News Releases
Norfolk Southern reports second-quarter 2017 results
Achieves record operating ratio of 66.3 percent and increases 2017 share repurchase guidance to $1 billion

NORFOLK, Va., July 26, 2017 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported second-quarter financial results.

Second-quarter net income was $497 million, up 23 percent year-over-year, driven by a 15 percent increase in income from railway operations, and a record operating ratio. Diluted earnings per share were $1.71, up 26 percent year-over-year.

"Norfolk Southern's strong financial results and all-time record operating ratio reflect the power of our team, successful execution of our dynamic plan, and focus on operating even more efficiently while providing high quality service to customers," said James A. Squires, Norfolk Southern chairman, president and CEO. "We remain committed to our core pillars of safety, service, stewardship and growth as we continue to enhance operations across the organization. We are confident in our ability to reach our goals and deliver sustainable shareholder value in the near and long terms. As a result of our achievements to date and the confidence we have in our outlook, we are increasing this year's share repurchase guidance by 25% to $1 billion."

Second-quarter summary

  • Railway operating revenues of $2.6 billion increased 7 percent compared with second-quarter 2016, as overall volumes were 6 percent higher, reflecting growth within our major commodity categories of coal and intermodal.
  • Railway operating expenses increased $65 million, or 4 percent, to $1.7 billion as targeted expense reductions helped offset volume and inflation-related expenses.
  • Income from railway operations was $888 million, up 15 percent year-over-year, and the operating ratio, or operating expenses as a percentage of revenues, was 66.3 percent, an all-time 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 operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products.

http://www.norfolksouthern.com

Norfolk Southern Corporation and Subsidiaries
 Consolidated Statements of Income
 (Unaudited)



Second Quarter


First Six Months


2017


2016


2017


2016


($ in millions, except per share amounts)













Railway operating revenues












Merchandise

$

1,597




$

1,577




$

3,181




$

3,126



Intermodal


593





538





1,164





1,060



Coal


447





339





867





688



Total railway operating revenues


2,637





2,454





5,212





4,874















Railway operating expenses












Compensation and benefits


703





667





1,446





1,390



Purchased services and rents


392





384





769





763



Fuel


190





174





403





323



Depreciation


264





257





523





509



Materials and other


200





202





410





396















Total railway operating expenses


1,749





1,684





3,551





3,381















Income from railway operations


888





770





1,661





1,493















Other income – net


32





4





56





20



Interest expense on debt


140





138





282





277















Income before income taxes


780





636





1,435





1,236















Provision for income taxes












Current


225





174





391





343



Deferred


58





57





114





101



Total income taxes


283





231





505





444















Net income

$

497




$

405




$

930




$

792















Earnings per share












Basic

$

1.72




$

1.37




$

3.20




$

2.67



Diluted


1.71





1.36





3.18





2.65















Weighted average shares outstanding












Basic


289.0




294.7




289.6




296.0


Diluted


291.2




296.6




292.0




297.7


































See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries
 Consolidated Statements of Comprehensive Income
 (Unaudited)



Second Quarter


First Six Months


2017


2016


2017


2016


($ in millions)













Net income

$

497




$

405




$

930




$

792



Other comprehensive income, before tax:












Reclassification adjustments for costs
















included in net income


7





6





14





13



Other comprehensive income (loss) of












equity investees


1





1





(1)





—



Other comprehensive income, before tax


8





7





13





13



















Income tax expense related to reclassification












adjustments for costs included in net income


(3)





(2)





(6)





(5)















Other comprehensive income, net of tax


5





5





7





8















Total comprehensive income

$

502




$

410




$

937




$

800





See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries
 Consolidated Balance Sheets
 (Unaudited)



June 30,


December 31,


2017


2016


($ in millions)

Assets








Current assets:








Cash and cash equivalents

$


642




$


956



Accounts receivable – net



926






945



Materials and supplies



289






257



Other current assets



79






133



Total current assets



1,936






2,291











Investments



2,848






2,777



Properties less accumulated depreciation of $11,984 and








$11,737, respectively



30,033






29,751



Other assets



105






73











Total assets

$


34,922




$


34,892











Liabilities and stockholders' equity








Current liabilities:








Accounts payable

$


1,223




$


1,215



Short-term debt



—






100



Income and other taxes



268






245



Other current liabilities



252






229



Current maturities of long-term debt



600






550



Total current liabilities



2,343






2,339











Long-term debt



9,273






9,562



Other liabilities



1,385






1,442



Deferred income taxes



9,259






9,140











Total liabilities



22,260






22,483











Stockholders' equity:








Common stock $1.00 per share par value, 1,350,000,000 shares








  authorized; outstanding 288,181,852 and 290,417,610 shares,








  respectively, net of treasury shares



290






292



Additional paid-in capital



2,228






2,179



Accumulated other comprehensive loss



(480)






(487)



Retained income



10,624






10,425











Total stockholders' equity



12,662






12,409











Total liabilities and stockholders' equity

$


34,922




$


34,892





See accompanying notes to consolidated financial statements.


 

 

Norfolk Southern Corporation and Subsidiaries
 Consolidated Statements of Cash Flows
 (Unaudited)



First Six Months


2017


2016


($ in millions)

Cash flows from operating activities






Net income

$

930




$

792



Reconciliation of net income to net cash provided by operating activities:






Depreciation


525





511



Deferred income taxes


114





101



Gains and losses on properties


(20)





(7)



Changes in assets and liabilities affecting operations:






Accounts receivable


(12)





(17)



Materials and supplies


(32)





(35)



Other current assets


48





103



Current liabilities other than debt


93





25



Other – net


(70)





(41)









Net cash provided by operating activities


1,576





1,432









Cash flows from investing activities






Property additions


(883)





(932)



Property sales and other transactions


60





40



Investment purchases


(4)





(23)



Investment sales and other transactions


3





3









Net cash used in investing activities


(824)





(912)









Cash flows from financing activities






Dividends


(354)





(350)



Common stock transactions


42





1



Purchase and retirement of common stock


(402)





(400)



Proceeds from borrowings – net


298





594



Debt repayments


(650)





(600)









Net cash used in financing activities


(1,066)





(755)









Net decrease in cash and cash equivalents


(314)





(235)









Cash and cash equivalents






At beginning of year


956





1,101









At end of period

$

642




$

866









Supplemental disclosures of cash flow information






Cash paid during the period for:






Interest (net of amounts capitalized)

$

270




$

260



Income taxes (net of refunds)


341





251





See accompanying notes to consolidated financial statements.

 

   

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. Stock Repurchase Program
    We repurchased and retired 3.4 million and 5.0 million shares of common stock under our stock repurchase program in the first six months of 2017 and 2016, respectively, at a cost of $402 million and $400 million, respectively.  Since the beginning of 2006, we have repurchased and retired 163.7 million shares at a total cost of $10.7 billion.

 

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SOURCE Norfolk Southern Corporation

For further information: Media Inquiries: Susan Terpay, 757-823-5204 (susan.terpay@nscorp.com); Investor Inquiries: Katie Cook, 757-629-2861 (katie.cook@nscorp.com),