CSX: “A positive tone for rail earnings”

CSX late Monday announced second-quarter earnings of $414 million, or $1.07 per share, compared with $305 million, or 77 cents per share, in the comparable quarter of 2009. CSX said higher traffic volume and efficiency measures contributed to the earnings increase. Revenue also rose, by 22%, to $2.66 billion.

The results beat analyst consensus expectations on anticipated revenue of $2.63 billion. Dahlman Rose & Co. Director-Equity Research and Railway Age Contributing Editor Jason Seidl called the performance “a high note,” noting CSX beat “both our and street estimates of $0.99 and $0.96, respectively.” Seidl also noted “an improved operating ratio of 71.2%, which is better than our estimate of 71.6%.”

Seidl noted, “The strong top line is largely attributable to a 13% year-over-year increase in total traffic, driven primarily by robust intermodal growth (up 18%), strong auto and metals volumes (up 63% and 44%, respectively), and solid increases in chemicals, emerging markets, and fertilizers. CSX reiterated its optimism about the ongoing freight recovery, stating that, while the economy remains dynamic, the company continues to see improvement in the market and maintains its positive outlook.”

During an earnings conference call Tuesday, CSX Chairman, President, and CEO Michael Ward repeated the company’s belief that conditions would continue to improve. “Each quarter, we see a little more strength,” Ward said. “We think almost all our major markets are going to continue to see that gradual recovery; we expect to have a very good 2010.”