CSX Corporation Beats Earnings Estimates

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CSX released its second quarter earnings report after closing bell tonight, posting earnings of 56 cents per share and a 6% year over year decline in revenue. Analysts had been expecting earnings of 53 cents per share and $3.1 billion in revenue for the quarter. In the same quarter last year, the transport company reported earnings of 53 cents per share and revenue of $3.2 billion.

Key metrics from CSX’s earnings report

CSX cited the main reason for the decline in revenue as lower fuel recovery, a decline in volume of 1% and a “changing business mix.” These factors more than offset gains from pricing. Other positive impacts CSX noted during the quarter were lower fuel prices and benefits from cost-cutting measures. Together, these two factors cut the company’s expenses 9%.

The company’s operating income surpassed $1 billion as a result of these positive factors, setting a new record high. Also the 66.8% operating ratio was a new record low for CSX. Michael Ward, CSX Chairman and CEO, said in a statement:

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“While we saw challenges in a number of markets, CSX employees delivered an even safer, more reliable and more differentiated service product this. We expect the momentum in network performance we saw in the second quarter to accelerate, continuing to create value for our customers and shareholders.”

CSX provides guidance

CSX management also provided guidance for this year. They expect earnings per share for the full year to grow by the mid- to high single digits. They also noted, however, that hitting the top end of that guidance range will be difficult because of the “current energy environment.”

Natural gas prices remain low, while inventory remains high, thus reducing the use of demand for coal. As a result, CSX expects to see about a 10% decline in domestic coal volume for this year. The transport company still expects to see about 30 million tons of export coal volume for the full year. Further, CSX believes margins will expand and is targeting a full-year operating ratio in the mid-60s for the long term.

As of this writing, shares of CSX were up 3.09%at $33.05 per share in after-hours trading.