CSX CORP CSX

Stephen Angel, the new President and CEO, outlined his vision for CSX, drawing parallels with his experience in the industrial gas sector. He emphasized safety as a sacred responsibility and highlighted the capital-intensive nature of both industries, stressing the importance of leveraging infrastructure for higher returns. Angel's priorities include driving best-in-class financial performance (operating margins, return on capital, cash flow), fostering a high-performance culture, developing a strong talent pipeline, and capitalizing on strategic opportunities to create compelling shareholder value. He aims for continuous improvement across all profitability levers: efficiency, productivity, price yield, volume, and capital efficiency.

The company reported significant operational improvements, with train velocity reaching its fastest point since early 2021 and dwell time hitting its lowest since mid-2023. Average daily cars online were the lowest since 2020, demonstrating disciplined network management. Trip Plan Compliance (TPC) also saw strong gains, with intermodal TPC rising to 93% and carload TPC to 83%. These improvements reflect enhanced asset utilization, reduced train miles, optimized horsepower, and solid fuel productivity, positioning the railroad for greater efficiency and responsiveness to customer needs.

CSX successfully completed two major infrastructure projects: the Howard Street Tunnel and the Blue Ridge subdivision rebuild, both slightly ahead of schedule. The Howard Street Tunnel project will enable double-stack clearance through Baltimore, expanding intermodal service offerings into the Northeast region starting in Q2 2026. The Blue Ridge rebuild, which incurred over $500 million in spending, enhances network capacity and resiliency. These completions remove significant network disruption costs and position the company for improved service levels and new commercial opportunities.

Market conditions were described as mixed, with customers facing uncertainty from shifting trade policies, weak global commodity prices, and a soft trucking market. Merchandise revenue volume was down 1%, though minerals volume and revenue were up 8% and 12% respectively. Coal revenue declined 11% on 3% lower volume, impacted by mine fires and softer steel market fundamentals, but utility coal performed well. Intermodal revenue increased 4% on a 5% volume increase, benefiting from strong international growth and new domestic service offerings, despite muted pricing and a soft trucking market.

The new CEO acknowledged the ongoing strategic shifts in the industry, particularly regarding potential mergers. He emphasized running CSX as a strong standalone company to create value and position it favorably for any future strategic opportunities. Management noted increased cooperation within the rail industry to convert truck volume to rail, citing recent intermodal performance as an encouraging sign. The company is actively developing new solutions and working with partners to expand its reach and gain market share, while also preparing to address competitive implications of potential industry consolidation.

Adjusted expenses increased by 3%, including approximately $60 million in severance, network disruption, and regulatory advisory costs. However, the company highlighted strong underlying cost momentum from efficiency savings, lower rail headcount, and improved fuel efficiency. The easing of network disruption costs is expected to provide approximately $100 million in benefits for the next year. CSX remains committed to shareholder distributions, having returned over $2 billion year-to-date, and plans to continue its long-term track record of powerful cash generation and steady dividend increases, while maintaining capital discipline.