With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-292-CSX

Seen on railroads everywhere, the transportation company operates over 21,000 miles of railroad tracks, but also operates in the real estate industry as well.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-267-CSX

With some 21,000 route miles of track in 23 states, the Jacksonville, Fla. freight railroad serves customers in 23 eastern U.S. states and Ontario and Quebec provinces in Canada.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Fortune Global 500

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

CSX Corporation is an American transportation company focused on railroad and trucking services. The company offers rail-to-truck transfers and bulk commodity operations. It also transports a wide range of materials including chemicals, food products, minerals, automotives, and coal.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

CSX (CSX): Company Profile, Stock Price, News, Rankings

legacy

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the CSX 4th Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question and answer session.

Thank you. And I would now like to turn the conference over to Matthew Korn, Head of Investor Relations and Strategy. You may begin.

Thank you, Abby. Hello, everyone, and good afternoon. Welcome to our Q4 earnings call. Joining me on the call today are Joe Hinrichs, President and Chief Executive Officer Mike Corey, Executive Vice President and Chief Operating Officer Kevin Boone, Executive Vice President and Chief Commercial Officer and Sean Pelkey, Executive Vice President and Chief Financial Officer. The presentation accompanying this call, which is available on our website, you will find slides with our forward looking disclosures and our non GAAP disclosures for your review.

With that, it is now my pleasure to introduce Mr. Joe Hinrichs.

All right. Thank you, Matthew, and hello, everyone. Thank you for joining our Q4 call. As we look back and review 2024, we see that our railroad faced a significant number of challenges during the year, including weaker commodity prices, a bridge collapse and multiple hurricanes. We had another year where U.

S. Industrial production was effectively flat, reflecting mixed end markets across our customer base. There were also some labor disruptions across North American supply chain, which added economic uncertainty. But it's so impressive that through all of this, our One CSX team continued working together to improve our overall business. We have been resilient, adapting to changing markets and operating conditions, while remaining focused on our commitment to customer service.

Last year was different than we planned, but we are proud of what we achieved and how we achieved it. We are confident because we know that our momentum continues to build and we are ready for the important year ahead of us in 2025. Now as shown on the first slide, we achieved a lot over 2024. CSX achieved 2% volume growth for the year, outpacing the industrial economy yet again. We accomplished this even with a number of constraints on our coal franchise, including the collapse of the Francis Scott Key Bridge in Baltimore.

Our leading merchandise business delivered 3% revenue growth even after absorbing the effects of much lower fuel surcharge, soft metals market and the hurricane disruptions. We delivered strong, consistent customer service and our customers have responded. You heard this for yourselves at our recent Investor Day and you can see it in our financial results as we are able to price according to the value we are delivering. Operationally, we worked across our network to reduce waste, unlock capacity and improve responsiveness. We took more steps in building a successful culture that can deliver more sustainable, efficient performance and drive more positive momentum for the business.

We also led the rail industry in reaching early agreements with our labor unions on our 5 year contracts, working together to value our employees, avoid the prolonged labor battles of the past and provide certainty for our customers. Now we can review some of the results of the Q4. Slide 2 highlights key metrics for our Q4 compared to last year. As we expected, our underlying operations performed well, but we did see the impact of substantially lower coal and diesel prices. Hurricane effects also weighed on revenues and expenses for the quarter as we noted in our October call.

Total volume grew by 1% versus last year in the quarter. The largest contributor was growth in intermodal volume, which gained 4%. Quarterly revenue declined by 4%, largely due to lower global coal prices and a decline in fuel surcharge. Earnings per share declined 7% on an adjusted basis, excluding the effects of the goodwill impairment this quarter. Overall, we executed well through a difficult period.

However, we are not satisfied with these results. We have a clear vision of what we want to achieve at CSX, as we shared with you at our recent Investor Day, and we are committed to delivering on that vision for the benefit of our customers, our employees and our shareholders. Now, I'll turn the call over to Mike to discuss our operational performance.

Thank you, Joe and I really appreciate you all taking the time today to participate. So first, I want to thank our team for the tremendous efforts through the quarter the year. And I'm really truly proud of this team. From weather to structural challenges like the Blue Ridge or Howard Street Tunnel, they worked together to minimize the impact on our customers. And they did all of this while controlling costs and building a safer work environment for our employees and the communities they operate in.

Let's go to the first slide. The 4th quarter saw a sequential decline in FRA injuries, which reflects our continuing initiatives around transforming our safety culture. However, the full year rate remained elevated compared to last year. A positive result of our efforts has been a significant reduction in our employees' lost time associated with injuries. We finished 2024 with the lowest total workdays lost in the calendar year in company history.

For FRA accidents, we saw a quarterly year over year increase, but finished largely flat on an annual basis. We strongly believe that our work in the field on hazard identification and exposure controls combined with our focus on newly hired and trained employees will continue to reduce significant injuries and accidents. And to improve the efficiency in our capital work, we continue to harden our main lines and infrastructure more effectively. We clearly see how our Safe CSX initiative is creating positive fundamental changes in both our safety leadership and the workplace environment our employees are in. Over to the next slide.

On this slide, you can see the impact of the strong hurricanes that passed through much of our service areas at the beginning of the quarter and flowed through to our customer service metrics. Much of the impact to our trip plan compliance came directly from our inability to deliver cars to customers due to the effects of the storm. Our customer switch data shows that we maintained a relatively good first and last mile switching considering the challenges. However, it remains our focus for improvement. I'm confident that our team will deliver in these metrics as we progress through the year.

I'm also very pleased with the progress that we've made in developing our field employees to be more responsive to customer needs. As this development takes hold, we have a much better understanding at the local level on how to manage costs through proper service process. Over to the next slide. As I stated earlier, 2024 brought various weather related challenges over the last two quarters that have affected our overall operating metrics. We entered Q4 still dealing with the residual effects of the previous storm such as the Blue Ridge reroutes.

Hurricane Melton in particular caused long periods of recovery for the various commodities to move into and out of Florida. This resulted in increased well for our traffic in our largest volume state. It also affected other parts of the network as we were unable to run our regular cadence on some flows throughout the storms up to recovery. On the velocity side, we were able to maintain excuse me, we were able to continue increasing our capacity and maintain our speed through very close management of our train starts. This also benefit our locomotive utilization and overall transportation, engineering and mechanical costs.

As we worked hard in adverse conditions to maintain our network fluidity, we also drove strong improvements in efficiency. The top right of the slide shows the gains we've made in fuel efficiency, which has resulted in 1,000,000 of dollars in savings this last year. The chart on the bottom reflects how we're using less power per tonne of freight moved, another indicator of better operating efficiency. Further, over 2024, our engineering, transportation and network teams work together to improve our work block performance. This resulted in substantial improvements in the amount of rail ties and ballast replaced per man hour compared to the previous year.

And we're seeing great productivity gains here, but there's still much more improvement that we expect to get going forward. For the Howard Street Tunnel, we've commenced rerouting traffic and our start date of February 1 is on target. This project was initially planned to take 3 years and create extensive daily track outages over one of our key corridors. We're extremely proud of the team for being able to turn this around from a 3 year project to one that will take 6 to 8 months for the tunnel to be operational. We'll benefit from this improvement forever and far faster than originally planned.

At the Investor Day, I spoke about the opportunities at Cumberland. The team is 90% complete with the site's reconfiguration and the results have been great. Already, we've doubled the number of cars processed per day, meeting our initial target. And with completion still to come, we are focusing on much more in terms of improvements. Overall, I'm extremely pleased with our progress on many of the fronts.

All our initiatives discussed at Investor Day are proceeding, and while 2024 had numerous challenges, we made fundamental improvements in many areas that will benefit us over the long run. We've increased transparency in the relationship between cost and service for our operating managers. As a result, our service continues to improve while our costs stay in line with expectations. Our Safe CSX program is well underway and the team is defining and implementing key process changes with our operating employees, bringing benefits to employee retention as well as improving reliability and resiliency across our network. Considering the various challenges that came about last year, I'm very pleased and confident in the operating team's response and the collective work in both restoration and tackling our initiatives going forward.

So looking forward, I believe we're well positioned to deliver our objectives in 2025 and beyond, and we're all looking forward to capitalizing on the opportunities as they present themselves. With that, over to you, Kevin.

All right. Thank you, Mike. First off, I do want to thank this entire sales organization for all their hard work throughout 2024. As Joe and Mike have described, we faced numerous challenges across our network this past year, and our team responded with a steady commitment to serving our customers, highlighted by our Q4 Voice of the Customer survey where we saw the Net Promoter Score reaching an all time high. We continue to see mixed conditions across the markets we serve.

Industrial output remains muted, Interest rates are still high, and the truck cycle has yet to inflect. With that said, we hear optimism from our customers as they consider the potential for its support of domestic economic policies, and we continue to see strong activity into 2025 with new project inquiries into our industrial development group. Our focus remains to drive outgrowth in the markets we serve, continuing our track record of exceeding industrial production. Let's review merchandise business as shown on Slide 8. For the Q4, revenue and volume were flat compared to last year.

But on a full year basis, revenue was 3% higher with a 1% increase in volume. Looking across the end markets, chemicals remained strong in the 4th quarter, consistent with the full year performance, with volume increasing 6%. Robust demand for plastics and LPGs has driven much of the growth throughout 2024. Minerals volume was supported by positive demand for cement and aggregates, and forest products volume was up 3% as CSX capitalized on continued demand in paper markets and pulp board. On the other side of the markets, volume for fertilizers business was impacted this quarter as supply chains here in Florida felt the lingering effects of hurricanes.

Performance within metals remained sluggish as it has been all year, largely due to continued soft demand for steel. Volume for our automotive business declined 2% for the quarter as higher dealer inventories have led to lower build rates. Looking ahead to 2025, we're seeing strong demand signals in our Ag and Fertilizer segments, along with continued strength in minerals and chemicals. Interest rate sensitive markets, including automotive, metals and housing continue to remain challenged. While we anticipate a slower start in the Q1, we do expect moderate merchandise carload growth for the full year, supported by steady service driven conversions and new industrial development projects that should accelerate as we exit 2025.

Now, let's turn to slide 9 to review the coal business. Coal revenue declined 20% for the quarter on 7% lower volume as we've navigated the effects of reduced global benchmark pricing and production issues. All in coal RPU declined 14% year over year and 4% sequentially, in line with previous guidance. Export volume fell modestly, largely due to lower supply availability of certain coal mines with temporary geological issues limited production. That said, for all of 2024, export coal volume grew by 9%, even considering the impacts of the Key Bridge and a ship loader outage at Curtis Bay.

Exports represented more than half of our coal carloads for the full year, a first for CSX. Domestic shipments were pressured during the quarter, driven by lower natural gas prices and ample utility stockpiles. More recently, we have seen colder winter weather that has begun to reduce utility stockpiles, providing incremental opportunities as we move into the summer months. As we look into 2025, we anticipate a decline in coal volume with the weakest year over year performance in the Q1. This includes temporary production outages at a couple of its CSX served mines that will mainly impact the first half of twenty twenty five from a year over year volume perspective.

Based on current global benchmark prices, we expect all in coal RPU to be down roughly 3% sequentially in the Q1. As we have highlighted previously, we also see a couple of plant closures at domestic utilities that are scheduled for later this year. Despite these challenges, our utility customers are facing accelerating growth in power demand across areas of our service network where data center build outs are in progress. Lower utilization rates at existing CSX serve utilities does provide opportunities to work with customers to meet increased demand. Turning to Slide 10 to review the intermodal business, 4th quarter revenue declined 5% on a 4% increase in volume, with lower diesel prices year over year significantly impacting revenue per unit by 7%.

Our domestic intermodal business performed well for the quarter, converting traffic from over the road even in this challenging truck market. We have been we have many initiatives underway, including continued growth in our direct business, new volume related to our Myrtlewood interchange, future improvements in double stacking capabilities into the Mid Atlantic, and many others that make us optimistic about our growth ahead. Within international, quarterly performance remained robust, allowing us to deliver strong growth for the full year as we gain from alignment with our key customers. Overall, we continue to compete and win intermodal business. Our inland port initiatives remain on track and we're excited about the prospects of closer alignment with our channel partners.

As the political and trade landscape shifts, we will remain in close contact with our customers, ensuring that we will be able to adapt to their needs. As we look ahead to 2025 and beyond, there's a lot to be excited about. With that, let me turn it over to Sean.

Thanks, Kevin, and good afternoon. Reported operating income and earnings per share both fell by 16% in the 4th quarter, impacted by a $108,000,000 or $0.04 impairment of goodwill related to quality carriers. I'll now speak to the Q4 income statement on an adjusted basis excluding the goodwill impairment charge. Revenue was lower by about $140,000,000 or 4%. Declines in fuel and export coal benchmark prices as well as business interruption from the hurricanes, drove a combined impact of around $200,000,000 Despite these challenges, the team delivered an 8th consecutive quarter of 3 plus percent growth in combined merchandise and intermodal revenue, excluding fuel.

We remain focused on operating efficiently and delivered an adjusted expense reduction of 2% with more details on the next slide. Interest and other expense was stable compared to the prior year. Adjusted income tax expense decreased $33,000,000 The effective tax rate of 22% included a $26,000,000 benefit, largely driven by the revaluation of the state deferred tax liability. Our expected tax rate going forward continues to be 24.5%. As a result, adjusted earnings per share fell $0.03 including a $0.06 combined impact from hurricanes, net fuel price, and lower export coal benchmarks.

Let's now turn to the next slide for a closer look at expenses. 4th quarter adjusted expenses decreased $40,000,000 Turning to the individual line items, labor and fringe was $26,000,000 lower, driven by lower incentive compensation expense and other items, partly offset by inflation. As expected, headcount increased slightly from the Q3, attributed to the timing of train and engine employee hiring, aiming to qualify the new employees ahead of the 2025 summer vacation season. We expect to absorb volume growth in 2025 with average headcount remaining stable versus current levels, while cost per employee will be higher year over year in line with labor inflation. Purchase services and other expense increased $43,000,000 The variance includes approximately $25,000,000 of smaller impairment charges, which were largely offset by a favorable legal settlement.

Additional variances were driven by inflation, expenses related to the timing of locomotive modernizations, and storm recovery costs. Depreciation was up $17,000,000 on a higher asset base, in line with the rate of quarter over quarter increase we expect in 2025. Fuel cost was down $86,000,000 driven by a lower gallon price and a 4th consecutive quarter of year over year efficiency savings. Finally, equipment and other rents increased by $7,000,000 while property gains were $5,000,000 unfavorable in the quarter. Now turning to the discussion of full year adjusted results on Slide 14, revenue finished 1% lower for the year on 2% volume growth, while adjusted operating income was 3% lower and adjusted earnings per share increased by $0.01 This includes over $400,000,000 of operating income headwinds from the discrete items we have discussed throughout the year.

As a result of our increasingly collaborative approach with customers, consistent operational execution, and cultural improvements flowing to our frontline employees delivering the service product, our customers are rewarding us with steady and profitable volume growth. In fact, volume increased in all four quarters for the first time in 10 years, while full year merchandise and intermodal pricing gains were once again above cost inflation. At the same time, we remain highly focused on controlling costs, eliminating waste and improving efficiency. Mike and the operating team made impressive strides in fuel efficiency during 2024, resulting in approximately $45,000,000 of savings. PS and O cost increased by just $50,000,000 versus 2023, inclusive of headwinds from prior year insurance recoveries as well as storm related costs in 2024.

Core PS and O expense was stable in the face of inflation and 2% higher volume, benefiting from numerous initiatives across operating and G and A functions. PS and O will be pressured in 2025 by the Howard Street Tunnel Project, as well as ongoing locomotive modernizations and cloud computing expense, but we are committed to unlocking further savings. Our headcount stabilized during 2024 with volume gains outpacing employee growth over the second half of the year and we expect to continue delivering labor productivity gains going forward. Turning our attention to 2025, this company is headed in the right direction. We're building a strong culture, serving our customers at high levels, pairing new business wins and industrial development opportunities with ongoing efficiency to deliver strong bottom line performance and investing for the future.

That said, the 3 considerations listed on this slide could drive significant net unfavorable impacts this year. As we enter the year, export coal benchmarks and fuel prices are working against us. And if they remain stable, would result in a combined $300,000,000 impact versus 2024, with nearly half of that in Q1 alone. On the flip side, we expect a roughly $50,000,000 net operating income benefit from cycling unique events, including hurricanes and the Key Bridge collapse, net of anticipated higher incentive comp in 2025. Finally, as we've outlined before, major construction projects on the Howard Street Tunnel and hurricane impacted Blue Ridge Subdivision will drive an incremental $10,000,000 per month net impact into Q4.

Q1 operating income will be our trough off, well below prior year. Results will improve from there and we expect to return to year over year growth in the second half. At our Investor Day in November, we presented a theme of proven model with powerful momentum and profitable growth. Despite the discrete pressures, the One CSX team remains confident in our long term guidance. Let's now discuss cash flows and distributions on Slide 16.

Investing in the safety and reliability of our infrastructure is our highest priority use of cash. Additionally, 2024 capital spending included increased allocations towards rolling stock and other return generating investments that support a pipeline of future growth and efficiency opportunities. The 2024 infrastructure figure also includes around $50,000,000 of initial spend on our Blue Ridge subdivision following the devastation caused by Hurricane Helene. We now expect total cost to exceed $400,000,000 before insurance recoveries as we work diligently to reopen this important route that will serve our customers for generations to come. Strong cash flow also supported close to $3,200,000,000 in shareholder returns for the year, including over $2,200,000,000 in share repurchases and $900,000,000 of dividends.

The share repurchase program once again outperformed, with CSX purchasing shares at a 2% discount to the market price in Q4, delivering value to ongoing owners. While economic profit finished lower for the year, largely due to the discrete items mentioned on the prior slide, our goal is to increase economic profit over time, which has been shown to strongly correlate with outsized shareholder returns. With that, let me turn it back to Joe for his closing remarks.

All right. Thank you, Sean. We will finish up our prepared remarks by discussing our expectations for 2025. As you heard from Kevin, many markets remain uncertain as we look ahead at the full year. Operationally, we are undertaking substantial projects to rebuild the Blue Ridge Subdivision after Hurricane and Lean and expand the Howard Street Tunnel in Baltimore.

That said, the momentum we have built with our leading customer service gives us confidence that we can deliver volume growth in the low to mid single digit range, driven by our merchandise and intermodal business. We expect volumes in the Q1 to show the effects of weather and a slow start for the auto industry and then build over the course of the year. Given scheduled coal plant closures and a number of mine production issues, we do anticipate coal volumes to be lower year over year in 2025. Next, consistent with our commentary over the last few months, we expect full year revenue to be impacted by lower global benchmark pricing for coal and reduced fuel surcharge, particularly in the first half of twenty twenty five. Mix will also be a factor as the intermodal business has the lowest RPU, but is likely to show the fastest growth this year.

Our efforts to drive efficiency improvements and manage controllable costs will continue. As Sean discussed, the Blue Ridge rebuild and the Howard Street tunnel project will add expense over the year, but our team is working hard to deliver productivity gains. Given our current outlook, we expect to hold our headcount effectively flat for the year. We plan on CapEx being roughly flat year over year excluding spend on the hurricane recovery, which we report out throughout the year. And finally, our capital allocation priorities remain unchanged.

We will continue to invest in the safety and fluidity of our network, execute on high return growth projects and opportunistically distribute excess capital to our shareholders. To sum up, I am proud of how the OneCSX team responded to the challenges that we encountered over 2024. There are great opportunities ahead in 2025 and the longer term. We will execute and deliver on them on behalf of our customers and our shareholders. I have no doubt that CSX will continue to move forward and we look forward to keeping you updated on our progress.

Now I'll be happy to answer your questions. Matthew, let's begin the Q and A process.

Thank you, Joe. We will now proceed to our question and answer session. Now to make sure that everyone has the opportunity to take part in the time that we have, we ask you to please limit yourselves to one and only one question. Operator, we're ready to start the process.

Thank And your first question comes from the line of Tom Wadewitz with UBS. Your line is open.

Yes. Good afternoon. Wanted to see if you were pretty clear on some of the headwinds and it sounds like a lot of those are in 1Q and first half. How you think about full year margin performance And if you kind of come out with some strengthening in volume in second half, can you see it potentially improve or is that tough to do given how meaningful some of the headwinds are?

So, yes, I mean, I think clearly the headwinds are going to be concentrated here in the first half of the year, worse in Q1 than Q2. So first half of the year, I think margin improvement is sort of out of the question unless something changes with commodity prices or what have you. As we get to the second half, yes, I mean, I think it's quite possible we see not only growth in operating income, but margins as well in the second half, assuming that the environment that we're operating in remains stable. The core fundamentals remain in place. We're going to grow volumes low to mid single digits, and that will be very supportive to operating income and margin growth over time, particularly as some of these headwinds ease given the capacity that we have on the network to absorb that growth.

And your next question comes from the line of Scott Group with Wolfe Research. Your line is open.

Hey, thanks. So similar question, but not about margin, just about like operating income dollars. Do you think we grow operating income this year? Or is that I guess down a lot in the Q1, sounds like up in the back half. When you add it all up, do you think we grow operating income this year?

Hey, Scott. So obviously, we didn't give specific guidance on what that's going to look like over the course of the year. What I would say is, if those headwinds that we outlined of $350,000,000 weren't there, we would deliver pretty solid growth in operating income this year. You know, low to mid single digit volume growth at 50% to 70% incremental margins that we talked about at the Investor Day is a good setup. You know, we do have some other challenges this year in terms of some of the utility coal headwinds that Kevin outlined, the mine issues that we've got right now, as well as, you know, the some of the closures later on in the year.

So that makes this year a little bit worse, but going forward, we feel pretty good about being able to hold those coal volumes relatively stable with some opportunity in exports. So on an adjusted basis, what I would say is, if you were kind of looking at our Investor Day guidance of mid to high single digit operating income growth, this year, we'd be towards the lower end of that, if you adjust for the discrete headwinds. And then in the following years, we'll see a bit of a rebound, particularly as we cycle some of the issues around or some of the costs related to the construction projects we've got going on this year.

And your next question comes from the line of Stephanie Moore with Jefferies. Your line is open.

Great. This is Joe Halfung on for Stephanie Moore. Thanks for taking our questions. Maybe stepping away from the guidance for a second, relative to when we last spoke on your Investor Day, I was wondering if you could highlight any incremental conversations you guys have had with customers related to the industrial development pipeline, if there's any tangible things you can point to, just relative conversation with customers you've been having over the last couple

Yes. I think, when we're coming into this year, obviously, given the political landscape changing pretty rapidly here, we thought there might be a pause in activity and new projects going out for bid. We've actually seen quite the opposite. We've seen that really stay healthy and, we're, we're a number of new new projects have come our way that we're working on, and the group is very, very busy. So I think, that's a big positive for us.

Obviously, there's a long tail to those projects. You have to get them permitted and then get them underway. But we see that strength that we noted at the Investor Day, really continuing in the Q1 here and hopefully accelerating with some of the, obviously, policy that may take place here in the next few months.

And your next question comes from the line of Chris Wetherbee with Wells Fargo. Your line is open.

Hey, thanks. Good afternoon. Just wanted to pick up on the comment that you mentioned. I think you said that ex some

of the cost items, you'd be in the sort of

the mid single digit or the lower end of sort of the EBIT range. I guess I want to make sure I understand that dynamic in the context of low to mid single digit volume growth. So I guess when we think about some of the other puts and takes that would drop from revenue down to or volume down to profit, can you talk maybe a little bit about the pricing outlook that you think about 2025, how that compares to 2024?

Chris, I'll start and then maybe kick it over to Kevin on the pricing side. So essentially what I was saying there is if you take those $350,000,000 of headwinds, assuming commodity prices on the coal and fuel side remain flat, you've got the network disruption as well as some of the things recycling from last year and adjust for that, we'd be you know, roughly in the, in the kind of lower end of the mid to high single digit range, plus or minus a little bit, depending on what happens over the course of the year with the economic environment. But we feel good, very good about pricing. And I'll give Kevin an opportunity to speak to that.

Yeah. I think, on the merchandise side, you know, nothing really changing there. We continue to compete in the market and really leverage the service products that we have. You know, the biggest difference versus last year, obviously, as you've seen on the commodity price for coal, so that's met coal prices have come down. As you know, our contracts reflect, move with those prices.

And so we've seen that, hopefully we'll see some strength, pick up. But that's, you know, that market is very, very dynamic. And I will say on the intermodal side, it's encouraging to see at least some stabilization and maybe some contractual rates starting to move up slightly. So I'm not here to call a cycle. I think others are better prepared to do that.

But as we see hopefully through the year and into the back half, we might see a little bit more support than what we certainly saw last year in 2024.

And your next question comes from the line of Ari Rosa with Citigroup. Your line is open.

Great. Good afternoon. So I just actually wanted to stay on that line of questioning. Maybe you could talk about the impact of tightening truck capacity and what's usually the lag in terms of where we would expect to see that reflected in results? And specifically, I assume it would be reflected primarily in intermodal.

But if you could talk about kind of other areas where we might see that impact kind of flow through results would be appreciated. Thanks.

Yes. The most obvious one is intermodal, but there is a lot of work that the team is doing on the merchandise side from a truck conversion point of view. And when you think about an environment where in the do nothing scenario, a customer can get savings by staying with truck, even though the value proposition might be greater with rail, you know, that there's not a lot of, you know, momentum to do that. Going into this year, I think, you know, some of our discussions are on the merchandise side and really accelerate as, as customers are looking for additional cost savings and we can really lean into that. So I'm, I'm optimistic that's going to be the case and that's the market that we can have a little bit of a supportive market, which we've been fighting the last couple of years here, will be very beneficial to us.

In remodel, when we look at our pricing, it does lag the market a bit here. So contracts, even the shorter duration ones can be a year and a lot of that takes place in the 1st part of the year. And so if we start to see some momentum, the bigger impact probably starts next year, but we could see some benefit as we exit this year.

And your next question comes from the line of Brandon Oglenski with Barclays. Your line is open.

Hey, good afternoon, everyone. Thanks for taking the question. Joe, I'm sure investors are excited here at the opportunity long term for growth, but obviously, some of the earnings headwinds when GDP is up, that might be a little frustrating in the near term. But maybe can you talk to what this tunnel project will ultimately yield getting beyond some of the hurricane damage in the Blue Ridge region? And should we be thinking that 2026 could actually be that much better when you think about margin opportunity, incremental margins, pricing, volumes, etcetera?

Thanks, Brandon. Yes, I mean, I think what you've heard from including other transports include is that while the GDP has been growing, the industrial side of the economy has been flat or down over the last couple of years, which more closely aligns with certainly in the merchandise side of our business. So the interest rate sensitive parts, automotive, is still well below pre pandemic levels, housing market and steel, other things like that. So we're obviously looking forward to hopefully, whether it be interest rates coming down or other policy changes that will help the industrial side of the economy and maybe we'll see a little bit of growth this year for the first time in a couple of years. So certainly that will impact us.

I think at a higher level, the Howard Street Tunnel project is one of the most important projects in this company. And as Mike highlighted in his commentary, we've been waiting for a long time to do this and we had a plan that was going to be a 3 year plan that we've now accelerated into 1 year, which is going to be done in the 2025 calendar year. That, of course, means 2025 will have a lot more expenses tied to it for the rerouting costs and taking care of our customers while we do that. But we get the benefits much sooner than originally planned, which helps in 2026 and 2027. And those benefits include the ability for us to run double stack, all the way up and down the East Coast including, you know, places from Chicago.

There are trains we can't take right now from Chicago double stack to the East Coast because we can't get through the Howard Street Tunnel and some bridges around that area. So you can go all the way out to our interchange with our Western rails and talk about the advantages that will help us. It's one of the probably if not the largest competitive advantage we have right now on our intermodal business has been the inability to double stack and be able to reach the high population density sectors on the East Coast because of that. So this is a big deal. I mean, actually, if you step back, between the MMBR interchange that's now open, which was one of the other competitive advantages we had on intermodal and other parts of our franchise.

And now the Howard Street Tunnel, we're going to take care of probably the 2 biggest competitive advantages we had in our network by the end of 2025. So we're really excited about that. And that's a big deal because right now we have to double stack, we have to route basically up through upstate New York and down. So you can imagine all the weather in the winter doing that. But also it's the outer route miles are tremendous.

And so and frankly, we can't run up and down that I-ninety five corridor with Double Stack right now. So a big deal to us. We're looking forward to those benefits. And so yes, that will contribute to more meaningful you know, ability to grow profits in 2026 and 2027 along with other things that are going on, including industrial development, including the efficiency actions we're taking across the network and including all the work that we're doing with our customers. So, we continue to be very excited about the potential of this business and support the targets and the stuff that we outlined at our Investor Day in November.

And those that if you can do the math now and say, okay, as Sean highlighted, 25% is going to be lower end of that, that means we're still very strongly believe in our plan that 26% and 27% will be more supportive of making that happen. Thanks.

And our next question comes from the line of Brian Ossenbeck with JPMorgan. Your line is open.

Hey, afternoon. Thanks for taking the question. So, I guess maybe one for Mike. Should we expect as this tunnel project gets underway, there are going to be some meaningful deterioration or adjustments that we're going to see in some of the service metrics? Just trying to figure out how that would play out considering it is such a big undertaking in a compressed period of time?

And then maybe just also get your thoughts on just the general health of the network having absorbed a couple of hurricanes, a couple port strikes or one near miss. And just your thoughts on staffing levels because it sounds like you're already pretty well staffed up into next year. So getting through all this in the near term, how do you feel like the network is positioned to hit that growth when it does come back perhaps in the back half of the year?

Thanks. Thanks for the question, Brian. I'm not going to get you to repeat the first part, but I can barely remember. No, I'm just kidding. In terms of the tunnel, Brian, we have already taken steps in the Q4 to start to move traffic and reroute it off the tunnel.

And so we're prepared. The cost Sean is talking about really is reflective of what we have to do to maintain some of our customer commitments and detour somewhere else that we're paying a haulage for. But effectively, I don't think the metrics are going to be affected, that dramatically. We've pretty much moved everything off. So, what you see is what you have now.

In terms of the network, yes, look, it was an interesting year. We started off in the Q2, really trying to focus on crew starts and looking at how our capacity was, our trains, how they were operating. And our focus was to basically take crew starts down in line with the service offering we had to make. And we started to do that and right up until and then we saw again, as you reduce the crew starts or the train starts, your dwell goes up. So we made adjustments.

And if you look in the middle of the year going into that Q3, the first set of hurricanes, we were running very well. And, on and those so those fundamental principles are still there. You keep if you look, there's pockets weeks where we didn't have the disruption from the hurricanes that we're I'm very, very happy with the performance of the railroad overall outside of those things. Going forward, yes, our headcount is stable. We have we do have more productivity improvements, right in front of us once we get in the look.

We just had 3 days of snow 2 days of snow and record and all that. Once we get through this, we're back on track because going into the Christmas shutdown, we're in very good shape and we really, really took action working with our customers as they reduced their needs to really, really reduce more starts. And that's our focus is, 1st of all, to run a safe railroad that employees know and come prepared for work and are able to do it. Number 2, service those customers, but productivity is extremely important for us because, we've made some great steps. We fought off the battles that we've had with these storms and the team is very entrenched in the principles that got us to where we were before the storm started.

So I'm very happy with the network. We've got work to do with all the different stuff going on right now like we always will. But overall fundamentally, we're on the right track.

And your next question comes from the line of Jon Chappell with Evercore ISI. Your line is open.

get into minutiae on certain model line items. You said cost per employee will be up aligned with labor inflation. So I assume you mean like 4 ish percent. That said, you have a really tough comp in 1Q 'twenty four where it was up 7% and then a super easy comp in 4Q 'twenty four where it was down 4% because of the incentive comp. So do we think about it as 4% on average, but try to get the quarterly cadence more aligned with typically kind of lower cost per employee in the Q1 and peaking in the Q4, due to annual bonuses incentive comp?

Yes, John. So here's how I think about it. I would take the Q4 number. I would add back the incentive comp adjustment. So that's about $1500 an employee.

And that's a pretty good run rate for the first half of the year. We may actually come in a little bit better than that in the first half of the year, due to two reasons. 1, looking very closely at overtime, trying to reduce that and other unproductive costs. But also, it looks like likely lower health and welfare costs that kick in here this year. Then as we get to the second half, take that first half run rate, add 4.25 percent to that, which is what I would expect, for second half wage inflation.

That should give you a good way to model it for the full year.

And your next question comes from the line of Ken Hoexter with Bank of America. Your line is open.

Hey, great. Good afternoon. Two quick ones to clarify and then my question. I guess, clarifying, Kevin, did you say met coal at these levels, the 191, is that down 3% sequentially? Is that based on these levels?

Or does it go lower if rates hold at these low levels? And then, you mentioned some outages, some mine outages. Does that include the recent fire at one of your mines? I presume that's what you meant when you said some mine outages. And then I guess, Sean, my big question is, you kind of talked mid single digit growth.

CSX (CSX) Q4 2024 Earnings Call Transcript

Company Participants