July 27, 2020 9:45 AM, EDT

CSX Earnings Slump in Q2 Amid COVID-19 Pandemic

CSXLuke Sharrett/Bloomberg News

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CSX Corp. became the latest Class I freight railroad to report lower earnings because of the COVID-19 pandemic when it reported second-quarter results July 22.

Net income fell 42% to $499 million, or 65 cents per share, compared with $870 million, or $1.08, in the year-ago period. Revenue dropped 26% year-over-year to $2.25 billion compared with $3.06 billion in 2019.

The Jacksonville, Fla., railroad’s operating ratio also worsened, to 63.3 compared with 57.4 last year.

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Operating ratio, or operating expenses as a percentage of revenue, is a key industry metric used to measure efficiency. The lower the ratio, the greater the company’s ability to generate profit.

The railroad’s earnings were below Wall Street’s forecast. Analysts interviewed by Zacks Consensus Estimate said they expected a price of 67 cents per share.

On a conference call with analysts and reporters, CEO James Foote pointed to the coronavirus as the main reason why freight volumes were down 20% in the quarter.

“This was the most disruptive quarter I have experienced in my career with both the fastest decline in volumes followed by one of the most rapid increases in volumes in the company’s history,” Foote said. “Reacting to those extreme swings while dealing with the pandemic has been and continues to be challenging.”


The railroad ended the quarter with 12.4% fewer employees than at this time in 2019, shedding 2,685 positions for a headcount of 18,856.

CSX is one of several Class I railroads that has moved to become more efficient by precision scheduled railroading. Created by the late Hunter Harrison, PSR involves moving freight with fewer railcars and locomotives using a more simplified, direct line of transport across the network.

The company said the combination of fewer employees and reduced crew starts did save $109 million.

Revenue from all of the sectors that the railroad carries freight declined:

  • Automotive 71% to $35 million in 2020 from $121 million in 2019.
  • Metals 24% to $48 million from $63 million.
  • Agriculture and food products 14% to $102 million from $118 million.
  • Chemicals 12% to $152 million from $173 million.
  • Forest products 10% to $64 million from $71 million.
  • Minerals 8% to $83 million from $90 million.
  • Fertilizer shipments 2% to $60 million from $61 million.

“Sequentially, the volume decline was the largest in CSX’s history and almost twice as severe as any quarter during the 2009 recession,” Foote said. “We’re happy to see the volumes recover from the May trough as the economy strengthens. However, while these trends are encouraging, the ultimate path of the recovery remains too wide to accurately predict at this point.”

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