CSX reported record first-quarter financial results April 16, thanks in part to the Jacksonville, Fla.-based railroad’s increases in freight delivery and lower operating costs.
“The CSX team of exceptional railroaders continues to execute across all aspects of our business, delivering new all-time high service levels,” CEO James Foote said. “These results reflect the strength of our company’s operating model and our commitment to providing a best-in-class service offering to our customers.”
Net earnings were a record $834 million, or $1.02 cents per share. The Zacks Investment Research estimate was 91 cents per share. This compares with earnings of $695 million or 78 cents per share a year ago.
CSX also reported its operating ratio, which measures operating expenses as a percentage of revenue, improved to a first-quarter record of 59.5 from 63.7 in the prior year. Operating ratio is a key industry metric used to measure efficiency. The lower the ratio, the greater the company’s ability to generate a profit.
Revenue was up 5% over the prior year, to $3.01 billion from $2.88 billion, driven by merchandise volume growth and what the company said were broad-based pricing gains. Expenses decreased 2% year-over-year to $1.79 billion, driven by continued efficiency gains. This combination yielded operating income growth of 17% for the quarter, to $1.22 billion compared with $1.04 billion in the same period last year.
“CSX operated significantly fewer active trains at higher performance levels, leading to reduced road crew starts and savings in ancillary crew costs such as crew balancing expense,” Chief Financial Officer Frank Lonegro told reporters and analysts on a conference call. “In addition, nonproductive recrews and road crew overtime, indicators of network fluidity, improved significantly year-over-year.
“These favorable operating results enable a 7% year-over-year decline in the active train and engine employee base, and drove an 8% improvement in crew utilization as measured by gross ton miles per active train and engine employee.”
The company’s leadership also said the bulk of its business will continue to be shipping merchandise.
CSX is the country’s third-largest Class I railroad operating 21,000 route miles of track predominately along the East Coast and Midwest to the Mississippi River.