10-QPeriod: Q2 FY2014

CSX CORP Quarterly Report for Q2 Ended Jun 27, 2014

Filed July 15, 2014For Securities:CSX

Summary

CSX Corporation reported a 7% increase in revenue to $3.2 billion for the second quarter of 2014, primarily driven by an 8% rise in shipment volume. Despite higher expenses (up 7% to $2.2 billion) largely due to increased volume, network performance costs, and inflation, operating income saw a modest 6% increase to $997 million. The operating ratio remained stable at 69.3%. For the first six months of 2014, revenue grew 4% to $6.26 billion, but operating income declined 5% to $1.74 billion, impacted by higher costs. Net earnings for the second quarter were $529 million, a slight increase from $521 million in the prior year, resulting in diluted earnings per share of $0.53, up from $0.51. Looking at the balance sheet, CSX maintained a strong liquidity position with $789 million in cash, cash equivalents, and short-term investments as of June 2014, supported by an undrawn $1 billion revolving credit facility. Capital expenditures are expected to increase to $2.4 billion for 2014, including significant investment in Positive Train Control (PTC) technology. The company repurchased $131 million of its stock in the quarter, reflecting a commitment to shareholder returns.

Financial Highlights

48 data points
Beta

Revenue

$3.24B

Net Income

$529.00M

16.3% Net Margin

EPS (Diluted)

$0.18

Total Assets

$31.98B

Cash & Equivalents

$573.00M

Free Cash Flow

$365.00M

Financial Statements
Beta
Revenue$3.24B
Operating Expenses$2.25B
Operating Income$997.00M
Interest Expense$135.00M
Net Income$529.00M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)3.01B
Shares Outstanding (Diluted)3.01B

Key Highlights

  • 1Revenue increased by 7% to $3.2 billion in Q2 2014, driven by an 8% increase in shipment volume.
  • 2Operating income grew by 6% to $997 million in Q2 2014, with a stable operating ratio of 69.3%.
  • 3Net earnings for Q2 2014 were $529 million, resulting in diluted EPS of $0.53, up from $0.51 in Q2 2013.
  • 4Total assets increased to $31.975 billion, primarily due to capital investments in properties.
  • 5Total liabilities decreased slightly to $21.071 billion, with a reduction in long-term debt.
  • 6The company announced an increase in 2014 capital investments to $2.4 billion, with a significant portion dedicated to Positive Train Control (PTC) implementation.
  • 7CSX repurchased $131 million of its common stock during the second quarter of 2014.

Frequently Asked Questions

Revenue increased by 7% to $3.2 billion primarily due to an 8% year-over-year growth in shipment volume across various markets, including agricultural products, chemicals, and intermodal.

Total expenses increased by 7% to $2.2 billion. This was mainly attributed to higher volume-related costs, increased expenses related to network performance (such as overtime and car hire costs), and inflation impacting materials and labor. There was also an increase in estimated environmental cleanup costs.

CSX increased its 2014 capital investment guidance to $2.4 billion, with over half allocated to core infrastructure. A significant portion of this investment is for the implementation of Positive Train Control (PTC), with an estimated total multi-year cost of at least $1.7 billion. Through June 2014, $1 billion had been spent on PTC.

As of June 27, 2014, CSX had $789 million in cash, cash equivalents, and short-term investments. The company also has a $1 billion unsecured revolving credit facility that was undrawn, providing significant liquidity. CSX plans to fund its capital investments through cash generated from operations.