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CSX Corp. reported first-quarter earnings April 20 that beat Wall Street analysts’ expectations.
The railroad’s income jumped to $1.28 billion, or 39 cents per share, compared with $706 million, 31 cents, in the same period a year ago.
The Jacksonville, Fla.-based Class I railroad’s revenue increased 20.6%, or by $600 million, compared with a year earlier, to $3.41 billion whereas in 2021 it was $2.81 billion.
Analysts surveyed by the financial media outlet Benzinga estimated that CSX would report an earnings-per-share price of 38 cents.
“We delivered a solid quarter thanks to the strong efforts of CSX’s railroaders,” CSX President James Foote said. “Our market environment continues to be supportive, and we expect our hard work to deliver improved fluidity across our network over the rest of the year while positioning us to capture opportunities for future growth.”
The railroad’s operating ratio worsened to 62.4 from 60.9 a year ago.
Operating ratio measures a company’s expenses as a percentage of revenue and determines efficiency. The lower the ratio, the more ability the company has to make a profit.
As business has improved for the railroad, like the trucking industry, the freight railroads have experienced a shortage of trained employees. CSX has been aggressively hiring conductors, engineers and other employees. CSX added 1,733 employees during the quarter increasing to 20,866 on March 31, compared with 19,133 a year ago. Foote said the shortage of employees and the difficulties associated with the COVID-19 pandemic have hampered railroad operations.
“There is one thing, and one thing only, that we are short of that is hampering us from doing the job that we want to do and get back to the service levels we were in 2019,” Foote said on a conference call with reporters and financial analysts. “We need more people in the engineer and conductor ranks. That’s it. We don’t need them anywhere else in the organization. We don’t need more management people. We don’t need more people fixing track and laying rail. They’re doing a great job. We need more engineers and conductors.”
Thanks to the tremendous efforts of CSX employees to serve customers effectively and safely, we delivered strong first quarter performance results and are well positioned for the rest of the year. Review the $CSX Q1 2022 performance information at https://t.co/sJsb55YzuC. pic.twitter.com/U3Bt0En4Nz— CSX (@CSX) April 20, 2022
Foote said because of COVID it’s taken at least nine months longer to hire and train a new employee before they are ready to work for CSX and operate in a railroad environment safely, which includes six months of on-the-job training.
“It is a lengthly process from the time we start looking for someone in this day and age that wants to be a railroad conductor to the time they have gone through the classroom, the pre-employment screening and then we have to make sure they are equipped and ready to work in a railroad operating environment and not get hurt and not hurt somebody else,” Foote said.
He said the railroad has completely revamped its hiring process to get more employees.
Meanwhile, one day before the company presented its financial report, CSX announced it has reached an agreement with several of its labor unions to provide monthly advance payments on future wage adjustments anticipated in the settlement of its ongoing contract talks. The tentative deal provides that the monthly payments of up to $600 would be made from May 2022 through the end of the year, or until a negotiated wage settlement is reached, whichever is earlier.
“We know that collective bargaining in the rail industry tends to take years. We also know that our union-represented operations employees are suffering from the broader economic challenges,” CSX Executive Vice President of Operations Jamie Boychuk said. “These are unprecedented times, and our operations employees have delivered for our customers, communities and the nation through the pandemic, ongoing supply chain disruptions, and higher housing, food and fuel prices. It’s time we recognize their efforts and the difficult circumstances.”
Beginning in 2019 the railroad and union began contract talks on the 2020 contract. The unions and National Carriers’ Conference Committee are currently in mediation before the National Mediation Board. It’s unclear when a new master contract will be reached.
CSX reported increases in nine of its 11 business lines.
Chemical revenue was up 7% to $618 million from $580 million a year ago.
Agriculture and food product revenue climbed 11% to $387 million from $349 million.
Mineral revenue moved upward by 15% to $144 million from $125 million.
Forest products revenue increased 4% to $228 million from $220 million.
Shipments of metal products were up 6% to $197 million from $186 million.
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Intermodal shipments saw a 13% increase to $527 million from $468 million.
Coal shipments soared by 39% to $533 million from $384 million.
CSX reported $230 million from trucking-related business. This was the first quarter ever the railroad has reported a revenue stream from trucking.
Other revenue increased by 41% to $202 million from $143 million.
Automotive revenue declined by 4% to $227 million from $236 million.
Fertilizer shipments notched downward 2% to $120 million from $122 million.