10-QPeriod: Q2 FY2013

CSX CORP Quarterly Report for Q2 Ended Jun 28, 2013

Filed July 17, 2013For Securities:CSX

Summary

CSX Corporation reported a modest increase in revenue and operating income for the second quarter and first six months of 2013 compared to the prior year. Revenue grew by 2% in the second quarter and 1% for the six-month period, largely driven by a combination of increased shipment volumes and higher revenue per unit due to pricing gains across various markets. Expenses also saw a 2% increase in the second quarter, primarily attributed to inflationary pressures and higher incentive compensation, though these were partially offset by cost-saving efficiencies and reduced fuel expenses. Net earnings also showed an upward trend, with a 5% increase in the second quarter and a 3% increase for the first six months. Diluted earnings per share followed suit, rising to $0.52 in Q2 2013 from $0.49 in Q2 2012, and $0.97 for the six months compared to $0.92 in the prior year. The company maintained a strong focus on operational efficiency, evidenced by a record operating ratio of 68.6% in the second quarter, a slight improvement from the previous year. CSX continues to invest in its infrastructure, with planned capital expenditures of $2.3 billion for 2013, including significant investment in Positive Train Control (PTC) technology.

Financial Highlights

48 data points
Beta

Revenue

$3.05B

Net Income

$521.00M

17.1% Net Margin

EPS (Diluted)

$0.17

Total Assets

$30.88B

Cash & Equivalents

$614.00M

Free Cash Flow

$254.00M

Financial Statements
Beta
Revenue$3.05B
Operating Expenses$2.11B
Operating Income$940.00M
Interest Expense$140.00M
Net Income$521.00M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)3.07B
Shares Outstanding (Diluted)3.07B

Key Highlights

  • 1CSX reported record quarterly revenue of $3.1 billion, a 2% increase year-over-year, driven by volume growth and higher revenue per unit.
  • 2Operating income also reached a record $963 million in the second quarter, up 2% from the prior year.
  • 3Diluted earnings per share increased to $0.52 in the second quarter of 2013, up from $0.49 in the same period of 2012.
  • 4The company achieved a record operating ratio of 68.6% in the second quarter of 2013, indicating improved operational efficiency.
  • 5Total expenses increased by 2% in the second quarter, primarily due to inflation and higher incentive compensation, but were partially offset by efficiency gains and lower fuel costs.
  • 6CSX plans capital investments of $2.3 billion for 2013, including approximately $325 million for Positive Train Control (PTC) implementation.
  • 7Cash generated from operations remains the primary funding source for capital expenditures, with substantial liquidity available through cash balances and a revolving credit facility.

Frequently Asked Questions

CSX's revenue grew by 2% to $3.1 billion in the second quarter of 2013 compared to the prior year. This growth was driven by a combination of a 1% increase in shipment volumes, particularly in merchandise and intermodal segments, and higher revenue per unit resulting from pricing gains across most markets.

Total expenses increased by 2% in the second quarter, mainly due to inflation and higher incentive compensation. However, CSX achieved cost savings through efficiency improvements, reduced fuel expenses, and gains on operating properties. These efforts resulted in a record operating ratio of 68.6% for the quarter, an improvement from 68.7% in the prior year's second quarter, indicating enhanced operational efficiency.

CSX plans to invest $2.3 billion in capital expenditures for 2013, with approximately $325 million allocated to the implementation of Positive Train Control (PTC). The company estimates the total multi-year cost for PTC implementation to be at least $1.7 billion, with $713 million already spent by June 2013. These investments are primarily funded through cash generated from operations.

CSX maintains a strong liquidity position with $1,017 million in cash, cash equivalents, and short-term investments as of the end of the second quarter of 2013. The company also has a $1 billion unsecured revolving credit facility that was undrawn. Working capital surplus was $71 million, a decrease from the prior year-end, primarily due to cash used for investments, debt repayment, and dividends. CSX has sufficient financial capacity through its credit facilities and operating cash flow to meet its short-term obligations.