10-QPeriod: Q3 FY2010

CSX CORP Quarterly Report for Q3 Ended Sep 24, 2010

Filed October 15, 2010For Securities:CSX

Summary

CSX Corporation reported strong financial results for the third quarter and the first nine months of 2010, demonstrating a significant recovery and growth compared to the same periods in 2009. Revenue saw a substantial increase, driven by higher volumes across most markets, particularly in automotive and intermodal, coupled with positive pricing and fuel recovery. Despite a notable rise in expenses, largely due to increased fuel and labor costs, operating income surged due to the significant revenue growth, leading to record operating ratios for the quarter. The company also announced an 8% increase in its quarterly cash dividend and continued its share repurchase program, signaling confidence in its financial position and commitment to shareholder returns. CSX's balance sheet shows an increase in properties due to capital investments, while shareholder's equity decreased due to substantial share repurchases. Liquidity remains robust, supported by substantial cash reserves and an undrawn credit facility. The company is making significant investments in its network, including the National Gateway initiative and the mandated Positive Train Control (PTC) system, which are expected to enhance efficiency, safety, and long-term value. While operational metrics like on-time performance and train velocity saw slight declines, the company emphasizes its continuous improvement efforts in safety, with year-over-year improvements in FRA reportable personal injuries and a decrease in train accident rates.

Financial Highlights

47 data points
Beta

Revenue

$2.67B

Net Income

$414.00M

15.5% Net Margin

EPS (Diluted)

$0.12

Total Assets

$27.03B

Cash & Equivalents

$636.00M

Free Cash Flow

$439.00M

Financial Statements
Beta
Revenue$2.67B
Operating Expenses$1.84B
Operating Income$825.00M
Interest Expense$131.00M
Net Income$414.00M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)3.40B
Shares Outstanding (Diluted)3.44B

Key Highlights

  • 1Revenue increased by 16% to $2.67 billion in Q3 2010 and by 16% to $7.82 billion for the nine months, driven by a 10% and 9% increase in volume respectively, and aided by pricing gains and higher fuel recovery.
  • 2Operating income surged by 39% to $825 million in Q3 2010 and by 37% to $2.23 billion for the nine months, reflecting strong revenue growth outpacing expense increases.
  • 3The operating ratio improved to a record 69.1% in Q3 2010, down from 73.5% in Q3 2009, indicating improved operational efficiency.
  • 4Net earnings rose to $414 million ($1.08 per diluted share) in Q3 2010, a significant increase from $290 million ($0.73 per diluted share) in Q3 2009.
  • 5CSX announced an 8% increase in its quarterly cash dividend to $0.26 per share and continued its share repurchase program, buying back approximately $5.7 million shares for $300 million in Q3 2010, with plans to complete the remaining $645 million of its $3 billion program by Q1 2011.
  • 6Capital expenditures for the nine months were $1.09 billion, with planned full-year 2010 capital expenditures projected at $1.8 billion, supporting network investments including Positive Train Control (PTC) and the National Gateway initiative.
  • 7Safety performance showed improvements, with an 8% decrease in the FRA Personal Injury Frequency Index and a 13% decrease in the FRA Train Accident Rate compared to the prior year.

Frequently Asked Questions

CSX's revenue increased by 16% to $2.67 billion in the third quarter of 2010 compared to the same period in 2009. This growth was primarily driven by a 10% increase in shipment volumes across various markets, particularly in automotive and intermodal. The company also benefited from core pricing gains and higher fuel recovery due to rising fuel prices.

Total expenses increased by 9% to $1.84 billion in the third quarter of 2010. This rise was mainly attributed to higher fuel costs and increased labor-related expenses. Despite the increase in expenses, the substantial revenue growth led to a significant increase in operating income, which surged by 39% to $825 million, and an improvement in the operating ratio to a record 69.1%.

CSX is committed to delivering shareholder value through a balanced approach. This includes an 8% increase in its quarterly cash dividend to $0.26 per share and a continued share repurchase program, with plans to complete the remaining $645 million of its $3 billion program by the first quarter of 2011. The company is also investing heavily in its network, planning $1.8 billion in capital expenditures for 2010, which includes initiatives like the National Gateway and the mandated Positive Train Control (PTC) system, aimed at enhancing efficiency, safety, and long-term growth.

CSX maintains a strong liquidity position, with $636 million in cash and cash equivalents as of September 24, 2010. It also has access to an undrawn $1.25 billion revolving credit facility and a $250 million receivables securitization facility. While the company reported a working capital deficit of $335 million, it states it has sufficient financial capacity to meet its short-term needs and obligations.