10-QPeriod: Q1 FY2008

CSX CORP Quarterly Report for Q1 Ended Mar 28, 2008

Filed April 16, 2008For Securities:CSX

Summary

CSX Corporation reported a strong first quarter in 2008, with significant increases in revenue and operating income compared to the same period in 2007. Revenue grew by 12% to $2.7 billion, driven by pricing gains and higher fuel recovery, which more than offset a slight decline in overall volumes primarily due to weakness in housing construction and automotive production. Operating income surged by 29% to a record $626 million, reflecting improved pricing and operational efficiencies despite a notable increase in fuel costs. Profitability also saw substantial improvement, with net earnings rising to $351 million from $240 million in the prior year, translating to basic earnings per share of $0.87, up from $0.55. The company's balance sheet strengthened, with cash and cash equivalents significantly increasing to $1.57 billion, bolstered by a $1 billion debt issuance. CSX continued its commitment to shareholder returns through substantial share repurchases and a dividend increase.

Financial Highlights

26 data points
Beta

Revenue

$2.71B

Net Income

$351.00M

12.9% Net Margin

EPS (Diluted)

$0.09

Cash & Equivalents

$1.57B

Free Cash Flow

$288.00M

Financial Statements
Beta
Revenue$2.71B
Operating Expenses$2.09B
Operating Income$626.00M
Interest Expense-$119.00M
Net Income$351.00M
EPS (Basic)$0.10
EPS (Diluted)$0.09
Shares Outstanding (Basic)3.64M
Shares Outstanding (Diluted)3.74M

Key Highlights

  • 1Revenue increased by 12% to $2.71 billion in Q1 2008, a new first-quarter record.
  • 2Operating income rose by 29% to $626 million, also a first-quarter record, driven by pricing gains and improved efficiency.
  • 3Net earnings jumped to $351 million ($0.87 per diluted share) from $240 million ($0.55 per diluted share) in Q1 2007.
  • 4Fuel expenses significantly increased by $157 million due to higher prices, but this was largely offset by revenue gains.
  • 5The company repurchased $300 million of its stock in the quarter and announced an additional $2.4 billion in repurchase authorization.
  • 6Cash and cash equivalents more than quadrupled to $1.57 billion, largely due to a $1 billion debt issuance.
  • 7Operational metrics, including on-time train originations and arrivals, and system train velocity, showed marked improvement.

Frequently Asked Questions

The revenue increase was primarily driven by improved pricing and higher fuel recovery due to increased fuel prices. These factors more than compensated for a slight decline in overall volumes, which were impacted by continued weakness in the housing construction and automotive markets.

While fuel expenses rose substantially by $157 million, CSX was able to offset this increase through higher revenue generated by pricing adjustments and fuel surcharges. Additionally, improved fuel efficiency and productivity initiatives helped mitigate the impact of rising fuel prices.

CSX employs a balanced approach that includes investments in future growth, significant share repurchases, and dividend payments. In the first quarter, the company repurchased $300 million in stock and announced a new repurchase authorization of $2.4 billion, in addition to increasing its quarterly dividend.

CSX's liquidity position significantly improved. Cash and cash equivalents increased by over $1.2 billion to $1.57 billion. This increase was largely due to a $1 billion debt issuance completed at the end of the quarter, along with strong cash flow from operations.