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CSX Q2 sales hit record, reaffirms 2014 outlook, increases spending plan

  • CSX -0.3% AH after reporting slightly better than expected Q2 earnings on record quarterly revenue, rising 6.5% Y/Y to $3.24B, as total volume rose 7.5% while average revenue per unit slipped 1%.
  • CSX affirms its 2014 outlook for modest earnings and expects double-digit earnings growth and margin expansion to resume next year, citing a positive economic environment and growth trends in the intermodal and oil and gas markets.
  • Raises its 2014 spending plan by $100M to $2.4B to support sustainable growth.
  • Coal volume rose 6.5% on higher shipments of domestic coal attributable to marketplace gains and utilities replenishing stockpiles.
  • The results may help ease concerns that the U.S. economy’s Q1 contraction showed weakness beyond winter-weather disruptions; analysts also project Union Pacific (NYSE:UNP) and Norfolk Southern (NYSE:NSC) to announce sales records.
Comments (5)
  • peace 2 u
    , contributor
    Comments (33) | Send Message
     
    With volume up 7.5% and revenues up only 6.5%, there is some missing information. There are probably pressures on pricing and/or product mix with the additional cars bringing a lower value per car.

     

    Regardless of the CSX details, the results show that the economy is more robust than government statistics and the media admit. With 6.5% y/y for CSX, the logical conclusion is that the parties which receive the deliveries are probably going to be in a range of 5.5 to 7.0%.

     

    If Norfolk Southern (NYSE:NSC), Kansas City Southern (NYSE:KSU), and Union Pacific (NYSE:UNP) come in with similar numbers, it should indicate that the economy is growing at a 6.0% rate. If the economy is growing that fast, it is time to take another look the investment portfolio.

     

    Just a thought or two.

     

    Peace.
    15 Jul, 06:00 PM Reply Like
  • 27975573
    , contributor
    Comments (288) | Send Message
     
    Not a chance for 6% growth rate!!!

     

    Sorry Peace 2 U......that is not how it works.
    If the products that CSX was carrying can not be priced 6% higher to
    the end user.....your economics do not hold water.
    With CPI at 1.8%....it ain't happin'
    15 Jul, 06:32 PM Reply Like
  • peace 2 u
    , contributor
    Comments (33) | Send Message
     
    27975573--I respectfully disagree.

     

    There appears to be a significant disconnect between what is happening on the streets and what the government statistics report.

     

    If freight car loadings are up, which the Association of American Railroads (aar.org) reports (for the week ending July 5, 2014, they were up 9.4% y/y), there is a reason the cargo is being moved--someone is buying something. Additional volume requires more employee-hours of labor. There are the additional operating expenses. The cargo which was hauled has to be processed, sold, manufactured or otherwise. This requires additional labor and operating expenses. All of which goes into improving the economy.

     

    The CPI is focused on what the consumer at the end of the line did last week, month, year. Those figures should go up after the raw materials are transported, processed and sold.

     

    Increased volume for CSX, by itself, does not indicate the growth of the economy. Similar growth rates by the other Class I railroads would be a further indication that something is happening in the economy.

     

    Some of the railroads, if not all, have been taking out locomotives which have been in storage and/or retired and putting them to work. There is a reason for that--more carloads must be hauled. That exercise is being done only because there is a need for them.

     

    I was reading an article yesterday about General Electric's new locomotives which are being tested to see if they comply with the new pollution standards. The article stated that normally there are 500 to 1,000 new locomotives ordered each year; in the first six months of this year 1,300 have been ordered. Although I do not know why the orders for new locomotives are up, there is something generating a need for them.

     

    When I look at investments, I look for companies which are likely to grow and succeed in the coming months and years. Whether I consider CSX to be a good investment is separate from what it is doing and what the economy is doing.

     

    My view of economics is different from yours. I try to look for what is on the way up, what is going to take place in the next few months and years. I am not a fan of historical numbers as they go to the past, not the future.

     

    Just a thought or two.

     

    Respectfully--

     

    Peace.
    16 Jul, 02:00 PM Reply Like
  • 27975573
    , contributor
    Comments (288) | Send Message
     
    Yes...increased volumes at lower prices!!!

     

    Secondly, if your thoughts were correct; we would have positive GDP
    Of course....we all know that we did not.

     

    My argument was with your 6% economic call....not on CSX.
    Third; GE has all the orders....they are not being made yet!!

     

    WE learn from the past.....the lesson that I am basing this discussion
    on is excess societal debt..... we did it again....like the roaring twenties.

     

    We will have slower growth until we pay more of the debt off.

     

    Respectfully--

     

    A Pragmatist
    16 Jul, 04:33 PM Reply Like
  • Jake1982
    , contributor
    Comments (39) | Send Message
     
    The biggest driver of growth has been intermodal. This is partially because of a strengthening economy, the big reason being trucking companies are working with the railroads and paying them to move their cargo the long haul portion of it.

     

    If you live near a main rail corridor watch a container train go by. More than likely this train is double stacked, and around 100 cars long. It is much cheaper for a company like JB Hunt to let one of the big railroads move those 200 loads, than to pay 200 drivers with semi's that need fuel and maintenance.

     

    To be fair, we are seeing improvement in almost every freight category, but to suggest 6% GDP growth because of these numbers is ridiculous.
    16 Jul, 11:25 PM Reply Like
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