JACKSONVILLE, Fla. — CSX Corp. today announced fourth quarter 2018 net earnings of $843 million, or $1.01 per share, versus $4,140 million, or $4.62 per share on a GAAP basis ($0.64 on an adjusted basis) in the same period last year. Fourth qua...
http://trn.trains.com/news/news-wire/2019/01/16-csx-claims-record-low-operating-ratio-of-603
Brian Schmidt, Editor, Classic Trains magazine
smoke, mirrors and a sharp pencil do wonders.
Never too old to have a happy childhood!
BaltACD smoke, mirrors and a sharp pencil do wonders.
I seem to recall some on here making dire predictions: revenue would decline in step with service deterioration as customers fled. But...
Revenue for the fourth quarter increased 10 percent over the prior year to $3.14 billion, supported by increases in fuel recovery, broad-based volume growth, pricing gains, higher supplemental revenue and favorable mix. Expenses increased 9 percent year over year to $1.89 billion, or 2 percent when 2017 results are adjusted for the impacts of restructuring and tax reform benefits. This combination yielded adjusted operating income growth of 25 percent for the quarter to $1.25 billion compared to $998 million in the same period last year.
Those inconvenient number are on a GAAP basis even if some want to claim them to be fictitious.
Wall Street didn't relish the news - CSX lost 29 cents a share today.
Low operating ratios are numbers that Wall Street understands. They went to MBA school and have used their expertise to save Toys R Us, Sears, and many others. What low operating ratios really mean is that you are not spending enough to keep trains rolling and customers happy.
petitnj Low operating ratios are numbers that Wall Street understands. They went to MBA school and have used their expertise to save Toys R Us, Sears, and many others. What low operating ratios really mean is that you are not spending enough to keep trains rolling and customers happy.
Odd then that revenue is up.
One reason why Revenue could have gone up Demurrage charges for cars that they never picked up after they got empty. Or revenue from selling almost 700 engines in the 4th quarter alone.
Shadow the Cats owner One reason why Revenue could have gone up Demurrage charges for cars that they never picked up after they got empty. Or revenue from selling almost 700 engines in the 4th quarter alone.
The sale/disposal of assets is not treated as revenue. This is a non-operating or "other" item. Perhaps JBS1 can instruct you.
charlie hebdoThe sale/disposal of assets is not treated as revenue. This is a non-operating or "other" item.
Well, it's not supposed to be, anyhow...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
CSX 2018 Total Revenue - $12.250 Billion
CSX 2018 Net Income - $3.309 Billion
CSX Net Income as Percent of Revenue - 27.0%
That is a very good ratio of Net Income to Revenue for a capital intensive industry.
As a comparison, CN in 2016 (2018 is not available until January 29 and 2017 is distorted by one time tax gains from the US Tax Cuts and Jobs Act) had the following:
CN Total Revenue - C$12.037 Billion
CN Net Income - C$3.640 Billion
CN Percent of Net Income to Revenue - 30.2%
tree68 charlie hebdo The sale/disposal of assets is not treated as revenue. This is a non-operating or "other" item. Well, it's not supposed to be, anyhow...
charlie hebdo The sale/disposal of assets is not treated as revenue. This is a non-operating or "other" item.
These constant and thinly veiled accusations that CSX or any other railroads are "cooking the books" are pretty specious, since so far nobody has offered any demonstrable proof of that. And yes, we all know the story of Arthur Anderson and Enron but that hardly proves that all financial statements are BS. Other than JBS1, none of us are accountants, but at least some of us have enough coursework and some experience with audits and financial documents to recognize "sour grapes."
charlie hebdoat least some of us have enough coursework and some experience with audits and financial documents to recognize "sour grapes."
Actually some others of us are licensed accountants.
If an asset is sold for more than its depreciated book value, the gain on the sale is going to show up in an other revenue account, which will impact the bottom line and result in appropriate taxes being paid.
In the case of a railroad, a gain on sale of an asset will not show up in Operating Revenue or it would distort the Operating Ratio. The Operating Ratio is intended to measure the percentage of revenues from hauling freight that are used to pay for the costs of hauling freight. Revenues from such things as a gain on sale of an asset or interest earnings from investing cash balances are not revenues from hauling freight.
At the same time, all the cash from the sale is available to be used as the railroad determines - for capital investment, for dividends, for stock buybacks, for operational cash flow, etc.
So with the CSX Operating ratio of 60.3, I would think that any gain on the sale of an asset should not be included in the Operating Ratio calculation, but it should be included in calculation of Income Before Taxes.
This is based on a transaction in its simplest form. There can be different accounting rules regarding deferrals, accruals, etc., that are specific to an individual industry. I am not a railroad accountant so am not familiar with any industry-specific rules. But if any asset sales such as line sales or locomotive sales are of the “plain vanilla” variety, they should impact the balance sheet and income statement as described above.
charlie hebdoThese constant and thinly veiled accusations that CSX or any other railroads are "cooking the books" are pretty specious, since so far nobody has offered any demonstrable proof of that.
And no one has offered any proof that they aren't.
Call it guilt by association - vulture capitalists such as Mantle Ridge have a history of looting companies - why should anyone assume that isn't occurring with CSX?
tree68 charlie hebdo These constant and thinly veiled accusations that CSX or any other railroads are "cooking the books" are pretty specious, since so far nobody has offered any demonstrable proof of that. And no one has offered any proof that they aren't. Call it guilt by association - vulture capitalists such as Mantle Ridge have a history of looting companies - why should anyone assume that isn't occurring with CSX?
charlie hebdo These constant and thinly veiled accusations that CSX or any other railroads are "cooking the books" are pretty specious, since so far nobody has offered any demonstrable proof of that.
Apply your line of reasoning to other areas beyond accounting and CSX and you have an important precondition for becoming an authoritarian state. Ike said it well in a letter in 1959: "Dictatorial systems make one contribution to their people which leads them to tend to support such systems — freedom from the necessity of informing themselves and making up their own minds concerning these tremendous complex and difficult questions.”
“Guilt by association” could just be a matter of seeing what one wants to see, based on their beliefs and prejudices. So why not be sure, and make the case by solid proof? If it is really happening, the proof ought to be obvious and easy.
Euclid tree68 charlie hebdo These constant and thinly veiled accusations that CSX or any other railroads are "cooking the books" are pretty specious, since so far nobody has offered any demonstrable proof of that. And no one has offered any proof that they aren't. Call it guilt by association - vulture capitalists such as Mantle Ridge have a history of looting companies - why should anyone assume that isn't occurring with CSX? “Guilt by association” could just be a matter of seeing what one wants to see, based on their beliefs and prejudices. So why not be sure, and make the case by solid proof? If it is really happening, the proof ought to be obvious and easy.
One word - ENRON
decievers never make it obvious and easy. Obfuscation is their stock in trade.
Euclid“Guilt by association” could just be a matter of seeing what one wants to see, based on their beliefs and prejudices.
That can go both ways - those who believe everything is on the up and up, and those who believe there's skullduggery afoot.
zardozHard to believe that a corporation would use "Creative Accounting"; after all, isn't the business world known for its fair play and honesty?
+1
I think it's smartest to never under estimate anyone who might have motive.
tree68That can go both ways -
Not to mention that those having their hands closest to your pockets are likely to be among the first to call you paranoid.
One suggestion is to watch the amount of long term debt reported on the financial statements over time. If they are returning amounts more than their annual Net Income to shareholders - i.e. dividends and buybacks exceeding their Net Income each year, then odds are that they are borrowing long term debt to return cash to shareholders.
For example, the last three years UP has paid out more than 100% of their net income as a result of dividends and share buybacks. In order to do this while still maintaining their capital program they have had to increase their long term debt. See slides 26, 27 and 28:
https://www.up.com/cs/groups/public/@uprr/@investor/documents/investordocuments/4q17_er_slides.pdf
In order to sustain that over the long term they will have to grow revenues and cut expenses enough to free up sufficient cash to cover the additional interest expense on the long term debt, and hope that interest rates will stay low when it is time to refinance their debt. (Most corporations do not retire debt, but rather refinance and extend it instead.)
It will be interesting to see how long railroads will be able to return more than 100% of Net Income each year to shareholders.
BaltACD Wall Street didn't relish the news - CSX lost 29 cents a share today.
Although on Friday it shot up $2.27, so Wall Street much not have been to upset. Odd that you did not report that after being so quick to point out the loss.....
An "expensive model collector"
n012944 BaltACD Wall Street didn't relish the news - CSX lost 29 cents a share today. Although on Friday it shot up $2.27, so Wall Street much not have been to upset. Odd that you did not report that after being so quick to point out the loss.....
Been down the last two trading days since the upward blip.
1/23/18 $57.10. Today 1/23/19 $65.08. 13.98% growth is not spectacular, but hardly down the toilet.
The rise in the share price doesn't do anything for the financial health of the firm in question. It just shows what speculators, day traders and other lowlifes are willing to pay for the shares.
CSSHEGEWISCH The rise in the share price doesn't do anything for the financial health of the firm in question. It just shows what speculators, day traders and other lowlifes are willing to pay for the shares.
Day-to-day and intraday prices may be the work of arbitrageurs and daytraders. A one-year trend is a reflection of what long-term investors think about the health of a company.
Ben Graham (who was one of Warren Buffett's mentors) famously stated that over the short term the stock market is a voting machine while over the long term its a weighing machine. What he meant is that over the long term the share prices reflect the true value of the company... on the other hand short term price fluctuations are often governed by emotion and fear. Best thing to do if you're nervous about the shares you own is to read up on the company.. If you feel it is doing ok then don't worry about it. If you feel the company is in trouble then by all means sell your shares... kinda how it should work.
Interesting.....
https://www.barrons.com/articles/csx-hedge-fund-mantle-ridge-sells-stock-51548435665?fbclid=IwAR3Kq2RO9M9JF7qJtdXtTeognidGEKtY6fIeiw3LRbXAxKv0_VkJ8XjcuTw
Interesting but not all that surprising given that they're activist investors. Their startegy is to buy enough stock to gain control.. improve the business... and then sellout. It's much like someone who buys old houses, spruces them up and then sells them at a profit. I expect Mantle Ridge to sell off all their holdings in CSX shortly...just as Perishing Square sold their shares in CP when the "turn around"was done. They're not passive investors like most of us are who make our money on the long term appreciation of the value of the companies we invest in. BTW.. there are lots of other reasons to sell a stock that have nothing to do with how the business is doing.. and everyone has to sell eventually in order to realize profit..
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