10-QPeriod: Q2 FY2011

CSX CORP Quarterly Report for Q2 Ended Apr 1, 2011

Filed April 20, 2011For Securities:CSX

Summary

CSX Corporation reported strong first-quarter 2011 results, with net earnings increasing by 30% to $395 million ($1.06 per diluted share) compared to the same period in 2010. This growth was primarily driven by a 13% increase in revenue to $2.81 billion, fueled by higher volumes across most markets (especially automotive, emerging markets, and intermodal), improved core pricing, and increased fuel recovery. Despite a significant 42% rise in fuel expenses due to higher prices, total expenses only increased by 10%, leading to a substantial 22% jump in operating income to $773 million and an improvement in the operating ratio to 72.5%. The company also completed a $3 billion share repurchase program during the quarter, demonstrating its commitment to returning value to shareholders. CSX plans to invest $2.0 billion in infrastructure and Positive Train Control (PTC) in 2011.

Financial Highlights

47 data points
Beta

Revenue

$2.83B

Net Income

$406.00M

14.4% Net Margin

EPS (Diluted)

$0.12

Total Assets

$27.58B

Cash & Equivalents

$534.00M

Free Cash Flow

$116.00M

Financial Statements
Beta
Revenue$2.83B
Operating Expenses$2.04B
Operating Income$790.00M
Interest Expense$140.00M
Net Income$406.00M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)3.32B
Shares Outstanding (Diluted)3.35B

Key Highlights

  • 1Net earnings surged 30% to $395 million ($1.06 per diluted share) in Q1 2011.
  • 2Revenue increased 13% to $2.81 billion, driven by a 7% volume increase and price gains.
  • 3Operating income rose 22% to $773 million, with the operating ratio improving to 72.5% (a Q1 record).
  • 4Fuel expenses increased significantly by 42% ($119 million) due to higher prices, but overall expense growth was managed to 10%.
  • 5CSX completed its $3 billion share repurchase program in Q1 2011.
  • 6Safety performance improved with an all-time low FRA personal injury frequency index and a 24% decrease in FRA train accident rate.
  • 7The company plans significant capital investments of $2.0 billion in 2011 for infrastructure and PTC.

Frequently Asked Questions

Revenue growth was driven by a combination of increased volume (up 7% overall, with notable gains in automotive, emerging markets, and intermodal), core pricing gains above rail inflation, and higher fuel recovery due to rising fuel prices.

While fuel expenses increased significantly by 42% ($119 million) due to higher prices, CSX managed its overall expenses to a 10% increase ($178 million). This was achieved through disciplined cost management in other areas and benefited from the termination of a prior intermodal purchased transportation agreement. Excluding the impact of fuel, total expenses only rose by 4%.

CSX is committed to a balanced approach. This includes investing in infrastructure (like terminal expansions and the National Gateway initiative) and Positive Train Control (PTC) implementation, totaling $2.0 billion planned for 2011. Additionally, the company has a strong focus on returning value to shareholders, as evidenced by eight dividend increases in the past five years and the recent completion of its $3 billion share repurchase program in Q1 2011.

CSX demonstrated improved safety metrics in Q1 2011, achieving an all-time low FRA personal injury frequency index and a 24% decrease in the FRA train accident rate. However, key service measures like on-time train originations and arrivals, as well as average train velocity, declined compared to the prior year, primarily attributed to weather impacts. The company is taking steps to improve service, including adding labor and locomotive resources.