01—Abstract
Summary
Summary of the 10-Q filed April 20, 2011. Cited figures are marked; the original filing is the authoritative source.
CSX Corporation reported strong first-quarter 2011 results, with net earnings increasing by 30% to $395 milliona ($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 billionb, 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 billionc 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.
02—Key points
Key Highlights
- Net earnings surged 30% to $395 million ($1.06 per diluted share) in Q1 2011.
- Revenue increased 13% to $2.81 billion, driven by a 7% volume increase and price gains.
- Operating income rose 22% to $773 million, with the operating ratio improving to 72.5% (a Q1 record).
- Fuel expenses increased significantly by 42% ($119 million) due to higher prices, but overall expense growth was managed to 10%.
- CSX completed its $3 billion share repurchase program in Q1 2011.
- Safety performance improved with an all-time low FRA personal injury frequency index and a 24% decrease in FRA train accident rate.
- The company plans significant capital investments of $2.0 billion in 2011 for infrastructure and PTC.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed April 20, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $2.83B$2.66B | +6.2% |
| Operating Expenses | $2.04B$1.90B | +7.5% |
| Operating Income | $790.00M$768.00M | +2.9% |
| Interest Expense | $140.00M$135.00M | +3.7% |
| Net Income | $406.00M$414.00M | −1.9% |
| EPS (Basic) | $0.12$0.12 | +2.8% |
| EPS (Diluted) | $0.12$0.12 | 0.0% |
| Shares Outstanding (Basic) | 3.32B3.45B | −3.6% |
| Shares Outstanding (Diluted) | 3.35B3.48B | −3.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the first quarter of 2011?
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.
How did CSX manage its expenses, particularly given the rise in fuel costs?
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%.
What is the company's strategy for capital deployment and shareholder returns?
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.
How is CSX performing in terms of safety and service?
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.
06—Continue