CSX (NASDAQ:CSX) reported third-quarter earnings per share of $0.57, up 30% from the prior year’s adjusted result, as volume growth, pricing gains and lower non-fuel costs helped lift profitability.
President and Chief Executive Officer Steve Angel said revenue rose 12% during the quarter, while total volume increased 5%. Operating margin reached 39.1%, representing a 420-basis-point improvement from the prior year’s adjusted result. The company also said it generated substantial free-cash-flow growth through productivity initiatives.
“Our volume grew 5% as more customers turned to our railroad to safely and reliably move their goods,” Angel said. “The progress we continue to make on productivity has helped drive substantial growth in profitability, earnings, and free cash flow.”
Safety, Efficiency and Service Progress
Angel said CSX’s Federal Railroad Administration injury rate declined 17% year over year in the third quarter, while its accident rate fell 4%. He said the company continued to focus on reducing risk, increasing awareness and improving communication across its operations.
The company also cited record fuel efficiency, which Angel said was the best ever achieved by CSX and the best reported by a U.S. railroad. Workforce efficiency, measured by gross ton miles per employee, improved substantially from a year earlier.
Service metrics improved sequentially, including velocity, dwell time and customer switching performance. Carload trip-plan compliance improved modestly from the prior quarter, though intermodal trip-plan compliance declined. Angel said October service performance had started strongly, with velocity averaging more than 19 miles per hour and dwell approaching 10 hours.
CSX is using closer coordination between its commercial and operating organizations to better position crews and locomotives for demand, Angel said. The company is also using technology, including autonomous track inspection cars, to improve planning and reduce delays.
Angel also recognized Mike Cory, who recently announced his retirement after 45 years in the railroad industry. Casey Albright, who oversees network operations and service design, and Doug Ryhorchuk, who oversees engineering, mechanical and transportation, will report directly to Angel going forward.
Costs and Fourth-Quarter Outlook
Chief Financial Officer Kevin Boone said higher fuel surcharge revenue, volume growth and pricing gains in merchandise, intermodal and coal supported the 12% revenue increase. He noted that third-quarter 2025 results included a $164 million goodwill impairment charge. Excluding that item, operating income increased 25% in the latest quarter.
Non-fuel costs declined 3% despite the 5% increase in volume. Labor expense rose $19 million, as productivity gains and lower severance expense mostly offset more than $90 million in higher incentive compensation and inflation-related costs, Boone said.
Purchase services and other expenses declined 10%, reflecting improved utilization of locomotives and vehicles, reduced external labor, lower general and administrative costs, maintenance efficiencies and the absorption of intermodal volume growth.
Boone said CSX expects normal seasonal cost increases in the fourth quarter, including higher purchase services and other costs and lower fuel efficiency during winter months. Labor costs are also expected to rise sequentially due to seasonal factors. The company expects fourth-quarter year-over-year operating-margin expansion of more than 350 basis points.
For 2026, CSX raised its revenue-growth outlook to the high-single-digit percentage range, from a prior expectation of mid- to high-single-digit growth. It maintained guidance for full-year operating-margin expansion of more than 350 basis points, capital expenditures below $2.4 billion and free-cash-flow growth of more than 80%.
Intermodal Leads Volume Growth
Chief Commercial Officer Maryclare Kenney said intermodal remained the largest contributor to volume growth. Total intermodal volume rose 7% year over year to a record level, while intermodal revenue increased 20% and revenue per unit climbed 13%. Nearly all of the revenue-per-unit increase came from fuel surcharge, she said.
Domestic intermodal drove the segment’s growth, while international intermodal volumes were roughly flat from a year earlier. Kenney attributed domestic demand to tight trucking capacity, high truck rates and elevated diesel prices, as well as new service offerings through Birmingham, Myrtlewood and Baltimore.
She said CSX expects further benefits as customers enter the 2027 bid season with full double-stack operations available through the company’s I-95 corridor via Baltimore. The company is also working with channel partners and shippers to identify freight that can be converted from truck to rail.
Merchandise revenue increased 11%, as volume rose 3%. Metals volume climbed 12%, supported by steel demand in infrastructure and energy markets and output growth from new steel mills served by CSX. Chemicals volume increased 7%, aided by conversions and demand for waste and petroleum products.
Fertilizer was the weakest merchandise category, with volume down 13%. Kenney cited supply constraints limiting phosphate shipments as well as low crop prices that have affected fertilizer affordability and demand.
Coal and 2027 Planning
Coal revenue increased 10%, driven by a 2% volume increase and a 7% gain in revenue per unit. Export coal volume rose 7% as mine output increased, while domestic coal volumes declined modestly during a mild summer and with natural-gas prices around $3, Kenney said.
Looking toward 2027, Angel said the company has identified more than 100 initiatives that are expected to contribute to productivity efforts next year. He said 2027 productivity gains may not match the scale of 2026 but should still be significant.
CSX also plans to add modestly to its train and engine employee pipeline to support growth, while continuing to size its workforce for a safe, reliable and efficient railroad. Angel said the company is investing in capacity where needed, including in Atlanta, where volume has increased 50% over the past three years and CSX is expanding switching and processing capacity by 50%.
About CSX (NASDAQ:CSX)
CSX Corporation is a transportation company whose primary business is freight railroading through its CSX Transportation subsidiary. The company operates an extensive rail network across the eastern United States, serving major industrial centers, population hubs, ports and distribution markets.
CSX transports a broad range of products, including chemicals, agricultural and food products, forest products, minerals, metals, automotive goods and other manufactured merchandise. Its services also include intermodal transportation, which combines rail service with trucks and containers, as well as the movement of coal and other bulk commodities.
The company traces its roots to the formation of CSX Corporation in 1980 through the merger of Chessie System and Seaboard Coast Line Industries.
