CSX · Q4 2025 Earnings

Cautious

CSX Corporation

Reported January 22, 2026

30-second summary

Q4 revenue of $3.51B fell 1% YoY as Intermodal (+7%) and Minerals (+10%) failed to offset broad merchandise weakness and Coal -5%; GAAP operating margin of 31.6% was +30bps YoY against GAAP but contracted 270bps vs. prior-year adjusted 34.3%. The bigger news is forward: Angel scrapped the 2025-2027 Investor Day targets, replaced them with FY26-only guidance assuming "no meaningful improvement in macroeconomic conditions," and built the plan around 200-300bps of margin expansion off the FY25 adjusted 33.2% base, sub-$2.4B capex, and ≥50% FCF growth — explicitly not on volume recovery. The prior watch-list question of whether Angel would introduce a quantitative FY guide is answered: he did, and then walked back the longer-dated framework underneath it.

Headline numbers

EPS

Q4 FY2025

$0.39

Revenue

Q4 FY2025

$3.51B

-1.0% YoY

Operating margin

Q4 FY2025

31.6%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$3.51B	-1.0%	$3.59B	-2.2%
EPS	$0.39	—	$0.44	-11.4%
Operating margin	31.6%	—	30.3%	+130bps

Guidance

Volume growth missed; FY2026 guidance emphasizes margin expansion and FCF growth with lower CapEx, but revenue growth expected to remain subdued at low single-digit pace.

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

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	FY2025	not explicitly quantified	$14.092 billion	in-line with qualitative expectations	Met
Operating Margin	FY2025	not explicitly quantified	32.1%	in-line with expectation of 'strong operating performance'	Met
Volume Growth	FY2025	expected to deliver volume growth for the full year	RTM flat YoY; revenue -3% YoY	missed prior expectation of growth	Missed
Free Cash Flow	FY2025	expected to continue demonstrated long-term track record of powerful cash generation	$1.789 billion	in-line with expectation	Met

New guidance

Metric	Period	Guide	YoY
Operating Margin Expansion	FY2026	200 to 300 basis points YoY expansion	—
CapEx	FY2026	below $2.4 billion	—
Free Cash Flow Growth	FY2026	at least 50% growth vs FY2025	—
Revenue Growth	FY2026	low single-digit growth	—

Reaffirmed unchanged this quarter: CapEx ($2.5 billion (excluding Blue Ridge))

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Merchandise	$2.156B	-2.0%
Intermodal	$0.562B	+7.0%
Coal	$0.472B	-5.0%
Chemicals	$0.68B	-4.0%
Agricultural and Food Products	$0.41B	-1.0%
Automotive	$0.285B	-4.0%
Forest Products	$0.229B	-11.0%
Minerals	$0.207B	+10.0%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Train Velocity	19.6 mph
Dwell	9.8 hours
Revenue Ton-Miles	48.4 billion
Carload Trip Plan Performance	83%
Intermodal Trip Plan Performance	92%
Operating Margin	31.6%
FRA Personal Injury Frequency Index	0.66
FRA Train Accident Rate	2.04

Management tone

Network disruption → growth pivot → infrastructure complete, growth pending → multi-year targets withdrawn.

Angel removed the inherited Investor Day framework entirely: "I am replacing our 2025-2027 targets with the guidance we've given for 2026 only." This is the most consequential tone shift in a year — a new CEO publicly de-committing from his predecessor's multi-year math after one full quarter of ownership. It tells you Angel does not believe the prior targets were achievable on the current macro and is unwilling to inherit the credibility risk.

The macro framing went to explicit non-recovery: "we do not anticipate any meaningful improvement in macroeconomic conditions." The volume-growth narrative that survived prior quarters has now been formally retired — FY26 is built on flat industrial production. Volume upside has been removed from the plan, not deferred.

The control narrative has fully replaced the market narrative. The 200-300bps margin guide is being underwritten by 100+ internal cost initiatives, not by revenue recovery. This is a credible posture for a new CEO building his own track record — but it also means there is no upside scenario in the guide that doesn't require execution to over-deliver.

The pricing language is measured. Angel described pricing progress as "a bit slow going," contingent on touching every contract, which "would probably take until about this time next year." For a rail with declining volumes, pricing-per-unit lift is the swing factor on the margin guide. Slow pricing + flat volumes is a tight math problem.

Finally, Angel's "proof in the pudding" framing — wanting to "experience that a few quarters... so I can get grounded and confident in our ability to build sustainable productivity over time" — is unusually candid. A new CEO publicly conditioning longer-term guidance on his own confidence-building is honest, but it also tells the buy-side that the next several quarters will be evaluated as evidence rather than execution against a plan.

Recurring themes management leaned on this quarter:

Cost discipline and workforce optimization across 100+ initiativesOperating margin expansion (200-300 bps) through productivity, not market recoveryCautious macro environment with no near-term catalystsSelective growth in intermodal, minerals, fertilizers; headwinds in chemicals, forest products, automotiveFree cash flow growth of 50%+ driven by capex discipline and lower tax rateNetwork stability and operational execution after 2025 disruptions

Risks management surfaced:

Industrial chemicals market weakness and customer freight spend constraintsHousing market decline and automotive production uncertaintyForest products and metals facility closures cycling through 2025Softness in trucking market and potential slowdown in imports post pull-forward activityCoal plant retirements and subdued global steel benchmark prices

Answers to last quarter's watch list

Whether Q4 adjusted operating margin recovers — Q4 GAAP operating margin came in at 31.6% (+30bps YoY GAAP), but on an apples-to-apples basis contracted 270bps vs. PY adjusted 34.3%. FY GAAP operating margin of 32.1% (33.2% adjusted) sits below the prior best-in-class levels. The cost-efficiency narrative held qualitatively but the margin recovery was muted; the real test moves to FY26's 200-300bps expansion guide.

Continue monitoring

Volume growth in Q4 vs. the "still expect" language — Volume growth did not hold in any commercially meaningful sense. Q4 revenue -1% YoY, FY units flat and RTMs +1%, with revenue -3% YoY on negative mix and coal RPU. Management has now formally abandoned the volume-growth expectation for FY26, baking in flat industrial production.

Resolved negatively

Coal YoY drag trajectory — Q4 Coal revenue $472M, -5% YoY, a meaningful narrowing from the FY -15% YoY trend, consistent with the smaller YoY impact expected in 2H. The export benchmark headwind is fading on the print, though coal remains a structural drag in the FY26 framing.

Resolved positively

Angel's first quantitative FY guide — Angel introduced quantitative FY26 guidance: 200-300bps operating margin expansion, sub-$2.4B capex, ≥50% FCF growth, and qualitative low single-digit revenue growth. He simultaneously withdrew the 2025-2027 multi-year targets. Quantitatively more disclosure; strategically less commitment.

Resolved positively

What to watch into next quarter

Q1 FY26 operating margin progression — Off the 33.2% FY25 adjusted base, the 200-300bps annual guide implies a roughly 35.2-36.2% FY26 exit. Watch whether Q1 prints at or above ~33% to validate the productivity-led path; a sub-33% Q1 would put the full 200bps floor at risk.

Pricing realization cadence — Angel said price yield will be higher in 2026 vs. 2025 than 2025 was vs. 2024, with full contract touch taking ~12 months. Watch whether merchandise RPU ex-fuel turns positive YoY in Q1 — the swing variable behind the margin guide given flat volumes.

CapEx run-rate confirmation — FY26 capex is guided "below $2.4B" vs. $2.90B gross / ~$2.43B ex-Blue Ridge in FY25. Watch Q1 capex annualized to confirm the reduction is real and not back-half loaded.

Coal continuation — Q4 -5% YoY was the cleanest coal print of the year. Watch whether Q1 prints flat-to-down-low-single-digit; further narrowing supports the FCF guide.

Double-stack ramp through Howard Street — Bidding in progress for a Q2 start; watch for early intermodal volume contribution and any commentary on the second bridge timeline.

First evidence the 100+ cost initiatives are producing measurable savings — Watch for a quantified labor productivity, headcount, or unit-cost disclosure on Q1; without one, the margin guide remains a faith trade.

Sources

CSX Corporation Q4 FY2025 Press Release / 10-K filing: https://www.sec.gov/Archives/edgar/data/277948/000027794826000003/qfr_q42025.htm
CSX Q4 FY2025 prepared commentary (Steve Angel CEO, Kevin Boone CFO, Mike Cory COO, Mary Claire Bryan CCO)

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