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Core Insights - CSX reported $3.59 billion in revenue for the quarter ended September 2025, reflecting a year-over-year decline of 0.9% and an EPS of $0.44 compared to $0.46 a year ago, with a revenue surprise of -0.22% and an EPS surprise of +4.76% [1] Financial Performance - The operating margin was reported at 30.3%, significantly lower than the estimated 65.7% by analysts [4] - Revenue from intermodal services was $527 million, exceeding the average estimate of $517.94 million, representing a year-over-year increase of +3.5% [4] - Revenue from coal was $490 million, slightly above the average estimate of $488.06 million, but showing a year-over-year decline of -11.4% [4] Volume Metrics - Volume for merchandise chemicals was 164 thousand, slightly below the average estimate of 167.59 thousand [4] - Volume for agricultural and food products was 110 thousand, surpassing the average estimate of 107.91 thousand [4] - Volume for automotive merchandise was 99 thousand, closely matching the average estimate of 99.39 thousand [4] Revenue Breakdown - Revenue from merchandise chemicals was $697 million, below the estimated $722.8 million, reflecting a year-over-year decline of -4.1% [4] - Revenue from agricultural and food products was $382 million, compared to the average estimate of $418.66 million, indicating a year-over-year change of -8.2% [4] - Revenue from automotive merchandise was $306 million, slightly below the average estimate of $310.08 million, but showing a year-over-year increase of +1.7% [4] - Revenue from forest products was $247 million, below the average estimate of $259.2 million, representing a year-over-year decline of -4.6% [4] - Revenue from metals and equipment was $224 million, exceeding the average estimate of $213.13 million, with a year-over-year increase of +7.7% [4] - Revenue from fertilizers was $126 million, below the average estimate of $139.15 million, but showing a year-over-year increase of +6.8% [4] Stock Performance - CSX shares have returned +10.6% over the past month, outperforming the Zacks S&P 500 composite's +0.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - CSX reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, but down from $0.46 per share a year ago, resulting in an earnings surprise of +4.76% [1][2] - The company generated revenues of $3.59 billion for the quarter ended September 2025, which was 0.22% below the Zacks Consensus Estimate and a decrease from $3.62 billion year-over-year [2] - CSX shares have increased by approximately 12.3% since the beginning of the year, compared to a 13.4% gain in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $3.61 billion, and for the current fiscal year, it is $1.65 on revenues of $14.21 billion [7] - The trend of estimate revisions for CSX was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Transportation - Rail industry, to which CSX belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8] - Another company in the same industry, Norfolk Southern, is expected to report quarterly earnings of $3.18 per share, reflecting a year-over-year decline of 2.2%, with a revenue estimate of $3.09 billion, up 1.3% from the previous year [9][10]

Financial Data and Key Metrics Changes - Reported operating income for Q3 was $1.1 billion, with earnings per share at $0.37, including a $164 million impairment charge [17][18] - Adjusted revenue decreased by approximately $30 million, or 1%, due to unfavorable mix and coal pricing, despite a 1% volume growth [17][18] - Adjusted expenses increased by 3%, with interest and other expenses rising by $19 million compared to the previous year [17][18] Business Line Data and Key Metrics Changes - Merchandise revenue and volume decreased by 1%, with minerals volume and revenue up 8% and 12% respectively [11][12] - Coal revenue declined by 11% on a 3% lower total volume, while utility coal tonnage increased by 22% year over year [13][15] - Intermodal revenue increased by 4% on a 5% volume increase, benefiting from strong growth with key customers [10][15] Market Data and Key Metrics Changes - Business conditions are mixed, with customers facing challenges from shifting trade policies and weak global commodity prices [11] - The domestic coal market shows steady trends, while the chemical and forest product markets are impacted by tariffs and production rationalization [12][13][15] Company Strategy and Development Direction - The company aims to be the best-performing railroad in North America, focusing on financial performance, safety, and customer service [4][5] - Completion of major infrastructure projects like the Howard Street Tunnel and Blue Ridge Subdivision is expected to enhance capacity and resiliency [10][11] - The company is actively pursuing strategic opportunities to create value for shareholders while maintaining strong customer relationships [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational performance and ability to navigate mixed economic conditions [25] - There is optimism regarding the potential for volume growth and improved margins in the upcoming quarters, driven by operational efficiencies [18][25] - The company is focused on building a high-performance culture and capitalizing on strategic opportunities as they arise [25][46] Other Important Information - Year-to-date free cash flow is $1.1 billion, with over $2 billion returned to shareholders [23] - The company maintains a full-year CAPEX guidance of $2.5 billion, excluding the Blue Ridge project [24] Q&A Session Summary Question: How does the company position itself against peers pursuing mergers? - Management emphasized the importance of running the company effectively to create value and be prepared for strategic opportunities when they arise [29][31] Question: How will the completion of infrastructure projects impact the company? - Management noted that the completion of these projects sets the company up well for future growth and cost reductions [34][36] Question: What are the expectations for coal and intermodal markets? - Management expressed optimism about domestic coal demand and intermodal growth, highlighting ongoing discussions with customers [66][83] Question: What are the cash priorities for 2026? - Management indicated a focus on shareholder returns and potential investments in projects that enhance operational efficiency [90]

Financial Data and Key Metrics Changes - The third quarter reported operating income was $1.1 billion, and earnings per share were $0.37, which included a $164 million impairment charge related to goodwill [27] - Adjusted revenue decreased by approximately $30 million or 1%, while adjusted expenses increased by 3% [27][29] - Year-to-date free cash flow reached $1.1 billion, including over $850 million in cash outflows for the Blue Ridge project [33] Business Line Data and Key Metrics Changes - Merchandise revenue and volume were down 1%, with revenue per unit (RPU) flat, while minerals volume and revenue increased by 812% [19] - Coal revenue declined by 11% on a 3% lower total volume, with domestic coal business showing steady trends [22][23] - Intermodal revenue increased by 4% on a 5% volume increase, benefiting from strong growth with key customers [24] Market Data and Key Metrics Changes - Business conditions across markets are mixed, with customers facing uncertainty from shifting trade policies and weak global commodity prices [18] - Fertilizer volume rebounded due to improved production, driving 7% growth in the quarter [20] - Forest products and chemical markets saw a 7% volume decline compared to the prior year, impacted by broader market softness and tariffs [21] Company Strategy and Development Direction - The company aims to be the best-performing railroad in North America, focusing on financial performance, safety, customer service, and operational efficiency [8][9] - Completion of major infrastructure projects like the Howard Street Tunnel and Blue Ridge Subdivision is expected to enhance network capacity and resiliency [16][18] - The company is actively pursuing strategic opportunities to create value for shareholders while maintaining strong customer relationships [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational performance and ability to capitalize on market opportunities despite mixed economic conditions [36] - The company anticipates continued improvements in operational efficiency and cost control, setting a positive outlook for the fourth quarter and beyond [34][36] - Management highlighted the importance of building a high-performance culture and leveraging strategic opportunities for growth [67] Other Important Information - The company remains committed to shareholder distributions, having returned over $2 billion year-to-date [33] - The completion of infrastructure projects is expected to provide a competitive edge in the market, particularly in intermodal services [18][19] Q&A Session Summary Question: How is the company positioned versus peers in light of potential mergers? - Management emphasized the importance of running the company effectively to create value and be prepared for strategic opportunities as they arise [41][43] Question: How is the company capitalizing on completed infrastructure projects? - Management noted that the completion of the Howard Street Tunnel and Blue Ridge projects positions the company well for cost reductions and increased service offerings [48][49] Question: What are the expectations for market conditions and growth drivers? - Management indicated that while some markets are facing challenges, there are opportunities for growth in intermodal and coal sectors, with optimism for future performance [85][89] Question: What are the company's priorities moving forward? - The focus is on driving best-in-class performance, building a high-performance culture, and capitalizing on strategic opportunities [67][68]

Financial Data and Key Metrics Changes - Third quarter reported operating income was $1.1 billion, and earnings per share was $0.37, including a $164 million impairment charge [17] - Adjusted revenue decreased by about $30 million, or 1%, due to unfavorable mix and coal pricing, while adjusted expenses increased by 3% [17][19] - Year-to-date free cash flow reached $1.1 billion, with over $850 million in cash outflows for the Blue Ridge project [23] Business Line Data and Key Metrics Changes - Merchandise revenue and volume were down 1%, with minerals volume and revenue up 8% and 12% respectively [11][12] - Coal revenue declined 11% for the quarter on a 3% lower total volume, while utility coal tonnage increased by 22% year over year [13][15] - Intermodal revenue was up 4% on a 5% increase in volume, benefiting from strong growth with key customers [10][16] Market Data and Key Metrics Changes - Business conditions are mixed, with customers facing uncertainty from shifting trade policies and weak global commodity prices [11] - The domestic coal market shows steady trends, while the chemical and forest product markets have faced challenges, with volume down 7% [12][70] - The intermodal market is expected to grow, particularly with the completion of the Howard Street Tunnel, which will enhance service offerings [11][80] Company Strategy and Development Direction - The company aims to be the best-performing railroad in North America, focusing on financial performance, safety, and customer service [4][5] - Completion of major infrastructure projects like the Howard Street Tunnel and Blue Ridge Subdivision is expected to enhance capacity and resiliency [10][11] - The company is actively pursuing strategic opportunities to create value for shareholders while maintaining strong customer relationships [25][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational performance and ability to navigate mixed economic conditions [25] - The company anticipates easing year-over-year headwinds into the fourth quarter, supported by strong operational execution and cost control [18] - There is optimism regarding the coal market and potential improvements in the chemical and forest product sectors as economic conditions stabilize [70] Other Important Information - The company has returned over $2 billion to shareholders year-to-date and remains committed to shareholder distributions [23] - The company expects to maintain its capital expenditure guidance of $2.5 billion for the full year, excluding the Blue Ridge project [24] Q&A Session Summary Question: How does the company position itself against peers pursuing mergers? - The company emphasizes running its operations effectively to create value and be prepared for strategic opportunities when they arise [31][32] Question: How will the completion of infrastructure projects impact the company? - The completion of the Blue Ridge and Howard Street projects is expected to enhance operational efficiency and cost reduction, setting the stage for growth [36][37] Question: What are the company's priorities moving forward? - The focus is on driving best-in-class performance, building a high-performance culture, and capitalizing on strategic opportunities [51] Question: How does the company view the current market conditions? - The company acknowledges mixed market conditions but remains optimistic about growth opportunities, particularly in intermodal and coal sectors [70][72] Question: What are the cash flow priorities for 2026? - The company plans to prioritize shareholder returns and may consider debt reduction, depending on cash flow performance [90]

Safety Performance - The FRA injury rate decreased by 17% year-to-date, accompanied by a 21% reduction in total injuries[14] - Injuries resulting in lost time decreased by 23% year-to-date[14] - The FRA train accident safety performance in Q3 was the best quarter since the end of 2023[14] - Human-factor accidents have improved, decreasing by 16% year-to-date[14] Operating Metrics (Q3 2025) - Velocity reached 18.9 mph[16] - Cars Online totaled 121,000[18] - Combined Intermodal Carload Trip Plan Compliance was at 87%[19] - Dwell time was 9.5 hours[21] - Car Miles per Day reached 136.6[25] - Fuel Efficiency was 0.94 Gal/kGTM[25] - GTMs / Available Horsepower was 132.5[25] Financial Performance (Q3 2025) - Revenue was $3.587 billion, a 1% decrease year-over-year[42] - Net Earnings were $694 million GAAP and $818 million adjusted, a 22% and 9% decrease year-over-year, respectively[42] - Earnings Per Share were $0.37 GAAP and $0.44 adjusted, a 20% and 4% decrease year-over-year, respectively[42] - Operating Margin was 30.3% GAAP and 34.9% adjusted, a decrease of 710 bps and 250 bps year-over-year, respectively[42] Volume & Revenue Changes (Q3 2025 YoY) - Merchandise volume decreased by 1%, with a corresponding 1% decrease in revenue[32] - Coal revenue decreased by 11%[35] - Intermodal volume increased by 4%, with a corresponding 5% increase in revenue to $527 million[38] Cash Flow and Capital Allocation (YTD Q3 2025) - Property additions totaled $1.284 billion[47] - Shareholder distributions, including buybacks and dividends, amounted to $1.785 billion[47] - Free Cash Flow before dividends was $1.066 billion[47]