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CSX’ Q1 Merchandise Carloads Softer Than Expected, but Intermodal Solid and Growth to Accelerate.

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

Eastern Class-I railroad CSX’ first quarter top line fell 1.5% (year over year), below our forecast due to softer than anticipated automotive carloads. Total volume was up 1% as solid intermodal growth and a spike in intermodal storage fee income offset soft overall merchandise and coal volumes (though utility volumes are rising). Automotive carloads fell 16% as the semiconductor shortage tempered OEM production and chemical volumes were down on soft energy end markets. Intermodal volume surged 10% on robust consumer goods spending and heavy retailer restocking, along with tight capacity in the truckload sector (rising truck to rail conversions). Revenue per carload fell 2% on fuel surcharge lag and mix, but we believe core pricing is rising as limited capacity is driving up rates across most transportation modes. Importantly, management still expects full-year volumes to exceed GDP growth, with double digit revenue gains. This implies a solid rebound driven by improving industrial end markets and ongoing intermodal tailwinds.

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Company Profile

Business Description

Operating in the eastern United States, Class I railroad CSX generated revenue near $11 billion in 2020. On its more than 21,000 miles of track, CSX hauls shipments of coal (13% of consolidated revenue), chemicals (22%), intermodal containers (16%), automotive cargo (9%), and a diverse mix of other bulk and industrial merchandise.

500 Water Street, 15th Floor
Jacksonville, FL, 32202
T +1 904 359-3200
Sector Industrials
Industry Railroads
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 19,300