Norfolk Southern reports first-quarter 2019 results
Achieves record first-quarter railway operating revenues, operating income, operating ratio, net income and earnings per share
NORFOLK, Va., April 24, 2019 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported first-quarter financial results.
First-quarter net income was $677 million, up 23 percent year-over-year, a result of a 16 percent increase in income from railway operations and an increase in other income. Diluted earnings per share were $2.51, up 30 percent year-over-year and a first-quarter record.
"Our first-quarter results reflect the initial steps in the implementation of our new strategic plan that are transforming our company," said James A. Squires, Norfolk Southern chairman, president and CEO. "We set company records for many financial measures in the first quarter, while improving our service product for our customers. We are intensely focused on the execution of the initiatives in our strategic plan that will drive shareholder value."
First-quarter summary
- Railway operating revenues of $2.8 billion, a first-quarter record, increased 5 percent compared with prior year, due to an increase in revenue per unit, resulting from increased rates as well as higher fuel surcharge revenue.
- Railway operating expenses were $1.9 billion, a decrease of $8 million, compared with the same period last year as fuel price declines and lower compensation and benefits expenses were offset by increased purchased services and rents.
- Income from railway operations was $966 million, an increase of 16 percent year-over-year, and a first-quarter record. The railway operating ratio, or operating expenses as a percentage of revenues, was 66.0 percent, also a first-quarter record.
About Norfolk Southern
Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 19,500 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts.
Forward-looking statements
This news release contains forward-looking statements that may be identified by the use of words like "believe," "expect," "anticipate," "estimate," "plan," "consider," "project," and similar references to the future. Forward-looking statements reflect our good-faith evaluation of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements.
Norfolk Southern Corporation and Subsidiaries |
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Consolidated Statements of Income |
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(Unaudited) |
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First Quarter |
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2019 |
2018 |
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($ in millions, except per share amounts) |
|||||||||
Railway operating revenues |
|||||||||
Merchandise |
$ |
1,686 |
$ |
1,605 |
|||||
Intermodal |
719 |
678 |
|||||||
Coal |
435 |
434 |
|||||||
Total railway operating revenues |
2,840 |
2,717 |
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Railway operating expenses |
|||||||||
Compensation and benefits |
727 |
737 |
|||||||
Purchased services and rents |
424 |
401 |
|||||||
Fuel |
250 |
266 |
|||||||
Depreciation |
283 |
272 |
|||||||
Materials and other |
190 |
206 |
|||||||
Total railway operating expenses |
1,874 |
1,882 |
|||||||
Income from railway operations |
966 |
835 |
|||||||
Other income – net |
44 |
8 |
|||||||
Interest expense on debt |
149 |
136 |
|||||||
Income before income taxes |
861 |
707 |
|||||||
Income taxes |
|||||||||
Current |
127 |
110 |
|||||||
Deferred |
57 |
45 |
|||||||
Total income taxes |
184 |
155 |
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Net income |
$ |
677 |
$ |
552 |
|||||
Earnings per share – diluted |
$ |
2.51 |
$ |
1.93 |
|||||
Weighted average shares outstanding – diluted |
269.4 |
285.9 |
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See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
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Consolidated Statements of Comprehensive Income |
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(Unaudited) |
|||||||||
First Quarter |
|||||||||
2019 |
2018 |
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($ in millions) |
|||||||||
Net income |
$ |
677 |
$ |
552 |
|||||
Other comprehensive income (loss), before tax: |
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Pension and other postretirement benefits (expense) |
5 |
(7) |
|||||||
Other comprehensive income (loss) of |
|||||||||
equity investees |
(1) |
1 |
|||||||
Other comprehensive income (loss), before tax |
4 |
(6) |
|||||||
Income tax benefit (expense) related to items of |
|||||||||
other comprehensive income (loss) |
(1) |
2 |
|||||||
Other comprehensive income (loss), net of tax |
3 |
(4) |
|||||||
Total comprehensive income |
$ |
680 |
$ |
548 |
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See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
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Consolidated Balance Sheets |
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(Unaudited) |
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March 31, |
December 31, |
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2019 |
2018 |
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($ in millions) |
|||||||||||
Assets |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ |
411 |
$ |
358 |
|||||||
Accounts receivable – net |
1,048 |
1,009 |
|||||||||
Materials and supplies |
228 |
207 |
|||||||||
Other current assets |
235 |
288 |
|||||||||
Total current assets |
1,922 |
1,862 |
|||||||||
Investments |
3,198 |
3,109 |
|||||||||
Properties less accumulated depreciation of $12,374 at |
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both periods |
31,158 |
31,091 |
|||||||||
Other assets |
784 |
177 |
|||||||||
Total assets |
$ |
37,062 |
$ |
36,239 |
|||||||
Liabilities and stockholders' equity |
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Current liabilities: |
|||||||||||
Accounts payable |
$ |
1,334 |
$ |
1,505 |
|||||||
Short-term debt |
250 |
— |
|||||||||
Income and other taxes |
338 |
255 |
|||||||||
Other current liabilities |
378 |
246 |
|||||||||
Current maturities of long-term debt |
585 |
585 |
|||||||||
Total current liabilities |
2,885 |
2,591 |
|||||||||
Long-term debt |
10,569 |
10,560 |
|||||||||
Other liabilities |
1,759 |
1,266 |
|||||||||
Deferred income taxes |
6,518 |
6,460 |
|||||||||
Total liabilities |
21,731 |
20,877 |
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Stockholders' equity: |
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Common stock $1.00 per share par value, 1,350,000,000 shares |
|||||||||||
authorized; outstanding 265,967,039 and 268,098,472 shares, |
|||||||||||
respectively, net of treasury shares |
267 |
269 |
|||||||||
Additional paid-in capital |
2,213 |
2,216 |
|||||||||
Accumulated other comprehensive loss |
(560) |
(563) |
|||||||||
Retained income |
13,411 |
13,440 |
|||||||||
Total stockholders' equity |
15,331 |
15,362 |
|||||||||
Total liabilities and stockholders' equity |
$ |
37,062 |
$ |
36,239 |
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See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
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Consolidated Statements of Cash Flows |
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(Unaudited) |
|||||||||
First Three Months |
|||||||||
2019 |
2018 |
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($ in millions) |
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Cash flows from operating activities |
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Net income |
$ |
677 |
$ |
552 |
|||||
Reconciliation of net income to net cash provided by operating activities: |
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Depreciation |
283 |
272 |
|||||||
Deferred income taxes |
57 |
45 |
|||||||
Gains and losses on properties |
(18) |
(8) |
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Changes in assets and liabilities affecting operations: |
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Accounts receivable |
(39) |
(26) |
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Materials and supplies |
(21) |
(23) |
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Other current assets |
12 |
13 |
|||||||
Current liabilities other than debt |
(27) |
12 |
|||||||
Other – net |
(43) |
(21) |
|||||||
Net cash provided by operating activities |
881 |
816 |
|||||||
Cash flows from investing activities |
|||||||||
Property additions |
(467) |
(383) |
|||||||
Property sales and other transactions |
152 |
13 |
|||||||
Investment purchases |
(2) |
(2) |
|||||||
Investment sales and other transactions |
(33) |
1 |
|||||||
Net cash used in investing activities |
(350) |
(371) |
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Cash flows from financing activities |
|||||||||
Dividends |
(230) |
(205) |
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Common stock transactions |
2 |
(1) |
|||||||
Purchase and retirement of common stock |
(500) |
(300) |
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Proceeds from borrowings – net of issuance costs |
250 |
543 |
|||||||
Debt repayments |
— |
(100) |
|||||||
Net cash used in financing activities |
(478) |
(63) |
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Net increase in cash, cash equivalents, and restricted cash |
53 |
382 |
|||||||
Cash, cash equivalents, and restricted cash |
|||||||||
At beginning of year |
446 |
690 |
|||||||
At end of period |
$ |
499 |
$ |
1,072 |
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Supplemental disclosures of cash flow information |
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Cash paid during the period for: |
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Interest (net of amounts capitalized) |
$ |
112 |
$ |
69 |
|||||
Income taxes (net of refunds) |
9 |
7 |
|||||||
See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
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Consolidated Statements of Changes in Stockholders' Equity |
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(Unaudited) |
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Common Stock |
Additional Paid-in Capital |
Accum. Other Comprehensive Loss |
Retained Income |
Total |
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($ in millions, except per share amounts) |
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Balance at December 31, 2018 |
$ |
269 |
$ |
2,216 |
$ |
(563) |
$ |
13,440 |
$ |
15,362 |
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Comprehensive income: |
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Net income |
677 |
677 |
|||||||||||||||||
Other comprehensive income |
3 |
3 |
|||||||||||||||||
Total comprehensive income |
680 |
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Dividends on common stock, |
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$0.86 per share |
(230) |
(230) |
|||||||||||||||||
Share repurchases |
(3) |
(22) |
(475) |
(500) |
|||||||||||||||
Stock-based compensation |
1 |
19 |
(1) |
19 |
|||||||||||||||
Balance at March 31, 2019 |
$ |
267 |
$ |
2,213 |
$ |
(560) |
$ |
13,411 |
$ |
15,331 |
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Common |
Additional |
Accum. Other |
Retained |
Total |
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($ in millions, except per share amounts) |
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Balance at December 31, 2017 |
$ |
285 |
$ |
2,254 |
$ |
(356) |
$ |
14,176 |
$ |
16,359 |
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Comprehensive income: |
|||||||||||||||||||
Net income |
552 |
552 |
|||||||||||||||||
Other comprehensive loss |
(4) |
(4) |
|||||||||||||||||
Total comprehensive income |
548 |
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Dividends on common stock, |
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$0.72 per share |
(205) |
(205) |
|||||||||||||||||
Share repurchases |
(2) |
(16) |
(282) |
(300) |
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Stock-based compensation |
1 |
17 |
(2) |
16 |
|||||||||||||||
Reclassification of stranded |
|||||||||||||||||||
tax effects |
(88) |
88 |
— |
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Balance at March 31, 2018 |
$ |
284 |
$ |
2,255 |
$ |
(448) |
$ |
14,327 |
$ |
16,418 |
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See accompanying notes to consolidated financial statements. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS: |
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1. |
Stock Repurchase Program |
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We repurchased and retired 2.9 million shares and 2.1 million shares of common stock under our stock |
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2. |
Leases |
|
On January 1, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards |
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3. |
Restricted Cash |
|
The "Cash, cash equivalents, and restricted cash" line item in the Consolidated Statements of Cash Flows |
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4. |
Reclassification of Stranded Tax Effects |
|
In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated |
SOURCE Norfolk Southern Corporation
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