CSX (CSX) Q1 FY26 earnings call: guidance and Q&A

How much does fuel weigh on the operating ratio, and what productivity opportunities support the high end of the 200-300 bps margin range?

Boone said the analyst's fuel-surcharge math (~100 bps drag on OR) is directionally correct amid fuel uncertainty. He credited broad PS&O progress and named energy costs (locomotive and non-locomotive fuel, utilities) and vehicle spend as focus areas, adding the team delivered Q4-planned initiatives faster than expected and is now building a 2027 pipeline.

“I think your math around the fuel surcharge is relatively directionally correct.”

asked by Christian Wetherbee · answered by Kevin Boone

When does double-stack service fully launch and how fast can the volume ramp?

Kenney said the last bridge completes within a week, then double-stack access opens; it doubles East-West and I-95 capacity, removes ~a day of transit, and unlocks new Southeast-to-Northeast lanes. New services typically take a couple of bid seasons to reach full ramp, building over the next year.

“It essentially doubles our capacity there, and it's also going to take about a day out of our current transit.”

asked by Ken Hoexter · answered by Maryclare Kenney

Does guidance assume any macro recovery, and what is management seeing in the freight market?

Kenney confirmed no macro recovery is assumed. Infrastructure-linked markets (aggregates, construction metals) and domestic intermodal remain positives; housing and automotive stay bleak (auto production ~-2%, a major plant down for retooling). Newer positives: plastics/feedstock upside from Middle East disruption and improved truck-to-rail conversion from higher fuel.

“with higher fuel prices, that does increase the value proposition of rail... we're more optimistic today than what we were in January in terms of truck conversion opportunities”

asked by Stephanie Benjamin Moore · answered by Maryclare Kenney

Is the ~$660M PS&O a good run rate or is there more to cut, and how should sequential margin trend given noise?

Boone said PS&O has many components with more opportunity to come as procurement pushes vendors and the team pivots to 2027. He flagged Q2 headwinds: no repeat of the $44M Q1 real estate gain, higher engine overhauls, transaction costs, and fuel pressure on margin — implying PS&O won't follow normal sequential seasonality.

“we won't have the real estate gain that occurred in the first quarter of $44 million”

asked by Scott Group · answered by Kevin Boone

Was the $44M gain expected and will more come; and why is dwell elevated at some terminals?

Boone said the $44M was anticipated but nothing of that size is planned for the rest of the year. Cory explained dwell is temporarily elevated because installing new work methods (24-hour line/yard closures) reroutes traffic; it's a learning-curve tradeoff to gain long-term efficiency, and he committed to bringing dwell and train speed back in line.

“we've impacted our train and yard plans because we're installing new methods of performing the work.”

asked by Brian Ossenbeck · answered by Kevin Boone

Is future ROIC improvement mainly asset productivity, mix/pricing, or cost efficiency?

Angel said the primary lever is the numerator — growing operating income/margins via the productivity build — supplemented by more prudent capital deployment: block-mode project execution, per-project funding discipline, and predictive analytics to prioritize infrastructure spend, which he expects to lower capital over time.

“The best way to drive return on invested capital is to drive the numerator.”

asked by Brandon Oglenski · answered by Stephen Angel

Can tightening truck spot/contract rates benefit intermodal/merchandise pricing in 2H or is it a 2027 story, and is merchandise pricing changing?

Kenney said discretionary merchandise pricing is solid and will benefit later this year and into 2027, but only ~50% of the book can be repriced annually, creating a lag. International intermodal is largely long-term contracted and not highly correlated to the truck market, so benefit there is limited.

“of our total book, it's only 50-or-so percent that we can touch on any given year... there is a lag effect.”

asked by Thomas Wadewitz · answered by Maryclare Kenney

Is coal RPU (up ~3% sequentially, roughly flat YoY) the start of a recovery and how to model it for 2026?

Kenney said export high-vol benchmarks have stabilized from Q4 into Q1 after falling through 2025, so the biggest YoY drag was in Q1 and the gap should narrow if benchmarks hold. Domestic demand is strong on power/data centers; two utilities are slated to close in Q2 but may receive life extensions given power demand.

“the primary benchmark that we're tied to on the high-vol side, it's been relatively stable.”

asked by Jonathan Chappell · answered by Maryclare Kenney

Quantify/timing of the Q2 cost items and clarify why the focus is shifting to 2027.

Boone reiterated Q2 items (engine overhauls, transaction costs, fuel margin pressure, atypical PS&O seasonality) without further specifics, and explained the 2027 focus is about building a continuous-improvement cadence and exit-rate momentum, requiring plans to be assembled now by mid-year.

“we want to build an exit rate in the '26 and in '27 to make sure we're delivering on year-over-year improvement consistently.”

asked by Ravi Shanker · answered by Kevin Boone