Focusing solely on fourth-quarter and full-year 2024 numbers, CSX experienced a difficult year—but the numbers don’t paint an accurate picture. Events beyond CSX’s control—the Francis Scott Key Bridge collapse in Baltimore, which shut down a major East Coast port area, two hurricanes and a trucking recession—overshadowed four consecutive quarters of overall volume growth and a network that, on balance, is running well, with satisfied customers.
CSX posted 4Q24 operating income of $1.11 billion, compared to $1.32 billion in the prior-year period. Net income was $733 million, or $0.38 per diluted share, compared to $882 million, or $0.45 per diluted share. These results include a pre-tax, non-cash goodwill impairment charge of $108 million assigned to the company’s acquisition of Quality Carriers in 2021. Adjusted (excluding the goodwill impairment charge) 4Q24 net income was $815 million, or $0.42 per diluted share. Total 4Q24 volume of 1.58 million units was 1% higher compared to 4Q23.
Revenue in 4Q24 totaled $3.54 billion, decreasing 4% year-over-year, as declines in fuel surcharge and coal revenue offset the effects of higher pricing and volume in merchandise and volume growth in intermodal. Operating income was $1.11 billion, including the goodwill impairment charge of $108 million. Adjusted operating income was $1.21 billion. CSX’s 4Q24 operating ratio was 68.7%; the adjusted OR was 65.7%.
For full-year 2024 (FY24), CSX operating income of $5.25 billion was down 5% from 2023. Net income was $3.47 billion, or $1.79 per share, compared to $3.67 billion, or $1.82 per share, in 2023. Adjusted net income was $3.55 billion, or $1.83 per diluted share. Operating income was $5.25 billion, including the goodwill impairment charge. Adjusted operating income was $5.35 billion. Revenue totaled $14.54 billion in FY24, decreasing 1% year-over-year. CSX’s FY24 OR was operating margin was 63.9%. The adjusted OR was 63.2%.
CSX posted total volume growth of 2% in FY24, “ahead of Industrial Production.” Merchandise revenue grew 3%, “driven by positive volumes and favorable pricing,” the company said. “Customer recognition for consistent service led to business gains and broadening opportunities for profitable growth. Capacity and efficiency improvements were initiated through effective network optimization projects and a successful, supportive culture.”
“While 2024 had its challenges, I am proud of how the ONE CSX team responded,” said President and CEO Joe Hinrichs, Railway Age’s 2025 Railroader of the Year. “We managed through substantial impacts from major hurricanes and the Key Bridge outage early in the year and remained focused on delivering industry-leading customer satisfaction. We will remain disciplined in delivering safety, service, and operating efficiency performance as we invest in the strength and capabilities of our network this year, and we look forward to delivering on the profitable growth opportunities ahead of us.”
“We grew volume in every quarter, the first time that’s happened in 10 years,” Hinrichs told Railway Age. “We’re the only Class I that grew volume in 2024, compared to 2019, before the pandemic. We’re running better, and our customers are happy. We’ve got good pricing momentum going into 2025, and we’re going to complete a major capacity improvement project—rebuilding and double-stack clearing of the Howard Street Tunnel in Baltimore.”
Addressing 2024’s challenges, Hinrichs noted that the Key Bridge collapse, in addition to closing intermodal terminals for seven weeks, also shut down the East Coast’s second-largest export coal facility, forcing CSX to reroute traffic. As well, Hurricane Helene, which affected much of the Southeast, destroyed a sizable chunk of CSX’s Blue Ridge Subdivision. Rebuilding it, at a cost of $400 million, will be completed this year. Two weeks later, Hurricane Milton hit northern Florida. “These were major events we couldn’t control,” Hinrichs told Railway Age. “While we performed very well dealing with all that, we really need the ‘noise’ to go away.”
TD Cowen Insight: “Improvement as We Move Through 2025”
By Jason H. Seidl, Elliot Alper and Uday Khanapurkar
Little is working in CSX’s favor to start 2025 as EBIT guidance now points to negative Y/Y growth. Coal headwinds from both volume and benchmark pricing plus network rebuilding costs is forcing the railroad to miss the low-end EBIT growth targets laid out just two months ago at its Investor Day. With some headwinds bleeding over into 2Q25, all eyes will be on 2H25.
CSX reported adjusted EPS of $0.42, in line with our and consensus estimate (the adjusted figure excludes a goodwill impairment charge relating to the 2021 Quality Carriers deal). Top line –4% Y/Y missed our estimate. Adjusted OR of 65.7% was 30bps worse than our estimate, which assumed a material sequential deterioration off 3Q24.
Coal pressured 4Q24 with carloads –6% Y/Y and revenue per carload –13% Y/Y. Headwinds are expected to continue in 2025. Mine outages will have a sharp impact on export volumes in 1Q25, and some domestic facility retirements scheduled for 4Q24 will result in coal carloads down in 2025. Despite an uptick in natural gas prices, management expects coal yield to decline 3% sequentially in 1Q25. Cold weather should support some destocking, suggesting a sharp 1Q25 trough in what should be a weak overall year for coal.
CSX faces more favorable intermodal comps in 2025 compared to its Class I peers, which should support full-year 2025 volume growth. Freight returning to the East Coast following resolution of the port labor dispute should help volumes, and a tightening in the truckload market in 2H25 could also drive over-the-road conversions. Autos, metals and housing face a challenged start to the year amid high interest rates, but CSX expects improvement as we move through 2025. Growth pockets will offset the coal carload headwind, and management expects low-to-mid-single-digit FY25 carload growth.
Despite a slow start to the year (carloadings down mid-single-digits through the first two weeks of January), CSX still expects low-to-mid single-digit volume growth for 2025. The railroad expects approximately $350MM net impact from multiple moving pieces in 2025: $300MM unfavorable impact in commodity prices as lower coal benchmarks limit upside (YTD coal carloadings down nearly 20%); $50MM favorable impact to cycling of lost business, and $10MM/month due to construction projects relating to the Howard Street Tunnel and Blue Ridge Subdivision projects. Management now expects 2025 operating income to be on the low side of their long-term guidance (5%), minus the $350MM of discrete items, which puts reported EBIT down nearly 3% on a full year basis. Management said there could be downside to commentary if the coal outlook worsens, vs. Union Pacific, which we model growing 9% in 2025.
CSX reiterated the Howard Street Tunnel rebuild costs of $10MM/month in 2025. While this is a material drag on earnings in 2025, CSX emphasized that the tunnel collapse forced them to condense a prior three-year capex plan into one. This suggests both expenses and capex relating to the rebuild should largely fall off in 2026. CSX’s rebuild is set to accommodate double-stack moves on the East Coast, which management expects to bring some volume benefits once complete.
We lower our 2025 EPS estimate to $1.80 from $2.05 and introduce our 2026 EPS estimate of $2.05. We maintain our 16.5x multiple (~in line with its five-year forward average). Using our new 2026 estimate, our $34 price target remains intact. Reiterate Hold.
