CSX (NASDAQ:CSX) reported first-quarter 2026 results that company leaders said reflected early progress on safety, network performance, and a broad set of efficiency initiatives, while acknowledging that market conditions remain uncertain. Management highlighted year-over-year volume and revenue growth, a sizable decline in operating expenses, and an updated full-year outlook influenced by higher energy prices.
Strong start: higher volume, lower costs, margin and EPS growth
President and CEO Steve Angel said the railroad delivered a “strong start to the year,” citing improvements in safety, operational execution through winter weather, and steps to streamline the cost structure. “Volume and revenue grew year over year while operating expense moved substantially lower, which led to significant margin expansion and EPS growth,” Angel said.
Boone said first-quarter expense declined by $153 million year over year, driven by more than $100 million of “year-over-year efficiency savings,” as well as benefits including real estate and the lapping of network disruption costs, partially offset by inflation and higher fuel prices.
Safety and operating metrics improve amid winter storms
EVP and COO Mike Cory said CSX improved key safety and operating indicators in the quarter. He reported the FRA injury rate improved 13% versus last year, alongside a 9% reduction in people-hours, while the train accident rate improved by more than 30%.
On network performance, Cory said the company managed through severe winter storms across much of the Midwest and Northeast. He noted that key operating metrics improved year over year, including train speed, dwell, and cars online, comparing favorably to a prior-year period impacted by disruptions such as the Blue Ridge reconstruction and Howard Street Tunnel project.
Cory also highlighted fuel efficiency gains, including “record first quarter fuel efficiency of 0.97 gallons per thousand gross ton miles” and 0.93 gallons per thousand GTMs in March, which he said was the best performance since 2021.
He pointed to intermodal terminal performance, citing Fairburn in Atlanta handling a 15% increase in lifts while maintaining service levels, and said engineering and network groups improved productivity through work-block coordination and disciplined curfew execution, driving double-digit efficiency improvements in rail and tie installation.
Business trends: intermodal strength, merchandise mix, coal demand steady
Chief Commercial Officer Maryclare Kenney said the quarter benefited from new business, reliable service, and favorable trends in select markets, despite early-quarter weather-related headwinds. Total volume increased 3% and revenue rose 2%, with a 1% decline in revenue per unit due to mix.
- Merchandise: Volume was flat, while revenue and revenue per unit rose 2%. Kenney said minerals led growth with 4% volume gains supported by cement and salt. Chemicals benefited from higher frac sand shipments tied to data center-driven natural gas production and “strength in plastics as domestic producers benefited from overseas supply chain disruptions.” Fertilizers improved on higher phosphate exports out of the Bone Valley. Forest products volume fell 9%, which Kenney attributed to weak housing and difficult comparisons as the company cycles 2025 closures.
- Intermodal: Revenue increased 5% on 6% volume growth, helped by new business in international and domestic markets. Kenney said intermodal RPU declined 1% due to mix, including growth in inland ports business with shorter length of haul.
- Coal: Revenue declined 1% on 1% lower volume. Kenney said domestic utility demand remained high and March operations supported customer restocking, while export shipments were impacted by cold weather that temporarily reduced loadings. She later said export benchmarks tied to CSX’s high-vol export coal were “relatively stable” from the fourth quarter into the first quarter, helping year-over-year comparisons as prior-year benchmark declines roll off.
Looking ahead, Kenney cited near-term opportunities in chemicals and continued demand tied to infrastructure projects (aggregates, cement, and construction steel). She said housing affordability remains a “real headwind,” with additional forest products closures year-to-date, and automotive remains pressured by lower production and an extended retooling at a major plant on CSX’s network.
Network investments: Howard Street Tunnel and SMX service plans
Kenney said final infrastructure improvements around the Howard Street tunnel clearances were nearing completion and expected to improve east-west transit. In the Q&A, she said the “last bridge should be complete in the next week or so,” after which CSX will have double-stack access. She said the project is expected to double capacity on certain east-west corridors and “take about a day out of our current transit,” while also enabling new and more efficient connections between Southeast and Northeast markets.
Kenney said CSX is completing final improvements on the former Meridian & Bigbee Railroad and plans to launch improved service with CPKC on its SMX product, which she described as providing “truck-competitive transit between major markets in the Southeast, with Dallas and Mexico.”
Guidance updated as energy prices rise; focus remains on productivity pipeline
Angel said CSX’s top-line outlook changed “largely” due to higher-than-expected energy prices, particularly diesel, which the company expects to lift fuel-related revenue starting in the second quarter. Including fuel and assuming diesel prices follow the forward curve, CSX now expects full-year revenue growth in the mid-single digits, up from low single digits previously.
Because higher fuel increases both revenue and expenses, Angel said it can pressure reported margin. Still, he said the company now expects year-over-year operating margin expansion of 200 to 300 basis points, trending toward the high end of the range. He reiterated expectations for 2026 capital spending below $2.4 billion and said CSX anticipates free cash flow to grow by more than 60% compared with 2025.
Boone told analysts the company’s plan includes “over 100 different initiatives,” with significant early progress, particularly in “PS&O” expense. He cited efforts such as shrinking the vehicle fleet (7% smaller versus the end of 2024), reducing equipment rentals, and targeting energy costs across locomotives, vehicles, and utilities. Boone also noted some second-quarter cost items, including incentive compensation, timing of contractual locomotive costs including overhauls, and advisory costs related to industry consolidation, as well as the absence of a $44 million real estate gain recorded in the first quarter.
On operations, Cory said some productivity efforts—such as executing longer, continuous work windows—have at times required rerouting traffic and contributed to delays, but he described these as part of a learning process to gain efficiency. He also cited targeted capital work identified through those efforts, including power switch projects in Cincinnati and Nashville and siding work on busy southern corridors.
Asked about longer-term positioning amid potential industry consolidation, Angel said the company’s approach is to “focus on execution” and ensure CSX is “going into that situation from a position of strength,” noting that such processes can take years to resolve.
About CSX (NASDAQ:CSX)
CSX Corporation is a leading North American transportation company that provides rail-based freight services and supply-chain solutions. Its operating subsidiary, CSX Transportation, moves a wide range of goods for customers across multiple industries, using a combination of long-haul rail service, intermodal operations and terminal and yard services. The company focuses on delivering efficient, reliable freight transportation between major production centers, consumption markets and port gateways.
CSX’s freight portfolio includes intermodal containers and trailers, bulk commodities, industrial products and specialized unit trains.
