CSX Corporation’s turnaround, which began in March 2017 with the appointment of the late Hunter Harrison as CEO, still has room for further improvements, CSX executives told investors during their second quarter earnings call on Tuesday afternoon. After taking the helm, Harrison quickly implemented his signature precision-scheduled railroading, which essentially converted CSX’s network from a hub-and-spoke model to a leaner point-to-point system by closing many of the railroad’s hump yards. When Harrison died a day after taking medical leave on December 16, Jim Foote was made acting chief executive officer and is the president and CEO today.
Foote and CSX EVP and CFO Frank Lonegro led the earnings call. The most impressive financial metric cited by Foote was CSX’s operating ratio of 58.6% for the second quarter of 2018, which improved 490 basis points from the previous quarter and 880 basis points from the second quarter of 2017. Foote said that he believed that OR number was a record for any Class 1 railroad. The improved operating efficiency yielded a 58% growth in earnings per share year-over-year, from $0.64 in the second quarter of 2017 to $1.01 for the current quarter, easily beating the Street’s expected $0.87 per share. CSX brought in $877M in net earnings for the quarter, a 71.9% improvement over the $510M net earnings for Q2 2017.
“These [record financial results] are due to the hard work of all CSX employees, who are really excited about what has been accomplished,” said Foote.