10-QPeriod: Q3 FY2023

CSX CORP Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 20, 2023For Securities:CSX

Summary

CSX Corporation reported a decrease in revenue and net earnings for the third quarter and the first nine months of 2023 compared to the same periods in 2022. Revenue declined due to lower fuel recovery, reduced coal pricing, and decreased intermodal volumes, though these were partially offset by gains in merchandise pricing and volumes. Expenses also saw a slight decrease, but the operating ratio widened, indicating reduced operating efficiency. Despite the top-line and bottom-line contractions, CSX continues to focus on returning capital to shareholders through dividends and share repurchases. The company also maintained a strong liquidity position with substantial cash on hand and available credit facilities. Management highlighted improvements in operational performance metrics such as train velocity and dwell time, and a significant increase in carload trip plan performance, indicating progress in service reliability. However, the FRA train accident rate saw a notable increase.

Financial Highlights

47 data points
Beta

Revenue

$3.57B

Net Income

$828.00M

23.2% Net Margin

EPS (Diluted)

$0.41

Total Assets

$41.59B

Cash & Equivalents

$1.36B

Free Cash Flow

$978.00M

Financial Statements
Beta
Revenue$3.57B
Operating Income$1.27B
Net Income$828.00M
EPS (Basic)$0.42
EPS (Diluted)$0.41
Shares Outstanding (Basic)1.99B
Shares Outstanding (Diluted)2.00B

Key Highlights

  • 1Revenue for Q3 2023 decreased by 8% year-over-year to $3.57 billion, and for the nine months ended September 30, 2023, it decreased by 1% to $10.98 billion.
  • 2Net earnings for Q3 2023 were $846 million, a decrease from $1.11 billion in Q3 2022. Diluted EPS was $0.42, down from $0.52.
  • 3Total expenses decreased slightly by 2% in Q3 2023, but the operating ratio increased by 430 basis points to 63.8%, indicating a decline in operational efficiency.
  • 4The company generated $4.05 billion in net cash from operating activities for the nine months ended September 30, 2023, but free cash flow (before dividends) decreased to $2.49 billion from $2.87 billion in the prior year.
  • 5CSX continued its capital return program, repurchasing $2.9 billion in shares and paying $666 million in dividends for the nine months ended September 30, 2023.
  • 6Operational performance showed improvements in train velocity (+11% in Q3) and dwell time (-19% in Q3), alongside significant gains in carload trip plan performance (82% in Q3 vs. 57% in prior year).
  • 7However, the FRA train accident rate increased by 19% in Q3 2023 compared to the prior year, despite a slight decrease in the FRA personal injury frequency index.

Frequently Asked Questions

CSX's revenue decreased primarily due to lower fuel recovery, a decline in export coal pricing attributed to lower benchmark rates, reduced trucking revenue, and lower intermodal volumes. These factors were partially offset by higher pricing in merchandise segments and increased coal volumes.

Net earnings decreased to $846 million in the third quarter of 2023 from $1.11 billion in the same period of 2022, resulting in a drop in diluted earnings per share from $0.52 to $0.42. This decline was influenced by lower revenues and an increased operating ratio, which reflects a decrease in operational efficiency.

CSX remains committed to returning capital to shareholders. The company repurchased approximately $2.9 billion of its stock and paid $666 million in dividends during the first nine months of 2023. CSX also announced a new $5 billion share repurchase program in October 2023.

The company reported notable improvements in operational efficiency, including an 11% increase in train velocity and a 19% decrease in dwell time during the third quarter of 2023 compared to the prior year. Carload trip plan performance also saw significant improvement. However, the FRA train accident rate increased by 19% in the same period, indicating a potential area of concern for safety performance.