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.