When CSX Corp. announced a sudden change in its CEO position Sept. 29, speculation began that the Jacksonville-based railroad company might be seeking a merger.
So when CSX officials, including new CEO Steve Angel, held their quarterly conference call with analysts Oct. 16, the first question was about the possibility of a merger.
“The way these things work, these strategic opportunities, you’ve got to wait for the right timing. You’ve got to wait for when the conditions are right,” Angel said.
“So what you do in the interim, you run the company to the best of your ability every day and you create value that way, and so if and when that time comes, you’re going into that discussion from a position of strength. So that’s really how I think about it,” he said.
During his prepared remarks before taking questions, Angel said “we’ve received quite a few inquiries on strategic opportunities. We will, of course, pursue anything we believe can create compelling value for our shareholders.”
Before replacing Joe Hinrichs as chief executive of CSX, Angel had been CEO of industrial gas and engineering company Linde plc and had previously worked at General Electric.
Although he had no direct experience in the railroad industry, Angel said his experience did prepare him for the CSX job.
“My career started at GE, where I worked directly with locomotives and rail operations. That experience gave me a deep appreciation for railroading that has stayed with me,” he said.
“I spent the last couple of decades leading large industrial companies, specifically industrial gas companies, but the interest in rail never faded.”
He said similarities between railroading and his industrial experience include a commitment to safety and building an infrastructure to generate high financial returns.
“In essence, you build a disciplined, high-performance culture, and you build a talent pipeline that will sustain the culture long after you’re gone,” he said.
CSX reported lower earnings in the third quarter.
Adjusted net income fell 8.5% to $818 million, or 44 cents per share, with revenue falling 1% to $3.59 billion.
CSX officials expressed optimism about better results in the months ahead, particularly with the completion of two major infrastructure projects in Baltimore and Tennessee that had disrupted its rail network all year.
The projects were completed slightly ahead of schedule, Chief Operating Officer Mike Cory said.
“With these projects complete, we now have full network access, positioning us for greater capacity and resiliency as we go forward,” he said.
“We’re seeing improvements across the board, but it’s really exciting to see the railroad become more efficient and even more responsive to our customers’ needs, especially given the current market conditions.”
Angel joined CSX at the end of the third quarter, but he has a positive outlook for future results.
“The railroad is running well, and we have a strong foundation to drive further improvements. While the underlying economy is mixed, our customer service is strong, and we have excellent relationships with those customers,” he said.
Angel also gave Hinrichs credit for the company’s position.
“He led this company through some difficult times and worked with this leadership team to make some real progress. Now we are all eager to move forward from a solid position,” he said.