CSX Q4 2025 Earnings Drop; 2026 Guidance Targets Margins

CSX Corp. (CSX) reported Q4 2025 earnings on Jan. 22, 2026, showing declines in revenue and profit while management projected margin expansion and substantial free-cash-flow gains driven by productivity initiatives and cost discipline.

Quarter Results and Segment Trends

CSX said in a press release that fourth-quarter revenue was $3.51 billion, down 1.0% year over year and below the consensus range. Net income was $720 million, or $0.39 a share diluted, down 1.8% from the prior year. Operating income was $1.11 billion on a GAAP basis, roughly flat year over year but about 9.0% lower on an adjusted basis. Gross profit fell 6.8% to $1.5 billion.

Cash from operations rose about 30.0% to $1.4 billion despite capital spending increasing roughly 31.0% to $677 million. CSX reduced headcount by more than 3.0% at quarter end and recorded approximately $50 million of pre-tax charges, including $31 million in severance and $21 million in technology impairments.

Volumes showed mixed trends. Overall units rose 1.0% year over year while revenue per unit declined 2.0% due to a shift in business mix and weaker coal pricing. Merchandise volumes and revenue fell 2.0%, with chemicals down 6.0% and forest products down 11.0%. Intermodal revenue increased 7.0% as volumes grew 5.0%. Coal volumes rose 1.0%, driven by a 6.0% gain in domestic shipments that offset a 3.0% drop in exports, while coal revenue declined about 5.0%. Intermodal growth stood out amid softness in other segments.

For full-year 2025, CSX reported revenue of $14.1 billion and GAAP operating income of $4.5 billion. Adjusted operating income was $4.7 billion after excluding a $164 million goodwill impairment recorded in the third quarter.

2026 Guidance and Cost Targets

Management set 2026 revenue growth at low single digits and targets operating margin expansion of 200 to 300 basis points over the adjusted 2025 base. This improvement is expected to come from workforce optimization, cuts to discretionary spending, and more than 100 productivity initiatives. Capital expenditures are forecast to remain below $2.4 billion. The company aims for at least 50.0% free cash flow growth in 2026 compared with 2025, driven by higher earnings, normalized cash taxes, and lower capital intensity.

Management noted inflation around 3.0% to 3.5%, with labor and union wage pressures near 3.8%. It withdrew the 2027 multi-year targets from its 2024 investor day. Mid-single-digit intermodal growth is expected to help offset continued weakness in other freight segments.

The quarter highlighted a contrast between softer revenue and profit and a materially stronger operating cash flow. CSX’s focus on productivity and cost discipline shifts near-term performance measures toward margin and cash generation.