Close

Form 8-K CSX CORP For: Jul 13

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/25/2024

1. TSLA
2. ENPH
3. TXN
4. BA
5. SPOT
6. META
7. V
8. IBM
9. KMB
10. HCP


July 13, 2016 3:07 PM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 8-K


Current Report


Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 13, 2016
CSX CORPORATION
(Exact name of registrant as specified in its charter)

Virginia
(State or other jurisdiction of
incorporation or organization)


1-8022
 
62-1051971
(Commission File No.)
 
(I.R.S. Employer
 
 
Identification No.)



500 Water Street, C900, Jacksonville, FL 32202
(Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:
(904) 359-3200



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

__ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

__ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

__ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






ITEM 2.02.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 13, 2016, CSX Corporation issued a press release and its CSX Quarterly Financial Report on financial and operating results for the quarter ended June 24, 2016. That press release corrected information released on Twitter. A copy of the press release is attached as Exhibit 99.1 and a copy of the CSX Quarterly Financial Report is attached as Exhibit 99.2, each of which is incorporated by reference herein. These documents are available on the Company's website, www.csx.com.*

The information contained in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, has been “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
 


ITEM 9.01.    EXHIBITS

(d)    The following exhibits are being furnished herewith:

99.1
Press Release dated July 13, 2016 from CSX Corporation
99.2
CSX Quarterly Financial Report.


*
Internet addresses are provided for informational purposes only and are not intended to be hyperlinks.






Signature

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


CSX CORPORATION

By: /s/ Carolyn T. Sizemore
Carolyn T. Sizemore
Vice President and Controller
(Principal Accounting Officer)
                                            
Date: July 13, 2016



Exhibit 99.1


CSX Corporation Announces Second Quarter Earnings

Highlights:

•
Delivered earnings per share of $0.47 and an operating ratio of 68.9 percent

•
Strong U.S. dollar, low commodity prices and energy market transition continue to challenge financial performance and are expected to impact full-year earnings

JACKSONVILLE, Fla. - July 13, 2016 - CSX Corporation (Nasdaq: CSX) today announced second quarter 2016 net earnings of $445 million, or $0.47 per share, down from $553 million, or $0.56 per share, in the same period of last year.

“CSX continued to drive strong customer service and network efficiency in a challenging market, which is expected to persist throughout this year,” said Michael J. Ward, chairman and chief executive officer. “In this environment, the company continues to right-size resources while making strategic investments to transform the company and capitalize on market opportunities to drive long-term value creation.”

Revenue for the quarter declined 12 percent, driven primarily by an overall 9 percent volume decline that impacted nearly all markets, including coal declines of more than 30 percent, which more than offset pricing gains from an improving service product.

Expenses improved 9 percent in the quarter, driven by efficiency gains of $96 million, lower volume-related costs of $86 million as CSX further aligned its cost structure with current and future market dynamics, and $56 million from reduced fuel prices.

Despite the strong efficiency performance in the quarter, operating income decreased 17 percent to $840 million and the operating ratio increased 210 basis points year-over-year to 68.9 percent.

Looking forward, CSX continues to expect 2016 full-year earnings per share to decline, reflecting the ongoing transition in the energy markets, along with the impact of the strong U.S. dollar and low commodity prices. As the company positions itself to serve the markets of tomorrow, CSX remains focused on maximizing shareholder value and achieving a mid-60s operating ratio longer term.







This release corrects information released via Twitter earlier today. CSX executives will conduct a quarterly earnings conference call with the investment community on July 14, 2016, from 8:30 a.m. to 9:30 a.m. Eastern time. Investors, media and the public may listen to the conference call by dialing 1-888-EARN-CSX (888-327-6279) and asking for the CSX earnings call. Callers outside the U.S., dial 1-773-756-0199. Participants should dial in 10 minutes prior to the call. In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company's website at http://investors.csx.com. Following the earnings call, an internet replay of the presentation will be archived on the company website.

This earnings announcement, as well as additional detailed financial information, is contained in the CSX Quarterly Financial Report available through the company’s website at http://investors.csx.com and on Form 8-K with the Securities and Exchange Commission.






About CSX and its Disclosures

CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 190 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

This announcement, as well as additional financial information, is available on the company's website at http://investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Twitter (http://twitter.com/CSX) and on Slideshare (http://www.slideshare.net/HowTomorrowMoves). The social media channels used by CSX may be updated from time to time.

More information about CSX Corporation and its subsidiaries is available at www.csx.com and on Facebook (http://www.facebook.com/OfficialCSX).


Forward-looking Statements

This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management's plans, strategies and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or



revise any forward-looking statement. If the company updates any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward- looking statements include, among others; (i) the company's success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions.

Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the company's SEC reports, accessible on the SEC's website at www.sec.gov and the company's website at www.csx.com.



Exhibit 99.2





CSX Corporation Announces Second Quarter Earnings

Highlights:

•
Delivered earnings per share of $0.47 and an operating ratio of 68.9 percent

•
Strong U.S. dollar, low commodity prices and energy market transition continue to challenge financial performance and are expected to impact full-year earnings

JACKSONVILLE, Fla. - July 13, 2016 - CSX Corporation (Nasdaq: CSX) today announced second quarter 2016 net earnings of $445 million, or $0.47 per share, down from $553 million, or $0.56 per share, in the same period of last year.

“CSX continued to drive strong customer service and network efficiency in a challenging market, which is expected to persist throughout this year,” said Michael J. Ward, chairman and chief executive officer. “In this environment, the company continues to right-size resources while making strategic investments to transform the company and capitalize on market opportunities to drive long-term value creation.”

Revenue for the quarter declined 12 percent, driven primarily by an overall 9 percent volume decline that impacted nearly all markets, including coal declines of more than 30 percent, which more than offset pricing gains from an improving service product.

Expenses improved 9 percent in the quarter, driven by efficiency gains of $96 million, lower volume-related costs of $86 million as CSX further aligned its cost structure with current and future market dynamics, and $56 million from reduced fuel prices.

Despite the strong efficiency performance in the quarter, operating income decreased 17 percent to $840 million and the operating ratio increased 210 basis points year-over-year to 68.9 percent.

Looking forward, CSX continues to expect 2016 full-year earnings per share to decline, reflecting the ongoing transition in the energy markets, along with the impact of the strong U.S. dollar and low commodity prices. As the company positions itself to serve the markets of tomorrow, CSX remains focused on maximizing shareholder value and achieving a mid-60s operating ratio longer term.













Table of Contents
The accompanying unaudited
CSX CORPORATION
CONTACTS:
 
financial information should be
500 Water Street, C900
 
read in conjunction with the
Jacksonville, FL 32202
INVESTOR RELATIONS
Company’s most recent
www.csx.com
David Baggs
Annual Report on Form 10-K,
 
(904) 359-4812
 
Quarterly Reports on Form
 
MEDIA
 
10-Q, and any Current
 
Melanie Cost
 
Reports on Form 8-K.
 
(904) 359-1702

1



This release corrects information released via Twitter earlier today. CSX executives will conduct a quarterly earnings conference call with the investment community on July 14, 2016, from 8:30 a.m. to 9:30 a.m. Eastern time. Investors, media and the public may listen to the conference call by dialing 1-888-EARN-CSX (888-327-6279) and asking for the CSX earnings call. Callers outside the U.S., dial 1-773-756-0199. Participants should dial in 10 minutes prior to the call. In conjunction with the call, a live webcast will be accessible and presentation materials will be posted on the company's website at http://investors.csx.com. Following the earnings call, an internet replay of the presentation will be archived on the company website.

This earnings announcement, as well as additional detailed financial information, is contained in the CSX Quarterly Financial Report available through the company’s website at http://investors.csx.com and on Form 8-K with the Securities and Exchange Commission.


About CSX and its Disclosures

CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 190 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

This announcement, as well as additional financial information, is available on the company's website at http://investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Twitter (http://twitter.com/CSX) and on Slideshare (http://www.slideshare.net/HowTomorrowMoves). The social media channels used by CSX may be updated from time to time.

More information about CSX Corporation and its subsidiaries is available at www.csx.com and on Facebook (http://www.facebook.com/OfficialCSX).

Forward-looking Statements

This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management's plans, strategies and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company updates any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward- looking statements include, among others; (i) the company's success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions.

Other important assumptions and factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the company's SEC reports, accessible on the SEC's website at www.sec.gov and the company's website at www.csx.com.

2

CSX Corporation


CONSOLIDATED INCOME STATEMENTS (Unaudited)
(Dollars in millions, except per share amounts)


 
Quarters Ended
 
Six Months Ended
 
Jun. 24, 2016
Jun. 26, 2015
$ Change
% Change
 
Jun. 24, 2016
Jun. 26, 2015
$ Change
% Change
 
 
 
 
 
 
 
 
 
 
Revenue
$
2,704

$
3,064

$
(360
)
(12
)%
 
$
5,322

$
6,091

$
(769
)
(13
)%
Expense
 
 
 
 
 
 
 
 
 
Labor and Fringe
749

825

76

9

 
1,545

1,704

159

9

Materials, Supplies and Other
519

559

40

7

 
1,069

1,186

117

10

Fuel
172

263

91

35

 
322

533

211

40

Depreciation
319

299

(20
)
(7
)
 
632

594

(38
)
(6
)
Equipment and Other Rents
105

101

(4
)
(4
)
 
210

214

4

2

Total Expense
1,864

2,047

183

9

 
3,778

4,231

453

11

 
 
 
 
 
 
 
 
 
 
Operating Income
840

1,017

(177
)
(17
)
 
1,544

1,860

(316
)
(17
)
 
 
 
 
 
 
 
 
 
 
Interest Expense
(141
)
(134
)
(7
)
(5
)
 
(284
)
(268
)
(16
)
(6
)
Other Income - Net
8

4

4

100

 
15

6

9

(150
)
Earnings Before Income Taxes
707

887

(180
)
(20
)
 
1,275

1,598

(323
)
(20
)
 
 
 
 
 
 
 
 
 
 
Income Tax Expense
(262
)
(334
)
72

22

 
(474
)
(603
)
129

21

Net Earnings
$
445

$
553

$
(108
)
(20
)%
 
$
801

$
995

$
(194
)
(19
)%
 
 
 
 
 
 
 
 
 
 
Operating Ratio
68.9
%
66.8
%
 
 
 
71.0
%
69.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Per Common Share
 
 
 
 
 
 
 
 
 
Net Earnings Per Share, Assuming Dilution
$
0.47

$
0.56

$
(0.09
)
(16
)%
 
$
0.84

$
1.00

$
(0.16
)
(16
)%
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding, Assuming Dilution (millions)
952

989

 
 
 
958

990

 
 
 
 
 
 
 
 
 
 
 
 
Cash Dividends Paid Per Common Share
$
0.18

$
0.18

 
 
 
$
0.36

$
0.34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3
CSX Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)


 
(Unaudited)
 
 
Jun. 24, 2016
Dec. 25, 2015
ASSETS
 
 
 
Cash and Cash Equivalents
$
566

$
628

Short-term Investments
262

810

Other Current Assets
1,400

1,402

Properties - Net
30,607

30,174

Investment in Affiliates and Other Companies
1,413

1,394

Other Long-term Assets
302

337

Total Assets
$
34,550

$
34,745

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Maturities of Long-term Debt
$
632

$
20

Other Current Liabilities
1,650

1,932

Long-term Debt
9,905

10,515

Deferred Income Taxes - Net
9,355

9,179

Other Long-term Liabilities
1,383

1,431

Total Liabilities
22,925

23,077

 
 
 
Total Shareholders' Equity
11,625

11,668

Total Liabilities and Shareholders' Equity
$
34,550

$
34,745


Certain prior year data has been reclassified to conform to the current presentation.


4
CSX Corporation

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Unaudited)
(Dollars in millions)


 
Six Months Ended
 
Jun. 24, 2016
Jun. 26, 2015
OPERATING ACTIVITIES
 
 
Net Earnings
$
801

$
995

Depreciation
632

594

Deferred Income Taxes
165

33

Gains on Property Dispositions
—

(19
)
Other Operating Activities - Net
(6
)
(21
)
Net Cash Provided by Operating Activities
1,592

1,582

 
 
 
INVESTING ACTIVITIES
 
 
Property Additions
(1,066
)
(1,288
)
Purchase of Short-term Investments
(260
)
(775
)
Proceeds from Sales of Short-term Investments
810

390

Proceeds from Property Dispositions
8

47

Other Investing Activities
27

52

Net Cash Used in Investing Activities
(481
)
(1,574
)
 
 
 
FINANCING ACTIVITIES
 
 
Long-term Debt Issued
—

600

Long-term Debt Repaid
—

(210
)
Dividends Paid
(344
)
(336
)
Shares Repurchased (a)
(515
)
(284
)
Other Financing Activities - Net (b)
(314
)
(9
)
Net Cash Used in Financing Activities
(1,173
)
(239
)
 
 
 
Net Decrease in Cash and Cash Equivalents
(62
)
(231
)
 
 
 
CASH AND CASH EQUIVALENTS
 
 
Cash and Cash Equivalents at Beginning of Period
628

669

Cash and Cash Equivalents at End of Period
$
566

$
438

 
 
 





5
CSX Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Cash Flow Statement

a)
Shares Repurchased: During the second quarter and six months ended of 2016 and 2015, the Company repurchased the following number of shares:
    
 
Quarters Ended
 
Six Months Ended
 
Jun. 24, 2016
Jun. 26, 2015
 
Jun. 24, 2016
Jun. 26, 2015
Shares Repurchased (Millions)
10

4

 
20

8

Cost of Shares (Dollars in millions)
$
266

$
157

 
$
515

$
284


b)
Other Financing Activities - Net: Included within Other Financing Activities - Net are payments of $307 million for locomotives which were purchased using seller financing in 2015.

6
CSX Corporation

VOLUME AND REVENUE (Unaudited)
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
 
 
Quarters Ended June 24, 2016 and June 26, 2015
 
 
 
 
 
 
 
 
 
 
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Products
93

101

(8
)%
 
 
$
243

$
266

(9
)%
 
 
$
2,613

$
2,634

(1
)%
 
Phosphates and Fertilizers
72

78

(8
)
 
 
114

122

(7
)
 
 
1,583

1,564

1

 
Food and Consumer
23

24

(4
)
 
 
64

68

(6
)
 
 
2,783

2,833

(2
)
 
Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chemicals
138

158

(13
)
 
 
478

530

(10
)
 
 
3,464

3,354

3

 
Automotive
121

120

1

 
 
313

313

—

 
 
2,587

2,608

(1
)
 
Metals
56

61

(8
)
 
 
146

156

(6
)
 
 
2,607

2,557

2

 
Housing and Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forest Products
68

74

(8
)
 
 
192

202

(5
)
 
 
2,824

2,730

3

 
Minerals
95

84

13

 
 
137

123

11

 
 
1,442

1,464

(2
)
 
Waste and Equipment
40

41

(2
)
 
 
85

78

9

 
 
2,125

1,902

12

 
Total Merchandise
706

741

(5
)
 
 
1,772

1,858

(5
)
 
 
2,510

2,507

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coal
195

295

(34
)
 
 
416

630

(34
)
 
 
2,133

2,136

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intermodal
694

723

(4
)
 
 
419

450

(7
)
 
 
604

622

(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
—

—

—

 
 
97

126

(23
)
 
 
—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
1,595

1,759

(9
)%
 
 
$
2,704

$
3,064

(12
)%
 
 
$
1,695

$
1,742

(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 24, 2016 and June 26, 2015
 
 
 
 
 
 
 
 
 
 
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Products
192

210

(9
)%
 
 
$
506

$
557

(9
)%
 
 
$
2,635

$
2,652

(1
)%
 
Phosphates and Fertilizers
148

156

(5
)
 
 
241

258

(7
)
 
 
1,628

1,654

(2
)
 
Food and Consumer
45

47

(4
)
 
 
124

132

(6
)
 
 
2,756

2,809

(2
)
 
Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chemicals
288

313

(8
)
 
 
979

1,064

(8
)
 
 
3,399

3,399

—

 
Automotive
234

221

6

 
 
603

580

4

 
 
2,577

2,624

(2
)
 
Metals
106

122

(13
)
 
 
284

310

(8
)
 
 
2,679

2,541

5

 
Housing and Construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forest Products
136

147

(7
)
 
 
381

400

(5
)
 
 
2,801

2,721

3

 
Minerals
157

144

9

 
 
237

226

5

 
 
1,510

1,569

(4
)
 
Waste and Equipment
73

72

1

 
 
151

140

8

 
 
2,068

1,944

6

 
Total Merchandise
1,379

1,432

(4
)
 
 
3,506

3,667

(4
)
 
 
2,542

2,561

(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coal
395

584

(32
)
 
 
815

1,268

(36
)
 
 
2,063

2,171

(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intermodal
1,372

1,378

—

 
 
824

865

(5
)
 
 
601

628

(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
—

—

—

 
 
177

291

(39
)
 
 
—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
3,146

3,394

(7
)%
 
 
$
5,322

$
6,091

(13
)%
 
 
$
1,692

$
1,795

(6
)%
 



7
CSX Corporation


VOLUME AND REVENUE
Revenue was down $360 million to $2.7 billion from the prior year's second quarter as price gains were more than offset by volume declines, lower fuel surcharge revenue and negative business mix.

Same Store Sales Pricing
Year-Over-Year Change
 
% Change

 
All-In
2.9
%
 
Merchandise and Intermodal
4.0
%
 
 
 
 
Same store sales is defined as customer shipments with the same commodity and car type, and the same origin and destination.

 


Revenue per unit was down 3 percent as pricing gains in the quarter were more than offset by lower fuel recoveries and negative mix. Same store sales increased across all markets with the exception of export coal.






MERCHANDISE

Agricultural Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
188

203

(7
)
 
 
$
421

$
456

(8
)
 
 
$
2,239

$
2,246

—

 

% of Carloads






 



Agricultural Products - Volume decreased in products used for animal feeding due to high inventories and a strong U.S. dollar that both challenged export moves and allowed for more import displacement of domestic product. Additionally, ethanol market dynamics favored Gulf region destinations for storage and export, which precluded CSX participation in shipments from Western origins.

Phosphates and Fertilizers - Volume declines were concentrated in phosphate due to customer production curtailments that reflect an anticipated weaker market for phosphate rock and sulfur inputs, partially a result of import phosphate displacement.

Food and Consumer - Lower volume was a result of weaker Western fruit and vegetable crop yields, which reduced refrigerated product moves. This decline was partially offset by increased alcoholic beverage volume reflecting increased demand for Mexican beer and growth in an expedited rail product into the Northeast.
    




8
CSX Corporation

Industrial Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
315

339

(7
)
 
 
$
937

$
999

(6
)
 
 
$
2,975

$
2,947

1
 
% of Carloads

 




Chemicals - While non-energy related chemicals volume increased slightly, low prices of crude oil and gas products led to significant volume decline in energy-related markets, including crude oil and frac sand.
 
Automotive - Volume increased, consistent with North American light vehicle production, with growth across several customers. Volume mix continued to favor trucks and SUV’s over passenger cars aligned with consumer buying patterns.

Metals - Despite continued sequential improvement, volume remained challenged versus last year due to domestic mill closures brought on by steel import levels that remain above average reflecting a strong U.S. dollar.
 

Housing and Construction Sector
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
203

199

2
 
 
$
414

$
403

3
 
 
$
2,039

$
2,025

1
 
% of Carloads
 



Forest Products - Volume declined in paper products due to continued industry consolidation, electronic substitution and near-term losses to truck as a result of excess capacity and low prices. Further, a strong U.S. dollar challenged exports and increased imports that do not move by rail.

Minerals - Growth in volume resulted from the continued onboarding of shipments in fly ash, a by-product of burning coal that requires environmental remediation, and ongoing strength in aggregates used in construction.

Waste and Equipment - Volume decreased as the cycling of prior year soil remediation projects more than offset increased equipment and military moves.





9
CSX Corporation


COAL
        
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
195

295

(34
)
 
 
$
416

$
630

(34
)
 
 
$
2,133

$
2,136

—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Tons
 





Domestic Utility Coal - Volume declined as natural gas prices continued to favor gas burn and kept utility inventory levels of coal high.
 
Domestic Coke, Iron Ore and Other - Lower volume resulted from an oversupplied coke market driven by softer domestic integrated steel production and the idling of a customer facility.

Export Coal - Volume decreased as a result of a strong U.S. dollar and global oversupply which impacted U.S. competitiveness in the world market for both metallurgical and thermal coal.






 
 
Quarters Ended
 
Six Months Ended
 
 
Jun. 24, 2016
Jun. 26, 2015
% Change
 
Jun. 24, 2016
Jun. 26, 2015
% Change
(Millions of Tons)
 
 
 
 
 
 
 
 
Domestic
 
 
 
 
 
 
 
 
Utility
 
11.5

18.2

(37
)%
 
23.9

35.8

(33
)%
Coke, Iron Ore and Other
 
4.7

7.1

(34
)
 
9.4

12.4

(24
)
Total Domestic
 
16.2

25.3

(36
)
 
33.3

48.2

(31
)
Export
 
 
 
 
 
 
 
 
Metallurgical
 
4.5

5.2

(13
)
 
8.9

11.0

(19
)
Thermal
 
1.8

3.2

(44
)
 
3.3

7.2

(54
)
Total Export
 
6.3

8.4

(25
)
 
12.2

18.2

(33
)
 
 
 
 
 
 
 
 
 
Total Coal
 
22.5

33.7

(33
)%
 
45.5

66.4

(31
)%

10
CSX Corporation

INTERMODAL
        
Volume (Thousands of units); Revenue (Dollars in millions); Revenue Per Unit (Dollars)
Volume
 
 
Revenue
 
 
Revenue Per Unit
 
2016
2015
% Change
 
2016
2015
% Change
 
2016
2015
% Change
694

723

(4
)
 
 
$
419

$
450

(7
)
 
 
$
604

$
622

(3
)
 
% of Units
 






Domestic - Volume increased 5 percent driven by growth with existing customers, ongoing success with CSX’s highway-to-rail conversion program, and network service offerings enhanced by service levels and investment.

International - Volume decreased 16 percent as a result of prior competitive losses in international accounts, difficult comparisons from cycling the 2015 West Coast port recovery and the weaker global freight environment.


Intermodal Network

11
CSX Corporation

OTHER REVENUE
Other revenue decreased $29 million primarily due to lower incidental charges and affiliate coal-related revenue.
 
FUEL SURCHARGE

Fuel surcharge revenue is included in the individual markets detailed within the volume and revenue explanations above. Fuel lag is the estimated difference between highway diesel prices in the quarter and the prices used for fuel surcharge, which are generally on a two month lag.

 
Quarters Ended
 
Six Months Ended
(Dollars in millions)
Jun. 24, 2016
Jun. 26, 2015
$ Change
 
Jun. 24, 2016
Jun. 26, 2015
$ Change
Fuel Surcharge Revenue
$
36

$
134

$
(98
)
 
$
88

$
325

$
(237
)
Fuel Lag (Expense) Benefit
$
(10
)
$
(1
)
$
(9
)
 
$
8

$
36

$
(28
)


12
CSX Corporation

EXPENSE
Expenses of $1.9 billion decreased $183 million, or 9 percent year over year, primarily driven by efficiency savings and lower volume-related costs.

EXPENSE
(Dollars in millions)
LABOR AND FRINGE
 

•
Inflation resulted in $19 million of additional cost driven by increased health and welfare costs.
•
Volume-related costs were $53 million lower.
•
Efficiency savings of $50 million were driven by lower operating and non-operating support costs driven by structural changes, the Company’s train length initiative that began in the second quarter of the prior year, lower overtime and reduced crew training.
•
Other costs increased $8 million.

EMPLOYEE COUNTS (Estimated)
 
 
 
 
 
 
 
2016
 
2015 (a)
 
Change
April
27,868
 
32,425
 
(4,557)
May
27,777
 
32,264
 
(4,487)
June
27,461
 
31,885
 
(4,424)
Average
27,702
 
32,191
 
(4,489)

(a) 2015 average employee counts were corrected by an immaterial omission of approximately 100 employees.

13
CSX Corporation


MATERIALS, SUPPLIES AND OTHER
 


•
Inflation resulted in $9 million of additional cost.
•
Efficiency savings of $32 million were primarily related to lower operating support costs, driven by structural changes and broad cost containment.
•
Volume-related costs were $7 million lower.
•
Other costs decreased $10 million due to a continuing decline in the severity of injuries in addition to various other cost reductions, which more than offset a prior year real estate gain of $17 million.

FUEL
 




•
A 25 percent price decline was the primary driver for $56 million in fuel expense savings.
•
Volume-related costs were $27 million lower.
•
Efficiency savings of $8 million were primarily related to locomotive fuel reduction technology and process improvement.


 
 
 
 
 
 
 
 
 
Quarters Ended
 
Six Months Ended
(Dollars and Gallons In Millions, Except Price per Gallon)
 
Jun. 24, 2016
Jun. 26, 2015
Fav /
(Unfav)
 
Jun. 24, 2016
Jun. 26, 2015
Fav /
(Unfav)
Estimated Locomotive Fuel Consumption (Gallons)
 
106.1

122.1

16.0

 
219.2

254.0

34.8

Price per Gallon (Dollars)
 
$
1.49

$
1.99

$
0.50

 
$
1.33

$
1.92

$
0.59

Total Locomotive Fuel Expense
 
$
158

$
243

$
85

 
$
292

$
488

$
196

Other
 
14

20

6

 
30

45

15

Total Fuel Expense
 
$
172

$
263

$
91

 
$
322

$
533

$
211







14
CSX Corporation

DEPRECIATION
Depreciation expense increased $20 million due to a larger asset base.

EQUIPMENT AND OTHER RENTS                
































 

•
Inflation resulted in $5 million additional cost primarily related to rates on automotive cars.
•
Volume-related costs were $1 million higher due to increases in automotive activity.
•
Efficiency savings of $6 million were due to improved car cycle times.
•
Other costs increased $4 million.








15
CSX Corporation

OPERATING STATISTICS (Estimated)
TON MILES
 
 
Quarters Ended
 
Six Months Ended
 
 
Jun. 24, 2016
Jun. 26, 2015
Improvement / (Deterioration)
 
Jun. 24, 2016
Jun. 26, 2015
Improvement / (Deterioration)
Revenue Ton-Miles (Billions)
 
 
 
 
 
 
 
 
Merchandise
 
33.9

36.8

(8
)%
 
68.3

72.8

(6
)%
Coal
 
11.0

15.8

(30
)
 
21.5

31.9

(33
)
Intermodal
 
6.9

7.4

(7
)
 
13.5

14.2

(5
)
Total
 
51.8

60.0

(14
)%
 
103.3

118.9

(13
)%
 
 
 
 
 
 
 
 
 
Gross Ton-Miles (Billions)
 
 
 

 
 
 
 
Total Gross Ton-Miles
 
98.4

111.0

(11
)%
 
195.6

218.3

(10
)%
(Excludes locomotive gross ton-miles)
 

 

 
 
 
 
SAFETY AND SERVICE

CSX’s FRA train accident rate of 1.88 for the quarter improved 10 percent from the prior year, while the FRA reportable personal injury frequency index of 0.90 is 14 percent unfavorable due to the significant decline in man-hours. The Company remains committed to ongoing improvement, with a focus on avoiding catastrophic events.
 
CSX’s operating performance continues to improve. On-time originations increased to 88 percent and on-time arrivals increased to 69 percent. Average train velocity was 21.1 miles per hour, up 4 percent versus last year, and terminal dwell was 25.0 hours, or flat to the prior year. The Company expects to sustain or improve this level of performance while continuing to drive productivity and resource efficiency.

 
 
Quarters Ended
 
Six Months Ended
 
 
Jun. 24, 2016
Jun. 26, 2015
Improvement / (Deterioration)
 
Jun. 24, 2016
Jun. 26, 2015
Improvement / (Deterioration)
Safety and Service Measurements
 
 
 
 
 
 
 
 
FRA Personal Injury Frequency Index
 
0.90

0.79

(14
)%
 
0.90

0.80

(13
)%
(Number of FRA-reportable injuries per 200,000 man-hours)
 
 
 

 
 
 
 
FRA Train Accident Rate
 
1.88

2.09

10
 %
 
2.37

2.33

(2
)%
(Number of FRA-reportable train accidents per million train miles)
 



 
 
 
 
 
 
 
 
 
 
 
 
 
On-Time Originations
 
88
%
66
%
33
 %
 
84
%
58
%
45
 %
On-Time Arrivals
 
69
%
48
%
44
 %
 
67
%
45
%
49
 %
 
 

 

 
 
 
 
Train Velocity (Miles per hour)
 
21.1

20.3

4
 %
 
21.1

20.2

4
 %
Dwell (Hours)
 
25.0

25.0

—
 %
 
25.5

26.3

3
 %
 
 
 
 
 
 
 
 
 
Cars-On-Line
 
205,945

205,239

—
 %
 
206,651

207,088

—
 %
 
 
 
 
 
 
 
 
 

Certain operating statistics are estimated and can continue to be updated as actuals settle.


16

CSX Rail Network


17

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings