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CSX CORP (CSX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue fell to $3.42B and diluted EPS to $0.34, down 7% and 24% year over year, respectively; management cited lower export coal benchmarks, reduced fuel surcharge, and operational constraints tied to major infrastructure projects and severe weather as key drivers .
  • Results missed Wall Street consensus: EPS $0.34 vs $0.368, revenue $3.42B vs $3.456B; miss was driven by commodity price headwinds (~$0.04 EPS impact) and ~$45M of incremental network/weather costs in the quarter; management sees similar commodity headwinds in Q2 but easing in H2 2025 . Values retrieved from S&P Global.
  • Executives reiterated that Q1 is the earnings trough and continue to expect full-year volume growth, with sequential operational improvement as Howard Street Tunnel detours and Blue Ridge rebuild constraints are worked through; capex plan unchanged and headcount expected to remain about flat .
  • Near-term catalysts: operational normalization (dwell and on-time metrics), coal pricing stabilization, intermodal demand trajectory, and completion of Howard Street Tunnel enabling double-stack on the I-95 corridor; capital returns remain active (nearly $1B in Q1 buybacks; $0.13 dividend declared) .

What Went Well and What Went Wrong

What Went Well

  • Safety improved: FRA injury rate and train accident rate both declined YoY and sequentially, reflecting Safe CSX initiatives and employee mentorship programs .
  • Intermodal service metrics rebounded; trip plan compliance improved after hurricane-related disruptions, with focus on terminal fluidity and minimizing dray times .
  • Industrial development pipeline expanded to nearly 600 projects, with 24 new facilities going live in Q1 and up to 50 more expected in the next nine months; management sees this as a multi-year volume growth driver .

What Went Wrong

  • Network fluidity deteriorated: train velocity down 3%, dwell up 19%, on-time originations and arrivals fell to 68% and 55%, respectively, amid tunnel shutdown detours and severe weather impacts .
  • Coal underperformed: revenue down 27% on 9% lower volume; all-in coal RPU declined 20% YoY, hurt by benchmark price weakness and temporary mine outages .
  • Expense pressures: purchased services and other rose $54M, with ~half tied to disruptions and weather; total incremental costs related to network constraints and severe winter weather ~ $45M in Q1 .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$3.62 $3.54 $3.42
Diluted EPS ($)$0.46 $0.38 (Adj: $0.42) $0.34
Operating Income ($USD Billions)$1.35 $1.11 (Adj: $1.21) $1.041
Operating Margin (%)37.4% 31.3% (Adj: 34.3%) 30.4%
Actual vs ConsensusQ1 2025
EPS ($)$0.34 vs $0.368 (miss)
Revenue ($USD Billions)$3.42 vs $3.456 (miss)
Segment (Q1 2025 vs Q1 2024)Volume (000s) 2025Volume (000s) 2024Revenue ($MM) 2025Revenue ($MM) 2024RPU ($) 2025RPU ($) 2024
Chemicals166 167 698 693 4,205 4,150
Agricultural & Food115 114 408 407 3,548 3,570
Automotive87 94 271 293 3,115 3,117
Minerals79 80 181 174 2,291 2,175
Forest Products70 73 249 262 3,557 3,589
Metals & Equipment65 70 209 220 3,215 3,143
Fertilizers48 47 136 136 2,833 2,894
Total Merchandise630 645 2,152 2,185 3,416 3,388
Intermodal716 701 493 506 689 722
Coal172 188 461 632 2,680 3,362
Trucking——202 215 ——
Other——115 143 ——
Total1,518 1,534 $3,423 $3,681 $2,255 $2,400
KPIs (Operations)Q1 2024Q1 2025
Train Velocity (mph)18.2 17.6
Dwell (hours)9.7 11.5
Cars Online124,720 132,200
On-Time Originations (%)75% 68%
On-Time Arrivals (%)70% 55%
Carload TPC (%)82% 69%
Intermodal TPC (%)94% 90%
Fuel Efficiency (gal/1,000 GTM)1.01 0.99

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Volume growthFY 2025Low-to-mid single-digit (Investor Day, reiterated Q4 call) Expect overall volume growth; Q1 is trough, sequential improvement through year Maintained (qualitative)
Commodity headwinds1H 2025~$300M full-year headwind from coal/fuel; near half in Q1 Similar headwind in Q2, easing in H2 2025 Maintained (timing clarified)
Network detour costs2025~$10M/month related to Howard St. Tunnel and Blue Ridge ~$10M/month; began in Feb for Howard St.; expect gradual improvement from Q1 to Q2 Maintained
Capex (ex-Blue Ridge)FY 2025Roughly flat vs 2024 Unchanged; Blue Ridge rebuild spend >$400M before insurance recoveries Maintained (detail reaffirmed)
Tax paymentQ2 2025N/A~$425M tax payment deferred from 2024 due to hurricane relief New timing disclosure
HeadcountFY 2025About flat; productivity focus About flat; expect decline in comp per head Q2 vs Q1; +4% wage increase in H2 Maintained (cadence detailed)
Capital returnsQ1–FY 2025Balanced, opportunistic buybacks/dividends Nearly $1B returned in Q1; continue balanced approach Maintained
DividendQ2 2025Prior rate $0.12 (raised Feb 2025) $0.13 per share declared, payable June 13, 2025 Raised vs prior base

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Operational constraints (Howard St. Tunnel, Blue Ridge)Began reroutes; accelerated timeline to complete tunnel within 2025; expected detour costs and service impacts manageable Constraints compounded by severe weather and flooding; gradual recovery expected through Q2; modest locomotives and field resources added to improve fluidity Near-term worsening; improvement expected sequentially
Coal benchmarks and mixWeak coal benchmarks; guided Q1 RPU down ~3% sequentially; domestic utility closures later in year Coal revenue -27%; RPU -20%; export tonnage -12% on temporary mine outages; domestic -4% but demand signals improving Continued headwind; potential stabilization
Intermodal demand and pricingDomestic conversions despite soft truck cycle; alignment with key partners; inland port initiatives Volume +2% driven by international; RPU -5% (lower fuel surcharge, mix); some pull-forward ahead of tariffs Mixed: volume resilient, pricing/mix pressure
Industrial developmentStrong pipeline; momentum into 2025 Pipeline ~600; 24 facilities live in Q1; up to 50 more in nine months Building positive momentum
Safety and cultureSafe CSX program progressing; fuel efficiency savings Further improvements in injury and accident rates; safety programs credited Improving
Tariffs/macro policyWatching trade shifts; potential East Coast advantage Elevated uncertainty; possible benefits to domestic steel/autos; low near-term visibility Uncertain; could turn supportive

Management Commentary

  • “We did not fulfill that commitment this quarter… our performance fell short of our expectations… we are taking actions to stabilize our operations, improve efficiency and enhance coordination across the entire One CSX team.” — President & CEO Joe Hinrichs .
  • “Total first quarter expense increased by 2%… includes around $45 million of additional costs related to network disruptions, congestion and severe winter weather.” — CFO Sean Pelkey .
  • “Coal revenue declined 27% on 9% lower volume… export tonnage declined by 12%… Australian benchmark averaged $185 per ton… modest headwind to RPU in the second quarter.” — CCO Kevin Boone .
  • “We continue to expect overall volume growth for the full year… first quarter to be a trough… sequential improvement.” — President & CEO Joe Hinrichs .

Q&A Highlights

  • Recovery timeline and margin cadence: Management expects Q2 to be better than Q1; margin improvement pace depends on macro and operational fluidity; small resource additions aimed at improving revenue capture without materially adding costs .
  • Magnitude of discrete cost headwinds: ~$10–$12.5M/month reroute costs (two months in Q1 for Howard St.), plus ~$20–$25M weather/congestion; opportunity to reduce as fluidity improves .
  • Revenue opportunities: Some perishable business missed in Q1; ~“$1M+ per day” revenue opportunity if cycle times normalize; confidence in customer retention supported by high Net Promoter Scores .
  • Coal contracts and other revenue: Contracts have floors; other revenue run-rate around ~$115M per quarter, with variability from subsidiaries, storage, reserves .
  • Headcount/comp cadence: Headcount roughly flat; Q2 comp per head to decline vs Q1 (overtime/weather); +4% wage increase in H2 .
  • Tariff exposure: China exposure concentrated in international intermodal; given East Coast footprint, leverage to domestic industry expansion .

Estimates Context

  • Q1 2025 consensus EPS $0.368 vs actual $0.34 (miss); consensus revenue $3.456B vs actual $3.423B (miss). Drivers: lower export coal benchmarks and net fuel prices ($0.04 EPS headwind), and ~$45M incremental network/weather costs; similar commodity headwinds expected in Q2, easing H2 . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 was the trough; watch sequential improvement in dwell, on-time metrics, and trip plan compliance through Q2 as detours and weather impacts fade; this is central to margin recovery and revenue capture .
  • Coal remains the swing factor: benchmark pricing near $185/ton implies continued RPU pressure in Q2; recovery hinges on price stabilization and resolution of temporary mine outages .
  • Intermodal shows resilient volume, but yield pressured by lower fuel surcharge and international mix; any domestic intermodal strength later in year would support RPU .
  • Industrial development is a structural tailwind: near-term facility on-boarding (24 in Q1; up to 50 more in 2025) supports medium-term volume growth independent of macro volatility .
  • Capital returns remain active amid headwinds: nearly $1B returned in Q1; $0.13 dividend declared; monitor Q2 cash outflow (~$425M deferred tax payment) and progress on Blue Ridge insurance recoveries .
  • Howard Street Tunnel completion is a major 2026+ catalyst: unlocks double-stack on the I-95 corridor and reduces outer-route miles; reroute costs (~$100M annualized) should flip to net benefits post-completion .
  • Risk/Reward: Near-term execution risk around service normalization; favorable setup in H2 if commodity headwinds ease and operational KPIs improve, with medium-term structural growth from industrial development and intermodal network enhancements .