Record Q2 Financial Performance Exceeding Expectations: CSX reported record second-quarter revenue of $3.94 billion, a 10% increase year-over-year, surpassing analyst forecasts. Net earnings rose 21% to $1.00 billion, and diluted earnings per share (EPS) jumped 23% to $0.54, also beating estimates. Operating income increased 17% to $1.51 billion, reflecting strong top and bottom-line growth.
Broad-Based Volume Growth with Intermodal Strength: Total volume for the quarter was up 6% year-over-year, driven by broad-based growth across markets. Intermodal was a standout, with a 9% increase in volume and a 26% rise in revenue, benefiting from truck-to-rail conversions, new service offerings, and the Howard Street Tunnel project.
Operating Margin Expansion Driven by Cost Controls: Despite a $177 million increase in fuel expenses due to higher diesel prices and a $40 million rise in labor costs, CSX expanded its operating margin by 240 basis points to 38.3%. This was achieved through effective cost management, including a 2% decline in non-fuel expenses, a 6% reduction in headcount, and record fuel efficiency.
Raised Full-Year 2026 Outlook: The company raised its full-year 2026 guidance, now projecting mid-to-high single-digit revenue growth, more than 350 basis points of operating margin expansion, and over 80% free cash flow growth. Capital spending is expected to remain below $2.4 billion.
Management Focus on Service Enhancement: CEO Steve Angel acknowledged the need for continued improvement in service metrics like dwell and trip-plan performance but emphasized that these issues are temporary. Management expressed confidence in strengthening service execution throughout the second half of the year, underscoring a commitment to operational excellence.

Overall Takeaway
The Q2 fiscal 2026 earnings call for CSX was broadly positive. The company delivered strong financial results, surpassing analyst expectations with record revenue and significant increases in net earnings and EPS. The robust volume growth, particularly in intermodal, coupled with effective cost management leading to impressive operating margin expansion, demonstrates solid operational execution. The raised full-year guidance further reinforces a positive outlook, despite ongoing efforts needed to enhance service metrics.

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Balance Sheets Overview

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