CSX Q3 Net Earnings Plunge 22% on Goodwill Impairment

Ticker: CSX · Form: 10-Q · Filed: Oct 16, 2025 · CIK: 277948

Sentiment: bearish

Topics: Railroad, Freight Transportation, Earnings Miss, Goodwill Impairment, Share Repurchase, Dividend Increase, 10-Q Analysis

Related Tickers: CSX, UNP, NSC, KSU

TL;DR

**CSX's Q3 earnings are a red flag, with a massive goodwill impairment wiping out profits and signaling potential trouble ahead for the railroad giant.**

AI Summary

CSX Corporation reported a significant decline in net earnings for both the third quarter and the nine months ended September 30, 2025. Third-quarter net earnings decreased by 22.4% to $694 million from $894 million in Q3 2024, while nine-month net earnings fell 20.8% to $2,169 million from $2,737 million in the prior year. Revenue also saw a slight dip, decreasing 0.9% to $3,587 million in Q3 2025 from $3,619 million in Q3 2024, and a 3.8% drop for the nine months to $10,584 million from $11,001 million. A key factor in the earnings decline was a $164 million goodwill impairment charge recorded in Q3 2025, which was not present in 2024. Total expenses increased by 10.4% in Q3 2025 to $2,500 million, largely due to this impairment and increases in purchased services and other expenses, up $54 million to $730 million. Despite the earnings pressure, CSX increased its quarterly cash dividend by 8% to $0.13 per common share in February 2025 and continued its share repurchase program, buying back 41 million shares for $1,264 million over the nine months ended September 30, 2025.

Why It Matters

This filing reveals a challenging quarter for CSX, with a substantial drop in net earnings driven by a significant goodwill impairment. For investors, this signals potential underlying issues or a re-evaluation of asset values, impacting profitability and potentially future dividend growth, despite the recent 8% dividend increase. Employees might face increased scrutiny on operational efficiency as the company navigates higher expenses and lower revenue. Customers could see impacts on service quality or pricing if CSX seeks to offset financial pressures. In the competitive landscape, this performance could put CSX at a disadvantage against rivals like Union Pacific or Norfolk Southern, especially if the impairment reflects broader industry headwinds or specific operational challenges.

Risk Assessment

Risk Level: medium — The $164 million goodwill impairment charge in Q3 2025, absent in the prior year, is a significant red flag, indicating a re-evaluation of asset values that directly impacted net earnings. Additionally, the 3.8% decline in nine-month revenue to $10,584 million from $11,001 million in 2024, coupled with a 10.4% increase in total expenses for Q3 2025, suggests operational pressures and potential challenges in maintaining profitability.

Analyst Insight

Investors should scrutinize the details of the goodwill impairment to understand its root cause and assess if it's an isolated event or indicative of broader asset valuation issues. Consider holding or reducing exposure until management provides clearer guidance on how they plan to address declining revenue and rising expenses, especially in light of competitive pressures in the rail and intermodal sectors.

Financial Highlights

debt To Equity
2.39
revenue
$3,587M
operating Margin
30.3%
total Assets
$43,279M
total Debt
$18,554M
net Income
$694M
eps
$0.37
gross Margin
N/A
cash Position
$612M
revenue Growth
-0.9%

Revenue Breakdown

SegmentRevenueGrowth
Traditional Rail Service$3,587M-0.9%
Intermodal Containers and TrailersN/AN/A
Other Transportation Services (Rail-to-truck transfers, bulk commodity operations)N/AN/A
Real Estate Sales, Leasing, Acquisition, and ManagementN/AN/A

Key Numbers

Key Players & Entities

FAQ

What caused the significant drop in CSX's net earnings for Q3 2025?

CSX's net earnings for Q3 2025 decreased significantly due to a $164 million goodwill impairment charge, which was not present in the comparable period of 2024. This charge contributed to a 10.4% increase in total expenses to $2,500 million.

How did CSX's revenue perform in the third quarter and first nine months of 2025?

CSX's revenue for the third quarter of 2025 was $3,587 million, a slight decrease from $3,619 million in Q3 2024. For the nine months ended September 30, 2025, revenue was $10,584 million, down from $11,001 million in the same period of 2024.

What was CSX's net earnings per share for Q3 2025?

CSX reported basic net earnings per share of $0.37 and diluted net earnings per share of $0.37 for the third quarter of 2025, down from $0.46 for both basic and diluted EPS in Q3 2024.

Did CSX continue its share repurchase program in 2025?

Yes, CSX continued its share repurchase program. For the nine months ended September 30, 2025, the company repurchased 41 million shares at a cost of $1,264 million. As of September 30, 2025, $1.3 billion of repurchase authority remained.

What was the change in CSX's dividend policy in 2025?

In February 2025, CSX's Board of Directors authorized an 8% increase in the quarterly cash dividend, raising it to $0.13 per common share, effective March 2025.

What are the key subsidiaries of CSX Corporation?

CSX Corporation's key subsidiaries include CSX Transportation, Inc. (principal operating subsidiary), Quality Carriers, Inc. (bulk liquid chemicals truck transportation), CSX Intermodal Terminals, Inc. (intermodal terminals and drayage), Total Distribution Services, Inc. (automotive distribution), and Transflo Terminal Services, Inc. (rail-to-truck transfers).

How did CSX's operating income change in Q3 2025 compared to Q3 2024?

CSX's operating income decreased to $1,087 million in Q3 2025 from $1,354 million in Q3 2024, representing a 19.7% decline. This was primarily driven by the increase in total expenses, including the goodwill impairment.

What was the total cash provided by operating activities for CSX in the first nine months of 2025?

For the nine months ended September 30, 2025, CSX generated $3,227 million in net cash provided by operating activities, a decrease from $3,859 million in the same period of 2024.

What new accounting pronouncements will impact CSX's future disclosures?

CSX will adopt ASU 2023-09 (Improvements to Income Tax Disclosures) for its 2025 annual report, requiring additional income tax disclosures. ASU 2024-03 (Disaggregation of Income Statement Expenses) will be adopted for its 2027 annual report, requiring more detailed expense captions. ASU 2025-06 (Targeted Improvements to the Accounting for Internal-Use Software) is effective Q1 2028.

What was the total amount of shares outstanding for CSX as of September 30, 2025?

As of September 30, 2025, there were 1,862,136,956 shares of CSX common stock outstanding. This figure is slightly lower than the 1,928,423,000 shares outstanding on September 30, 2024, reflecting the impact of share repurchases.

Risk Factors

Industry Context

CSX operates in the highly competitive freight railroad industry, primarily serving the eastern United States. The industry is capital-intensive and subject to economic cycles, with demand for services closely tied to manufacturing, energy, and consumer spending. Key trends include the shift towards more sustainable logistics, technological advancements in rail operations, and ongoing regulatory oversight.

Regulatory Implications

CSX faces significant regulatory scrutiny from bodies like the Surface Transportation Board (STB) and the Federal Railroad Administration (FRA). Compliance with safety regulations, environmental standards, and operational mandates is critical. Any changes in regulations or enforcement actions could impact operating costs and business practices.

What Investors Should Do

  1. Monitor expense management closely.
  2. Analyze the impact of the goodwill impairment.
  3. Evaluate revenue trends by segment.
  4. Assess the sustainability of shareholder returns.

Key Dates

Glossary

Goodwill Impairment
A reduction in the carrying value of goodwill on the balance sheet when its fair value is determined to be less than its carrying amount. This often occurs due to a decline in the acquired company's performance or market conditions. (A $164 million goodwill impairment charge significantly impacted CSX's Q3 2025 net earnings and increased total expenses.)
Purchased Services and Other
Expenses incurred for services obtained from third-party providers and other miscellaneous operating costs not classified elsewhere. (An increase of $54 million in this category contributed to the overall rise in total expenses for Q3 2025.)
Diluted EPS
Earnings per share calculated by dividing net income by the weighted-average number of diluted common shares outstanding. Diluted shares include all potential common shares that could be issued from stock options, warrants, and convertible securities. (Diluted EPS for Q3 2025 was $0.37, down from $0.46 in Q3 2024, reflecting the decrease in net earnings.)
Right-of-Use Lease Asset
An asset recognized on the balance sheet representing a lessee's right to use an underlying asset for the lease term, arising from lease agreements. (CSX has a Right-of-Use Lease Asset of $470 million as of September 30, 2025, reflecting its obligations under lease contracts.)
Accumulated Other Comprehensive Loss
A component of shareholders' equity that includes unrealized gains and losses on certain investments, foreign currency translation adjustments, and pension plan adjustments, net of tax. (CSX reported an Accumulated Other Comprehensive Loss of $(220) million as of September 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year, CSX reported a notable decline in both revenue and net earnings for the nine months ended September 30, 2025. Revenue decreased by 3.8% to $10.584 billion, while net earnings fell by 20.8% to $2.169 billion. This performance was significantly impacted by a $164 million goodwill impairment charge in the current period, which was absent in the prior year, and an overall increase in total expenses. Operating margins have compressed due to these factors.

Filing Stats: 4,780 words · 19 min read · ~16 pages · Grade level 14.2 · Accepted 2025-10-16 16:03:18

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Consolidated Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2025 and September 30, 2024 3 Condensed Consolidated Comprehensive Income Statements (Unaudited) - Quarters and Nine Months Ended September 30, 2025 and September 30, 2024 3 Consolidated Balance Sheets - At September 30, 2025 (Unaudited) and December 31, 2024 4 Consolidated Cash Flow Statements (Unaudited) - Nine Months Ended September 30, 2025 and September 30, 2024 5 Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - Quarters and Nine Months Ended September 30, 2025 and September 30, 2024 6

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 32

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 48

Controls and Procedures

Item 4. Controls and Procedures 48

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 49

Risk Factors

Item 1A. Risk Factors 49

CSX Purchases of Equity Securities

Item 2. CSX Purchases of Equity Securities 49

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 50

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 50

Other Information

Item 5. Other Information 50

Exhibits

Item 6. Exhibits 51 Signature 52 CSX Q3 2025 Form 10-Q p.2 Table of Contents CSX CORPORATION

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS (Unaudited) (Dollars in Millions, Except Per Share Amounts) Third Quarters Nine Months 2025 2024 2025 2024 Revenue $ 3,587 $ 3,619 $ 10,584 $ 11,001 Expense Labor and Fringe 815 806 2,427 2,377 Purchased Services and Other 730 676 2,214 2,087 Depreciation and Amortization 424 416 1,276 1,236 Fuel 281 276 825 902 Equipment and Other Rents 86 91 267 260 Goodwill Impairment (Note 12) 164 — 164 — Total Expense 2,500 2,265 7,173 6,862 Operating Income 1,087 1,354 3,411 4,139 Interest Expense ( 210 ) ( 206 ) ( 631 ) ( 625 ) Other Income - Net 21 36 69 105 Earnings Before Income Taxes 898 1,184 2,849 3,619 Income Tax Expense ( 204 ) ( 290 ) ( 680 ) ( 882 ) Net Earnings $ 694 $ 894 $ 2,169 $ 2,737 Per Common Share (Note 2) Net Earnings Per Share, Basic $ 0.37 $ 0.46 $ 1.16 $ 1.41 Net Earnings Per Share, Assuming Dilution $ 0.37 $ 0.46 $ 1.16 $ 1.40 Average Shares Outstanding (In Millions) 1,864 1,936 1,874 1,946 Average Shares Outstanding, Assuming Dilution (In Millions) 1,867 1,940 1,876 1,950 CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS (Unaudited) (Dollars in Millions) Third Quarters Nine Months 2025 2024 2025 2024 Total Comprehensive Earnings (Note 10) $ 698 $ 895 $ 2,181 $ 2,747 See accompanying notes to consolidated financial statements. CSX Q3 2025 Form 10-Q p.3 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited) September 30, 2025 December 31, 2024 ASSETS Current Assets: Cash and Cash Equivalents $ 612 $ 933 Short-term Investments (Note 9) 6 72 Accounts Receivable - Net (Note 8) 1,370 1,326 Materials and Supplies 414 414 Other Current Assets 109 75 Total Current Assets 2,511 2,820 Properties 53,864 52,191 Accumulated Depreciation ( 17,330 ) ( 16,533 ) Properties - Net 36,534 35,658 Investment in Affiliates and Other Companies 2,598 2,520 Right-of-Use Lease Asset 470 487 Goodwill and Other Intangible Assets - Net (Note 12) 270 433 Other Long-term Assets 896 846 Total Assets $ 43,279 $ 42,764 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,344 $ 1,290 Labor and Fringe Benefits Payable 439 480 Casualty, Environmental and Other Reserves (Note 4) 159 149 Current Maturities of Long-term Debt (Note 7) 608 606 Income and Other Taxes Payable 164 508 Other Current Liabilities 252 243 Total Current Liabilities 2,966 3,276 Casualty, Environmental and Other Reserves (Note 4) 311 313 Long-term Debt (Note 7) 18,554 17,897 Deferred Income Taxes - Net 7,709 7,725 Long-term Lease Liability 481 486 Other Long-term Liabilities 500 560 Total Liabilities 30,521 30,257 Shareholders' Equity: Common Stock, $ 1 Par Value 1,862 1,900 Other Capital 920 846 Retained Earnings 10,191 9,988 Accumulated Other Comprehensive Loss (Note 10) ( 220 ) ( 232 ) Non-controlling Minority Interest 5 5 Total Shareholders' Equity 12,758 12,507 Total Liabilities and Shareholders' Equity $ 43,279 $ 42,764 See accompanying notes to consolidated financial statements. CSX Q3 2025 Form 10-Q p.4 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CASH FLOW STATEMENTS (Unaudited) (Dollars in Millions) Nine Months 2025 2024 OPERATING ACTIVITIES Net Earnings $ 2,169 $ 2,737 Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities: Depreciation and Amortization 1,276 1,236 Deferred Income Taxes 143 19 Goodwill Impairment (Note 12) 164 — Other Operating Activities ( 58 ) ( 43 ) Changes in Operating Assets and Liabilities: Accounts Receivable ( 30 ) 7 Other Current Assets ( 32 ) 27 Accounts Payable 101 57 Income and Other Taxes Payable ( 508 ) ( 148 ) Other Current Liabilities 2 ( 33 ) Net Cash Provided by Operating Activities 3,227 3,859 INVESTING ACTIVITIES Property Additions ( 2,225 ) ( 1,691 ) Proceeds from Sales of Short-term Investments 72 81 Proceeds and Advances from Property Dispositions 64 50 Business Acquisition, Net of Cash Acquired ( 15 ) ( 68 ) Other Investing Activities ( 41 ) ( 94 ) Net Cash Used In Investing Activities ( 2,145 ) ( 1,722 ) FINANCING ACTIVITIES Shares Repurchased ( 1,284 ) ( 1,212 ) Dividends Paid ( 730 ) ( 700 ) Long-term Debt Repaid (Note 7) ( 12 ) ( 556 ) Long-term Debt Issued (Note 7) 600 550 Other Financing Activities 23 72 Net Cash Used in Financing Activities ( 1,403 ) ( 1,846 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 321 ) 291 CASH AND CASH EQUIVALENTS Cash and Cash Equivalents at Beginning of Period 933 1,353 Cash and Cash Equivalents at End of Period $ 612 $ 1,644 See accompanying notes to consolidated financial statements. CSX Q3 2025 Form 10-Q p.5 Table of Contents CSX CORPORATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Dollars in Millions) Nine Months 2025 Common Shares Outstanding (Thousands) Common Stock and Other Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income (a) Non-controlling Minority Interest Total Shareholders' Equity Balance December 31, 2024 1,900,190 $ 2,746 $ 9,988 $ ( 232 ) $ 5 $ 12,507 Comprehensive Earnings: Net Earnings — — 646 — — 646 Other Comprehensive Income — — — 5 — 5 Total Comprehensive Earnings 651 Common stock dividends, $ 0.13 per share — — ( 245 ) — — ( 245 ) Share Repurchases ( 23,707 ) ( 24 ) ( 727 ) — — ( 751 ) Excise Tax on Net Share Repurchases — — ( 7 ) — — ( 7 ) Stock Option Exercises and Other 1,894 20 — — — 20 Balance March 31, 2025 1,878,377 $ 2,742 $ 9,655 $ ( 227 ) $ 5 $ 12,175 Comprehensive Earnings: Net Earnings — — 829 — — 829 Other Comprehensive Income — — — 3 — 3 Total Comprehensive Earnings 832 Common stock dividends, $ 0.13 per share — — ( 243 ) — — ( 243 ) Share Repurchases ( 14,209 ) ( 14 ) ( 387 ) — — ( 401 ) Excise Tax on Net Share Repurchases — — ( 4 ) — — ( 4 ) Stock Option Exercises and Other 112 18 — — — 18 Balance June 30, 2025 1,864,280 $ 2,746 $ 9,850 $ ( 224 ) $ 5 $ 12,377 Comprehensive Earnings: Net Earnings — — 694 — — 694 Other Comprehensive Income — — — 4 — 4 Total Comprehensive Earnings 698 Common stock dividends, $ 0.13 per share — — ( 242 ) — — ( 242 ) Share Repurchases ( 3,387 ) ( 3 ) ( 109 ) — — ( 112 ) Excise Tax on Net Share Repurchases — — ( 1 ) — — ( 1 ) Stock Option Exercises and Other 1,125 39 ( 1 ) — — 38 Balance September 30, 2025 1,862,018 $ 2,782 $ 10,191 $ ( 220 ) $ 5 $ 12,758 (a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $ 61 million as of December 31, 2024, $ 59 million as of March 31, 2025, $ 58 million as of June 30, 2025, and $ 57 million as of September 30, 2025. For addi

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Dollars in Millions) Nine Months 2024 Common Shares Outstanding (Thousands) Common Stock and Other Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income (a) Non-controlling Minority Interest Total Shareholders' Equity Balance December 31, 2023 1,958,757 $ 2,650 $ 9,609 $ ( 279 ) $ 5 $ 11,985 Comprehensive Earnings: Net Earnings — — 880 — — 880 Other Comprehensive Income — — — 6 — 6 Total Comprehensive Earnings 886 Common stock dividends, $ 0.12 per share — — ( 235 ) — — ( 235 ) Share Repurchases ( 6,789 ) ( 7 ) ( 240 ) — — ( 247 ) Excise Tax on Net Share Repurchases — — ( 1 ) — — ( 1 ) Stock Option Exercises and Other 2,961 55 ( 2 ) — — 53 Balance March 31, 2024 1,954,929 $ 2,698 $ 10,011 $ ( 273 ) $ 5 $ 12,441 Comprehensive Earnings: Net Earnings — — 963 — — 963 Other Comprehensive Income — — — 3 — 3 Total Comprehensive Earnings 966 Common stock dividends, $ 0.12 per share — — ( 233 ) — — ( 233 ) Share Repurchases ( 16,308 ) ( 16 ) ( 547 ) — — ( 563 ) Excise Tax on Net Share Repurchases — — ( 6 ) — — ( 6 ) Stock Option Exercises and Other 124 15 1 — ( 1 ) 15 Balance June 30, 2024 1,938,745 $ 2,697 $ 10,189 $ ( 270 ) $ 4 $ 12,620 Comprehensive Earnings: Net Earnings — — 894 — — 894 Other Comprehensive Income — — — 1 — 1 Total Comprehensive Earnings 895 Common stock dividends, $ 0.12 per share — — ( 232 ) — — ( 232 ) Share Repurchases ( 11,925 ) ( 12 ) ( 390 ) — — ( 402 ) Excise Tax on Net Share Repurchases — — ( 4 ) — — ( 4 ) Stock Option Exercises and Other 1,603 58 — — 1 59 Balance September 30, 2024 1,928,423 $ 2,743 $ 10,457 $ ( 269 ) $ 5 $ 12,936 (a) Accumulated Other Comprehensive Loss balances shown above are net of tax. The associated taxes were $ 74 million as of December 31, 2023, $ 72 million as of March 31, 2024, $ 72 million as of June 30, 2024, and $ 71 million as of September 30, 2024. For

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Nature of Operations and Significant Accounting Policies Background CSX Corporation together with its subsidiaries ("CSX" or the "Company"), based in Jacksonville, Florida, is one of the nation's leading transportation companies. The Company provides rail-based transportation services including traditional rail service, the transport of intermodal containers and trailers, as well as other transportation services such as rail-to-truck transfers and bulk commodity operations. CSX's principal operating subsidiary, CSX Transportation, Inc. ("CSXT"), provides an important link to the transportation supply chain through its approximately 20,000 route-mile rail network and serves major population centers in 26 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The Company's intermodal business links customers to railroads via trucks and terminals. CSXT is also responsible for the Company's real estate sales, leasing, acquisition, and management and development activities, substantially all of which are focused on supporting railroad operations. Other entities In addition to CSXT, the Company's subsidiaries include Quality Carriers, Inc. ("Quality Carriers"), CSX Intermodal Terminals, Inc. ("CSX Intermodal Terminals"), Total Distribution Services, Inc. ("TDSI"), Transflo Terminal Services, Inc. ("Transflo"), CSX Technology, Inc. ("CSX Technology") and other subsidiaries. Quality Carriers is the largest provider of bulk liquid chemicals truck transportation in North America. CSX Intermodal Terminals owns and operates a system of intermodal terminals, predominantly in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments) for certain customers. TDSI serves the automotive industry with distribution centers and storage locations. Transflo connects non-rail served customers to the many bene

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Nature of Operations and Significant Accounting Policies, continued Basis of Presentation In the opinion of management, the accompanying consolidated financial statements contain all normal, recurring adjustments necessary to fairly present the consolidated financial statements and accompanying notes. Where applicable, prior year information has been reclassified to conform to the current presentation. Pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been omitted from these interim financial statements. CSX suggests that these financial statements be read in conjunction with the audited financial statements and the notes included in CSX's most recent annual report on Form 10-K as well as any subsequently filed current reports on Form 8-K. Fiscal Year The Company's fiscal periods are based upon the calendar year. Except as otherwise specified, references to "third quarter(s)" or "nine months" indicate CSX's fiscal periods ending September 30, 2025, and September 30, 2024, and references to "year-end" indicate the fiscal year ended December 31, 2024. New Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures . This standard update requires additional interim and annual disclosures about a company's income taxes, including more detailed information around the annual rate reconciliation and income taxes paid. The Company will adopt the guidance for its 2025 annual report filed on Form 10-K, which will result in additional disclosures related to income taxes but will not impact the Company's results of operations or financial position. In Nov

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2. Earnings Per Share The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution. Third Quarters Nine Months 2025 2024 2025 2024 Numerator (Dollars in Millions) : Net Earnings $ 694 $ 894 $ 2,169 $ 2,737 Denominator (Units in Millions) : Average Common Shares Outstanding 1,864 1,936 1,874 1,946 Other Potentially Dilutive Common Shares 3 4 2 4 Average Common Shares Outstanding, Assuming Dilution 1,867 1,940 1,876 1,950 Net Earnings Per Share, Basic $ 0.37 $ 0.46 $ 1.16 $ 1.41 Net Earnings Per Share, Assuming Dilution $ 0.37 $ 0.46 $ 1.16 $ 1.40 Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards including employee stock options, performance units and restricted stock units. When calculating diluted earnings per share, the potential shares that would be outstanding if all outstanding stock options were exercised are included. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. The total average outstanding stock options that were excluded from the diluted earnings per share calculation because their effect was antidilutive is in the table below. Third Quarters Nine Months 2025 2024 2025 2024 Antidilutive Stock Options Excluded from Diluted EPS (Units in Millions) 5 3 5 3 CSX Q3 2025 Form 10-Q p.10 Table of Contents CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2. Earnings Per Share, continued Share Repurchases During fourth quarter 2023, the Company began repurchasing shares under the $ 5 billion share repurchase program approved in October 2023. Total repurchase authority remaining was $ 1.3 billion as of September 30, 2025. Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings. During third quarters and nine months ended September 30, 2025, and September 30, 2024, the Company engaged in the following repurchase activities: Third Quarters Nine Months 2025 2024 2025 2024 Shares Repurchased (Millions) 3 12 41 35 Cost of Shares (Dollars in Millions) $ 112 $ 402 $ 1,264 $ 1,212 Average Price Paid per Share $ 33.07 $ 33.66 $ 30.61 $ 34.60 Excise Taxes Paid for Net Share Repurchases (Dollars in Millions) $ — $ — $ 19.9 $ — The Inflation Reduction Act of 2022 imposes a nondeductible 1% excise tax on the net value of most share repurchases made after December 31, 2022. Excise tax commensurate with net share repurchases is reflected in equity and a corresponding liability for excise taxes payable is included in other current liabilities on the consolidated balance sheet. The cost of shares repurchased shown in the table above excludes the impact of this excise tax. Excise tax

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 3. Stock Plans and Share-Based Compensation Under CSX's share-based compensation plans, awards consist of performance units, stock options and restricted stock units for management and stock grants for directors. Share-based compensation expense for awards under share-based compensation plans is measured using the fair value of the award on the grant date and is recognized on a straight-line basis over the service period of the respective award. Alternatively, expense is recognized upon death or over an accelerated service period for employees whose agreements allow for continued vesting upon retirement or separation. Forfeitures are recognized as they occur. Total pre-tax expense and income tax benefits associated with share-based compensation are shown in the table below. Income tax benefits include impacts from option exercises and the vesting of other equity awards. Third Quarters Nine Months (Dollars in Millions) 2025 2024 2025 2024 Share-Based Compensation Expense: Restricted Stock Units $ 7 $ 7 $ 20 $ 21 Stock Options 4 3 10 9 Employee Stock Purchase Plan 3 2 8 6 Performance Units — 4 2 7 Stock Awards for Directors — — 3 2 Total Share-Based Compensation Expense $ 14 $ 16 $ 43 $ 45 Income Tax Benefit $ 4 $ 4 $ 10 $ 12 Long-term Incentive Plan In February 2025, the Company granted the following awards under a new long-term incentive plan ("LTIP") for the years 2025 through 2027, which was adopted under the CSX 2019 Stock and Incentive Award Plan. Granted (Thousands) Weighted Avg. Fair Value Performance Units 668 $ 33.74 Restricted Stock Units 666 33.37 Stock Options 1,100 10.16 CSX Q3 2025 Form 10-Q p.12 Table of Contents CSX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 3. Stock Plans and Share-Based Compensation, continued Performance Units Units vest approximately three years after grant. Payouts will be made in CSX common stock with a payout range for most participants between 0 % and 200 % of the target awards depending on Company performance against predetermined goals. Payouts for certain executive officers are subject to formulaic upward or downward adjustment by up to 20 %, capped at an overall payout of 240 %, based upon the Company's total shareholder return relative to specified comparable groups over the performance period. The fair values of performance units granted to certain executive officers were calculated using a Monte-Carlo simulation model. Measurement against goals related to both average annual operating income growth and Economic Profit, in each case adjusting for certain items as defined in the plan, will each comprise 50 % of the payout. As defined under the plan, Economic Profit incentivizes strategic investments earning more than management's desired minimum required return and is calculated as CSX's Gross Cash Earnings minus the Capital Charge on Gross Operating Assets. Stock Options Stock options were granted with ten-year terms and vest over three years in equal installments each year on the anniversary of the grant date. These awards are time-based and are not based upon attainment of performance goals. The fair values of stock option awards were determined at the grant date using the Black-Scholes valuation model. Restricted Stock Units The restricted stock units awarded vest over three years in equal installments each year on the anniversary of the grant date and are settled in CSX common stock on a one -for-one basis. These awards are time-based and are not based upon CSX's attainment of performance goals. Other Awards Awards are periodically granted outside of the annual LTIP program, subject to approval by the Board of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 4. Casualty, Environmental and Other Reserves Personal injury and environmental reserves are considered critical accounting estimates due to the need for management judgment. Casualty, environmental and other reserves are provided for in the consolidated balance sheets as shown in the table below. September 30, 2025 December 31, 2024 (Dollars in Millions) Current Long-term Total Current Long-term Total Casualty: Personal Injury $ 54 $ 94 $ 148 $ 51 $ 91 $ 142 Occupational 7 53 60 7 59 66 Total Casualty 61 147 208 58 150 208 Environmental 39 110 149 37 114 151 Other 59 54 113 54 49 103 Total $ 159 $ 311 $ 470 $ 149 $ 313 $ 462 These liabilities are accrued when probable and reasonably estimable in accordance with the Contingencies Topic in the ASC. Actual settlements and claims received could differ, and final outcomes of these matters cannot be predicted with certainty. Considering the legal defenses currently available, the liabilities that have been recorded and other factors, it is the opinion of management that none of these items individually, when finally resolved, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. Should a number of these items occur in the same period, however, their combined effect could be material in that particular period. Casualty Casualty reserves represent accruals for personal injury, occupational disease and occupational injury claims primarily related to railroad operations. The Company's self-insured retention amount for casualty claims is $ 100 million per occurrence as discussed at Note 5, Commitments and Contingencies . Currently, no individual claim is expected to exceed the self-insured retention amount. Personal Injury Personal injury reserves represent liabilities for employee work-related and third-party injuries. Work-related injuries for CSXT employees are primarily subject to th

View Full Filing

View this 10-Q filing on SEC EDGAR

View on Read The Filing