Key financial results
- CSX reported third quarter earnings of $0.57 per share, representing a 30% increase compared to adjusted results from the prior year.
earnings of $0.57 per share increased 30% compared to last year's adjusted results.
- Total revenue increased 12% year-over-year, driven by a 5% volume growth, pricing gains, and higher fuel surcharges.
Revenue increased 12%, driven by higher fuel surcharge 5% volume growth and pricing gains across the merchandise, intermodal and coal markets.
- Operating margin improved by 420 basis points to reach 39.1% on an adjusted basis.
our operating margin improved to 39.1%, which was 420 basis points higher than last year's adjusted results.
- Operating income increased by 25% after adjusting the prior year period for a $164 million goodwill impairment.
Adjusting for that charge, Higher revenue and lower nonfuel costs drove a 25% increase in operating income
- Nonfuel costs decreased by 3% during the third quarter while volume increased by 5%.
The team handled 5% more volume in the third quarter while reducing nonfuel costs by 3%.
Business segment results
- Total volume: Total volume grew 5% year-over-year across the network.
Our volume grew 5% as more customers turn to our railroad to safely and reliably move their goods
- Merchandise: Merchandise revenue increased 11% with a 3% increase in volume.
In merchandise, revenue increased by 11% with a 3% increase in volume.
- Merchandise: Metals volume performed best in merchandise with a 12% increase driven by infrastructure and energy markets.
Metals was the top performer, gaining 12% as fuel demand particularly plate, has been very good across infrastructure and energy markets.
- Merchandise: Chemicals volume increased 7% due to conversion and opportunities in waste and petroleum products.
Chemicals was also a highlight, with volume up 7% and driven by conversion and good opportunities in waste and petroleum products.
- Merchandise: Fertilizers volume dropped 13% due to persistent supply issues and low crop prices.
fertilizers has been the softest merchandise area for us, with volume down 13% for the quarter.
- Intermodal: Intermodal volume increased 7% year-over-year to reach a new all-time record, with revenue up 20% and revenue per unit up 13%.
Total intermodal volume was up 7% year-over-year and reached a new all-time record with revenue up 20% and RPU up 13%.
- Intermodal: Domestic intermodal drove the growth while international remained roughly stable year-over-year.
As we've seen through '26, the domestic business drove this quarter while international remained roughly stable year-over-year.
- Coal: Coal revenue increased by 10% driven by a 2% increase in volume and a 7% increase in revenue per unit.
Lastly, coal revenue increased by 10%, driven by a 2% increase in volume and a 7% increase in RPU.
- Coal: Export coal tons grew 7% while domestic tons declined modestly during a mild summer.
Export tons grew by a solid 7% as mine output increased while domestic tons declined modestly during a relatively mild summer
Capital allocation
- Management expects full-year capital expenditures to remain below $2.4 billion.
Our outlook for capital expenditures remains below $2.4 billion.
- Free cash flow growth is projected to exceed 80% for the full year.
and we expect free cash flow growth of more than 80%.
Industry trends and dynamics
- Tight trucking capacity, high truck rates, and elevated diesel costs continued to benefit the intermodal segment through highway conversions.
Reduced trucking availability, high truck rates and elevated diesel costs continue to benefit our Intermodal segment.
- Average diesel prices increased nearly 50% year-over-year, creating fuel price headwinds of 70 basis points on operating margin.
- Global coal benchmarks moved higher due to supply constraints in China, which lifted pricing for Australian exports and provided a moderate benefit to U.S. export yields.
global coal benchmarks have moved higher this quarter supply constraints in China lifted pricing for Australian exports. This has gradually flowed to U.S. export prices
Competitive landscape
- CSX continues working closely with interline partners like CP and BN to find new and better intermodal solutions for customers.
it's been common practice for CSX to work closely with our interline partners, to try to find new and in some cases, better solutions for our customers.
- Contract renewals are capturing favorable pricing as management applies a surgical approach to match pricing with inflation and the value of service.
We're really taking a surgical approach to pricing. You mentioned inflationary pressures. We recognize those. We're having conversations around that with customers as we go through the renewal process.
Macroeconomic environment
- The housing market and paper and pulp segments remain lackluster, though tightening truck capacity helped drive alternative volume growth.
- Utility coal burn was impacted by a relatively mild summer with natural gas prices remaining around $3.
domestic tons declined modestly during a relatively mild summer where natural gas prices remained around $3.
Growth opportunities and strategies
- New service offerings through Birmingham, Myrtle Wood, and Baltimore are performing well and attracting new intermodal business.
the new service offering through Birmingham, Myrtle Wood, Baltimore and other areas are performing well and attracting new business.
- CSX is investing in track infrastructure in Atlanta to increase switching and processing capacity by 50% following a 3-year volume surge.
Atlanta is a good example of that, where we've seen a 50% increase in volume over the last 3 years. And we're investing in track infrastructure to increase our switching and processing capacity by 50%.
- The company is entering the bid season with the benefit of full double-stack operations along the I-95 corridor through the Howard Street Tunnel in Baltimore.
we're pleased to enter the bid season with the benefit of full double-stack operations on our I-95 corridor through Baltimore.
Financial guidance and outlook
- Full-year revenue growth is now expected to be in the high single digits, upgraded from the previous mid- to high single-digit range.
We now expect revenue growth in the high single digits compared to the mid- to high single-digit range we provided previously.
- Full-year operating margin expansion is projected to exceed 350 basis points.
I'm confident that we will achieve full year operating margin expansion of more than 350 basis points.
- Fourth-quarter year-over-year operating margin improvement is expected to be above 350 basis points.
we expect to deliver year-over-year margin improvement above 350 basis points in the fourth quarter.
Leadership changes and operations
- Mike Quarry announced his retirement after a 45-year career, with Doug Ryhorchuk and Casey Albright taking direct operational reporting roles under Steve Angel.
- FRA injury rates decreased by 17% and accident rates fell by 4% year-over-year.
Our FRA injury rate decreased by 17%, and our accident rate fell by 4%.
- Third-quarter fuel efficiency reached record levels for CSX and any U.S. railroad.
Third quarter fuel efficiency was not only the best ever achieved by CSX, but also the best ever reported by any U.S. railroad
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Earnings per share | $0.57 | Increased 30% compared to last year's adjusted results |
| Total volume | Up 5% | Up 5% year-over-year |
| Operating margin | 39.1% | 420 basis points higher than last year's adjusted results |
| Revenue | Up 12% | Up 12% year-over-year |
| Revenue per unit | Up 7% | Up 7% year-over-year |
How management sounded
Positive (+45 on our -100 to +100 scale). Management expressed strong confidence following record fuel efficiency, broad productivity gains, and raised revenue guidance for the full year. Management sounded more upbeat than on 27% of the 194 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Winter weather impacts and seasonal cost increases on the PSMO line during the fourth quarter.
- Execution of the 2027 bid season for domestic intermodal alongside tight trucking capacity.
- Progress on hiring train and engine employees and training pipeline execution for early 2027.
Earlier calls
- Q2 2026 (Jul 22, 2026), tone Balanced: CSX reported record quarterly revenue with 10% growth and raised full-year guidance after strong volume demand.
