CSX Corp (NASDAQ:CSX) Q2 2019 Earnings Conference Call - Final Transcript
Jul 16, 2019 • 04:30 pm ET
Good afternoon, ladies and gentlemen, and welcome to the CSX Corporation Second Quarter 2019 Earnings Call. As a reminder, today's call is being recorded. [Operator Instructions] Following the presentation, we will be conducting a question-and-answer session. [Operator Instructions]
For opening remarks and introduction, I'd like to turn the call over to Mr. Bill Slater, Chief Investor Relations Officer for CSX Corporation.
Thank you, Shirley, and good afternoon, everyone. Joining me on today's call is Jim Foote; President and Chief Executive Officer; Kevin Boone, Interim Chief Financial Officer; and Mark Wallace; Executive Vice President of Sales and Marketing. On Slide 2 is our forward-looking disclosure followed by our non-GAAP disclosure on Slide 3.
With that, it's my pleasure to introduce President and Chief Executive Officer, Jim Foote.
James M. Foote
Good afternoon, and thanks a lot, Bill. Before we get started with the presentation, I'd like to first thank all CSX employees for the hard work once again drove the company to new record operating levels this quarter. These records include operating income, free cash flow and operating efficiency in the form of an all-time low operating ratio for a US Class I railroad. Not only did we achieve record financial results, but we continued our industry leadership and safety with the best performance in terms of lowest personal injury rate and meaningfully reduced train accidents.
During this quarter, we successfully completed PTC installation and activation across our network. We now operate nearly 13,000 PTC equipped track-miles and are on pace to have the system fully tested and operational with our tenant railroads ahead of the required deadline.
Let's move on now to Slide 5 of the presentation and our financial results. Second quarter results were straightforward with only a few small and unique items that Kevin will discuss. Second quarter EPS increased 7% to $1.08 versus last year's figure of $1.01. Our second quarter operating ratio improved by a 120 points to a record 57.4%.
Turning to Slide 6, we are delivering better service to our customers, which is reflected in our merchandise volume as our improved reliability is leading to customers trusting us with more of their freight. This led to broad-based growth across the merchandise segment as customers are recognizing the value of our best-in-class service offering. This growth was offset by declines in coal, intermodal and other revenue, resulting in a 1% decline in total revenue to $3.1billion. I remain encouraged by the performance of our core merchandise franchise during a softer-than-expected rate environment. We led the Class I volume growth again this quarter and grew volumes at all markets with the exception of metals and equipment and fertilizers. Total merchandise revenue increased 2% as volume growth and pricing gains were partially offset by mixed headwinds.
Intermodal revenue declined a 11% on 10% lower volumes, primarily due to the impact of lane rationalization is implemented last fall and early this year. We'll begin to lap those rationalizations at the end of the third quarter. Coal revenue declined 2% and 2% higher