10-QPeriod: Q2 FY2023

CSX CORP Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 20, 2023For Securities:CSX

Summary

CSX Corporation reported its second-quarter 2023 financial results, showing a decline in revenue and operating income compared to the same period last year. Total revenue decreased by 3% to $3.7 billion, and operating income fell by 13% to $1.5 billion, leading to a slight decrease in earnings per diluted share to $0.49 from $0.54 in the prior year. This performance was impacted by lower intermodal volumes, reduced fuel recovery, and pricing declines in export coal, partially offset by gains in merchandise traffic and higher coal volumes. Despite the top-line pressure, CSX demonstrated operational improvements in metrics like train velocity and dwell time, indicating efficiency gains. The company continued its commitment to shareholder returns through share repurchases and dividend payments, though the pace of repurchases slowed compared to the previous year. CSX maintained a solid liquidity position with a substantial revolving credit facility and sufficient cash on hand to manage its operations and capital expenditures, which are primarily focused on infrastructure sustainment and profitable growth.

Financial Highlights

46 data points
Beta

Revenue

$3.70B

Net Income

$984.00M

26.6% Net Margin

EPS (Diluted)

$0.49

Total Assets

$40.98B

Cash & Equivalents

$956.00M

Free Cash Flow

$652.00M

Financial Statements
Beta
Revenue$3.70B
Operating Income$1.47B
Net Income$984.00M
EPS (Basic)$0.49
EPS (Diluted)$0.49
Shares Outstanding (Basic)2.02B
Shares Outstanding (Diluted)2.02B

Key Highlights

  • 1Revenue for the second quarter of 2023 decreased by 3% to $3.7 billion compared to $3.8 billion in the second quarter of 2022.
  • 2Operating income declined by 13% to $1.5 billion in Q2 2023 from $1.7 billion in Q2 2022.
  • 3Earnings per diluted share decreased to $0.49 in Q2 2023 from $0.54 in Q2 2022.
  • 4Total expenses increased by 5% to $2.2 billion, driven by higher labor, purchased services, and depreciation costs, partially offset by lower fuel costs.
  • 5Key operational metrics showed improvement, with train velocity increasing by 16% and dwell time decreasing by 21% year-over-year.
  • 6CSX repurchased $863 million of its common stock during the second quarter of 2023, compared to $1.5 billion in the prior year.
  • 7The company maintained a strong liquidity position, with $956 million in cash and cash equivalents and an undrawn $1.2 billion revolving credit facility as of June 30, 2023.

Frequently Asked Questions

The decrease in revenue was primarily driven by lower fuel recovery, a decline in other revenue, reduced pricing in export coal due to lower benchmark rates, and a drop in intermodal volume. These factors were partially offset by gains in merchandise pricing and volumes, and higher coal volumes.

While total expenses increased by 5%, CSX saw a significant decrease in fuel costs due to lower locomotive fuel prices, which partially offset increases in labor, purchased services, and depreciation. The company also benefited from lower gains on property dispositions in the prior year, which made the current year's expense increase appear larger on a comparative basis.

CSX is focused on improving operational efficiency, as evidenced by increased train velocity and reduced dwell times. For 2023, planned capital investments are approximately $2.3 billion, with about 75% dedicated to sustaining core infrastructure and operating equipment, and the remainder focused on profitable growth initiatives. The company primarily funds these investments through cash generated from operations.

CSX continues to return capital to shareholders through dividends and share repurchases. In February 2023, the quarterly cash dividend was increased by 10%. During Q2 2023, the company repurchased $863 million of its stock, a decrease from the prior year's comparable quarter. CSX has $1.3 billion remaining under its current share repurchase authorization as of June 30, 2023.