CSX's Q1 a 'good start' to the year, Hinrichs says

CSX President and CEO Joe Hinrichs described the Class I's first-quarter 2024 results as "a good start to the year and in-line with our expectations."

CSX posted Q1 2024 operating income of $1.35 billion, compared to $1.46 billion in the prior year; and net earnings of $893 million, or 46 cents per diluted share, down from $987 million, or 48 cents per diluted share in Q1 2023.

Total volume of 1.53 million units for Q1 was 3% higher compared to first quarter 2023, with intermodal volume up 7%, coal volume up 2%, and merchandise volume flat, according to a CSX press release.

"We were pleased to see our consistent customer-service performance lead to volume growth, and we remain focused on improving the reliability and fluidity of our network," Hinrichs said.

Revenue totaled $3.68 billion for the quarter, declining 1% year-over-year as lower fuel surcharge, a decline in other revenue, weaker trucking revenue and reduced export coal prices offset gains in merchandise pricing and higher intermodal and coal volumes. Q1 2024 revenue was flat sequentially.

Although Q1 operating income declined 8% year over year, it increased 3% from Q4 2023.

For the remainder of 2024, the company expects total volume and total revenue growth in the low-to-mid-single-digit range, Hinrichs said during a Q1 call with analysts.

"We expect our merchandise business to gain momentum through the year as effects from new business wins, truck conversions, and the ramp-up of industrial development projects build on a favorable trends in many of our end markets," Hinrichs said, according to a transcript of the call. "We look for steady growth in intermodal, supported by stable consumer demand and more normalized retail inventories, which are driving improved port activity."

The company also addressed the impact on its operations since the Francis Scott Key Bridge collapse forced the Port of Baltimore's shutdown last month. CSX is one of the two Class Is that serve the port. CSX expects it could lose $25 million to $30 million in sales a month due to the port's closure, executives said. Much of the losses are expected to be from the coal business.

"[We] are taking actions to effectively mitigate as much of the impact as we can," Hinrichs said. "Our team at Curtis Bay and across the rest of the coal franchise will be ready to ramp back up as quickly as possible once the channel returns to full operation."

Hinrichs also took time on the call to remember his immediate predecessor, former CSX President and CEO Jim Foote, who died earlier this week at the age of 70. Foote served as CSX's top leader from late December 2017 until he retired in September 2022.

"He guided this company through some very challenging and transformative times in our history, including rebuilding the network after the dramatic changes in 2017 and dealing with the COVID pandemic," Hinrichs said. "I had several impactful and insightful conversations with Jim while I was being recruited to come to CSX. And I thank Jim for his support with our board of directors to bring an outsider in as CEO of CSX. We thank Jim for all his contributions to CSX and the railroad industry overall throughout his 40-plus year career. And our thoughts and prayers go out to his family and friends."