JACKSONVILLE, Fla. — Strong revenue growth helped boost CSX Transportation’s first-quarter profit, but charges related to management layoffs weighed on results, the railroad reported on Wednesday.
Revenue rose 10 percent for the quarter thanks to volume growth, pricing gains, and increased fuel recovery charges. Net profit was up 2 percent despite a $173 million restructuring charge related to the elimination of 765 management positions under former CEO Michael Ward. CSX reported earnings per share of 39 cents. Absent the restructuring charge, earnings per share would have been 51 cents.
"I am pleased to join the CSX team and working together we are going to make this company the best North American railroad, capable of consistently meeting and exceeding the expectations of our customers and our shareholders," CEO E. Hunter Harrison, who joined CSX on March 6, said in a statement. "As the business environment continues to improve and we implement Precision Scheduled Railroading, CSX will realize these objectives while driving volume growth and achieving a new level of financial performance."
During the railroad’s earnings call this morning, CSX executives breezed through the quarterly results in order to give Wall Street analysts more time to quiz Harrison about his goals for the company. And they said they’d provide a more detailed view of CSX’s long-term strategy in the third or fourth quarter.
Overall, CSX traffic volume was up 3 percent for the quarter. Merchandise traffic was up 4 percent, coal 3 percent, and intermodal 1 percent. Revenue per unit was up 7 percent, led by a 28 percent improvement in revenue for loads of coal.
Rising coal exports – up 50 percent for the quarter – drove an overall 2 percent increase in coal shipments for the quarter. But utility coal, which makes up nearly half of CSX’s coal volume, fell 11 percent.
The railroad’s operating ratio was 75.2 percent, up from 73.1 percent a year ago. Excluding the restructuring charge, however, the operating ratio was a first-quarter record 69.2 percent.
CSX produced $123 million of productivity and efficiency gains for the quarter as it brought down expenses by 13 percent. Key operating metrics – including average train speed and terminal dwell – held relatively steady. But train length grew 4 percent and fuel efficiency improved 3 percent.
CSX has a favorable second-quarter outlook for 69 percent of its traffic volume, including intermodal, export coal, and several categories of merchandise business. It has a neutral outlook on 23 percent of its traffic, including automotive, chemicals, and metals and equipment. Only domestic coal, which makes up 8 percent of volume, earns a negative outlook.
For the full year, CSX expects its operating ratio to fall to the mid 60-percent range and earnings per share to grow 25 percent. The railroad increased its dividend by 11 percent, to 20 cents per share, and announced a $1 billion share buyback program that will run for the next 12 months.
For the quarter, CSX reported operating income of $712 million on revenue of $2.8 billion. Net profit was $362 million, up from $352 million a year ago.