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CSX Corporation’s 2025 10-K reveals a resilient $14.1 billion revenue performance despite Hurricane Helene’s $470 million infrastructure damage and declining coal markets. The company prioritized shareholder returns with $2.4 billion in buybacks and dividends while maintaining PSR-driven efficiency.[S1] Welcome to the Stoky Podcast. I’m Noah, and today we are diving deep into the twenty twenty-five 10-K filing for CSX Corporation. They are a massive player in the North American supply chain, and their latest report gives us a real look at how the economy is moving—literally. [S2] Thanks for having me, Noah. I’ve been seeing headlines about rail disruptions and weather lately, so I’m curious to see how a giant like CSX actually handled the last year. It sounds like they had a lot of moving parts to manage. [CHAPTER] I. Business Operations and Network Overview [S1] They really did, Ash. To understand CSX, you have to picture a network of about 20 thousand route miles. They cover 26 states, mostly east of the Mississippi, and even reach into Canada [Item 1 - Business, ¶2]. They aren’t just moving trains; they are connecting ports to factories and power plants. [S2] Twenty thousand miles is hard to wrap my head around. Is this just a single line of track, or is it more complex than that? [S1] It’s a highly strategic grid. They have four main corridors. For example, the I-90 corridor connects Chicago to New York and is built for high-velocity double-stack intermodal trains [Item 2 - Properties, ¶3-5]. This is where your consumer goods and electronics are moving at high speeds. [S2] So when we talk about what’s actually inside those railcars, is it mostly just coal? I feel like that’s the old-school image of railroads. [S1] That’s a common misconception. Actually, "merchandise" is their biggest breadwinner. It brought in 8 point 8 billion dollars in twenty twenty-five—that’s 62 percent of their total revenue [Item 1 - Business, ¶5]. We’re talking chemicals, cars, agricultural products, and lumber. [S2] Wait, so coal isn't the main driver anymore? What happened to the volume there? [S1] Coal still matters, but it’s down to about 13 percent of their revenue [Item 1 - Business, ¶6]. They moved 718 thousand carloads of it, but global competition and the shift toward natural gas and renewables are putting pressure on that segment. [S2] That makes sense. But if merchandise is the king now, how do they keep it all moving without getting bogged down? I imagine a network that big can get congested easily. [S1] They use something called Precision Scheduled Railroading, or PSR. It’s all about a point-to-point schedule. In twenty twenty-five, they actually saw train velocity improve by 1 percent [Item 7 - MD&A, ¶22]. They also saw a huge 24 percent improvement in personal injury frequency [Item 7 - MD&A, ¶22]. [S2] A 24 percent improvement in safety sounds significant. Is that just better training, or is there more tech involved? [S1] It’s both. They have over 3 thousand 4 hundred locomotives and use things like Positive Train Control and wayside detectors to catch equipment issues before they cause an accident [Item 2 - Properties, ¶6-8; Item 1 - Business, ¶3]. [S2] But I noticed you mentioned a "Blue Ridge subdivision" earlier. Didn't they have some major damage there? [S1] Exactly, Ash. Hurricane Helene was a major blow. They had to spend 470 million dollars just to rebuild that section in western North Carolina after the storm severed connectivity [Item 7 - MD&A, ¶27, ¶30]. That’s a massive unexpected bill for one piece of track. [CHAPTER] II. Strategic Initiatives and Business Developments [S1] That rebuilding effort is part of their broader strategy to maintain a "truck-competitive" service. By sticking to those PSR schedules, they want to convince companies to move freight off the highways and onto the rails [Item 1 - Business, ¶4]. [S2] Why would a company choose rail over a truck, though? Is it just about the cost, or is there a bigger strategic reason? [S1] Cost is a factor, but sustainability is becoming huge. Rail is much more fuel-efficient and has lower emissions per ton-mile than trucking [Item 1 - Business, ¶1]. CSX is leaning into that to win over domestic customers. [S2] I also saw they have a trucking wing called Quality Carriers. Why own a trucking company if you’re trying to compete with trucks? [S1] It’s about "last-mile" delivery. Quality Carriers handles bulk liquids and chemicals, allowing CSX to offer a complete door-to-door service [Item 7 - MD&A, ¶10]. However, they did take a 164 million dollar hit on that business this year due to a "goodwill impairment" [Item 7 - MD&A, ¶10]. [S2] "Goodwill impairment"—that sounds like they realized they overpaid for it or it’s not performing as well as they hoped. Is that a red flag? [S1] It suggests the trucking market was tougher than expected in twenty twenty-five. But strategically, they are still looking at the big picture. They’ve been around since 1980, formed from famous old lines like the Baltimore & Ohio [Item 1 - Business, ¶10]. They know how to play the long game. [S2] And speaking of the long game, I saw something about Norfolk Southern and Union Pacific looking at a merger. Does that change the landscape for CSX? [S1] It definitely keeps them on their toes. If their competitors merge, it could change pricing dynamics across the whole industry [Item 1 - Business, ¶11]. CSX has to stay efficient to keep their "right to play" in those high-volume corridors. [CHAPTER] III. Financial Performance and Results of Operations [S1] Let’s look at the hard numbers, Ash. Total revenue for twenty twenty-five was 14 point 1 billion dollars, which was actually a 3 percent dip from the previous year [Item 7 - MD&A, ¶7]. [S2] A 3 percent drop doesn't sound like a disaster, but in a business this big, that’s hundreds of millions of dollars. What was the main culprit? [S1] Mostly the export coal market. Prices dropped globally, and shipment volumes followed [Item 7 - MD&A, ¶7]. They also saw lower fuel surcharge recoveries, which happens when fuel prices go down—they can’t charge customers as much for the "extra" cost of diesel [Item 7 - MD&A, ¶9]. [S2] So if revenue is down, did they manage to cut costs to protect their bottom line? [S1] Actually, operating expenses went up 3 percent to 9 point 6 billion dollars [Item 7 - MD&A, ¶10-12]. That’s a tough combination. It caused their operating income to drop 14 percent to 4 point 5 billion dollars [Item 7 - MD&A, ¶7]. [S2] Why did costs go up while revenue was going down? That seems like a recipe for a bad year. [S1] Labor was a big part of it. Wage inflation added 67 million dollars to their costs [Item 7 - MD&A, ¶13]. They also had 172 million dollars in extra costs for "purchased services," which includes dealing with those weather disruptions and insurance claims [Item 7 - MD&A, ¶13]. [S2] So the hurricane didn't just break the tracks; it broke the budget a bit too. [S1] In a way, yes. When you add it all up, their net earnings fell to 2 point 9 billion dollars, and earnings per share dropped 14 percent to 1 point 54 dollars [Item 7 - MD&A, ¶14]. [S2] I noticed they use a term called "Economic Profit" or "CSX Cash Earnings." Is that just a fancy way to make the numbers look better? [S1] Not exactly. It’s a metric they use to see if they are making more money than it costs to maintain their massive asset base [Item 7 - MD&A, ¶16-19]. It’s a way of holding themselves accountable for all that expensive track and equipment. [S2] And their free cash flow? I remember you mentioned they still had some cash left over. [S1] They generated 1 point 8 billion dollars in free cash flow before dividends [Item 7 - MD&A, ¶19]. That’s down from the year before, partly because they had to pay 429 million dollars in taxes that they had deferred previously [Item 7 - MD&A, ¶19]. [CHAPTER] IV. Liquidity, Capital Resources, and Shareholder Returns [S2] Even with the lower cash flow, it sounds like they are still being pretty generous with their shareholders. I saw they increased the dividend again? [S1] They did. They bumped the quarterly dividend up 8 percent to 0 point 13 dollars per share [Item 5 - Market, ¶3]. That marks 21 consecutive years of annual increases. They also spent 1 point 4 billion dollars buying back their own stock [Item 7 - MD&A, ¶28-30]. [S2] How can they afford to give away over 2 billion dollars to shareholders when their income is down and they have a 470 million dollar repair bill for a hurricane? [S1] It comes down to their liquidity. They have a 1 point 2 billion dollar credit facility that they haven't even touched [Item 7 - MD&A, ¶25]. They also maintain investment-grade credit ratings, which means they can borrow money at relatively low rates when they need to [Item 7 - MD&A, ¶29, ¶32]. [S2] So they are confident enough in their future cash flows to keep the payouts going. But what about next year? Are they going to keep spending at this level? [S1] They are actually planning to pull back a bit. Capital expenditures for twenty twenty-six are projected to be under 2 point 4 billion dollars, compared to the 2 point 9 billion dollars they spent this year [Item 7 - MD&A, ¶27, ¶30]. [S2] That sounds like a smart move to preserve cash. But does cutting spending mean the network might start to degrade? [S1] Noah: They are focusing that 2 point 4 billion dollars on "sustainment"—basically making sure the core tracks, bridges, and signals are in top shape [Item 7 - MD&A, ¶30]. They are also still investing in their fleet of 3 thousand 4 hundred locomotives to keep things efficient. [CHAPTER] V. Risk Factors and Challenges [S2] It seems like CSX is a well-oiled machine, but what keeps the leadership up at night? I mean, besides hurricanes. [S1] There’s a long list. One of the biggest is labor relations. Most of their 23 thousand employees are in unions [Item 1 - Business, ¶8]. If negotiations go south, it could lead to strikes or massive wage hikes that they can't easily offset. [S2] And I imagine the government has a say in how they run things too, right? [S1] A huge say. They are regulated by the Surface Transportation Board, the FRA, the EPA, and even the TSA [Item 1 - Business, ¶8]. New rules on how they handle hazardous materials or how they set their rates can have an immediate impact on their profit margins. [S2] What about competition? You mentioned trucks earlier, but are there other threats? [S1] Cybersecurity is a major one now. They have a 24/7 Security Operations Center because a single breach could shut down their entire dispatching system [Item 1A - Risk Factors]. If the trains can't talk to the signals, the whole network stops. [S2] That’s a scary thought. And I suppose they are always at the mercy of the broader economy. If people stop buying cars or chemicals, the trains stay empty. [S1] Exactly. They are a "derived demand" business. They only move what the economy produces [Item 1A - Risk Factors, ¶1-24]. If there’s a recession, CSX feels it immediately. [CHAPTER] VI. Forward-Looking Guidance and Outlook [S2] So, looking ahead to twenty twenty-six, what’s the vibe? Are they optimistic or just trying to hold the line? [S1] They are leaning into their PSR model to drive more efficiency. They expect to see some tailwinds, like a 40 million dollar reduction in depreciation expenses because they’ve extended the useful life of some of their equipment [Item 7 - MD&A, ¶45]. [S2] Every little bit helps. But can they actually grow their revenue if coal keeps sliding? [S1] They are betting on intermodal growth—moving those shipping containers from ports to the rest of the country [Item 1 - Business, ¶5]. As long as consumer demand stays steady and they can beat trucks on reliability, that’s where the growth is. [S2] It sounds like CSX is essentially a 180-year-old startup in some ways—constantly trying to reinvent how they move things while dealing with the same old problems like weather and labor. [S1] That’s a great way to put it, Ash. They have a massive, irreplaceable network, but they have to be incredibly disciplined to make it pay off. Their twenty twenty-five report shows they can take a punch from a hurricane and a market downturn and still come out with billions in profit. [S2] Well, Noah, thanks for breaking this down. It’s clear that while the "Golden Age" of rail might be in the history books, companies like CSX are still the backbone of how we get our stuff today. [S1] Absolutely. Thanks for joining us on the Stoky Podcast. We’ll see you next time. --- STORY TITLE --- CSX Navigates $448 Million Revenue Decline Amid Hurricane Recovery and Coal Headwinds - 10-K --- PODCAST SUMMARY --- CSX Corporation’s 2025 10-K reveals a resilient $14.1 billion revenue performance despite Hurricane Helene’s $470 million infrastructure damage and declining coal markets. The company prioritized shareholder returns with $2.4 billion in buybacks and dividends while maintaining PSR-driven efficiency.

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