10-QPeriod: Q2 FY2018

CSX CORP Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 18, 2018For Securities:CSX

Summary

CSX Corporation reported a strong second quarter and first half of 2018, showcasing significant improvements in profitability and operational efficiency. Revenue for the second quarter increased by 6% to $3.1 billion, driven by higher fuel recovery, price increases, and volume growth across several markets. Notably, expenses saw a substantial decrease of 8% to $1.8 billion, largely attributable to the implementation of 'scheduled railroading' which reduced workforce and operational costs. This combination led to a dramatic 34% increase in operating income to $1.3 billion and a significant improvement in the operating ratio to 58.6%. Earnings per diluted share more than doubled, rising 84% to $1.01. The company also highlighted improved operational performance with record train velocity and reduced terminal dwell times. Financially, CSX saw a substantial increase in cash from operations and successfully issued new long-term debt, bolstering its liquidity. The company continued its commitment to shareholder returns through significant share repurchases, increasing its authorized program to $5 billion.

Financial Highlights

45 data points
Beta

Revenue

$3.10B

Net Income

$877.00M

28.3% Net Margin

EPS (Diluted)

$0.34

Total Assets

$36.92B

Cash & Equivalents

$1.32B

Free Cash Flow

$588.00M

Financial Statements
Beta
Revenue$3.10B
Operating Expenses$1.82B
Operating Income$1.28B
Net Income$877.00M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)2.59B
Shares Outstanding (Diluted)2.60B

Key Highlights

  • 1Revenue increased 6% to $3.1 billion in Q2 2018, driven by fuel recovery, price increases, and volume growth.
  • 2Total expenses decreased 8% to $1.8 billion in Q2 2018, primarily due to cost efficiencies from 'scheduled railroading'.
  • 3Operating income surged 34% to $1.3 billion in Q2 2018, with the operating ratio improving by 880 basis points to 58.6%.
  • 4Diluted Earnings Per Share (EPS) grew 84% year-over-year to $1.01 for the second quarter.
  • 5The company reported record train velocity and improved terminal dwell times, indicating enhanced operational efficiency.
  • 6Cash provided by operating activities increased significantly to $2.0 billion for the first six months of 2018.
  • 7CSX increased its share repurchase program authorization to $5 billion and repurchased approximately $974 million in Q2 2018.

Frequently Asked Questions

Revenue increased by 6% to $3.1 billion primarily due to increases in fuel recovery, price increases across all markets, and volume growth in most markets. This was partially offset by lower 'other' revenue.

Expenses decreased by 8% to $1.8 billion largely due to the implementation of 'scheduled railroading,' which led to reductions in workforce, crew starts, and the active locomotive fleet. Fuel price increases were a partial offset.

The operating ratio, a key measure of efficiency in the railroad industry, improved by 880 basis points to 58.6%. This indicates that CSX is spending less to generate each dollar of revenue, signaling improved operational efficiency and profitability.

CSX continued its robust share repurchase program, increasing the total authorization to $5 billion. In the second quarter of 2018, the company repurchased approximately $974 million worth of shares.