- CSX CEO James Foote noted that CSX has laid off more than 4,000 employees since Q4 2016 in a presentation illustrating Q4 2017 results. CFO Frank Lonegro said the plan is to cut approximately 2,000 more employees in 2018.
- Lonegro also said that CSX will reveal a more detailed plan regarding future layoffs at the company's 2018 Investor and Analyst Conference in New York on March 1. Foote's comments suggested that the company will not make any more major disruptive moves like the late E. Hunter Harrison's closing of eight hump yards last year.
- Besides beating market expectations, CSX's adjusted EPS grew 31% YoY, while adjusted revenue dropped 2% YoY and the adjusted operating ratio landed at 64%.
2017 was a rollercoaster for CSX, and in more ways than one: E. Hunter Harrison became CEO, then began implementing his precision scheduled railroad program by closing eight hump yards. Worker strikes and massive delays ensued, resulting in a barrage of customer complaints.
Not only that, but CSX continued to lay off thousands of employees. The Surface Transportation Board called the company in for a hearing in October on account of the customer complaints, and just two months later, Harrison died suddenly.
But CSX leadership seems confident 2018 will be less bumpy and more efficient — and that means more layoffs as the company streamlines operations.
"We now have more accountability within the operating department to ensure the hard work to implement the schedule railroading gift to the bottom line," Foote said in the earnings call, referring to new VP of Operations Ed Harris, who worked with Harrison at Illinois Central and Canadian National.
Harris soothed investors concerned about whether CSX will continue to make big changes to its operations by stating that Harrison had already done most of the "heavy lifting."
"We are going to continue to follow Hunter’s plan of pursuing a scheduled railroad environment that in turn will lead to less train starts, more engines and storage, less equipment and a more fluid network and the table has been set," Harris said. "I read in one of Jim’s earlier reports that the heavy lifting has been done, and I really agree that it has been done."
Foote recognized that shutting down eight hump yards last year was "very disruptive and dramatic," and assured investors that they shouldn't expect anything like that this year.
But he also said CSX is still in the middle of big changes, so there will likely be more minor disruptions this year as the company ramps up its efficiency plan to move shipments faster through the supply chain.
"We are the beneficiaries of that very, very difficult work that was done by him (Harrison) and the team here," Foote said. "That is not to say that what we have here is a walk in the park. We are going to continue to grind. Now comes the difficult part of getting this trains to continually to run at – I mean, we’re already hitting both velocities now that are ever near record speeds in the history of CSX."