Despite missing Wall Street expectations, CSX posts record fourth quarter numbers

Earlier today, Class I railroad carrier CSX reported another strong quarter, with fourth quarter earnings of $457 million and $0.43 per share.

This represented a 13 percent annual gain in earnings per share—and a new fourth quarter record for CSX— but fell short of Wall Street expectations of $0.44 per share.

CSX said quarterly operating income at $841 million was off by 1 percent compared to the fourth quarter of 2010, and quarterly revenue at $2.951 billion was up 5 percent. Total revenue for 2011 at $11.743 billion was up ten percent.

For the full year, CSX reported record performances in operating income— at$3.418 billion and up 11 percent; operating ratio at 70.9 percent, and earnings per share at $1.67.

Quarterly volume growth was down 4 percent overall in the fourth quarter at 1.619 million units. Agricultural products were down 2 percent, and chemicals and coal were down 7 and 5 percent, respectively, and intermodal also dipped 5 percent. Total merchandise was off by 1 percent at 666 million units. Revenue per unit for the quarter was $1,655.

“Our quarterly results were driven by top line growth, reflecting strong core pricing and fuel recovery, as well as an excellent service product,” said Michael Ward, CSX President and CEO, on an earnings call earlier today. “Service measures are now at high levels thanks to the outstanding execution of our operating team and the resource investments we made in the second half of the year. We expect service levels to remain high going forward.”

Ward said CSX remains on track for its 65 percent operating ratio target.

In his comments on the call, Clarence Gooden, CSX executive vice president, sales and marketing, said that the fourth quarter of 2010 included one more week than the fourth quarter of 2011.

Quarterly volume gains, said Gooden, drove $51 million in annual revenue, and the combined effect of rate and mix accounted for $138 million, reflecting yield gains across all three major markets as he noted CSX continues to sell the continuing value of rail transportation. Increased fuel recovery accounted for $117 million in the fourth quarter, which Gooden said helped to offset the impact of higher fuel costs.

Same-store sales pricing for the fourth quarter increased by 6.9 percent and are defined as shipments by the same customer, commodity, and car type and the same origin and destination, with these shipments representing about 75 percent of CSX’ traffic base.

“Increased fuel recovery contributed to higher revenue per unit,” said Gooden.