CSX(US:CSX)2022-04-20 21:34Financial Performance - Revenue increased by $600 million, or 21%, year over year, totaling $3.413 billion in Q1 2022[119] - Operating income rose to $1.282 billion, an increase of $181 million, or 16%, year over year[119] - Earnings per diluted share increased by $0.08, or 26%, to $0.39 compared to the previous year[118] - Total expenses increased by $419 million, or 24%, reaching $2.131 billion in Q1 2022[130] - Free cash flow before dividends increased by $42 million year over year, totaling $976 million[138] - Cash provided by operating activities increased by $67 million, driven by higher cash-generating income[146] - Cash used in investing activities increased by $71 million due to higher property additions and short-term investments[146] Acquisitions - The acquisition of Quality Carriers, Inc. for $541 million contributed significantly to revenue and expenses[119] - CSX acquired Quality Carriers, Inc. for $541 million in cash on July 1, 2021[155] - The acquisition of Pan Am Systems, Inc. is anticipated to close on June 1, 2022, expanding CSX's reach in the Northeastern United States[156] Operational Metrics - Coal volume decreased by 10%, with domestic coal shipments impacted by lower utility coal demand[129] - Intermodal revenue increased by 13%, driven by higher domestic shipments despite a decrease in international shipments[119] - Train velocity decreased by 15% to 16.0 miles per hour compared to 18.9 miles per hour in Q1 2021[142] - On-time originations fell to 65% from 79%, a decrease of 18%[142] - Total revenue ton-miles decreased by 3% to 46.4 billion from 47.8 billion in Q1 2021[142] - The company expects operating metrics to improve with ongoing hiring and training initiatives[141] Safety and Risk Management - Safety metrics improved, with the FRA train accident rate decreasing by 15% to 2.75 and personal injury frequency index improving by 18% to 0.78[140] - Key risks include legislative developments, economic conditions, competition, and natural events that could impact operations and financial condition[170] - The company cautions against placing undue reliance on forward-looking statements, which are based on current information and good faith beliefs[168] Financial Position - Total liabilities increased by $226 million, primarily due to a $225 million increase in income and other taxes payable[152] - Working capital surplus decreased by $458 million to $1.2 billion as of March 31, 2022[153] - Planned capital investments for 2022 are expected to be approximately $2.0 billion, with over 80% allocated to core infrastructure[150] Interest Rate Management - CSX entered into five fixed-to-floating interest rate swaps to hedge 10 years of interest rate risk on $800 million of fixed rate outstanding notes due between 2036 and 2040[173] - As of March 31, 2022, the fair value of these swaps was a $27 million liability included in other long-term liabilities on the consolidated balance sheet[173] - Gains and losses from changes in fair value of the interest rate swaps offset changes in the fair value of the hedged portion of the underlying debt, resulting in no gain or loss recognized due to hedge ineffectiveness[173] - The swaps will expire in 2032, and if settled early, the remaining liability or asset will be amortized over the remaining life of the associated notes[173] - Changes in interest rates may impact future interest payments on long-term debt, representing interest rate risk to the company[172] Forward-Looking Statements - Forward-looking statements may include projections of earnings, revenues, margins, and operational initiatives, but actual results could differ materially due to various risks[168] - The company has no obligation to update or revise any forward-looking statement, and updates should not imply further updates will occur[168] - There have been no material changes in market risk from the previous annual report, except as noted in the current report[171]