CSX experienced a tough second quarter and first half of 2025, compared to the prior-year’s periods, but saw some sequential improvements over this year’s first quarter while “managing through mixed market conditions, supported by operational momentum and new business wins.” TD Cowen says that CSX is “sticking to operations, with service trending in the right direction” (below).
CSX posted 2Q25 operating income of $1.28 billion compared to $1.45 billion in the prior year period. Net income was $829 million, or $0.44 per diluted share, compared to $963 million, or $0.49 per diluted share. Total volume of 1.58 million units for the quarter was flat compared to second quarter 2024, but up 4% sequentially from 1Q25’s 1.52 million units.
“The skill and commitment of CSX’s railroaders enabled us to deliver significant sequential improvements in network fluidity and cost efficiency that are apparent in our financial results,” said President and CEO Joe Hinrichs. “While uncertainty continues to impact select industrial markets, we remain focused on completing two major infrastructure projects that will strengthen our position to execute on many profitable growth opportunities ahead.” Those two projects—rebuilding of the Howard Street Tunnel and Blue Ridge Subdivisions, “remain on schedule for fourth-quarter completion,” Hinrichs told Railway Age. Operationally, “we ran very well in May and June,” posting a “strong sequential improvement in network performance,” he said.
Operating revenue totaled $3.57 billion for the quarter, decreasing 3% year-over-year, “as the effects of lower export coal prices, reduced fuel surcharge and a decline in merchandise volume were only partially offset by higher merchandise pricing, an increase in other revenue and growth in intermodal volume.” Operating income of $1.28 billion decreased 11% compared to the same period in 2024. EPS of $0.44 decreased 10% compared to the prior year but increased 29% from the previous quarter’s $0.34.
CSX’s operating ratio was 64.1% for the quarter, compared to 60.9% in 2Q24, increasing by 320 basis points year-over-year, but decreasing by 550 basis points sequentially from 1Q25.
When asked about the possibility of U.S. Class I transcontinental mergers, Railway Age’s 2025 Railroader of the Year said that while “we’re not going to speculate, we’re open to all possibilities,” especially those that could result in “business growth, better customer service and improved shareholder value.”
Hinrichs, From the Earnings Call
“While we cannot comment, we want to be clear that at CSX, we are absolutely focused on delivering shareholder value and are always open to anything that can help us achieve this objective. We have a strong franchise that we believe is the best in the East, and we are making it stronger every day. Our customer service is industry leading, and we have exceptionally strong relationships with those customers. We are working closely with numerous partners to help accelerate the buildout of industrial capacity on our network. And our commercial team is actively developing new solutions that will help us expand our reach and gain share. We are driving forward with major network projects that will prove to be valuable investments. Our Howard Street Tunnel project will allow us to compete in key intermodal markets. The Blue Ridge rebuild will ensure network balance and our operations team continues to unlock ad efficiency yard by yard and region by region. While we are confident in CSX’s path forward, we welcome all opportunities that would allow us to deliver value for our shareholders, drive profitable growth and serve our customers better. We actively evaluate these opportunities for their upside potential. This has been and remains the focus of our management and our Board.”
Hinrich’s first answer to a consolidation driven question from an analyst asking if his experience working at Ford made him feel a single-line service is a big benefit to shippers: “As we said in our remarks, we’re open to all those possibilities and all those conversations, how we do that—how we can best create value for our shareholders, properly grow the business and serve those customers better and look forward to those opportunities.”
His second answer to a similar question as the first: “We think there are all kinds of opportunities to work together to make it better for our customers, and we’re open to talking about all those possibilities. Again, we’re focused on creating value for our shareholders and looking where ways to profitably grow, and we think that better customer service helps you do that. There are … all kinds of ways to deliver that better customer service. So, we’re looking forward all those conversations and making that stuff happen.”
TD Cowen: “Sticking to Operations; Service Trending in the Right Direction”
By Jason Seidl, Elliot Alper and Uday Khanapurkar, TD Cowen
CSX came in above our forecast and consensus expectations for 2Q25 driven by a beat on OR that more than offset a modest top line miss. Full year volume guidance remains intact though bridge clearance for double-stack is pushed back a bit vs. previous expectations. No speculation from management on M&A, though not shutting it down keeps the proverbial door open, in our view. PT of $45 intact.
CSX reported EPS of $0.44, beating our forecast and the consensus estimate of $0.42. Top line modestly missed our forecast, and the beat was driven on the margin with a 64.1% OR vs. our 65.8% forecast. This is despite the first full quarter of network disruption costs of $10MM/month.
CSX made sequential improvements to its network fluidity in 2Q25 despite dealing with its two projects causing network disruptions. While CSX is on track for its own projects, getting bridge clearance to double-stack containers appears to be slightly delayed. CSX should be able to run its traditional routes by year-end, but adding the double-stack capacity now expected may be at the whim of the state, which could increase the risk of additional delays.
Chemicals and Forest Products were the biggest decliners in 2Q25, attributed primarily to customer outages that should come back online in 3Q25. The soft housing market also continues to weigh on Forest Products market. Coal, which is –7% QTD for CSX, saw production constraints, and along with lower benchmark pricing, brought coal revenue down 15% in 2Q25; RPU should stay ~flat to slightly down into 3Q25.
3Q25 margins have puts and takes (wage increases that go into effect, a $20MM headwind, $15MM-$20MM restructuring headwind, $20MM PS&O headwind), among export coal that should be a large swing for the quarter. CSX held volume guidance that would call for a pickup in 2H25, which may seem less aggressive (given softer macro sentiment) when accounting for factory outages at multiple large customers and easier comparisons in the back half of the year.
Recall, we upgraded CSX this week given our call that there will be consolidation among the East and West railroads. We believe any transaction would result in the rail industry going from 4 U.S. Class I’s to 2 (with the acknowledgment of both Canadian players having significant U.S. exposure). If UNP makes a bid for NSC, then BNSF may wait to see how the process evolves (i.e., not make an offer immediately following UNP) before possibly making an offer for CSX. Management did not speculate on potential mergers but did say that “we’re open to all those possibilities and all those conversations, how we do that—how we can best create value for our shareholders.” An openness to conversation leaves the door open, in our view a prudent response from management.
We modestly tweak our estimates though we now value CSX off a takeout EV/EBITDA multiple of 12.5x, which gets us to our $45 price target. Reiterate Buy. We believe next catalyst for CSX shares will be UNP earnings where UNP as the potential buyer may shed more light on the M&A talk even if it too avoids direct commentary.
CSX is a high-quality company with solid fundamentals that appears well positioned to benefit from long-term economic growth. CSX should win back market share in 2026 following the completion of multiple network projects. CSX is well positioned to grow with increased domestic infrastructure spending.
