10-QPeriod: Q3 FY2011

CSX CORP Quarterly Report for Q3 Ended Jul 1, 2011

Filed July 21, 2011For Securities:CSX

Summary

CSX Corporation reported a strong second quarter in 2011, demonstrating robust revenue and operating income growth. Revenue increased by 13% to $3.0 billion, reaching an all-time quarterly record, driven by pricing, higher fuel recovery, and increased volumes across most segments, particularly intermodal and merchandise. Operating income surged by 21% to $926 million, also a record, with an improved operating ratio of 69.3%. This performance reflects a growing demand for rail services and effective cost management, with expenses rising only 10% despite a significant increase in fuel prices. The company continues its commitment to shareholder value through strategic capital deployment, including significant investments in infrastructure and a balanced approach to dividends and share repurchases. CSX announced a new $2 billion share repurchase program and increased its quarterly dividend by 38%. The company also highlighted progress on key infrastructure projects and public-private partnerships aimed at enhancing network capacity and service efficiency. Despite a slight decline in some service metrics compared to the prior year, CSX is taking steps to improve performance, such as increasing its workforce and adding locomotive resources.

Financial Highlights

47 data points
Beta

Revenue

$3.01B

Net Income

$502.00M

16.7% Net Margin

EPS (Diluted)

$0.15

Total Assets

$28.25B

Cash & Equivalents

$580.00M

Free Cash Flow

$1.03B

Financial Statements
Beta
Revenue$3.01B
Operating Expenses$2.08B
Operating Income$920.00M
Interest Expense$138.00M
Net Income$502.00M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)3.21B
Shares Outstanding (Diluted)3.23B

Key Highlights

  • 1Revenue reached an all-time quarterly record of $3.0 billion, a 13% increase year-over-year.
  • 2Operating income increased by 21% to $926 million, also an all-time quarterly record, with an improved operating ratio of 69.3%.
  • 3Net earnings grew by 22% to $506 million, with diluted earnings per share increasing to $0.46.
  • 4CSX implemented a 3-for-1 stock split in May 2011 and increased its quarterly cash dividend by 38% to $0.12 per share.
  • 5The company announced a new $2 billion share repurchase program, expected to be completed by the end of 2012.
  • 6Significant capital investments are planned for infrastructure, with approximately $2.2 billion budgeted for 2011.
  • 7Safety performance improved, with a 22% decrease in the FRA reportable personal injuries frequency index and a 16% improvement in the FRA train accident rate.

Frequently Asked Questions

Revenue increased by 13% to $3.0 billion, primarily driven by pricing above rail inflation, higher fuel recovery reflecting increased fuel prices, and a 3% increase in overall volume. Key segments contributing to volume growth included intermodal, forest products, food & consumer, and metals. While utility coal volume declined, this was offset by strong export demand.

Total expenses increased by 10% to $2.1 billion, which was outpaced by revenue growth. The significant rise in fuel costs ($127 million increase) was a primary driver. However, excluding the impact of fuel, total expenses only increased by 4% year-over-year, indicating effective cost management in other areas such as labor and materials.

CSX focuses on a balanced approach to capital deployment. This includes significant reinvestment in infrastructure (approximately $2.2 billion planned for 2011), consistent dividend increases (38% raise in Q2 2011), and substantial share repurchases. The company announced a new $2 billion share repurchase program, adding to its commitment to return capital to shareholders.

CSX reported improvements in safety metrics, with lower personal injury and train accident rates. However, key service metrics like on-time train originations and arrivals declined compared to the previous year, and dwell time increased. The company is actively addressing these service challenges by increasing its workforce and locomotive resources, showing sequential improvement from Q1 to Q2 2011.