10-QPeriod: Q2 FY2010

CSX CORP Quarterly Report for Q2 Ended Jun 25, 2010

Filed July 15, 2010For Securities:CSX

Summary

CSX Corporation reported strong financial results for the second quarter and first six months of 2010, indicating a recovery from the previous year. Revenue saw a significant increase of 22% year-over-year in the second quarter, driven by a 13% rise in volume and positive pricing gains across most markets. This revenue growth translated into a substantial 33% increase in operating income, with the company achieving an all-time record operating ratio of 71.2%. Net earnings also rose considerably, with diluted earnings per share increasing to $1.07 for the quarter. The company's operational efficiency improved, as evidenced by a record operating ratio and positive safety trends. CSX is also actively managing its capital structure, including significant share repurchases and a strategic debt exchange that lowered interest expenses. Looking ahead, CSX anticipates strong double-digit earnings per share growth for the full year 2010, supported by continued volume and revenue growth, particularly in coal exports, and further operating ratio improvement. The company plans to invest approximately $1.7 billion in capital expenditures for 2010 to enhance its network, safety, and service reliability. Key initiatives include the ongoing implementation of Positive Train Control (PTC) and the National Gateway project, aimed at improving freight network efficiency.

Financial Highlights

47 data points
Beta

Revenue

$2.66B

Net Income

$414.00M

15.5% Net Margin

EPS (Diluted)

$0.12

Total Assets

$26.74B

Cash & Equivalents

$633.00M

Free Cash Flow

$319.00M

Financial Statements
Beta
Revenue$2.66B
Operating Expenses$1.90B
Operating Income$768.00M
Interest Expense$135.00M
Net Income$414.00M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)3.45B
Shares Outstanding (Diluted)3.48B

Key Highlights

  • 1Revenue increased by 22% to $2.7 billion in Q2 2010 compared to Q2 2009, driven by a 13% volume increase and core pricing gains.
  • 2Operating income rose by 33% to $768 million in Q2 2010, with the operating ratio improving to an all-time record of 71.2%.
  • 3Net earnings increased by $109 million to $414 million in Q2 2010, with diluted earnings per share rising to $1.07.
  • 4The company repurchased approximately $823 million of its common stock during the six months ended June 30, 2010.
  • 5Capital expenditures are planned at $1.7 billion for the full year 2010, with significant investments in network enhancement and safety initiatives like Positive Train Control (PTC).
  • 6CSX completed a debt exchange in March 2010, lowering its average interest rate from 7.74% to 6.22% on $660 million of debt.
  • 7Safety performance showed improvement, with a 14% reduction in the FRA Personal Injury Frequency Index compared to the prior year.

Frequently Asked Questions

CSX's revenue growth in the second quarter of 2010 was primarily driven by a significant increase in volume, up 13% year-over-year, and positive core pricing gains across various markets. Higher fuel recovery due to increased fuel prices also contributed to the revenue increase.

While revenue increased significantly, expenses also rose by 18% year-over-year. This increase was mainly due to higher fuel costs, a smaller favorable adjustment in casualty reserves compared to the previous year, and higher labor-related costs. The company also reported a loss from an operating property transaction.

CSX expects strong double-digit earnings per share growth for the full year 2010, driven by continued volume and revenue growth, anticipated improvements in the operating ratio, and strong export coal shipments. The company plans to invest $1.7 billion in capital expenditures to support its network and safety initiatives.

CSX is investing in its network through capital expenditures and has several key initiatives. These include the implementation of Positive Train Control (PTC), which is estimated to cost at least $1.2 billion, and the National Gateway project, a public-private infrastructure initiative aimed at improving freight network efficiency between Mid-Atlantic ports and the Midwest.