CSX Posts Gains in 3rd Quarter Financial Results

CSX released its third quarter financial results on Thursday showing revenue was up 18 percent over the same quarter of 2021.

Quarterly revenue was $3.90 billion, which CSX management said was “driven by higher fuel surcharge, pricing gains, a 2 percent increase in volumes, and an increase in storage and other revenues.”

Operating income was $1.58 billion, a 10 percent increase over the prior-year period’s $1.44 billion.

Management said those results reflect additional labor and fringe expense related to tentative labor contracts with $42 million set aside for wage, bonus, and other benefit costs incurred in previous quarters.

Those additional costs resulted in an increase in the operating ratio to 59.5 percent.

Net earnings were $1.11 billion (or $0.52 per share), a 15 percent increase over the $968 million (or $0.43 per share) at the same point last year.

Duluted earnings per share were $0.52 up 21 percent from $0.43 in third quarter of 2021.

CSX said it expects full-year double digit revenue and operating income growth, excluding the effects of real estate transactions in Virginia.

The Class 1 carrier said it expects to continue hiring additional workers in train and engine service and to continue focusing on improving relationships with customers, employees, and CSX stakeholders.

CSX management said it is confident of increasing traffic volume as service improves, which would help offset a potential decline in freight demand.

New CSX CEO Joseph Hinrichs said during an earnings call he’s talked with the railroad’s eight largest customers.

“Almost every single one of them has told me directly . . . that when you deliver better service, and more reliable, more predictable service, we want to do more business with you,” he said. “So we don’t have to chase growth.”

Hinrichs said growing freight volume growth is the key to maintaining profit margins by controlling costs and making the most of the railroad’s assets.

CSX said it is seeking to have 7,000 active train crew members. It now has 6,819 with 730 conductors in training.

Jamie Boychuk, executive vice president of operations, acknowledged CSX service is not where it should be but is improving as crew levels rise.

The service issues were reflected in third quarter operating metrics. On-time departures fell to 58 percent from 71 percent a year ago, while on-time arrivals fell to 46 percent versus 62 percent last year.

Carload trip plan compliance fell to 57 percent compared to 68 percent a year ago. Intermodal trip plan compliance was 90 percent for the quarter, up from 88 percent a year ago.

Boychuk said during the earnings call that if CSX faces an economic downturn and/or a loss of traffic that it will not furlough crew members as it did at the beginning of the COVID-19 pandemic in spring 2020 when the economy went into a recession.

He said CSX wants to protect its active train and engine workforce and will rely on attrition and reducing conductor training class sizes before resorting to furloughs.

“We are going to be prepared to handle all the traffic that comes back at us,” Boychuk said.

Hinrichs said he has directed management “to look at things from a customer perspective to make sure that we are holding ourselves to a higher standard of service and accountability.”

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