Frank Lonegro, CSX Corporation executive vice president and chief financial officer, updated the company’s expectations for fourth quarter earnings per share and volume while speaking at the Credit Suisse 4th Annual Industrials Conference.
“We now expect fourth-quarter earnings per share on a reported basis to be flat to slightly up, as macroeconomic headwinds impacting the company’s volume are moderating,” stated Lonegro. “At the same time, a recent operating property sale will now offset the impact of a debt refinancing charge announced earlier in the quarter.”
Volumes for the fourth quarter-to-date declined 3 percent overall, with many markets seeing more moderate declines than in previous quarters. Coal is showing sequential volume stabilization and is essentially flat in the fourth quarter to date. Lonegro remarked that total volume is now expected to decline in the low-to-mid single digit range on a comparable 13-week basis, and expected to be flat to slightly up including the extra week that is part of CSX’s 2016 accounting year.
Lonegro also noted the results of CSX’s efficiency initiatives, which have delivered approximately $550 million of cost savings through the third quarter. Expectations for full-year 2016 efficiency savings are approximately $400 million. This includes approximately $100 million from structural changes in the coal network, $150 million from normal productivity initiatives, and the balance from initiatives such as train length, which has increased 20 percent over the past two years. CSX expects these initiatives to contribute to achieving a mid-60s operating ratio longer-term.