trying to hire people, correct? David Vernon: Yes. James Foote: Yes. Now, we're not, I don't think, I think this is a trend for every business right now. It's a challenge. I think we're evolving in the way we think about this and have to try and figure out things to do to make these jobs more attractive. They're extremely good paying jobs, with extremely good benefits, with all kinds of other bells and whistles, but in today's world, that's not enough. So a lot of the things we're doing right now in terms of, as Jamie said getting referrals, doing this, doing that, going to fill the need on a short-term basis that I'm convinced, and I think the team is convinced that we need to kind of look at this from a long-term perspective and say, what do we really need to do to make sure that we have a stable, long-term pipeline of people that enjoy coming to work, and doing what they need to do. And, nice weekends, holidays, winter outside, all of that where people before kind of delight that, they don't want to do that anymore. So we have to look at the whole big picture and we'll do that, because we need employees to run railroads such as that. And so we're going to change our thoughts, our processes and throwing money at people these days is not the answer. David Vernon: And I guess the other question in there was whether and when you start to get worried that the service issues maybe you are having now, starts to impact your ability to kind of take rate up into 2022? James Foote: Well, I think that the, I'm not worried right now, because I think we have plans in place that will get us where we need to be by the end of the year. As I said in my remarks earlier, we were caught somewhat surprised, and as much as we had a plan in place to get us to where we thought we needed to be and the issues that everybody is facing right now kind of flared up. But we have, it has been a full court press. Jamie and I are personally doing everything we possibly can to work with the union leadership to help us make them tremendous in response to making sure that we're ready and willing and able to serve our customers. So I feel pretty good about where we should be absolute working and working today. It is not like the pandemic is growing out there, hello, it's alive and well right here. So, who knows what things, what's going to happen in the next couple of weeks, couple of months? Well, let's assume that we have some reasonable health conditions in the country. I feel pretty good we'll go into 2022 rare positions and we will continue to make sure that we have a pipeline of labor coming at us all the time in the future. Operator: Your next question comes from Walter Spracklin with RBC. Your line is now open. Walter Spracklin: Yes, thanks very much. I just have quickly, good afternoon everyone. I just wanted to come back on pricing. But I'd take a different angle in terms of how you're structuring or might be restructuring or changing at all. The type of contracts you're negotiating with your customers and in particular, we're in a period of high pricing, particularly in trucking and intermodal. And there are some questions whether that is sustainable? So my question to you is, are you changing or can you change at all the terms in your contract to lengthen them out to better capture and preserve the current pricing environment longer than you otherwise would have on your prior, under the structure of your prior contracts? James Foote: Well, I don't think there's anything in this environment that changes our overall approach to how we go to market. It's about being transparent with the customer around the cost pressures that we're facing in our business. They get it. They're facing the same issues and having a discussion around that. I'm more interested about how we partner with our customers to grow their business and help them compete in the markets. Those are the things that I'm really focused about. We all realize we have to cover our costs. That's, that's really a secondary discussion. When it comes to the conversations I'm trying to have with the customer. I'm trying to understand how their business is being impacted today, what they expect, how they expect to grow next year, what can we do from a service, perspective to help them in our new markets, help them advantages in the markets and compete and win share, if they're winning in the market, we're going to win. And so a lot of those conversations are happening today. Certainly, we expect to cover our costs going forward, but really, it's a combination of volume growth, and we want to grow with our customers, and we want them to be successful growing their business going forward. Kevin Boone: Yes, it wasn't so much to take advantage, but more to come to an agreement where okay, capacity is very tight, maybe a customer wants to lock in higher for longer, and you can accommodate that through longer terms. Just curious if any of that is coming up where customers wanting to -- desperate for capacity wants to lock in for longer and if you can, keep that pricing in as a result for longer as well, that sounds like that's not happening. James Foote: No, look, I'm a 100% confident. I talk with Jamie every day that this network is going to get better and better and we're going to enter next year, able to service our customers. And we're having those discussions of how we bring on more volume. And what we're asking our customers to do is tell us what that volume looks like. So we can resource and prepare from a headcount perspective all the crews. We certainly have the locomotives. We have the assets out there to go and service that business. So we want to get ahead of that. It's been incredibly hard markets to predict what volumes are going to do and we've all been surprised about the shape of the recovery. But what we're trying to do and get out in front, so we know how much we need to hire and get way out ahead of it, to make sure that we're there for the customer going forward. Walter Spracklin: Makes sense. I appreciate the time. Operator: Your next question comes from Cherilyn Radbourne with TD Securities. Your line is now open. Cherilyn Radbourne: Thanks very much. Good afternoon. I wanted to ask a question about automotive where volumes are up a lot, but presumably not as much as they could be. So could you talk about the extent to which you have visibility to when the chip shortage might improve? And do you think that the pent-up demand that might be released once that happens could be a tailwind that could contribute to above trend volume growth into 2022? James Foote: Well, and you're probably looking at the same data I am. You can't find a used car, you can't find a new car. It's another market where demand is outstripping supply. We're close to -- we stay close with our auto customers. We've seen rolling shutdowns and auto plants that we serve. And that continues to persist. When we came into the year we started to see the problem. The problem seems to continue to move to the right. It's going to impact our third quarter. And, the question remains, how long into the fourth quarter that goes and does it extend into next year? Are there going to be other supply constraints in the market, other materials that will provide shortages? It's a global supply chain and so what's the next thing that we could run out of? That's what we're all watching. But to stay in close with the customers and we do know there's pent-up demand are going into next year, that will help a of other markets that we serve, I think, the metals market, plastics, all those are inputs into the auto industry today. And hopefully it provides another incremental growth lever that will be pulled as we move into 2022. But there's, everybody sees that there's a lot of pent-up demand. The auto production today has continued to come down given the supply constraints out there. Cherilyn Radbourne: That’s all from me. Thank you. Operator: Your next question comes from Ravi Shanker with Morgan Stanley. Your line is now open. Ravi Shankar: Thank you. Good afternoon everyone. Couple of follow-ups. Jim, I wanted to follow up on your comment earlier that now throwing money is not going to solve the labor problem, which doesn't make sense, given some the structural issues. But in the near term, I think a lot of the other industries are throwing money the problem, whether it's trucking or fast food or retail or whatever. So I mean, are you saying that you're not going to go down that route at all or at what point do you do that? And also, kind of, how do we think about revenue per employee in the back half of the year? James Foote: Well, I personally think that we're, as I said, we need to look at, fundamentally look at what we need to do to make sure that we have a content happy workforce over the long period of time. And so that's what we're trying to do. I think that's kind of the plan in most businesses, whether it's bringing on to work or whatever it is you might need to do to make your job more fulfilling, that's great. If I'm a trucking company or an intermodal company and I decide that the smart thing to do is to pay my truck driver a quarter of a million dollars a year to drive a truck and then as always happens in the trucking business. Not maybe next year, but the year after, when the bottom drops out and there is excess capacity all over the street and people are driving trucks for their rates in order to put gas in the tank, the business model doesn't work so good. So we try to take a longer term more holistic approach to managing our workforce. Ravi Shankar: Got it. If I can squeeze in a follow up, the other revenue was about over $103 million this quarter. Is that a good run rate to look at for the back half of the year? Sean Pelkey: Yes, Ravi. So, that was impacted by the intermodal storage fees that, are due to the supply chain issues in the truck driver shortages that we've been talking about here. So, does that continue into the second half of the year? I think it depends on what happens with the persistence of those issues. But that's really the fundamental driver here in the second quarter. And then of course, you've got the quality impact that will hit other revenue in the second half. So don't forget about that as well. Ravi Shankar: Perfect. Thank you. Operator: Your next question comes from Jon Chappell with Evercore. Your line is now open. Jonathan Chappell: Thank you. Good afternoon, everyone. Kevin, just a quick one for you in your new seat, are you going to start for the first time, what impact are scope three emissions having either for their interest in using the rail to give a bit more of their wallet or from your side, pitching the rail, in addition to your cost benefits, having a mission benefit as well as an opportunity to take more business? Kevin Boone: Well, I can tell you, the environmental fits and definitely moved to the front of our marketing deck and when we discuss with customers. And, I think from the executive level down to starting to flow to the transportation buyers, they realized that’s an initiative coming from the top, it's high priority. And we're an easy solution to solve through that. So it's something I've asked the sales team to continue to press. We are incorporating in every discussion we have going forward, and it's resonated, quite frankly. And so it's a huge, when I think about all the secular trends that are going to help CSX grow going forward, you have the driver shortage. I don't think it gets fixed anytime soon. That's a huge advantage for us. We can supply capacity into the market and then you have the environmental side. Very, very powerful, and it will continue to grow. We've seen all the things that have happened in the market. Investors want it. Our employees want it and our customers and the consumer wants it. So it's something I'm incredibly passionate about. We're going to continue to sell it and it's pretty exciting. Jonathan Chappell: Have you seen it translate yet or do you think it's more of just like the immediate future? Kevin Boone: I think it's always -- it's hard to measure, but we win that business because we're more environmentally friendly than the truck. It's another reason we're winning business today. The other reason, obviously capacity constrained, we can – we have capacity, we're going to continue to grow capacity it will recover. I'm confident our operating team is going to recover, and we're going to have the best most capacity to offer our customers going into the next year. It is simple as that and so, all those factors play into why we're winning business, why we're winning in the market. But, the tailwinds are there. From a growth perspective it's just, I don’t know -- my responsibility along with Jamie to go out and deliver on that. Jonathan Chappell: Got it. Thanks, Kevin. Operator: Your last question comes from Jeff Kauffman with Vertical Research. Your line is now open. Jeffrey Kauffman: Thank you very much and thank you for squeezing me in. Sadly, all the intelligent questions have been asked at this point. But let me just come back to the customer side, Jim, because that seems to be a focus in the market side right now. If you had your ability to put all the people you want in the railroad today, and you talked about the challenge and getting to the 500 T&E by this summer, but let's just say you could and you could fix that element of what's going on, how much of the service and the trip plan issues would that solve? Because when I talk to transport companies, they tell me, yes well customers are holding on to equipment a little longer than they should or we've had trouble getting our equipment back or just timely handoffs with some of our other service partners. How much would be fixed, if you had every asset internally that you wanted? James Foote: The employee issue, the Train and Engine service employee issue, will clean up a vast majority of the issues we have that show up and what we call our trip plan compliance number, will improve our velocity, will drive down our dwell. There will still be the noise in the supply chain. It's not going to correct as shortage of chassis, that's not going to correct a shortage of containers or draining or port congestion and that sort of thing, but it will and so therefore it's not Nirvana, but it will certainly help us in terms of being able to improve the overall reliability of our product again, and get it back to where it was, so we can focus on making even better and better. Jeffrey Kauffman: Okay, so you would say the lion's share of getting to where you need to be is something you can handle internally with more resources? James Foote: Yes, I mean, we've always said that. I mean we've -- by changing, fundamentally changing the way this company runs over the last almost four years now, we've freed up capacity across the network. We have significant amount of track capacity so we can add growth without investing in track capacity. As Jamie said earlier, we have locomotives available. We have locomotives on standby. We have locomotives in storage if we need to use them. So yes, the impediment to our performance right now is primarily, if not exclusively, I'd like to say it's primarily because certainly in this business, you have to throw in the occasional pandemic or hurricane. But primarily when we can hire, if I figure out ways, like everybody else in the country, to replenish our workforce, the problem was, we had a pandemic. We didn't hire during the pandemic because the business went away. We have 7% of our workforce that retires every year. 7% of our workforce retired, we thought, okay, the business bounced back, we'll hire 7% of our employees back plus a little bit more to handle the growth. And they're not available. So yes, we'll fix that. It's just taking us longer than we expected and when we get that done, the railroad will be back running the way it did before and we'll get it even better. Jeffrey Kauffman: Okay, congratulations to you and your team in a very challenging environment. Thank you. James Foote: Thank you. Operator: There are no further questions at this time. This concludes today's conference call. Thank you for joining. You may now disconnect.
CSX Corporation (NASDAQ:CSX) Stock Analysis: A Steady Outlook Amid Market Fluctuations
- The average target price for CSX Corporation (NASDAQ:CSX) remains stable at $37, reflecting a consistent analyst outlook despite past fluctuations.
- CSX faced a 7% year-over-year decline in revenue in the first quarter, attributed to weaker coal prices and reduced fuel surcharges, yet managed to meet consensus expectations.
- Despite revenue and profit declines, analyst Ken Hoexter from Bank of America Securities sets a price target of $38 for CSX, indicating cautious optimism for the company's future.
CSX Corporation (NASDAQ:CSX) is a major player in the rail-based freight transportation industry, providing essential services across a vast network that connects key population centers and industries. The company's stock has experienced some fluctuations in its consensus target price over the past year. Currently, the average target price is $37, showing stability compared to $37.69 a year ago. This consistency reflects analysts' steady outlook on CSX's performance.
Despite a challenging first quarter, CSX's stock has seen a positive movement, rising by 1.2% as the market shifts focus towards earnings. The company faced a 7% year-over-year decline in revenue, primarily due to weaker coal prices and reduced fuel surcharges. However, CSX managed to meet consensus expectations, indicating resilience in a mixed market environment, as highlighted by the Nasdaq Composite and S&P 500's fractional gains.
The recent uptick in CSX's target price from the last quarter's $35 to $37 suggests a positive shift in analysts' expectations. This could be attributed to improved market conditions or strategic initiatives within the company. Despite the decline in revenue, CSX's demand remains steady, as noted by CEO Joe Hinrichs in a conversation with CNBC's Morgan Brennan. The company's dividend yield stands at 1.9%, but it faces competition from the 10-Year Treasury Note, which offers better risk-adjusted returns.
CSX's first-quarter 2025 earnings report revealed a decline in revenue and profit, falling short of Wall Street expectations. The decrease in coal revenue and fuel surcharges offset gains in intermodal, impacting the company's financial performance. Analyst Ken Hoexter from Bank of America Securities has set a price target of $38 for CSX, reflecting cautious optimism about the company's future prospects.
As CSX navigates its earnings season, investors and stakeholders should monitor upcoming company announcements and industry trends that could influence analysts' target prices and the stock's performance. The company's recent earnings conference call, attended by major financial institutions, provided insights into its strategic direction and financial performance, highlighting the importance of staying informed in a dynamic market landscape.
CSX Corporation (NASDAQ:CSX) Stock Analysis: A Steady Outlook Amid Market Fluctuations
- The average target price for CSX Corporation (NASDAQ:CSX) remains stable at $37, reflecting a consistent analyst outlook despite past fluctuations.
- CSX faced a 7% year-over-year decline in revenue in the first quarter, attributed to weaker coal prices and reduced fuel surcharges, yet managed to meet consensus expectations.
- Despite revenue and profit declines, analyst Ken Hoexter from Bank of America Securities sets a price target of $38 for CSX, indicating cautious optimism for the company's future.
CSX Corporation (NASDAQ:CSX) is a major player in the rail-based freight transportation industry, providing essential services across a vast network that connects key population centers and industries. The company's stock has experienced some fluctuations in its consensus target price over the past year. Currently, the average target price is $37, showing stability compared to $37.69 a year ago. This consistency reflects analysts' steady outlook on CSX's performance.
Despite a challenging first quarter, CSX's stock has seen a positive movement, rising by 1.2% as the market shifts focus towards earnings. The company faced a 7% year-over-year decline in revenue, primarily due to weaker coal prices and reduced fuel surcharges. However, CSX managed to meet consensus expectations, indicating resilience in a mixed market environment, as highlighted by the Nasdaq Composite and S&P 500's fractional gains.
The recent uptick in CSX's target price from the last quarter's $35 to $37 suggests a positive shift in analysts' expectations. This could be attributed to improved market conditions or strategic initiatives within the company. Despite the decline in revenue, CSX's demand remains steady, as noted by CEO Joe Hinrichs in a conversation with CNBC's Morgan Brennan. The company's dividend yield stands at 1.9%, but it faces competition from the 10-Year Treasury Note, which offers better risk-adjusted returns.
CSX's first-quarter 2025 earnings report revealed a decline in revenue and profit, falling short of Wall Street expectations. The decrease in coal revenue and fuel surcharges offset gains in intermodal, impacting the company's financial performance. Analyst Ken Hoexter from Bank of America Securities has set a price target of $38 for CSX, reflecting cautious optimism about the company's future prospects.
As CSX navigates its earnings season, investors and stakeholders should monitor upcoming company announcements and industry trends that could influence analysts' target prices and the stock's performance. The company's recent earnings conference call, attended by major financial institutions, provided insights into its strategic direction and financial performance, highlighting the importance of staying informed in a dynamic market landscape.
CSX Misses Earnings Expectations, Shares Slide 3%
Shares of CSX Corp (NASDAQ:CSX) dropped more than 3% pre-market today after the railroad operator reported fourth-quarter results that fell short of analyst expectations. The company struggled with a challenging operating environment, citing weather disruptions and infrastructure setbacks.
CSX reported earnings per share of $0.38, missing Wall Street’s consensus estimate of $0.44. Revenue for the quarter came in at $3.54 billion, narrowly below analysts’ projections of $3.59 billion.
The company highlighted the impact of significant challenges in 2024, including disruptions from major hurricanes and the Key Bridge outage earlier in the year. Despite these setbacks, the company emphasized its commitment to maintaining high levels of customer satisfaction.
In contrast, competitor Union Pacific delivered stronger results, exceeding profit expectations thanks to improved shipping volumes and effective pricing strategies. However, Union Pacific’s performance was tempered by lower fuel surcharge revenues and a less profitable cargo mix.
CSX’s results underscore the difficulties the railroad faced in navigating external disruptions, while its rival Union Pacific managed to leverage favorable conditions more effectively, widening the competitive gap. Investors will be watching closely as CSX seeks to address these headwinds heading into 2025.
CSX Misses Earnings Expectations, Shares Slide 3%
Shares of CSX Corp (NASDAQ:CSX) dropped more than 3% pre-market today after the railroad operator reported fourth-quarter results that fell short of analyst expectations. The company struggled with a challenging operating environment, citing weather disruptions and infrastructure setbacks.
CSX reported earnings per share of $0.38, missing Wall Street’s consensus estimate of $0.44. Revenue for the quarter came in at $3.54 billion, narrowly below analysts’ projections of $3.59 billion.
The company highlighted the impact of significant challenges in 2024, including disruptions from major hurricanes and the Key Bridge outage earlier in the year. Despite these setbacks, the company emphasized its commitment to maintaining high levels of customer satisfaction.
In contrast, competitor Union Pacific delivered stronger results, exceeding profit expectations thanks to improved shipping volumes and effective pricing strategies. However, Union Pacific’s performance was tempered by lower fuel surcharge revenues and a less profitable cargo mix.
CSX’s results underscore the difficulties the railroad faced in navigating external disruptions, while its rival Union Pacific managed to leverage favorable conditions more effectively, widening the competitive gap. Investors will be watching closely as CSX seeks to address these headwinds heading into 2025.
CSX Corporation (NASDAQ: CSX) Earnings Report Highlights
- CSX Corporation reported earnings per share (EPS) of $0.42, missing the estimated $0.44.
- Revenue for the quarter was $3.54 billion, slightly below the estimated $3.56 billion.
- The company faced a pre-tax, non-cash goodwill impairment charge of $108 million, impacting its financial results.
CSX Corporation (NASDAQ: CSX) is a major player in the freight railroad industry, providing essential rail services across the eastern United States and parts of Canada. The company operates within the Zacks Transportation - Rail industry, facilitating the transportation of various commodities such as chemicals and automotive products. Despite its significant role, CSX recently reported earnings that fell short of expectations.
On January 23, 2025, CSX announced earnings per share (EPS) of $0.42, slightly below the estimated $0.44. This marks a decrease from the $0.45 per share reported in the same quarter the previous year. The earnings miss represents a negative surprise of 2.33%, as highlighted by Zacks. In the previous quarter, CSX also missed expectations, with earnings of $0.46 per share against an anticipated $0.48, resulting in a 4.17% negative surprise.
CSX's revenue for the quarter was $3.54 billion, falling short of the estimated $3.56 billion. This represents a 1.24% decline from the Zacks Consensus Estimate and a decrease from the $3.68 billion reported a year ago. The shortfall was primarily attributed to decreased coal shipments and reduced fuel surcharges. Despite these challenges, CSX has managed to surpass consensus earnings per share estimates twice in the last four quarters.
The company's financial results for the fourth quarter and full year of 2024 were impacted by a pre-tax, non-cash goodwill impairment charge of $108 million. This led to a decrease in operating income to $1.11 billion from $1.32 billion in the same period the previous year. Net income for the quarter was $733 million, or $0.38 per diluted share, down from $882 million, or $0.45 per diluted share, in the fourth quarter of 2023.
For the full year 2024, CSX reported an operating income of $5.25 billion, reflecting a 5% decline from the previous year. The net income for the year was $3.47 billion, or $1.79 per share, compared to $3.67 billion, or $1.82 per share, in 2023. When adjusted for the goodwill impairment charge, the operating income for the quarter was $1.21 billion, and for the year, it was $5.35 billion. Adjusted net income stood at $815 million, or $0.42 per diluted share, for the quarter, and $3.55 billion, or $1.83 per share, for the year.
CSX Corporation (NASDAQ: CSX) Earnings Report Highlights
- CSX Corporation reported earnings per share (EPS) of $0.42, missing the estimated $0.44.
- Revenue for the quarter was $3.54 billion, slightly below the estimated $3.56 billion.
- The company faced a pre-tax, non-cash goodwill impairment charge of $108 million, impacting its financial results.
CSX Corporation (NASDAQ: CSX) is a major player in the freight railroad industry, providing essential rail services across the eastern United States and parts of Canada. The company operates within the Zacks Transportation - Rail industry, facilitating the transportation of various commodities such as chemicals and automotive products. Despite its significant role, CSX recently reported earnings that fell short of expectations.
On January 23, 2025, CSX announced earnings per share (EPS) of $0.42, slightly below the estimated $0.44. This marks a decrease from the $0.45 per share reported in the same quarter the previous year. The earnings miss represents a negative surprise of 2.33%, as highlighted by Zacks. In the previous quarter, CSX also missed expectations, with earnings of $0.46 per share against an anticipated $0.48, resulting in a 4.17% negative surprise.
CSX's revenue for the quarter was $3.54 billion, falling short of the estimated $3.56 billion. This represents a 1.24% decline from the Zacks Consensus Estimate and a decrease from the $3.68 billion reported a year ago. The shortfall was primarily attributed to decreased coal shipments and reduced fuel surcharges. Despite these challenges, CSX has managed to surpass consensus earnings per share estimates twice in the last four quarters.
The company's financial results for the fourth quarter and full year of 2024 were impacted by a pre-tax, non-cash goodwill impairment charge of $108 million. This led to a decrease in operating income to $1.11 billion from $1.32 billion in the same period the previous year. Net income for the quarter was $733 million, or $0.38 per diluted share, down from $882 million, or $0.45 per diluted share, in the fourth quarter of 2023.
For the full year 2024, CSX reported an operating income of $5.25 billion, reflecting a 5% decline from the previous year. The net income for the year was $3.47 billion, or $1.79 per share, compared to $3.67 billion, or $1.82 per share, in 2023. When adjusted for the goodwill impairment charge, the operating income for the quarter was $1.21 billion, and for the year, it was $5.35 billion. Adjusted net income stood at $815 million, or $0.42 per diluted share, for the quarter, and $3.55 billion, or $1.83 per share, for the year.
CSX Corporation (NASDAQ:CSX) Quarterly Earnings Preview
- CSX Corporation is set to release its quarterly earnings on January 23, 2025, with an estimated EPS of $0.44 and projected revenue of $3.56 billion.
- The company faces industry challenges such as high interest rates and weak freight demand but benefits from declining fuel costs.
- Key financial metrics indicate CSX's strong market position, with a P/E ratio of 17.71 and an earnings yield of 5.65%.
CSX Corporation (NASDAQ:CSX) is a leading transportation company in the United States, primarily focused on rail-based freight transportation. As a major player in the transportation sector, CSX competes with other industry giants like Union Pacific (UNP) and Norfolk Southern. The company is set to release its quarterly earnings on January 23, 2025, with analysts estimating an EPS of $0.44 and projected revenue of $3.56 billion.
Investors are keenly observing CSX's upcoming earnings, especially given the current challenges in the transportation sector. As highlighted by Zacks, high interest rates, weak freight demand, and supply-chain issues are affecting the industry. Despite these hurdles, a decline in fuel costs is providing some relief, as fuel is a significant expense for transportation companies like CSX.
CSX's financial metrics offer insights into its market position. With a P/E ratio of 17.71, investors are paying $17.71 for every dollar of earnings, reflecting confidence in the company's profitability. The price-to-sales ratio of 4.37 indicates the market value compared to its revenue, while the enterprise value to sales ratio of 5.55 shows the company's total value relative to its sales.
The company's ability to generate cash is evident from its enterprise value to operating cash flow ratio of 15.22. This suggests that CSX is efficiently converting its operations into cash. Additionally, an earnings yield of 5.65% provides a return on investment relative to its share price, making it an attractive option for investors.
CSX's financial health is further supported by a debt-to-equity ratio of 1.47, indicating a balanced approach to financing its assets. The current ratio of 1.39 suggests that CSX is well-positioned to cover its short-term liabilities with its short-term assets, ensuring stability in its operations amidst industry challenges.
