|Bid||71.41 x 1200|
|Ask||73.49 x 1400|
|Day's Range||71.84 - 73.19|
|52 Week Range||46.81 - 80.62|
|Beta (5Y Monthly)||1.21|
|PE Ratio (TTM)||19.59|
|Earnings Date||Oct 14, 2020 - Oct 19, 2020|
|Forward Dividend & Yield||1.04 (1.44%)|
|Ex-Dividend Date||Aug 28, 2020|
|1y Target Est||78.30|
(Bloomberg Opinion) -- The time may finally be right for another big railroad deal. All it took was another economic downdraft.Private equity firms Blackstone Group Inc. and Global Infrastructure Partners are reportedly weighing a joint bid for Kansas City Southern that would value the railroad at about $21 billion including debt. Any takeover would also add to an aggressive flurry of dealmaking over the past few days after a pandemic-inspired lull. Siemens Healthineers AG agreed to buy U.S. radiotherapy company Varian Medical Systems Inc. for about $16 billion, while 7-Eleven owner Seven & i Holdings Co. is paying $21 billion for Marathon Petroleum Corp.’s Speedway gas stations. Waiting in the wings is a potential takeover of the popular video-sharing app TikTok and a Nvidia Corp. buyout of SoftBank Group Corp.’s Arm Ltd. chip-designing business. The sudden rash of dealmaking suggests buyers with supple balance sheets are getting more comfortable with the trajectory of an eventual recovery from the coronavirus pandemic, even as cases surge again.It’s notable that railroads may be included in this latest deal frenzy. There hasn’t been a major takeover of a North American railroad since Warren Buffett’s Berkshire Hathaway Inc. struck a $36 billion deal for Burlington Northern Santa Fe in 2009. There were attempts by Canadian Pacific Railway Ltd. under the leadership of legendary railroader Hunter Harrison to seek a merger first with CSX Corp. in 2014 and then Norfolk Southern Corp. in 2015, but the carrier was rebuffed each time amid antitrust concerns. The failed talks showed the hurdles for any merger between the largest North American train operators after a wave of dealmaking in the late 1990s consolidated the industry into effectively seven main players, of which Kansas City Southern is the smallest and one of the few with major infrastructure in Mexico. As Buffett proved, though, a private investor is a different story. The irony may be that Harrison, a big believer in the benefits of consolidation who died in 2017, may have done more to prolong the lull in railroad dealmaking than bring it back. Before his death, Harrison served a brief term as CEO of CSX. His tenure there was tumultuous and he managed to ruffle quite a few feathers, but in the end, he was able to prove to both investors and his fellow railroad CEOs that his signature “precision-scheduled railroading” — a strategy for reducing the capital, cars and people needed to run trains efficiently — could work for U.S. carriers.Analysts had previous contended the U.S. railroads’ circuitous lines across mountainous terrain would make it more difficult for them to reach the levels of profitability that Harrison had produced at Canadian Pacific and at Canadian National Railway Co. before that. Posthumously, nearly all of his rivals — from Union Pacific Corp. to Norfolk Southern and, yes, Kansas City Southern— have adopted some form of precision-scheduled railroading. Burlington Northern is the only odd man out. The problem with this for would-be buyers of railroads is that this push for efficiency has increased both the profit margins and the stock prices of said railroads. Before news of the potential private equity approach on Friday, Kansas City Southern was actually up about 2% for the year, compared with a nearly 12% slide for the S&P 500 Industrial Index and a virtually flat performance for the broader benchmark. The reported $21 billion price tag would value Kansas City Southern at a premium to its all-time high set in February and Bloomberg Intelligence analysts warn even that may not be high enough. To justify a deal at these levels, the private equity buyers would have to be able to argue that the full scale of profit improvements under precision-scheduled railroading isn’t fully appreciated by the public markets. It’s hard to see how they do that. In January, before the worst of the pandemic, Kansas City Southern had predicted it would meet its 2021 goal of bringing its operating ratio — a measure of profitability where a lower number is better — down to the range of 60% to 61% a year early. The pandemic obviously undermined those plans. But even amid the sharp slump in volumes that’s ensued over the intervening months, Kansas City Southern in July raised its target for estimated cost savings this year to $95 million, excluding benefits from labor cuts and lease negotiations. That’s up from $61 million. After the rally on the deal news, the company trades at about 22 times estimated 2021 earnings, above the valuation commanded by other railroads that are further along in the process of precision-scheduled railroading.This makes any transaction more of a bet on the future of trade between the U.S. and Mexico and a push to relocate manufacturing away from China. It’s a decent wager given the recent resurgence of interest among U.S. industrial companies to consider factories a bit closer to home. The caveat to that is Mexico’s more volatile regulatory and political environment. Amidst the pandemic, many manufacturers complained of a harsher approach to factory lockdowns across the border than in the U.S., a sign that the potential for supply-chain disruptions lingers even with the recently signed United States-Mexico-Canada trade agreement. I’m reminded of an interview with Harrison that I participated in at Bloomberg headquarters in 2015: “I don’t like Kansas City Southern because of the Mexico play,” he said. “I don’t like Mexico. I like to play in an arena where I know the rules, and I understand what might happen. That’s crazy down there.” This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JACKSONVILLE, Fla., July 31, 2020 (GLOBE NEWSWIRE) -- CSX (NASDAQ: CSX) announced today the publication of its 2019 Environmental, Social and Governance (ESG) report, highlighting the company’s sustainability performance in the areas of safety, environment, people, communities and governance. “CSX’s goal is to be the best-run railroad in North America and fundamental to that goal is strong ESG performance,” said James M. Foote, president and chief executive officer. “Since our last comprehensive ESG report was published, CSX has undergone a significant transformation. We revolutionized our operating model, wholly transforming the company’s financial and ESG profile. The 2019 report illustrates how the transformation has allowed us to achieve new levels of reliability, customer service, safety, and environmental efficiency.”The 2019 report discusses many significant achievements; including, record-setting safety performance, achieving 2020 emissions reduction targets ahead of schedule, and becoming the first U.S. Class 1 railroad to operate at a fuel efficiency rate of less than one gallon of fuel per thousand gross ton miles for a quarter.“CSX is proud of the successes and milestones outlined in the 2019 ESG report. Looking ahead, we are ready to embark on the next phase of sustainable growth and to make CSX the sustainable transportation mode of choice for our customers,” said Foote.Click here to view the 2019 CSX ESG report.About CSXCSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 200 years, CSX has played a critical role in the nation’s economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 230 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. More information about CSX Corporation and its subsidiaries is available at www.csx.com. Like us on Facebook (http://facebook.com/OfficialCSX) and follow us on Twitter (http://twitter.com/CSX). Contact: Bill Slater, Investor Relations 904-359-1334Bryan Tucker, Corporate Communications 855-955-6397
(Bloomberg Opinion) -- Dissecting earnings reports is always more of an art than a science. That’s particularly true in a pandemic, when the state of play changes at an ever-faster clip. With a surge in coronavirus cases in the U.S. Sun Belt and burgeoning concerns about a second wave in Europe and parts of Asia, any glimmers of insight from companies who operate on the ground floor of the economy carry extra weight. Nearly five months into this pandemic, CEOs in the manufacturing sector appear to at least have a handle on what’s happening with their businesses, for better or for worse. Tuesday brought results from three companies that sit at key fault lines in the industrial economy: 3M Co., Rockwell Automation Inc. and Raytheon Technologies Corp. Here are my top takeaways: 3M Co. : The maker of N95 masks has been on the front line of the pandemic, but even in normal recessions, it’s usually one of the first companies to see the early signs of a recovery, given the fast turnaround time for many of its products. So it’s particularly encouraging that 3M says it’s actually seeing July sales trending up by a low-single digit percentage compared to a year earlier. That compares with a 13.1% decline on an organic basis in the second quarter that was slightly worse that what analysts had been anticipating, one possible reason for the stock’s slide on the news. The forward trajectory is all that really matters at this point, though. Sales of N95 masks and other protective gear have undoubtedly been one big driver of the growth in July, with 3M on track to make two billion of the respirators this year. But other companies including Fastenal Co. and Cintas Corp. have predicted a moderation of the surge-style spikes seen in the earlier days of the pandemic in April and May as the market is now comparably better-supplied. More importantly, for those seeking signs of economic revival, 3M cited “broad-based sales improvements across businesses and geographies.” While this doesn’t necessarily augur a V-shaped recovery for the manufacturing sector, it does suggest things are moving in the right direction. The cloud over any rebound for 3M is its potential liabilities related to per- and polyfluoroalkyl substances, or PFAS, which have been linked to cancer and other ailments. 3M reached an agreement last week with Alabama that will see it assess contamination from the so-called forever chemicals; invest in treatment and remediation; and research the substances impact on health and the environment — at an unspecified cost to the company. Some analysts had been expecting 3M to take another significant charge on PFAS in the second quarter and the missed opportunity to “kitchen-sink” what were going to be ugly numbers anyway may also be a factor in the stock reaction. Rockwell Automation Inc.: Continuing with the theme of possible green shoots of recovery, Rockwell CEO Blake Moret is confident enough in the trajectory of his company’s recovery that he announced intentions to roll back temporary pay cuts for employees by December and “hopefully sooner.” Rockwell also intends to make another “recognition payment” to manufacturing workers who have continued to come in to factories and kept its operations grinding along. While some companies have had to turn furloughs into permanent job cuts as the pandemic and associated economic slump have dragged on longer than expected, this is an important counterpoint. It speaks to a broader trend across the industrial landscape of companies prioritizing labor and seeking cost cuts elsewhere first in recognition of the unique nature of this particular downturn and shifting expectations of the corporate world’s duty to the community. Railroads CSX Corp. and Union Pacific Corp. have also said they are bringing workers off of furlough as volumes rebound. In terms of numbers, Rockwell actually increased its fiscal 2020 profit guidance for the year and now anticipates adjusted earnings per share of $7.40 to $7.60 on an organic sales decline of about 8%. This is based on an expectation that a “gradual recovery continues, with no increase in pandemic-related facility closures or disruptions to the supply chain.” Coming out of this crisis, Rockwell is set to be a key beneficiary of any significant push to bring manufacturing work back to North America. Raytheon Technologies Corp. : Whatever recovery is happening in manufacturing, it isn’t showing up in the world of commercial aerospace, with flight travel still at a crawl. Raytheon — formed earlier this year from the merger of United Technologies Corp. and Raytheon Co. — burned through nearly $250 million of cash in the first quarter as stable results from its defense businesses failed to offset a disastrous slump in the aerospace operations. The Collins Aerospace parts division, previously the company’s most profitable, was barely in the green on an adjusted basis in the second quarter and Raytheon took a $3.2 billion goodwill writedown on the roughly $30 billion acquisition of Rockwell Collins Inc. in 2018 that helped form the unit. The charge reflects the deteriorating outlook for commercial aerospace due to the coronavirus, which no one could have predicted, but it’s worth remembering that the deal was very expensive from the start and the assumptions underpinning that price tag relied on quite a lot of things breaking the company’s way. The Pratt & Whitney engine segment saw sales tumble more than 30% excluding the impact of M&A and currency swings. Raytheon CEO Greg Hayes said the company had cut 8,000 positions in its commercial aerospace divisions and said some of that reduction would be permanent, a shift from the first quarter when he warned about cutting too deep. Arguably, things could have been uglier. The question now is whether the worst is truly behind the company. A slide in the earnings presentation termed “Current Environment” has big question marks next to projections for commercial air traffic and macroeconomic conditions. In case it wasn’t clear what those meant, they are also colored gray, as in this is a gray area.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As you might know, CSX Corporation (NASDAQ:CSX) recently reported its quarterly numbers. It was a credible result...
The gap between this year's U.S. intermodal volumes and last year's on a weekly basis is narrowing, with last week's volumes only 1.7% lower than the same period in 2019.U.S. intermodal units for the week ending July 18 totaled 266,912 containers and trailers, which is 1.7% lower than the same period a year ago, according to the Association of American Railroads.U.S. carloads are also narrowing their gap, although there is still a double-digit percentage difference between this year and last year. U.S. weekly carloads totaled 214,685 carloads, a 15.7% decline compared with the same period last year.Combined carload and intermodal traffic for U.S.-originated loads totaled 481,597 carloads and intermodal, which is an 8.5% drop compared with the same weekly period in 2019.Meanwhile, year-to-date U.S. volumes total 13.07 million carloads and intermodal units, 12.8% lower than a year ago.U.S carloads (blue: RTOTC.USA), intermodal trailers (orange: RTOIT.CLASSI) and containers (green: RTOIC.CLASSI) over the past year. The data comes from the Association of American Railroads. (SONAR)Intermodal: the Comeback Kid?The 1.7% difference between weekly U.S. intermodal volumes this year and last year – North American intermodal units are down 1.8% on a weekly basis – comes as the Class I railroads are reporting that both domestic and intermodal volumes have been increasing steadily since their pandemic-induced lows in April.Vessel operators that had previously canceled sailings in the third quarter have since reinstated some of those sailings, resulting in increased activity for the railroads' international intermodal segments, companies said during their second-quarter earnings results this week and last week. Meanwhile, e-commerce has helped to boost domestic intermodal volumes, the railroads said.This SONAR chart graphs U.S. Customs data to show maritime import shipments by port over the last three months. The chart tracks shipments to a port using a seven-day average. Blue (ICSTM.LAX) represents the Port of Los Angeles, while green (ICSTM.LGB) indicates the Port of Long Beach and purple (ICSTM.NYC) represents the Port of New York/New Jersey. Orange (ICSTM.SAV) indicates the Port of Savannah and yellow (ICSTM.HOU) represents the Port of Houston. (SONAR)"In April and May, they were obviously tough months for us both for domestic and international [intermodal], but we started to see volumes rebound nicely in June, especially on the domestic side as the economy began to reopen and we saw inventories being replenished [for] some of the retailers," said Mark Wallace, executive vice president for sales and marketing at CSX Corporation (NASDAQ: CSX). "We also saw strong volume surges for our e-commerce business as individuals stayed home but shopped online...We think that strength will continue and we're encouraged" by the reversal of the blanked sailings, Wallace said during CSX's second-quarter earnings call on Thursday, July 23.At Canadian Pacific Railway Limited (NYSE: CP), CP Chief Marketing Officer John Brooks said, "There's a lot of uncertainty in this [intermodal] space [with consumers and the pandemic outcome]...But I think our forecast right now is we continue to see, I would say a little bit of a surge here continue in the third quarter and then maybe a little bit of normalization as you move back into the fourth quarter. But that's going to all be dependent on what we see happen with this pandemic."But even if the coronavirus pandemic lingers for several months, e-commerce and the do-it-yourself movement are two factors that could help support intermodal volumes in the back half of the year."We are very bullish on the strength of the consumer in North America, even more so on the consumer living in the U.S. in a big city, because we have a three-coast network and we can access some of the highly populated areas," said Canadian National Railway Company (NYSE: CNI) CEO JJ Ruest during his company's second-quarter earnings call. "And the consumer disposable income is really key to CN's future. And the product that's most-suited to exploit the consumer spending and disposable income is intermodal. And the business coming by the port is definitely one of our mid- to long-term strategies to increase our business in that space."Click here for more FreightWaves articles by Joanna Marsh.Related articles:CSX views 2H with guarded optimismCN eyes intermodal opportunities to boost 2H 2020Canadian Pacific says mid-50s operating ratio within reachKansas City Southern seeks to maintain PSR-related cost cutsSee more from Benzinga * Hapag-Lloyd Promising Cargo Loaded As Booked * Report: Wide Use Of Self-Driving Vehicles 'At Least' A Decade Away * Drilling Deep: Fighting Nuclear Verdicts By Preparing For Them Now(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
CSX Corporation (NASDAQ: CSX) is "cautiously optimistic" about volumes in the second half of 2020, noting that while volumes have rebounded significantly in recent weeks, the coronavirus, the election and overall economic uncertainty remain potential headwinds."There remains a lot of uncertainty around the pace of the recovery and the continuing impact of COVID-19 on states and businesses," said Mark Wallace, CSX's executive vice president for sales and marketing, during CSX's second-quarter earnings call on Wednesday, July 22. "Couple that with what's going on with the upcoming election in November and other geo-political issues – that all shapes our view that while we're encouraged with the increases we're seeing today, we remain cautiously optimistic about the back half."Wallace said customers' consensus about the back half of 2020 is that the outlook remains unclear. But CSX "has been pleased" to see volumes recover in its merchandise and intermodal segments.Within the merchandise segment, the reopening of the automotive plants has helped other markets such as steel and plastics, according to Wallace. Agricultural products and the beverage business are also seeing their supply chains reopen, he said.Meanwhile, April and May were "tough months" for the intermodal segment, Wallace said. But volumes started to improve in June, especially for domestic intermodal because the U.S. economy was reopening and retailers were seeking to replenish inventories. E-commerce was also seeing a surge in business, according to Wallace. The coronavirus pandemic and its subsequent lockdowns contributed to CSX's rail volumes reaching their lowest point this spring, company executives said. But then after the sheltering-in-place restrictions were removed, volumes rebounded by 25% over a six-week period."This was the most disruptive quarter I have experienced in my career, both the fastest decline in volumes followed by one of the most rapid increases in volumes in the company's history. Reacting with those swings while dealing with the pandemic has been and continues to be challenging," said CSX President and CEO Jim Foote. Operational changes made during the pandemicTo trim network capacity to meet demand and cut costs, CSX took measures such as placing over 1,000 locomotives and railcars in storage, reducing shifts at some diesel shops, and moving heavier semi-yearly work to other facilities, according to Jamie Boychuk, CSX's executive vice president of operations. CSX also mixed its auto network with its manifest and intermodal networks in some areas and it reduced train starts, Boychuk said.CSX will retain some of these measures as volumes rebound, and it will add assets back if needed, according to Boychuk. But within the six-week period where volumes rebounded by 25%, CSX used only 15% more locomotives in that timeframe.The company also increased train length by 4% and train weight by 7%, and it plans to continue lengthening trains, according to Boychuk. Meanwhile, hundreds of train and engine employees have been brought back and have been positioned in areas where traffic might increase. "We used this time during COVID-19 almost like our practice hour to be prepared on how to run trains differently, on how to really adjust our network. We're using more distributed power; we are doing more of a train mix," Boychuk said.He continued, "Are we going to have to continue to add some assets? Absolutely. It continues to improve and go above the pre-COVID volume. Definitely we'll be putting some assets back in and bringing some more people off furlough but I've always said that every asset we bring in will earn its keep."Second-quarter financial resultsSecond-quarter net profits for CSX slipped 43% amid a pandemic-induced 26% drop in revenue.View more earnings on CSXNet income totaled $499 million, or $0.65 per diluted share, in the second quarter of 2020 compared with $870 million, or $1.08 per diluted share, in the second quarter of 2019.(CSX)Second-quarter revenue fell 26% to $2.26 billion amid lower economic activity driven by the COVID-19 pandemic, CSX said. Volumes fell 20% to 1.26 million units, while revenue per unit slipped 7% to $1,794.Meanwhile, expenses in the second quarter fell by 19% to $1.43 billion amid volume-related reductions and continued efficiency gains.For more on CSX's second-quarter results, go here. Click here for more FreightWaves articles by Joanna Marsh.Related articles:CSX's second-quarter net income falls 43%CSX's Ed Harris retiringCareer Tracks: Supply chain professor nets CSCMP awardCSX seeks to manage expenses and costsCSX first-quarter net profit falls but operating ratio reaches recordPhoto: CSXSee more from Benzinga * CSX's Second-Quarter Net Income Falls 43% * Feds: Railroads' Rate Discussions Can Be Evidence In Price-Fixing Lawsuits * Labor Union Presses Railroads On Additional Coronavirus Measures(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
|Maintains||Argus Research: to Buy||7/24/2020|
|Maintains||TD Securities: to Hold||7/23/2020|
|Maintains||Morgan Stanley: to Equal-Weight||7/23/2020|
|Maintains||Credit Suisse: to Outperform||7/23/2020|
|Maintains||Citigroup: to Neutral||6/25/2020|
|Maintains||Deutsche Bank: to Buy||6/17/2020|
Full Time Employees: 19,000
CSX Corporation, together with its subsidiaries, provides rail-based freight transportation services. The company offers rail services; and transportation of intermodal containers and trailers, as well as other transportation services, such as rail-to-truck transfers and bulk commodity operations. It transports chemicals, automotive, agricultural and food products, minerals, fertilizers, forest products, and metals and equipment; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, and industrial plants, as well as exports coal to deep-water port facilities. The company also offers intermodal transportation services through a network of approximately 30 terminals transporting manufactured consumer goods in containers; drayage services, including the pickup and delivery of intermodal shipments; and trucking dispatch services. In addition, it serves the automotive industry with distribution centers and storage locations, as well as connects non-rail served customers through transferring products from rail to trucks, which includes plastics and ethanol. The company operates approximately 20,000 route mile rail network, which serves various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, as well as owns and leases approximately 3,561 locomotives. It also serves production and distribution facilities through track connections. CSX Corporation was incorporated in 1978 and is headquartered in Jacksonville, Florida.