CSX Corp. reported higher-than-expected earnings and a big jump in second-quarter revenue.
However, the Jacksonville-based railroad company is leaving business on the table because of ongoing problems hiring train staff.
Jacksonville’s other Fortune 500 freight company, Landstar System Inc., reported lower-than-expected quarterly earnings and said demand for its truck services is stable.
CSX said July 20 that revenue rose 28% in the second quarter to $3.82 billion and earnings rose by 2 cents a share to 54 cents.
That’s higher than the average analyst’s forecast of 47 cents a share, according to Zacks Investment Research.
In the company’s conference call with analysts, CEO Jim Foote said demand for freight service remains strong.
“But what remains constant is that right now, as we have seen this entire year, there is more demand for rail service than what we are able to satisfy,” he said.
CSX continues to work to increase its train and engine staff.
Executive Vice President of Operations Jamie Boychuk said the company averaged a pipeline of 500 trainees in the second quarter.
“This pipeline will allow us to continue filling classes as we work towards our headcount targets. For the second consecutive quarter, over 300 conductors qualified and total active T&E increased to nearly 6,700 employees,” he said.
Foote said the company needs to reach about 7,000 train and engine employees to be fully staffed and it could reach that level by the end of the third quarter.
However, attrition has been higher than planned, including newly hired employees deciding to leave.
“It’s been somewhat of a surprise to all of us, the number of people that have dropped out after, again, going through all of the classroom training, all of the on-the-job training and then working a few months and deciding that they don’t like railroading as a profession,” Foote said.
Despite the hiring challenges, Foote said CSX’s business outlook is strong.
“We continue to expect double-digit revenue and operating income growth for the full year,” he said.
Landstar revenue up 26%
Landstar reported revenue rose 26% to $1.975 billion and earnings rose by 65 cents a share to $3.05.
However, the company had projected revenue of at least $2 billion and earnings of $3.22 to $3.32 per shares.
In a July 20 news release, CEO Jim Gattoni said while the results were below its guidance, “truck load volume growth continued to be impressive given tough year-over-year comparisons and an overall shift of consumer spending from goods to services.”
Gattoni said Landstar’s truck revenue per load is usually higher in July, but so far July revenue is in line with May and June results.
“Given the current operating environment, I view Landstar’s relatively stable revenue per load since May as a positive,” he said.
“There is a lot of unease regarding U.S. economic conditions as we head into the third quarter.”
Landstar is projecting third-quarter earnings of $2.75 to $2.85 a share, up from $2.58 in last year’s third quarter.
Landstar also announced its board of directors raised its quarterly dividend by 5 cents a share to 30 cents.