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CSX Corporation (CSX)
Q1 2019 Earnings Conference Call
April 16, 2019 4:30 PM ET
Bill Slater - Chief Investor Relations Officer
James Foote - President and Chief Executive Officer
Frank Lonegro - Executive Vice President and Chief Financial Officer
Mark Wallace - Executive Vice President of Sales and Marketing
Conference Call Participants
Allison Landry - Credit Suisse
Chris Wetherbee - Citigroup
Ken Hoexter - Bank of America Merrill Lynch
Brian Ossenbeck - JPMorgan
Amit Mehrotra - Deutsche Bank
Tom Wadewitz - UBS
Scott Group - Wolfe Research
Justin Long - Stephens, Inc.
Ben Hartford - Robert W. Baird
David Vernon - Sanford Bernstein
Ravi Shanker - Morgan Stanley
Walter Spracklin - RBC Capital Markets
Brandon Oglenski - Barclays Capital
Cherilyn Radbourne - TD Securities
Bascome Majors - Susquehanna International
Previous Statements by CSX
» CSX Corporation (CSX) CEO Jim Foote on Q4 2018 Results - Earnings Call Transcript
» CSX Corporation (CSX) Presents at Credit Suisse 6th Annual Industrials Conference (Transcript)
» CSX Corporation (CSX) CEO Jim Foote on Q3 2018 Results - Earnings Call Transcript
For opening remarks and introduction, I would like to turn the call over to Mr. Bill Slater, Chief Investor Relations Officer for CSX Corporation. Sir, you may go ahead.
Thank you, and good afternoon, everyone. Joining me on today’s call is Jim Foote, President and Chief Executive Officer; Frank Lonegro, Chief Financial Officer; and Mark Wallace, Executive Vice President of Sales and Marketing.
On Slide 2 is our forward-looking disclosure followed by our non-GAAP disclosure on Slide 3.
With that, it is my pleasure to introduce President and Chief Executive Officer, Jim Foote.
Thanks, Bill, and thank you all for joining us today. As you know, Kevin Boone is taking on new responsibilities, and I’d first like to thank him for the great job he did in leading our Investor Relations effort and for helping me directly over the last 15 months. We are happy that Bill Slater decided to join CSX, and with his experience on the buy side and in private equity, he will be a great addition to the team.
As for the quarter, solid performance across many measures produced both record financial results and record service. I want to thank all of the CSX employees, especially those in the field for their hard work and keeping the railroad running on time during difficult weather condition. Despite the challenging condition, CSX set new records in Q1 for just about every service metric. While we are all proud of these accomplishments, nobody is resting on their success.
I’d also like to add a little more detail on the recent appointment of Kevin to Vice President of Marketing and Strategy, and Arthur Adams to Vice President of Sales and Customer Engagement. Both report to Mark in the expanded sales and marketing organization and are part of the continuing effort to build a highly-skilled team focused on finding creative ways to address our customers’ key transportation needs and drive profitable sustained growth.
Kevin will develop and lead a group focused on utilizing deep research and analytics to identify and advance new business opportunity and high-priority growth initiatives across our merchandise markets.
Arthur, who is our Head of Marketing Services, is lead – is leading the transformation of customer service operations and e-solutions in addition to directing our TRANSFLO operations, and he is adding an expanded team targeting small and medium-sized customers to his responsibility. His initial area of focus will also be the Merchandise segment. Both Kevin and Arthur will do a great job for us and ultimately our shareholders.
Now, let’s get to the presentation, Slide 5, and start with our results. The results are once again straightforward with only a few small unique items that Frank will point out. First quarter EPS increased 31% to $1.02 versus last year’s figure of $0.78. Our Q1 operating ratio improved by 420 basis points to 59.5%, a new first quarter record for the company.
Turning to Slide 6, you can see there was broad strength across our merchandise and coal businesses, partially offset by the impact of changes in certain intermodal business segments. Our top line increased 5% to over $3 billion. Merchandise volumes, pricing, other revenue and fuel recovery, all contributed to growth.
I’m encouraged by the strong performance of our merchandise business with 6% overall revenue growth. Merchandise volume growth of 3% is the result of positive growth across every market with the exception of fertilizer, which was slower primarily due to the impact of difficult weather conditions, which delayed spring applications. The continuing turnaround in our merchandise business is without a doubt the result of our improved service levels.
Despite continued growth in the International segment, intermodal revenue declined by 5% on 5% lower volumes due to the additional lane rationalizations implemented following peak season. Coal revenue increased 7% as strength in domestic steel and industrial markets, combined with growth in export coal more than offset domestic utility declines.
Finally, growth in other revenue is primarily the result of a settlement of a customer contract dispute. Excluding this impact, other revenue would have been flat versus last year.
On Slide 7, let’s review our safety performance. The safety of our employees remains my top priority and we are getting better. As you can see in the charts, we achieved significant reductions in FRA personal injuries and train accidents, both sequentially and year-over-year.
While this progress is encouraging and we may be the best in the industry this year, I can tell you that we will never be satisfied with our performance, if one of our employees gets injured or killed while at work. It is just unacceptable.