CSX(CSX) - 2024 Q2 - Quarterly Report

Revenue and Income - Revenue for Q2 2024 was flat at $3.701 billion compared to Q2 2023, with a slight increase of $2 million[136] - Operating income decreased by $18 million, or 1%, to $1.448 billion, resulting in an operating margin of 39.1%, down 50 basis points year over year[136] - CSX's operating income for the first six months of 2024 was $2,785 million, a decrease of 4.4% compared to $2,913 million in 2023[160] - Gross Cash Earnings (GCE) for the same period was $3,113 million, down from $3,199 million, reflecting a decrease of 2.7%[160] - Economic Profit (non-GAAP) decreased to $1,268 million in 2024 from $1,435 million in 2023, indicating a decline of 11.7%[160] - Free Cash Flow (FCF) before dividends was $1,150 million, a decrease of 24.7% from $1,528 million in the prior year[165] Expenses and Costs - Total expenses increased by $20 million, or 1%, to $2.253 billion, driven by higher labor costs and inflation[149] - Interest expense rose by $8 million due to higher average debt balances[151] - Income tax expense decreased by $8 million, benefiting from favorable state legislative changes[151] Volume and Revenue Segments - Intermodal volume increased by 5% year over year, while total volume rose by 2% to 1,578 thousand units[140] - Chemicals revenue increased by 9% to $722 million, driven by higher shipments of plastics and petroleum products[140] - Coal volume decreased by 3%, with export coal shipments increasing despite challenges from the Francis Scott Key Bridge collapse[145] - Trucking revenue decreased by $6 million due to lower fuel and capacity surcharges[146] - Other revenue declined by $32 million, attributed to lower carload demurrage and reduced intermodal storage[147] Cash Flow and Investments - Cash from operating activities fell by $300 million, primarily due to $387 million in federal tax payments related to the 2023 tax year[176] - The company generated $103 million more cash for investing activities due to higher property additions, consistent with planned capital expenditures[176] - Planned capital investments for 2024 are expected to be approximately $2.5 billion, focusing on core infrastructure, safety, reliability, and productivity initiatives[181] Assets and Liabilities - Total assets increased by $150 million from year-end, primarily due to a $228 million increase in net property and a $58 million increase in investments in affiliates[184] - Total liabilities decreased by $485 million from year-end, mainly due to a $387 million payment of previously postponed federal taxes[184] - CSX reported a working capital surplus of $441 million as of June 30, 2024, an increase of $305 million from $136 million at year-end 2023[185] Capital Structure and Shareholder Returns - CSX had $1.2 billion in cash, cash equivalents, and short-term investments, with plans to use these funds for capital expenditures, working capital, and shareholder returns[178] - The company has a $1.2 billion unsecured revolving credit facility, with no outstanding balances as of June 30, 2024[180] - CSX did not issue any long-term debt during the six months ended June 30, 2024, maintaining flexibility in its capital structure[179] - Share repurchases totaled $810 million, and dividends paid amounted to $468 million, contributing to a total shareholders' equity increase of $635 million[184] Employee and Safety Metrics - Approximately 17,600 of CSX's 23,300 employees are members of a rail labor union, with agreements in place until December 31, 2024[187] - The FRA Personal Injury Frequency Index increased to 1.25 from 0.91, indicating a deterioration in safety performance[170] - On-Time Originations decreased to 74% from 78%, and On-Time Arrivals dropped to 64% from 71% year-over-year[170] - Train velocity improved by 3% to 18.2 miles per hour, while dwell time increased by 10% to 10.2 hours compared to the prior year[167] Financial Strategy - The company is committed to maintaining an investment-grade credit profile while returning cash to shareholders through dividends and share repurchases[186] - CSX's capital charge for the period was $1,845 million, reflecting an 8% required return on gross operating assets[160]