tapebrief
CSX · Q2 2025

CSX · Q3 2025 Earnings

Cautious

CSX Corporation

Reported October 16, 2025

30-second summary

Revenue of $3.59B fell 1% YoY as Coal's 11% collapse and Merchandise weakness offset Intermodal +4% and a 38% jump in Other. GAAP operating margin of 30.3% is down 710bps YoY (vs. 37.4% in Q3 FY2024); adjusted operating margin of 34.9% is down ~250bps YoY (Q3 FY2024 had no comparable adjustment, so GAAP = adjusted in the prior-year period) — a meaningful step-down that the company attributes in part to a $164M Quality Carriers goodwill impairment, $35M of restructuring/severance/advisory costs, and ~$25M of network disruption costs related to the now-completed Blue Ridge and Howard Street projects. Management reaffirmed qualitative FY volume growth and $2.5B capex, added "still" to the volume language (a softening tell), and Steve Angel's first quarter sets a more measured, optionality-driven posture than Hinrichs's growth pivot last quarter.

Headline numbers

EPS

Q3 FY2025

$0.44

Revenue

Q3 FY2025

$3.59B

-1.0% YoY

Operating margin

Q3 FY2025

30.3%

Key financials

Q3 FY2025
MetricQ3 FY2025YoYQ2 FY2025QoQ
Revenue$3.59B-1.0%$3.57B+0.4%
EPS$0.44—$0.44+0.0%
Operating margin30.3%—35.9%-560bps

Guidance

CSX reaffirmed full-year volume growth and CapEx guidance while Q3 delivered strong 30.3% operating margins despite flat-to-negative revenue growth.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

MetricPeriodGuideYoY
Operating MarginQ3 FY202530.3% (GAAP) / 34.9% (adjusted)—
RevenueQ3 FY2025$3.587 billion-1% YoY

Reaffirmed unchanged this quarter: Volume growth (expected to deliver volume growth for the full year), CapEx guidance ($2.5 billion (excluding Blue Ridge))

Segment KPIs

Q3 FY2025
SegmentQ3 FY2025YoY
Merchandise$2.208B-1.0%
Intermodal$0.527B+4.0%
Coal$0.49B-11.0%
Trucking$0.207B-3.0%
Other$0.155B+38.0%

Other KPIs

Q3 FY2025
SegmentQ3 FY2025
Volume (Units)1.61 million
Volume Growth YoY1%
Train Velocity18.9 miles per hour
Dwell9.5 hours
Operating Margin30.3%
Adjusted Operating Margin (Non-GAAP)34.9%
Revenue Ton-Miles50.4 billion
FRA Personal Injury Frequency Index1.16

Management tone

Network disruption → growth pivot → infrastructure complete, growth still pending.

Three quarters ago the network was the problem. Last quarter Hinrichs declared the network "stabilized" and pivoted to growth. This quarter, under new CEO Steve Angel, Mike Cory closed the loop: "With these projects complete, we now have full network access, positioning us for greater capacity and resiliency as we go forward." The catalyst Hinrichs sold has now arrived — but the demand side hasn't shown up to match it. The +1% volume print and softened "still expect" language tell you management knows it.

Hinrichs's growth pivot has been replaced by Angel's stewardship posture. Last quarter the framing was offensive: industrial development, Howard Street as a catalyst, NPS at all-time highs. This quarter the operating philosophy is "make the most important things the most important things. Focus, execute, grind the details, repeat." This is not a transformation speech. It's a stewardship speech — appropriate for a regulated industry, but a clear deceleration in ambition.

The cash-return framing has moved to the foreground. "CSX remains committed to shareholder distributions and has returned over $2 billion year to date" plus "demonstrated long-term track record of powerful cash generation" — when management leads with cash returns rather than growth, they are telling you what they have confidence in. Cash, not revenue acceleration.

Angel's closing remarks did contain one notable new disclosure: "We've received quite a few inquiries on strategic opportunities. We will, of course, pursue anything we believe can create compelling value for our shareholders." This is a meaningful escalation from prior-quarter posture, even within the bounds of prepared commentary, and signals management is now willing to publicly acknowledge inbound strategic interest.

Recurring themes management leaned on this quarter:

Best-in-class operating performance and margin expansionInfrastructure completion unlocking capacity and growthIndustry cooperation on modal conversion (truck-to-rail)Strategic optionality on M&A without urgencyCost momentum and operational efficiencySelective market strength (aggregates, coal, intermodal)

Risks management surfaced:

Mixed economic conditions and customer uncertaintyTariff impacts on chemicals, forest products, and metals marketsSoft trucking market creating pricing headwinds for intermodalWeather and seasonal disruptions (storm season, winter)STB regulatory scrutiny of potential consolidation dealsTemporary production outages at key customer facilities

Answers to last quarter's watch list

Operating margin progression in Q3 — GAAP operating margin came in at 30.3% (-710bps YoY); adjusted (non-GAAP) margin of 34.9% (-250bps YoY) is the more defensible comparison given the $164M Quality Carriers goodwill impairment in the GAAP figure. Either way, the base case of sequential improvement did not materialize at the GAAP line.
Resolved negatively
Coal RPU and volume trajectory — Coal revenue of $490M is -11% YoY on -3% total tonnage; all-in coal RPU is -9% YoY per prepared remarks. Export tonnage -11% YoY, domestic utility tonnage +22% YoY. Management commentary confirms the export benchmark headwind is diminishing into Q4, consistent with the "smaller YoY impact" promised for 2H.
Continue monitoring
Trip-plan performance recovery — Carload TPP at 83% improved sequentially from 75% in Q2 FY2025 (per prepared remarks) and is up from 80% YoY (per press release); intermodal TPP at 93% improved from 90% sequentially and 92% YoY. Both metrics resolved positively versus the Q2 baseline flagged.
Resolved positively
FY revenue/EPS guide reintroduction — Management did NOT reintroduce a quantitative full-year revenue or EPS range. Volume growth remains qualitative ("still expect to deliver"), capex reaffirmed at $2.5B. The continued refusal to give a quantitative range — combined with the "still" wording softening — suggests visibility has not improved.
Resolved negatively
Howard Street Tunnel timeline — Mike Cory confirmed major infrastructure projects "complete" and "finished slightly ahead of schedule," with network now positioned for "greater capacity and resiliency." Kevin Boone added that double-stack clearance through Baltimore begins in Q2 2026.
Resolved positively

What to watch into next quarter

Whether Q4 adjusted operating margin recovers — Pelkey's Q&A bridge implies ~$45M of sequential cost benefits Q3→Q4, largely offset by ~$120-130M Other-revenue normalization and $10-20M higher incentive comp. If Q4 adjusted margin doesn't recover meaningfully despite the cost roll-off, the cost-efficiency narrative weakens materially.

Volume growth in Q4 vs. the "still expect" language — Q3 delivered +1% YoY. For FY volume growth to hold, Q4 needs at least flat-to-positive YoY against a Q4 FY2024 comp that included hurricane impacts. Watch whether management ultimately walks back the qualitative volume guide.

Coal YoY drag trajectory — Watch whether Q4 export coal pricing headwind continues to diminish as Boone suggested, and whether the recent reopening of a key export mine produces tonnage recovery.

Angel's first quantitative FY guide — Hinrichs left without giving a number. Watch whether Angel introduces a quantitative range on Q4 earnings as part of his FY2026 framing. Continued qualitative-only guidance two quarters into his tenure would be a meaningful signal.

Follow-through on "strategic inquiries" language — Angel's prepared-remarks disclosure that CSX has "received quite a few inquiries on strategic opportunities," reinforced in Q&A by the Praxair-Linde analogy, is the most concrete M&A-adjacent commentary in years. Watch whether the next quarter brings any escalation in language or any specific catalyst.

Sources

  1. CSX Corporation Q3 FY2025 Press Release / 10-Q filing: https://www.sec.gov/Archives/edgar/data/277948/000027794825000053/qfr_q32025.htm
  2. CSX Q3 FY2025 prepared commentary and Q&A (Steve Angel CEO, Mike Cory COO, Kevin Boone CCO, Sean Pelkey CFO)

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