CSX’s Eliasson: “Meaningful margin expansion”

Speaking at the Bank of America Merrill Lynch 2015 Transportation Conference in Boston on May 14, 2015, CSX Chief Financial Officer Fredrik Eliasson said that, for the full year, CSX “continues to expect EPS growth in the mid-to-high single digit range, as well as meaningful margin expansion as the company makes progress toward a mid-60s operating ratio.”

Discussing CSX’s performance and second-quarter volume and earnings projections, Eliasson said that earnings growth this year “will be driven predominantly by accelerating pricing performance and productivity gains approaching $200 million as we cycle [through] strong volume comparisons and additional coal headwinds.” Second-quarter volume “is tracking slightly below expected levels due to very strong comparisons to last year. However, thanks to improving service levels and asset utilization, we still expect second-quarter EPS growth that is flat to slightly up compared to last year.”

Eliasson also highlighted CSX’s financial performance over the past decade, during which CSX “delivered a compound annual growth rate in EPS of 20%, despite the loss of nearly $900 million in coal revenue over the past few years. We have delivered strong shareholder value by remaining focused on our three key value levers: pricing above inflation, driving ever more efficient operations, and growing our merchandise and intermodal businesses faster than the economy. CSX is emerging from the energy transition a stronger company with a more diversified business mix, which has been evident over the past three quarters in which we have delivered double-digit earnings growth and significant margin expansion.”

The foundation of CSX’s strategy is delivering excellent service to customers,” Eliasson said. “To that end, we are making key resource investments to enhance service to the levels we produced prior to last year, and position us to take advantage of the long-term growth opportunities present across nearly all of the markets we serve.”