10-QPeriod: Q3 FY2009

CSX CORP Quarterly Report for Q3 Ended Sep 25, 2009

Filed October 20, 2009For Securities:CSX

Summary

CSX Corporation reported third quarter 2009 results reflecting the continued impact of the global recession, with significant year-over-year declines in revenue and operating income. Revenue fell 23% to $2.3 billion, and operating income decreased 18% to $598 million. However, the company managed expenses effectively, reducing them by 24% through productivity gains and cost management, leading to a record operating ratio of 73.9% for the quarter. This demonstrates the company's ability to adapt to challenging economic conditions by controlling costs. The nine-month period also showed similar trends, with revenue down 22% and operating income down 18%. Despite the revenue headwinds, CSX maintained a strong liquidity position, with $1.3 billion in cash, cash equivalents, and short-term investments, and an undrawn $1.25 billion credit facility. The company also entered into a new $250 million receivables securitization facility to enhance short-term liquidity. Management remains focused on cost control and believes CSX is well-positioned for recovery.

Financial Highlights

46 data points
Beta

Revenue

$2.29B

Net Income

$290.00M

12.7% Net Margin

EPS (Diluted)

$0.08

Total Assets

$27.02B

Cash & Equivalents

$1.24B

Free Cash Flow

$244.00M

Financial Statements
Beta
Revenue$2.29B
Operating Expenses$1.70B
Operating Income$594.00M
Interest Expense$140.00M
Net Income$290.00M
EPS (Basic)$0.08
EPS (Diluted)$0.08
Shares Outstanding (Basic)3.53B
Shares Outstanding (Diluted)3.57B

Key Highlights

  • 1Revenue for the third quarter declined 23% to $2.3 billion, primarily due to decreased volume (down 15%) and lower fuel surcharge revenue, more than offsetting core pricing gains.
  • 2Total expenses were reduced by 24% to $1.7 billion, reflecting cost management initiatives, lower fuel costs, and productivity gains.
  • 3Operating income decreased by 18% to $598 million compared to the prior year's third quarter.
  • 4The company achieved a record operating ratio of 73.9% for the third quarter, indicating improved operational efficiency despite revenue pressures.
  • 5Net earnings for the third quarter were $293 million, or $0.74 per diluted share, down from $382 million, or $0.94 per diluted share, in the prior year.
  • 6CSX maintained a strong liquidity position with $1.3 billion in cash, cash equivalents, and short-term investments, and an undrawn $1.25 billion revolving credit facility.
  • 7Capital expenditures for the nine months ended September 24, 2009, were $1.0 billion, with a full-year plan of $1.6 billion.

Frequently Asked Questions

The primary reason for the revenue decline is the broad-based weakness in the economy, which led to a significant decrease in shipping volume (down 15% year-over-year for the quarter) and lower fuel surcharge revenue due to declining fuel prices. These factors more than offset core pricing gains.

CSX effectively managed its expenses, reducing them by 24% year-over-year in the third quarter. This was achieved through aggressive cost management, productivity initiatives, employee furloughs, reduced overtime, and lower fuel costs, which allowed the company to achieve a record operating ratio of 73.9%.

CSX maintained a strong liquidity position with $1.3 billion in cash, cash equivalents, and short-term investments as of September 25, 2009. Additionally, the company has a $1.25 billion undrawn revolving credit facility. A new $250 million receivables securitization facility was also established for short-term liquidity needs.

The sale of The Greenbrier resort in May 2009 resulted in a gain of $25 million after tax, which is reported as part of discontinued operations. For the nine months ended September 24, 2009, net earnings from discontinued operations were $15 million, which included this gain.