CSX shares fell early Thursday after the company reported its third-quarter results, which failed to meet market expectations. The rail-based freight transportation supplier projected that the impact of Hurricane Helene would affect the current quarter more severely than the previous three-month period. Net earnings for the three-month period ending September 30 reached $0.46 per share, a rise from $0.41 in the same period last year.
This result, however, fell short of the Capital IQ consensus estimate of $0.48. Revenue increased by 1% year over year to $3.62 billion but was below Wall Street's expectation of $3.68 billion, prompting a 5.5% decline in stock price during premarket trading. Factors contributing to the revenue dynamics included growth in merchandise and intermodal volume, along with gains in merchandise pricing.
These gains were counteracted by a decline in coal revenue, lower fuel surcharge, and reduced revenue from other areas. Hurricane Helene, which made landfall in Florida at the end of September, is projected to have impacted revenue by $10 million to $15 million by the end of the quarter, as noted by Chief Financial Officer Sean Pelkey during an earnings call. 'Our aim was to grow volume, revenue, and the operating margin compared to last year, and that is exactly what we delivered,' stated Chief Executive Joe Hinrichs during the call.
He elaborated on the challenges faced in this quarter, mentioning adaptations necessary due to significant weather events, equipment malfunctions at the coal terminal, and fluctuations in diesel prices. The intermodal segment reported a 2% decline in revenue, totaling $509 million, despite a 3% increase in volume.
Conversely, merchandise revenue increased by 6% to $2.23 billion, supported by a 3% gain in volume along with pricing strength. Coal revenue, however, decreased by 7%, reaching $553 million, and trucking revenue slipped 2% to $214 million. Operating income saw a 7% year-over-year increase, amounting to $1.35 billion, while total expenses fell to $2.27 billion from $2.3 billion in the same quarter last year. Pelkey noted that the fourth quarter's storm-related impacts are expected to exceed those of the third quarter, with a current estimate of around $50 million.
This forecast encompasses storm recovery and rerouting costs near $20 million, in addition to roughly $30 million of net revenue impacts. As CSX looks forward, the company anticipates a slight decrease in fourth-quarter revenue, influenced by lower fuel and coal prices along with modest volume growth.
Hinrichs mentioned, 'We estimate that lower fuel surcharge and the total effects of a slightly softer coal market will lead to roughly $200 million in revenue effects year-over-year just on their own.' Price: 33.53, Change: -1.94, Percent Change: -5.47.