CSX Corporation (NASDAQ: CSX) stock rose over 4.7% on April 21st, 2021 (as of 12:12:24 UTC-4 · USD ; Source: Google finance) after the company posted decent results for the first quarter of FY 21.
Merchandise revenue fell 6% and led by declines in automotive and energy-related shipments within the chemicals and minerals segments. These declines were partially offset by growth in the metals and fertilizers businesses. Intermodal revenue rose 11% driven by strong demand for transportation services due to continued inventory replenishments and growth from East Coast ports. Coal revenue declined 5%. Domestic coal revenue increased due to growth in utility coal shipments. This growth was more than offset by declines in export coal, mainly from reduced international shipments of thermal coal. Other revenue rose 42%. The largest driver of this increase was higher revenue from storage at intermodal facilities.
CSX in the first quarter of FY 21 has reported the adjusted earnings per share of 93 cents, missing the analysts’ estimates for the adjusted earnings per share of 95 cents, according to the Zacks Consensus Estimate. The company had reported 1 percent fall in the adjusted revenue to $2.813 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue of $2.810 billion. This is due to intermodal and other revenue growth was more than offset by declines in merchandise, coal, and fuel surcharge revenues. Expenses increased 2 percent year over year to $1.71 billion and operating income declined 7 percent for the quarter to $1.10 billion. For the first quarter, free cash flow before dividends was $934 million, up 15% when compared to the first quarter of 2020.
Meanwhile, the company has recently announced the closing of an agreement with Virginia to sell certain interest in CSX owned line segments. This project is expected to generate meaningful value for CSX and enhance the safety and reliability of both passenger and freight railroad service in the DC and Virginia area. The transaction will result in a substantial gain of about $350 million in the second quarter this year. The cash proceeds of $525 million will be realized over time, with approximately $400 million expected in 2021.
On the other hand, the company expects incentive comp in the second quarter to remain relatively flat. Partially offsetting these headwinds, efficiency gains remain strong, as T&E employee productivity was up nearly 10% and train length increased 13% to a first quarter record. Total headcount was down 7%, reflecting structural improvements made over the last year.