CSX's Lonegro updates third-quarter, year-end expectations

CSX's third-quarter earnings per share are expected to decline slightly from second-quarter results, and volume will decline by single digits year-over-year, Executive Vice President and Chief Financial Officer Frank Lonegro announced yesterday.

Lonegro updated investors and analysts yesterday at the Cowen and Co.'s annual Global Transportation Conference in Boston about CSX's third-quarter expectations, full-year guidance and long-term strategy.

"Third quarter earnings per share are expected to decline slightly from second quarter levels, based on high single digit volume reductions that are partially offset by improving efficiency benefits and strong pricing gains that reflect a service product that meets and exceeds customer expectations," said Lonegro, according to a press release.

Full-year coal volume will show some improvement as a result of global market conditions showing modest improvement in recent months. As a result, total full-year coal tonnage is now expected to decline between 20 percent and 25 percent year-over-year, he said.

Longer term, the company's "CSX of Tomorrow" strategy is designed to maximize opportunities in the Class I's evolving business mix to drive earnings growth and margin expansion, he said.

The CSX of Tomorrow strategy, which will be profiled in a cover story in Progressive Railroading’s November issue, aims to position the Class I to capitalize on long-term growth opportunities in the intermodal and merchandise markets, and to continue offsetting sustained losses in coal business. The strategy calls for realigning the network around the growth opportunities, continuing to improve service to meet and exceed customers’ expectations, and applying technology and automation to enhance safety, service and efficiency.

CSX will focus on high-density routes serving merchandise and intermodal growth. It also plans to extend sidings that drive longer, more efficient trains; invest in technology automation to further improve efficiency; and invest in intermodal terminals and double-stack clearance projects to capture a greater share of the 9 million truckload market opportunity in the East, said Lonegro.

Those initiatives are part of CSX's efforts to reach its target of a mid-60s operating ratio longer term, he said.