CSX(CSX) - 2024 Q4 - Annual Report

Revenue and Business Segments - CSX Corporation generated $14.5 billion in revenue for 2024, with merchandise, intermodal, coal, and trucking as its primary lines of business[19] - The merchandise business accounted for 2.6 million carloads (42% of volume) and generated$ 8.9 billion in revenue (61% of total revenue) in 2024[22] - The intermodal business shipped 2.9 million units (46% of volume) and generated $2.0 billion in revenue (14% of total revenue) in 2024[22] - The coal business shipped 736 thousand carloads (12% of volume) and generated$ 2.2 billion in revenue (15% of total revenue) in 2024[22] - The trucking business generated $844 million, or 6% of total revenue, in 2024[22] - Other revenue accounted for 4% of total revenue, including charges for intermodal storage and switching[20] Acquisitions and Workforce - CSX completed the acquisition of Pan Am Systems on June 1, 2022, expanding its reach in the Northeastern United States[15] - The Company had more than 23,500 employees as of December 2024, with approximately 17,500 being union members[21] Safety and Operational Risks - The FRA Personal Injury Frequency Index was 1.19 in 2024, compared to 0.94 in 2023, indicating a focus on workplace safety[22] - Network or supply chain constraints, including labor shortages and extreme weather, could negatively impact service efficiency and shipment volumes[52][64] - The Company relies heavily on the security and stability of its technology systems, with potential cyber-attacks posing significant operational risks[47][49] - A public health crisis could adversely affect the Company's business, leading to reduced demand for transported commodities and potential supply chain disruptions[45][46] Market Conditions and Competition - The Company faces competition from various transportation providers, which could be intensified by improvements in alternative transportation modes[59] - Global economic conditions, including slower growth in Asia and Europe, could negatively affect demand for the Company's transportation services[61] - Changing dynamics in the energy markets, particularly regarding coal, could impact the Company's coal volumes and revenues[62] Environmental and Regulatory Factors - Climate-related regulations and risks could increase operating costs and negatively impact the Company's financial results[69][71] - The Company is subject to environmental laws that may result in significant costs and liabilities if violated[71] Infrastructure and Equipment - CSX operates a rail network exceeding 35,539 track miles, serving 26 states and parts of Canada[88] - As of December 2024, CSX owns or long-term leases over 3,500 locomotives, with approximately 67% in active service[100] - The company has a total of 64,104 pieces of equipment, with about 90% in active service as of December 31, 2024[101] - The largest yard, Waycross, GA, processed 915,159 railcars or intermodal containers in 2024[90] - CSX's I-90 Corridor is a primary route for import traffic, linking Chicago to the Northeast, supporting high-speed service across various commodities[92] - The Southeastern Corridor connects major cities and is positioned to handle projected traffic volumes of intermodal and automotive traffic[94] - CSX's coal network remains well positioned to supply utility markets despite a significant decline in the domestic coal market over the last decade[95] Cybersecurity Measures - The company has implemented a comprehensive cybersecurity framework to manage risks and protect stakeholder data[75] - CSX conducts annual cybersecurity exercises with third-party consultants to enhance its cybersecurity measures[77] - The Audit Committee oversees the company's cybersecurity risk management and technology infrastructure resilience[84] Financial Performance - Revenue for 2024 was$ 14.54 billion, a decrease of $117 million or 1% compared to 2023[148] - Total expenses increased by$ 137 million or 1% year-over-year, totaling $9.3 billion[150] - Operating income decreased by$ 254 million or 5% to $5.24 billion, with an operating margin of 36.1%, down 140 basis points from 37.5%[150] - Net earnings fell by$ 198 million to $3.47 billion, resulting in earnings per diluted share of$ 1.79, a decrease of $0.03 or 2%[150] - Intermodal volume increased by 5% to 2.89 million units, while total volume rose by 2% to 6.28 million units[152] - Chemicals revenue increased by 10% to$ 2.85 billion, driven by higher shipments of plastics and industrial chemicals[152] - Coal revenue decreased by 10% to $2.25 billion, primarily due to lower domestic shipments[152] - Labor and fringe expenses rose by$ 113 million, attributed to inflation and increased headcount[166] - Fuel expenses decreased by $209 million, reflecting a 13% drop in locomotive fuel prices[168] - Goodwill impairment for Quality Carriers was recorded at$ 108 million in 2024[170] - Adjusted operating income for the year ended December 31, 2024, was $5,353 million, with an adjusted operating margin of 36.8%[182] - Economic Profit for 2024 was$ 2,341 million, down from $2,577 million in 2023, indicating a decrease in returns above the cost of capital[190] - Free Cash Flow (FCF) before dividends decreased by$ 561 million year-over-year to $2,784 million, primarily due to higher property additions and reduced cash from operating activities[194] - Cash from operating activities in 2024 was$ 5,247 million, compared to $5,514 million in 2023[196] Operational Efficiency - Train velocity improved by 2% to 18.3 miles per hour, while dwell time increased by 10% to 10.3 hours compared to 2023[200] - On-time originations decreased to 73% from 77%, and on-time arrivals fell to 65% from 71% compared to the previous year[200] - Total revenue ton-miles for 2024 were 194.3 billion, a slight increase from 193.7 billion in 2023[200] - The FRA personal injury frequency index increased to 1.19, while the FRA train accident rate decreased to 3.40, reflecting mixed safety performance[200] Goodwill and Shareholder Information - The company reported a goodwill impairment of$ 108 million, impacting net earnings by $82 million for the year[182] - The capital charge for 2024 was calculated at$ 3,718 million, based on an 8% required return on gross operating assets[190] - CSX's common stock has 1,900,189,590 shares outstanding as of December 31, 2024, with a total of 5.4 billion shares authorized[115] - The company declared dividends of $0.48 per share for the year 2024, an increase from$ 0.44 per share in 2023[117] - CSX completed a share repurchase program in Q4 2023 and initiated a new $5 billion share repurchase program in October 2023, with$ 2.6 billion remaining as of December 31, 2024[122] - In Q4 2024, CSX repurchased 29,534,085 shares at an average price of $33.60 per share[124] - The weighted average of common shares outstanding for diluted earnings per share calculation was 1,943 million as of December 31, 2024[115] Executive Leadership - CSX's Executive Vice President and Chief Operating Officer, Michael A. Cory, was appointed in September 2023, bringing 40 years of operations experience[113] - The company reported a total of 20,567 common stock shareholders of record as of January 31, 2025[115] - CSX's Executive Vice President and Chief Financial Officer, Sean R. Pelkey, has been in this role since January 2022, overseeing all finance activities[111] - CSX's Executive Vice President and Chief Digital and Technology Officer, Stephen Fortune, was appointed in April 2022, focusing on technology strategy and cybersecurity[113] - The company has a total repurchase authority remaining of$ 2.586 billion as of December 31, 2024[122]