CSX Results Mixed on Weak Coal Shipments

CSX Corp. (NYSE: CSX) reported fiscal third quarter results before markets opened this morning. For the quarter, the railroad operator posted diluted earnings per share (EPS) of $0.44 on revenues of $2.89 billion. In the same period a year ago, the company reported EPS of $0.43 on revenues of $2.96 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.43 EPS and $2.93 billion in revenues.

CSX’s CEO said, “CSX continues to respond well to moderating economic conditions and challenges in our domestic coal business.” Challenges indeed.

Revenues fell 2% year-over-year in the third quarter, which the company attributed to overall lower traffic volume, a change in the mix of the company’s business, and lower fuel recovery. Operating income fell 3% from $878 million in the same period a year ago to $854 million.

CSX’s shipments of agricultural products fell 8% year-over-year, but the big loser was coal, down 16%. Coal shipment revenue was down 17%. The biggest gainer was automotive shipments, up 17% and a revenue jump of 18%. Unfortunately for CSX, automotive traffic and revenue are only about a third the size of coal traffic and revenue.

The other gainer came in intermodal shipping, up 8% on volume and 10% on revenue. And while intermodal volume was nearly double coal volume, revenues are just half of coal revenues.

Fuel costs were slightly higher year-over-year, at $3.16 per gallon compared with $3.13 a year ago, and total diesel fuel costs fell 12%, but that was surely due to lower traffic volume.

CSX’s shares are up about 3% in after-hours trading at $21.63 in a 52-week range is $19.87 to $23.71. Thomson Reuters had a consensus analyst price target of around $25.65 before today’s report.

Paul Ausick