As you might expect, Jacksonville’s largest company is also one of the most well-prepared for hurricanes and other disasters.
In fact, CSX Corp. operates a 76,000-square-foot data and operations center at a secret location on the Southside that may be the safest place in town during a hurricane.
It was designed to withstand a Category 4 storm and make sure the Jacksonville-based railroad company can maintain its operations throughout the Eastern U.S.
“We basically locked about 30 people in during the hurricane,” CSX Chairman and CEO Michael Ward said Thursday in an interview following the company’s third-quarter earnings report.
He said everything went according to plan during Hurricane Matthew and the company was able to get its operations basically back to normal in Florida by Monday.
“I think we got somewhat lucky in Florida and in Jacksonville,” he said.
However, Ward said the storm impacted about 2,600 miles of CSX railroad tracks in Florida, Georgia and the Carolinas, and operations are still not back in parts of North Carolina.
“There’s so much power out, we can’t run full normal operations” in North Carolina, he said.
Besides CSX facilities, the company’s customers in North Carolina also are experiencing issues getting back into business.
“We’ll probably be ready to move before the customers are ready,” he said.
Ward said it’s too early to say what the financial impact will be from the storm, but he’s happy CSX did not experience any injuries or accidents related to the storm and the aftermath.
The company has had to remove about 5,000 downed trees from its tracks and deploy about 1,000 generators, many to make sure that crossing signals are operating properly.
While storm-related losses could impact fourth-quarter earnings, CSX late on Wednesday reported higher-than-expected third quarter results.
CSX had already projected that earnings would be below last year, because of lower volumes of freight shipped through its system. Its earnings per share of 48 cents were 4 cents lower than the third quarter of 2015, but that was 3 cents higher than the average forecast of analysts, according to Thomson Financial.
Ward said CSX’s ongoing efforts to cut costs offset the volume declines somewhat and the expense cuts were higher than analysts were expecting.
“That was the primary driver,” he said.
Revenue fell 8 percent in the quarter to $2.71 billion, with volume declines in almost every merchandise category. The exception was the automotive sector, where shipments rose by 6 percent.
“That is the one area of strength,” Ward said.
Economic conditions could get better in the coming months. After declining in the first three quarters this year, the Federal Reserve Board’s industrial production index is forecast to be flat in the fourth quarter, Ward said.
“At least they think it’s going to be somewhat better, which will help,” he said.
Declining coal shipments have been a big drain on CSX’s freight volume in recent years, but Ward said there are signals of a turnaround coming in the export coal market, which also will help.
Ward said CSX will continue to seek ways to control costs to offset continued challenges in freight volume, because the company can do something about its expenses.
“While we don’t like the volumes, we can’t control that,” he said.
In a research note Thursday, Stifel, Nicolaus analyst John Larkin said he is maintaining a “hold” rating on the company’s stock but CSX is doing what it can in the current business climate.
“We have consistently believed that CSX has been the most realistic of the major railroads when it comes to assessing the future, providing guidance to the Street, and taking concrete actions to offset the impact of the end of the bull commodities market,” Larkin said.