CSX Corporation

CSX reported second-quarter 2026 revenue up 10% year over year, volume up 6%, operating income up 17%, and EPS up 23%. Operating margins improved 240 basis points, even with 160 basis points of fuel price headwinds, and total expenses rose 6% while non-fuel expenses declined 2%. Management also said total second-quarter expenses increased by $138 million, including a $177 million increase for fuel and a $40 million increase in labor costs, partly offset by savings from a 6% lower head count. For full-year 2026, CSX raised guidance to mid- to high single-digit revenue growth, greater than 350 basis points of operating margin expansion, greater than 80% free cash flow growth, and capital spending of less than $2.4 billion.

Steve Angel said the quarter showed progress toward best-in-class performance, with stronger demand, better safety and productivity, and a focus on profitable growth rather than market share. He stressed that CSX wants business that expands operating income, improves margins, and earns good returns on invested capital. He also said the company still has work to do on service fluidity and network execution, but expects steady improvement and views productivity and pricing discipline as long-term priorities.

Kevin Boone highlighted record revenue, lower non-fuel expense, and strong incremental margins. He said total revenue was up 10%, operating income rose 17%, and EPS increased 23%, while expenses rose 6% and non-fuel costs fell 2%. He broke out a $177 million fuel cost increase and a $40 million labor increase, partly offset by savings from a 6% lower head count, lower third-party services, and a 12% reduction in intermodal terminal cost per lift. He also said third-quarter incentive compensation should step down sequentially, partly offset by the 3.75% union wage increase, and that some PS&O costs will rise later in the year.

Analysts focused heavily on pricing, service quality, and whether the company is getting enough operating leverage from higher volumes. Management said same-store pricing should be stronger this year than last, but declined to quantify 2027, emphasizing that pricing is being managed market by market and that domestic intermodal pricing is near the end of the 2026 bid season. On service, Mike Cory acknowledged terminal dwell and trip-plan performance are not where CSX wants them, attributing the issues mainly to stronger-than-expected demand and temporary crew tightness rather than a structural problem, and said service metrics should improve sequentially. Questions also probed hiring, capacity, and margin targets; management said any headcount increase would be modest and that they do not see structural capacity issues.