Railroad operator CSX (CSX) posted better-than-expected results for its top and bottom lines in the first quarter despite a decline in the volume of freight that it transports and less than five months after its former chief executive, Hunter Harrison, passed away.
The Jacksonville, Florida-headquartered company generated revenue of $2.88 billion in the first quarter of the year, up slightly from $2.87 billion in the corresponding quarter of the prior year, according to results published after US markets closed on Tuesday. This was also ahead of the consensus estimate of analysts polled by Capital IQ for revenue of $2.79 billion.
Net earnings per share assuming dilution almost doubled to $0.78 from $0.39 a year earlier, also ahead of the Street’s estimate for approximately $0.66 per share.
The increase in total sales came despite a 4% drop in the total volume of goods transported to 1.5 million units which was partly mitigated by a 4% increase in revenue per unit to $1,877. The company said that this was primarily due to increases in other revenue, fuel recovery and price increases across most markets mostly offset by volume declines.
Also supporting the results was a 13% decline in expenses year-on-year and an improvement in the company’s operating ratio by 950 basis points to 63.7% from 73.2% in the prior year.
“Since implementation of scheduled railroading began in March 2017, CSX has taken significant strides to transform the organization and to make CSX more competitive,” James Foote, chief executive of CSX, said. “Our company’s operating model provides substantial opportunities to leverage our service product offering, capture
growth and deliver superior financial returns.”
Within the group’s total merchandise transportation category – which accounted for $1.78 billion of the total revenue – the biggest contributions came from chemicals, automotive and agricultural & food products, whose volumes were down by 7%, 6% and 12%, respectively.
The decline in volumes of chemicals transported was attributed in part to reduced fly ash shipments and inventory shortages caused by plant outages. A reduction in North American vehicle production was seen as a causing factor for the drop in automotive volumes while losses in the ethanol market as well as challenges in the domestic and grain markets were seen as having contributed to the lower volume of agricultural and food products volumes.
The first quarter results come after CSX’s previous chief executive, Hunter Harrison, a highly regarded figure in the rail transportation industry, died in December.
Harrison, who had joined CSX in March 2017 from Canadian Pacific Railway, had a track record of producing market-leading operating results. Since joining CSX, he spearheaded the company’s pivot from a hub-and-spoke system to a more traditional operating model under the Precision Scheduled Railroading plan.