CSX’s first quarter results fell short of Wall Street’s expectations, with management citing a combination of operational disruptions and external headwinds as primary factors. CEO Joseph R. Hinrichs stated, “Our performance fell short of our expectations. As a result, we left good business on the table, reduced our revenues, and our inefficiencies meant we incurred more expense.” The company faced network slowdowns due to two major infrastructure projects—Howard Street Tunnel and Blue Ridge subdivision rebuild—as well as severe winter weather, which drove increased expenses and limited revenue opportunities, particularly in key markets like coal and grain.
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CSX (CSX) Q1 CY2025 Highlights:
- Revenue: $3.42 billion vs analyst estimates of $3.46 billion (7% year-on-year decline, 1.2% miss)
- Adjusted EPS: $0.34 vs analyst expectations of $0.37 (7.2% miss)
- Adjusted EBITDA: $1.47 billion vs analyst estimates of $1.53 billion (42.8% margin, 4.1% miss)
- Operating Margin: 30.4%, down from 36.3% in the same quarter last year
- Sales Volumes fell 1% year on year (3.2% in the same quarter last year)
- Market Capitalization: $63.14 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions CSX’s Q1 Earnings Call
- Tom Wadewitz (UBS) asked about the breakdown of operational challenges and timeline for recovery. EVP and COO Mike Cory detailed compounding weather and project-related events, emphasizing efforts to reduce idle cars and add locomotives, with improvement expected gradually over the next quarter.
- Brandon Oglenski (Barclays) questioned whether typical margin improvements from Q1 to Q2 are achievable given ongoing disruptions. CFO Sean Pelkey replied that while Q2 should improve, the pace depends on both macro environment and operational progress, with cost savings tied to restored network fluidity.
- Ari Rosa (Citigroup) inquired about lost contracts and customer reactions to tariff uncertainty. EVP and Chief Commercial Officer Kevin Boone clarified that no contracts were lost, but growth opportunities were missed; he described customer conversations as focused on adapting to fluid trade policy.
- John Chappell (Evercore ISI) sought clarity on the one-off costs and their persistence into Q2. Pelkey explained that about half of the $45 million in Q1 disruption costs were tied to reroutes, with gradual improvement expected as conditions normalize.
- Ken Hoexter (Bank of America) asked about volume outlook and whether near-term industrial gains could offset declines from China. CEO Hinrichs and Cory described sector-specific trends and highlighted opportunities in steel, auto, and grain as potential offsets, contingent on economic recovery.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be watching (1) the pace of operational recovery as infrastructure projects conclude and weather impacts subside, (2) signs of volume and margin improvement in core markets like coal, automotive, and intermodal, and (3) how U.S. industrial development and changing tariff policies influence freight flows and customer demand. Execution on these fronts will be crucial for restoring profitability and validating CSX’s long-term growth strategy.
CSX currently trades at $33.62, up from $27.31 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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