Core Viewpoint - CSX Corporation is actively rewarding shareholders through dividends and buybacks, but faces significant challenges from high debt levels and a struggling coal market [1]. Factors Favoring CSX - CSX has demonstrated a shareholder-friendly approach by paying dividends of $852 million in 2022, $882 million in 2023, and $930 million in 2024, with a current dividend yield of 1.75% [2] - The company repurchased shares worth $4.73 billion in 2022, $3.48 billion in 2023, and $2.24 billion in 2024, indicating a strong commitment to returning capital to shareholders [2]. Safety and Operational Improvements - CSX has made commendable progress in workplace safety, with the FRA Personal Injury Frequency Index improving to 0.89 in 2023 from 1.01 in 2022, and the FRA train accident rate improving to 3.32 in 2023 from 3.37 in 2022 [3]. - The company plans to launch a new safety training program for operations leaders in the current year [3]. Key Risks for CSX - Rail network issues, including locomotive and crew shortages, pose significant challenges that could adversely impact service levels and operational efficiency [4]. - High labor costs, projected to increase by 4% in 2024, contribute to elevated operating expenses, affecting profitability [4]. Financial Concerns - CSX's total net capital expenditures are expected to reach $2.5 billion for 2025, indicating high debt levels, with long-term debt at $17.9 billion and a long-term debt-to-capitalization ratio of 59% [5]. - The company's times interest earned ratio of 6.5 is below the industry average of 7, raising concerns about financial stability [5]. Coal Market Challenges - The coal market weakness has led to a 10% year-over-year decline in coal revenues to $2.24 billion in 2024, with coal volumes decreasing by 3% [6]. - For 2025, CSX anticipates further declines in coal volumes due to facility shutdowns and mine production issues [6]. - Over the past six months, CSX shares have decreased by 16.8%, underperforming the Zacks Transportation-Rail industry's decline of 5.8% [6].

Industry Overview - The transportation industry serves as a barometer for economic growth, with increased movement of goods and travel during economic booms and a slowdown during contractions [1] Company Profile: Union Pacific - Union Pacific is one of the largest railroads in North America, dominating shipping lines west of the Mississippi River and connecting to Canadian rail systems and major gateways in Mexico [2] - The company is considered a solid dividend-paying value stock despite potential vulnerabilities to tariffs affecting cross-border trade [2][3] Tariff Impact and Economic Policy - Tariffs could reduce exchange volumes between the U.S. and Mexico, but they may also boost U.S. manufacturing, benefiting domestic railroads like Union Pacific [3] - Union Pacific management expressed confidence in navigating tariffs, emphasizing a strong balance sheet and efficient operations [4] - The company is prepared for shifts in trade patterns, potentially increasing trade with other countries if North American trade decreases [6] Financial Performance and Valuation - Union Pacific has maintained a different cost structure compared to package delivery companies, leading to strong free cash flow and high margins regardless of economic conditions [8] - Over the past 15 years, the company has consistently grown revenue, operating income, and free cash flow, with no negative operating income or free cash flow reported [9] - The company has increased its dividend by over 700% during this period and reduced its share count by over 40% through buybacks, resulting in a payout ratio of 48% and a dividend yield of 2.3% [10] Market Position and Growth Potential - Union Pacific's price-to-earnings (P/E) ratio is 20.9, aligning closely with its 10-year median P/E of 20.4, indicating a balanced position between growth, income, and value [11] - The company is viewed as a stable investment with less volatility in earnings compared to other cyclical companies in the industrial sector, benefiting from the efficiency of rail transport [12] - Overall, Union Pacific is highlighted as an excellent value stock to consider for investment [13]

Core Viewpoint - Canadian Pacific Kansas City Limited (CPKC) and Lanco Group/Mi-Jack have sold the Panama Canal Railway Company (PCRC) to APM Terminals, enhancing CPKC's focus on its core North American rail business [1][3]. Company Overview - CPKC is the first and only single-line transnational railway linking Canada, the United States, and Mexico, with approximately 20,000 route miles and 20,000 employees [6]. - APM Terminals operates advanced container terminals globally, with a presence in 60 locations across 33 countries and approximately 33,000 employees [4]. Financial Performance - In 2024, PCRC generated revenue of US$77 million and EBITDA of US$36 million [2]. Strategic Implications - The sale of PCRC is seen as a move to optimize assets and create shareholder value, allowing CPKC to concentrate on its North American operations [3]. - APM Terminals views PCRC as an attractive infrastructure investment that aligns with its core services of intermodal container movement [3]. Historical Context - PCRC has been a 50/50 joint venture between CPKC subsidiary Kansas City Southern and Lanco Group/Mi-Jack since its formation in 1998, operating a 47-mile railway adjacent to the Panama Canal [2][3].

Group 1 - CSX Corporation has secured a new five-year tentative collective bargaining agreement with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers [1] - The agreement emphasizes CSX's commitment to valuing and empowering employees, focusing on safety, respect, and excellence [2] - The tentative agreement is subject to ratification by the union's membership, which consists of 59 members [2] Group 2 - CSX has ratified agreements with 11 labor unions, covering 14 different work groups, which accounts for 47 percent of its unionized workforce [3] - The terms of the agreements provide equivalent packages of improved wages, health care, and paid time off benefits [3] - CSX aims to work with other unions to reach similar agreements and improve the work environment for employees [3] Group 3 - CSX is a premier transportation company based in Jacksonville, Florida, providing rail, intermodal, and rail-to-truck transload services [4] - The company plays a critical role in the economic expansion and industrial development of the nation, connecting major metropolitan areas in the eastern United States [4] - CSX's network links over 240 short-line railroads and more than 70 ocean, river, and lake ports with major population centers and farming towns [4]

Core Points - Canadian Pacific Kansas City (CPKC) has filed its notice of meeting and management proxy circular for the 2025 annual and special meeting of shareholders [1] - The annual meeting will be held virtually on April 30, 2025, at 9 a.m. MT, allowing for greater participation from shareholders [2] - Detailed instructions for participation and a Virtual AGM User Guide will be provided to shareholders [3] Company Overview - CPKC is the first and only single-line transnational railway linking Canada, the United States, and Mexico, with access to major ports across North America [4] - The railway stretches approximately 20,000 route miles and employs 20,000 railroaders, providing extensive rail service and network reach [4] - CPKC offers a suite of freight transportation services, logistics solutions, and supply chain expertise to its customers [4]

Core Points - CSX Corporation has secured a new five-year tentative collective bargaining agreement with the Brotherhood of Railroad Signalmen [1] - The agreement reflects a strong partnership with union leadership and emphasizes safety, respect, and operational excellence [2] - The tentative agreement is subject to ratification by the union's membership, which includes 1,215 signalmen [2] Labor Relations - CSX has ratified agreements with 11 labor unions, covering 14 different work groups, which accounts for 47 percent of its unionized workforce [3] - The terms of the agreements provide improved wages, health care, and paid time off benefits [3] - CSX is committed to working with other unions to reach similar agreements and improve the work environment for employees [3] Company Overview - CSX is a premier transportation company based in Jacksonville, Florida, providing rail, intermodal, and rail-to-truck transload services [4] - The company plays a critical role in the economic expansion and industrial development of the United States, connecting major metropolitan areas and various markets [4]

Company Overview - CSX Corp. is a premier transportation company based in Jacksonville, Florida, providing rail, intermodal, and rail-to-truck transload services across various markets including energy, industrial, construction, agricultural, and consumer products [3] - The company has been integral to the economic expansion and industrial development of the United States for nearly 200 years, connecting major metropolitan areas in the eastern U.S. and linking over 240 short-line railroads and more than 70 ports [3] Upcoming Financial Results - CSX Corp. will release its first quarter financial and operating results after the market close on April 16, 2025 [1] - A conference call and live webcast will follow at 4:30 p.m. Eastern Time, hosted by the company's management team [1] Participation Details - Interested participants can join the teleconference by dialing 1-888-510-2008 (U.S.) or 1-646-960-0306 (international), with a passcode of 3368220 [2] - Participants are advised to dial in 10 minutes prior to the call, and a replay of the webcast will be available on the company's website after the earnings call [2]

Core Points - Canadian Pacific Kansas City (CPKC) has successfully ratified a new four-year collective agreement with the United Steelworkers (USW), covering approximately 600 clerical and intermodal employees in Canada [1][2] - This agreement marks the third collective agreement reached by CPKC employees in Canada this year, indicating a trend towards long-term labor stability and improved conditions for employees [2] - CPKC President and CEO Keith Creel emphasized the importance of collaboration with labor unions in achieving these agreements, which aim to enhance wages and benefits for thousands of employees [2] Company Overview - CPKC is the first and only single-line transnational railway connecting Canada, the United States, and Mexico, with extensive access to major ports across North America [3] - The company operates approximately 20,000 route miles and employs around 20,000 railroaders, providing comprehensive rail service and network reach to key markets [3] - CPKC is focused on growth alongside its customers, offering a range of freight transportation services, logistics solutions, and supply chain expertise [3]

Core Viewpoint - Canadian Pacific Kansas City Limited (CPKC) is issuing US$1.2 billion in notes to refinance existing debt and for general corporate purposes, with the offering expected to close on March 17, 2025 [1][2]. Group 1: Offering Details - CPKC's wholly-owned subsidiary, Canadian Pacific Railway Company, is issuing US$600 million of 4.800% Notes due 2030 and US$600 million of 5.200% Notes due 2035 [1]. - The offering is guaranteed by CPKC and is subject to customary closing conditions [1]. - The net proceeds will primarily be used for refinancing outstanding indebtedness and may be temporarily invested in short-term investment grade securities or bank deposits until utilized [2]. Group 2: Underwriters and Registration - The joint active bookrunners for the offering include Wells Fargo Securities, BofA Securities, Goldman Sachs, and Morgan Stanley, along with a syndicate of other financial institutions [3]. - The offering is made under an effective shelf registration statement previously filed with the SEC, and copies of the documents can be obtained from the SEC or the underwriters [4]. Group 3: Company Overview - CPKC is the first and only single-line transnational railway linking Canada, the United States, and Mexico, with access to major ports across North America [10]. - The company operates approximately 20,000 route miles and employs 20,000 railroaders, providing extensive rail service and logistics solutions to its customers [10].

Core Points - CSX Corp. will have its Executive Vice President and Chief Financial Officer, Sean Pelkey, speak at the 2025 JP Morgan Industrials Conference on March 11, 2025, at 7:30 a.m. Eastern time [1] - The address will be available for live streaming and will have a replay option on the company's investor relations website [2] Company Overview - CSX, headquartered in Jacksonville, Florida, is a leading transportation company providing rail, intermodal, and rail-to-truck transload services across various markets, including energy, industrial, construction, agricultural, and consumer products [3] - The company has been integral to the economic expansion and industrial development of the United States for nearly 200 years, connecting major metropolitan areas in the eastern U.S. and linking over 240 short-line railroads and more than 70 ports [3]