CSX updates Q4 expectations

Written by Mischa Wanek-Libman, editor
image description
CSX

CSX has revised its expectations for fourth quarter performance to reflect a decrease in earnings per share, but says it remains committed to finding cost savings and efficiencies and invest in improvements to drive its long-term strategy.

CSX Corporation Executive Vice President and Chief Operating Officer Cindy Sanborn updated investors and analysts at Baird’s 2016 Industrial Conference in Chicago regarding the company’s expectations for fourth quarter and full-year performance, as well as progress on the company’s long-term strategy.

“In the fourth quarter, we expect an eight cent earnings per share impact related to costs associated with refinancing near-term debt,” Sanborn said. “While we now expect fourth-quarter earnings per share to be down, absent the eight-cent impact, the company’s earnings remain consistent with its prior guidance of flat to slightly down from the prior year.”

Sanborn highlighted the ongoing dynamic business environment, including the company’s expectations that volume will be roughly flat on a reported basis, which includes an extra accounting week in the fourth quarter this year. The Class 1 said strong cost performance is helping to offset those challenges to deliver solid financial performance throughout the year.

Through the third quarter, CSX has delivered about $550 million in cost savings through both efficiency initiatives and volume-variable savings. The railroad credited these savings to aggressive actions related to three of the company’s major cost drivers – labor, fuel and assets – with gains in train length and crew savings, record fuel efficiency and improved locomotive productivity and asset reliability. CSX notes that it is achieving these efficiency improvements while delivering safe, reliable service that meets or exceeds customer needs.

The railroad’s longer-term focus remains on transforming the company into the CSX of Tomorrow as it transitions away from coal and toward more service-sensitive merchandise and intermodal markets. CSX says the foundation of that transformation is employee and customer excellence that supports shareholder value creation.

The company continues to transform its network by redeploying investment from the coal network and other lower density lines to the higher-density outer triangle of the network to drive service efficiency and growth, with investments in longer sidings, technology and intermodal services to maximize new business opportunities. CSX says technology is supporting it in becoming a highly-automated railroad, to further improve safety, resource efficiency and service.

“Together, these initiatives drive service excellence for customers, which enables growth and enhances the company’s ability to achieve pricing that reflects the value of its service product. Combined, this strategy is furthering CSX’s progress toward achieving a mid-60s operating ratio longer-term,” the railroad said.

Tags: