CSX Corp. (NASDAQ:CSX)

Current Income Tax Expense

The current income tax expense demonstrated a fluctuating but overall increasing trend during the five-year period. Starting at $716 million in 2018, it slightly decreased to $712 million in 2019 and further declined to $682 million in 2020. However, there was a significant increase in 2021 to $1,003 million, followed by a further rise to $1,131 million in 2022. This indicates a marked growth in current tax obligations in the last two years of the period analyzed.

Deferred Income Tax Expense

Deferred income tax expense showed a consistent downward trend throughout the period. It began at $279 million in 2018 and showed a slight decrease to $273 million in 2019. This decline became more pronounced in subsequent years, dropping to $180 million in 2020, $167 million in 2021, and finally $117 million in 2022. This pattern suggests a continual reduction in deferred tax liabilities or expenses over the years.

Total Income Tax Expense

The overall income tax expense reflected the combined effects of the current and deferred tax expenses. There was a minor decrease from $995 million in 2018 to $985 million in 2019, followed by a more noticeable drop to $862 million in 2020. Subsequently, the total income tax expense increased significantly to $1,170 million in 2021 and continued to rise to $1,248 million in 2022. This indicates that despite the falling deferred tax expense, the substantial rise in current tax payments drove the total tax expense upward in the later years.

Summary Insights

The data reveals a clear shift in the composition of income tax expenses. While deferred tax expenses steadily decreased, current income tax expenses increased sharply from 2020 onwards. The overall income tax expense follows a similar trajectory, decreasing modestly in earlier years but increasing substantially in the last two years. This could reflect changes in taxable income, tax regulations, or the company's tax planning strategies. The trends underscore the growing importance of managing current tax liabilities in the company’s financial planning.

The data reflects the trends in various tax-related rates over a five-year period ending December 31, 2022.

Federal Income Tax Rate

The federal income tax rate remained constant at 21% throughout the entire period from 2018 to 2022, indicating no changes in federal tax policy impacting the company during these years.

State Income Taxes

The state income tax rate experienced fluctuations, starting at 2.6% in 2018 and slightly decreasing to 2.5% in 2019. It then increased to 3.2% in 2020, followed by a gradual decline to 2.8% in 2021 and further down to 2.2% in 2022. This pattern suggests variability in state tax obligations, with a notable peak in 2020 and a trend toward lower state taxes in the subsequent years.

Other

The "Other" tax component remained negative throughout the period, starting at -0.5% in 2018. It further decreased to -0.7% in 2019, recovered slightly to -0.4% in 2020, then improved to -0.2% in 2021 and -0.1% in 2022. This indicates a diminishing negative impact from other tax elements over the years.

Effective Income Tax Rate

The effective income tax rate showed a relatively stable pattern with minor variability. It was 23.1% in 2018, dipped slightly to 22.8% in 2019, rose to 23.8% in 2020, decreased marginally to 23.6% in 2021, and returned to 23.1% in 2022. This consistency suggests that despite fluctuations in state taxes and other components, the overall tax burden on earnings remained relatively steady.

Other employee benefit plans

There is a notable decline from 2018 to 2020, where values decreased from 146 million to 96 million. Subsequently, a modest recovery is observed in 2021 and 2022, with values stabilizing around 105-106 million. This suggests an initial reduction in obligations or costs related to benefit plans followed by slight increases or stabilization.

Other (first occurrence)

A downward trend is identified between 2018 and 2020, with values falling from 608 million to 382 million. Following that period, there is a considerable rebound in 2021, reaching 499 million, and further growth in 2022 to 553 million. This pattern indicates a recovery phase after a period of decline.

Deferred income tax assets

The deferred income tax assets show a consistent decreasing pattern through 2018 to 2020, dropping from 754 million to 478 million. A partial recovery takes place in 2021 and 2022, with values rising back to 605 and 658 million respectively. This suggests fluctuations possibly linked to changes in tax positions or adjustments in deferred tax calculations.

Accelerated depreciation

This item exhibits a continuous negative trend, with increasing absolute negative values each year, starting from -6799 million in 2018 and reaching -7600 million in 2022. The steadily deepening negative amount implies a growing cumulative accelerated depreciation expense, which could impact reported earnings materially.

Other (second occurrence)

Values remain negative but fluctuate moderately within a range between -645 million and -451 million from 2018 to 2020, followed by a drop in 2021 to -622 million, and slight increase to -627 million in 2022. This indicates some volatility, but overall consistent negative balances in this category.

Deferred income tax liabilities

The deferred income tax liabilities show a steady increase in the negative balance over the years, moving from -7444 million in 2018 to -8227 million in 2022. This growing liability suggests increasing deferred tax obligations, which may relate to timing differences in income recognition or tax regulations.

Net deferred income tax assets (liabilities)

This net figure remains negative throughout the period and follows an increasing negative trend from -6690 million in 2018 to -7569 million in 2022. The worsening net deferred income tax liabilities underscore a deteriorating position when balancing deferred tax assets against liabilities and could indicate increasing future tax burdens.

The financial data reveals a steady increase in deferred income tax liabilities from the end of 2018 through 2022. Over this five-year period, the liabilities rose from US$6,690 million to US$7,569 million. This represents an overall growth of approximately 13.1%.

The annual increments demonstrate a consistent upward trend, with increases observed each year. The smallest increase occurred between 2021 and 2022 when the liabilities rose by US$186 million, whereas prior years experienced slightly larger increments ranging between US$170 million and US$193 million.

This gradual increase in deferred income tax liabilities may suggest ongoing recognition of future tax obligations, potentially arising from timing differences in income and expense recognition or other temporary differences.

Trend Summary

Consistent year-over-year growth in deferred income tax liabilities over the five-year span.

Magnitude of Change

An increase of approximately US$879 million, reflecting a 13.1% rise from 2018 to 2022.

Yearly Growth

Relatively stable increments, each in the range of US$170 to US$200 million annually.

Potential Implications

The continuous increase may point to expanding temporary differences or shifting tax positions that will result in future tax payments.

The financial data reveals several noteworthy trends in liabilities, shareholders’ equity, and net earnings over the five-year period from 2018 to 2022. Both reported and adjusted figures show varying dynamics, indicating that adjustments have a significant effect on the interpretation of the company’s financial position.

Total Liabilities

Reported total liabilities increased steadily from US$24.1 billion in 2018 to US$29.3 billion in 2022. This represents a cumulative growth of approximately 21.4% over the period. Adjusted liabilities also followed an upward trajectory but at lower absolute values, rising from US$17.5 billion to US$21.7 billion. The growth in adjusted liabilities of about 24.3% slightly exceeds that of reported liabilities, suggesting that adjustments reflect a proportional escalation in obligation recognition.

Shareholders’ Equity

Reported shareholders’ equity showed instability, decreasing from US$12.6 billion in 2018 to US$11.8 billion in 2019, then recovering to US$13.1 billion in 2020 and peaking at US$13.5 billion in 2021 before declining again to US$12.6 billion in 2022. In contrast, adjusted shareholders’ equity consistently increased from US$19.3 billion in 2018 to a peak of US$20.9 billion in 2021, with a minor reduction to US$20.2 billion in 2022. The adjusted equity figures are significantly higher than reported ones, implying that the adjustments may include revaluation of assets or recognition of other comprehensive income elements that enhance equity infrequently captured in reported figures.

Net Earnings

Reported net earnings fluctuated, starting at US$3.3 billion in 2018, remaining relatively stable through 2019, but declining by 16.9% to US$2.8 billion in 2020, potentially reflecting adverse business conditions. Subsequently, earnings rebounded substantially to US$3.8 billion in 2021 and further increased to US$4.2 billion in 2022. Adjusted net earnings exhibit a similar pattern but with consistently higher values, indicating positive effects from adjustments such as deferred tax impacts or non-recurring items. Adjusted earnings grow from US$3.6 billion in 2018 to US$4.3 billion in 2022, underscoring an overall improvement in operating profitability after considering tax and other adjustments.

Overall, the data suggests an improving financial performance when considering adjusted figures, with equity and net earnings showing resilience and growth despite fluctuations in reported numbers. The growing adjusted liabilities and equity demonstrate a controlled increase in obligations alongside stronger capital buffers. Adjusted net earnings provide a clearer view of sustainable profitability, which has generally increased over the analyzed period.

Net Profit Margin

The reported net profit margin showed a generally positive trend from 27.01% in 2018, peaking at 30.19% in 2021 before slightly declining to 28.05% in 2022. The adjusted net profit margin followed a similar pattern but consistently remained higher than the reported values, reaching its highest level of 31.53% in 2021 and then decreasing to 28.84% in 2022. This indicates that adjustments for deferred taxes and other factors contribute to a more favorable profitability margin measurement.

Financial Leverage

Reported financial leverage increased from 2.92 in 2018 to 3.32 in 2022, with a slight dip in the intermediate years. Adjusted financial leverage, however, remained consistently lower than the reported figures, ranging from 1.91 in 2018 to 2.08 in 2022. Both measures suggest a moderate rise in leverage over the period, but the adjusted measure indicates a more conservative use of debt or financing structures when tax adjustments are accounted for.

Return on Equity (ROE)

Reported ROE experienced fluctuations, decreasing significantly in 2020 to 21.11% from 28.11% in 2019, then recovering to a high of 33.02% in 2022. Adjusted ROE also declined in 2020 to 14.53%, then steadily improved to 21.22% by 2022. The adjusted ROE consistently understates the reported ROE, likely reflecting the impact of deferred tax adjustments which moderate the return metric.

Return on Assets (ROA)

The reported ROA decreased from 9.01% in 2018 to 6.95% in 2020, then rebounded to 9.94% in 2022. The adjusted ROA showed similar behavior but remained slightly higher than the reported ROA over all periods, increasing from 9.77% in 2018 to 10.22% in 2022. The adjusted figures likely incorporate tax effects that improve asset efficiency measures relative to reported data.

Net Earnings Trends

Reported net earnings showed a generally positive trend over the five-year period, increasing from 3,309 million US dollars in 2018 to 4,166 million US dollars in 2022. There was a noticeable dip in 2020, when earnings decreased to 2,765 million US dollars, followed by a recovery and growth in subsequent years. Adjusted net earnings followed a similar pattern, starting at 3,588 million US dollars in 2018, dropping to 2,945 million US dollars in 2020, and then rising to 4,283 million US dollars in 2022, reflecting an overall upward trajectory despite the mid-period downturn.

Profit Margin Developments

Reported net profit margins exhibited fluctuations but remained relatively stable, starting at 27.01% in 2018 and ending at 28.05% in 2022. The margin peaked in 2021 at 30.19%, which aligns with the higher reported net earnings seen that year. Adjusted net profit margins mirrored this behavior with a high of 31.53% in 2021, indicating that the adjustment for deferred taxes resulted in slightly higher profitability ratios. However, by 2022, the adjusted margin decreased noticeably to 28.84%, narrowing the gap with the reported margin.

Comparative Insights

In all periods, adjusted net earnings and profit margins were higher than their reported counterparts, suggesting that adjustments for deferred income taxes positively impacted the profitability metrics. The variability in 2020, which saw declines in both reported and adjusted figures, could reflect external economic challenges during that year. The recovery and subsequent increase in earnings and margins from 2021 onward indicate a strong rebound and improved financial performance.

The financial data reveals several notable trends regarding shareholders' equity and financial leverage over the five-year period examined.

Shareholders’ Equity

Reported shareholders’ equity exhibited a fluctuating pattern, starting at US$12,563 million in 2018, dipping to US$11,848 million in 2019, rebounding to US$13,101 million in 2020, increasing slightly to US$13,490 million in 2021, and then decreasing again to US$12,615 million in 2022. This indicates some volatility over the years with an overall negative trend when comparing the end points of 2018 and 2022.

Adjusted shareholders’ equity, which accounts for deferred income tax adjustments, consistently maintained higher values than the reported equity across all periods. It showed a more stable upward trend, rising steadily from US$19,253 million in 2018 to US$20,184 million in 2022. This suggests that when accounting adjustments are considered, the equity base demonstrates growth and relative stability.

Financial Leverage

The reported financial leverage ratio experienced variability but with an overall increasing tendency. It started at 2.92 in 2018, increased to a peak of 3.23 in 2019, then declined somewhat to 3.04 in 2020 and 3.00 in 2021, before rising again to 3.32 in 2022. This indicates that the company’s use of debt relative to equity, based on reported figures, has generally intensified, particularly by 2022 surpassing all prior years.

The adjusted financial leverage ratio, meanwhile, remained consistently lower than its reported counterpart in every year, reflecting the larger adjusted equity base. It displayed a slight upward trend from 1.91 in 2018 to 2.08 in 2022, with minor fluctuations in the intervening years. This indicates a moderate increase in leverage when adjusting for deferred tax effects, but overall leverage remained less aggressive compared to reported figures.

In summary, the adjustments applied to shareholders’ equity and financial leverage provide a more conservative and stable view of the company’s capitalization and leverage structure. While the reported figures suggest more volatility and higher leverage, the adjusted metrics imply a stronger equity position and lower relative debt burden over the observed period.

The analysis of the annual reported and deferred income tax adjusted financial data reveals several notable trends in the company's earnings, equity, and return on equity (ROE) over the five-year period from 2018 to 2022.

Net Earnings

Reported net earnings display a generally positive trend, with an initial increase from 3,309 million US dollars in 2018 to 3,331 million US dollars in 2019, followed by a decline to 2,765 million US dollars in 2020. Subsequently, earnings recover strongly, reaching 3,781 million US dollars in 2021 and further increasing to 4,166 million US dollars in 2022.

Adjusted net earnings follow a similar trajectory, starting higher than reported earnings in 2018 at 3,588 million US dollars and peaking in 2022 at 4,283 million US dollars. This adjusted measure likewise dips in 2020 but recovers subsequently, suggesting the influence of deferred income tax adjustments on smoothing earnings over time.

Shareholders’ Equity

Reported shareholders’ equity attributable to CSX exhibits fluctuations throughout the period. It starts at 12,563 million US dollars in 2018, decreases to 11,848 million US dollars in 2019, then increases to 13,101 million US dollars in 2020 and 13,490 million US dollars in 2021 before declining again to 12,615 million US dollars in 2022.

In contrast, adjusted shareholders’ equity consistently remains significantly higher than reported equity, with values ranging from 19,253 million US dollars in 2018 to a peak of 20,873 million US dollars in 2021 before a slight decrease to 20,184 million US dollars in 2022. The adjusted equity shows a steadier upward trend compared to the reported figures, reflecting the impact of deferred tax adjustments on equity valuation.

Return on Equity (ROE)

Reported ROE displays a pattern consistent with the fluctuations in net earnings and reported equity. Starting at 26.34% in 2018, it rises to 28.11% in 2019, drops sharply to 21.11% in 2020, then rebounds to 28.03% in 2021 and peaks at 33.02% in 2022, indicating improved profitability relative to reported equity over time.

Adjusted ROE is markedly lower than reported ROE across all years, reflecting the higher adjusted equity base. It decreases from 18.64% in 2018 to 14.53% in 2020, followed by an increase to 18.91% in 2021 and reaching 21.22% in 2022. This trend shows a recovery in profitability on an adjusted basis, though the return remains more conservative compared to the reported measure.

Overall, the data suggest the company experienced a dip in earnings and profitability in 2020, likely influenced by external factors affecting that fiscal year. Both reported and adjusted earnings and ROE recovered significantly by 2022. The adjusted figures provide a more stable and higher equity base, which results in lower but possibly more reflective returns on equity. This indicates that deferred income tax adjustments materially impact the presentation of financial performance and position, smoothing volatility and presenting a more consistent equity valuation.

The analysis of the annual reported and deferred income tax adjusted financial data reveals several important trends over the five-year period from 2018 to 2022.

Reported Net Earnings

Reported net earnings show an overall upward trajectory, increasing from US$3,309 million in 2018 to US$4,166 million in 2022. A dip is noted in 2020 when earnings decreased to US$2,765 million, representing the lowest point in the period analyzed, followed by a recovery and steady growth in subsequent years.

Adjusted Net Earnings

Adjusted net earnings, which account for deferred income tax effects, similarly follow an increasing trend over the period. The values increased from US$3,588 million in 2018 to US$4,283 million in 2022. Like reported earnings, the adjusted earnings declined markedly in 2020 to US$2,945 million before rising strongly in 2021 and 2022.

Reported Return on Assets (ROA)

Reported ROA fluctuates over the examined years but generally exhibits an improving trend. Beginning at 9.01% in 2018, ROA slightly declined to 8.71% in 2019 and then decreased more substantially to 6.95% in 2020. Subsequently, it recovered to 9.33% in 2021 and further increased to 9.94% in 2022, reaching the highest level in the given timeframe.

Adjusted Return on Assets (ROA)

Adjusted ROA, which incorporates deferred tax effects, maintains a similar pattern with reported ROA albeit at higher levels throughout. Starting at 9.77% in 2018, the adjusted ROA declines to 7.4% in 2020—the lowest point—before climbing back to 10.22% in 2022, the peak of the period. This suggests tax adjustments contribute to an enhanced perception of asset efficiency.

Overall, the data indicates a negative impact in 2020 across all metrics, likely reflecting external adverse conditions or operational challenges. However, the recovery from 2021 onwards is notable, delivering improved profitability and asset utilization as indicated by both net earnings and ROA measures. The adjusted figures consistently exceed reported values, emphasizing the relevance of deferred tax considerations in evaluating the company’s financial performance.