• Total Revenue: $3.4 billion, down 7% from the same period last year.
• Total Volume: Decreased 1% compared to last year.
• Intermodal Volumes: Increased 2% due to an uptick in port traffic.
• Earnings Per Share (EPS): Decreased by 24%.
• Merchandise Revenue and Volume: Both declined 2%.
• Coal Revenue: Declined 27% on 9% lower volume.
• Intermodal Revenue: Down 3% despite a 2% increase in volume.
• Expenses: Increased by 2%, with $45 million additional costs related to network disruptions and severe winter weather.
• Free Cash Flow: Stable in the first quarter.
• Capital Expenditures: $133 million spent on Blue Ridge Subdivision rebuild project.
• Cash Return to Shareholders: Nearly $1 billion in the first quarter.

• Warning! GuruFocus has detected 5 Warning Signs with CSX.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CSX Corp (NASDAQ:CSX) reported a 2% increase in intermodal volumes, driven by an uptick in port traffic.
• The company saw a third straight sequential decline in its FRA injury rate, indicating improvements in safety.
• CSX Corp (NASDAQ:CSX) achieved a record with four automotive terminals winning industry awards for service excellence.
• The company has a strong pipeline of nearly 600 industrial development projects, with 24 new facilities going live in the first quarter.
• CSX Corp (NASDAQ:CSX) maintained strong customer relationships, evidenced by high net promoter scores despite operational challenges.

Negative Points

• Total revenue for the quarter decreased by 7% year-over-year, primarily due to lower benchmark coal prices and reduced fuel surcharge.
• Earnings per share fell by 24%, reflecting reduced revenues and network performance challenges.
• Operational disruptions, including severe weather and infrastructure projects, led to inefficiencies and increased expenses.
• The company faced a 9% decline in coal volume, impacted by lower export prices and temporary mine outages.
• CSX Corp (NASDAQ:CSX) experienced challenges in network fluidity, with increased dwell times and yard congestion affecting service metrics.

Q & A Highlights

Q: Can you break down the operational challenges CSX is facing, particularly with the Howard Street Tunnel project and weather impacts? A: Joseph Hinrichs, President and CEO, explained that the challenges are due to a series of compounding events, including infrastructure projects like the Howard Street Tunnel and severe weather. The focus is on reducing cars online and working closely with customers to manage excess inventory. Additional resources, such as locomotives and mechanical staff, are being deployed to improve network fluidity.

Q: With the operational challenges, can we expect a typical improvement in operating margins from Q1 to Q2? A: Sean Pelkey, CFO, stated that while Q2 is typically better than Q1, the magnitude of improvement depends on the macro environment and operational recovery. The company is not adding significant costs, and as operations improve, there is potential for revenue growth.

Q: How are customer relationships being managed amid the current disruptions, and what is the impact of tariffs on customer strategies? A: Kevin Boone, EVP of Sales and Marketing, clarified that no major contracts have been lost. The focus is on maintaining strong communication with customers to mitigate disruptions. Regarding tariffs, the situation is fluid, but there are potential long-term benefits from increased U.S. industrial production.

Q: What is the outlook for CSX's volume growth and profitability given the current challenges? A: Joseph Hinrichs emphasized that while Q1 was challenging, the fundamentals of CSX's strategy remain sound. The company expects volume growth for the full year, with improvements in network performance anticipated as infrastructure projects progress and macro conditions stabilize.

Q: Can you provide more details on the revenue opportunities that were missed due to operational issues? A: Kevin Boone noted that while some opportunities were perishable, there is still significant potential to capture demand in Q2 as network performance improves. The company is focused on meeting current market demand levels and leveraging strong customer relationships.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.