CSX Q3 2025 Earnings: Goodwill Writedown and Costs Hit Profitability

In its latest quarterly report, railroad giant CSX Corp. provides a detailed look into its financial performance for the third quarter of 2025. While total revenue remained nearly flat, a significant one-time charge and rising operating costs led to a notable drop in profitability. Let's unpack the numbers from the company's 10-Q filing to understand the key drivers behind its results.

For the three months ending September 30, 2025, CSX reported revenue of $3.59 billion, a slight 1% decrease from the $3.62 billion in the same period last year. However, operating income fell a substantial 20% to $1.09 billion, and net earnings dropped to $694 million from $894 million a year ago.

Here is a visual breakdown of the company's income statement, illustrating how revenue from its various segments flows through expenses to generate profit.

The Goodwill Impairment

The most significant item impacting the quarter's results was a $164 million goodwill impairment charge. Goodwill is an accounting term for the premium a company pays when it acquires another business for more than the value of its physical assets. An impairment, or writedown, of this goodwill means the company no longer believes the acquired business will generate the financial returns it originally expected.

In this case, the charge was related to Quality Carriers, CSX's trucking business. This non-cash expense was a direct hit to operating income, single-handedly accounting for more than half of the year-over-year decline. Excluding this impairment, the company's operating margin would have been 34.9% instead of the reported 30.3%, though still below the prior year's 37.4%.

A Shifting Revenue Mix

Beneath the stable top-line revenue, there were notable shifts in demand across CSX's freight business:

• Merchandise Revenue: The largest segment, which includes chemicals, automotive, and agricultural products, saw revenue dip 1% to $2.21 billion. Declines in shipments of crude oil, plastics, and domestic grains were partially offset by growth in minerals and automotive freight.
• Coal Revenue: This segment saw a significant 11% decrease in revenue to $490 million, reflecting ongoing shifts in energy markets.
• Intermodal Revenue: A bright spot for the quarter, Intermodal revenue grew 4% to $527 million on the back of a 5% increase in volume. Intermodal transport involves moving goods in the same container using multiple modes of transportation, such as rail and truck.
• Other Revenue: This category jumped 38% to $155 million, driven by higher demurrage fees (charges for customers holding onto rail cars for too long) and payments from clients who did not meet their volume commitments.

Cost Pressures Mount

Beyond the impairment charge, CSX faced broad-based cost increases. Total expenses rose 10% to $2.5 billion. Key drivers included:

• Labor and Fringe: Increased by $9 million, driven by $22 million in severance costs and $15 million from inflation, which more than offset a decrease in incentive compensation.
• Purchased Services and Other: Jumped $54 million due to inflation, higher volume, technology contract restructuring, and costs related to network disruptions.

In conclusion, CSX's third-quarter results paint a picture of a company navigating a challenging landscape. While overall business volumes are steady, the significant goodwill writedown in its trucking segment and persistent inflationary pressures have squeezed profitability. The performance of its core rail segments, particularly the growth in Intermodal, will be critical for investors to watch as the company works to manage costs and adapt to a shifting market.