CSX Corp. (NYSE: CSX) reported fiscal third quarter results after markets closed Tuesday. For the quarter, the railroad operator posted diluted earnings per share (EPS) of $0.52 on revenues of $2.94 billion. In the same period a year ago, the company reported EPS of $0.51 on revenues of $3.22 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.50 EPS and $2.98 billion in revenues.

Pricing gains were more than offset by the combination of lower fuel recovery, a 3% volume decline and continued transition in CSX’s business mix. At the same time, expenses declined 11% on the collective effect of continued low fuel prices, cost reductions reflecting lower volume, and savings from efficiency initiatives. The resulting $933 million in operating income drove a third quarter record operating ratio of 68.3%.

CSX CEO  Michael J. Ward said:

CSX’s third quarter results demonstrate the company’s ability to leverage improving service while controlling costs in a dynamic environment where commodity prices and the strength of the U.S. dollar are challenging many of our markets. Our performance supports strong pricing and continued efficiency gains as we continue to drive value for customers and shareholders.

CSX continues to target its full-year expectations for EPS growth in the mid-single digits and margin expansion as it progresses toward its longer-term goal of a full-year operating ratio in the mid-60% range. The company said these targets remain intact despite expectations for 2015 coal revenue to decline by approximately $450 million primarily due to continued low natural gas prices and high inventory levels. CSX now expects domestic coal volume to decline by more than 10% in 2015, while the full-year outlook for export coal volume remains approximately 30 million tons. These significant coal headwinds are now also expected to continue in 2016.

CSX’s shares traded up about 2% in after-hours trading at $28.23 in a 52-week range is $24.47 to $37.99. Thomson Reuters had a consensus analyst price target of around $32.91 before today’s report.

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