News Releases
Norfolk Southern reports second-quarter 2019 results
Achieves record second-quarter operating income, operating ratio, net income, and earnings per share

NORFOLK, Va., July 24, 2019 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported second-quarter financial results.

Second-quarter net income was $722 million, up 2 percent year-over-year, a result of a 4 percent increase in income from railway operations – yielding a record second-quarter operating ratio of 63.6 percent. Diluted earnings per share were $2.70, up 8 percent year-over-year and a second-quarter record.

"Norfolk Southern's record financial results underscore our unrelenting commitment to shareholder value as we advance along the path of our strategic transformation," said James A. Squires, Norfolk Southern chairman, president and CEO. "Our strong financial and operational performance in the second quarter was achieved while also finalizing preparations for the successful implementation of our new operating plan, TOP'21. This execution reflects the strength of our team, commitment to our customers, and power of our balanced strategic plan to deliver enhanced shareholder value."

Second-quarter summary

  • Railway operating revenues of $2.9 billion increased 1 percent compared with prior year, as a 5 percent increase in average revenue per unit was offset by a 4 percent decline in total volume.  
  • Railway operating expenses were $1.9 billion, a decrease of $12 million, compared with the same period last year as fuel price declines and lower purchased services and rents were offset by increased depreciation expense.    
  • Income from railway operations was $1.1 billion, an increase of 4 percent year-over-year, a second-quarter record. The railway operating ratio, or operating expenses as a percentage of revenues, was 63.6 percent, also a second-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

Consolidated Statements of Income

(Unaudited)



Second Quarter


First Six Months


2019


2018


2019


2018


($ in millions, except per share amounts)









Railway operating revenues








Merchandise

$

1,756



$

1,718



$

3,442



$

3,323


Intermodal

701



714



1,420



1,392


Coal

468



466



903



900


Total railway operating revenues

2,925



2,898



5,765



5,615










Railway operating expenses








Compensation and benefits

712



706



1,439



1,443


Purchased services and rents

418



430



842



831


Fuel

254



272



504



538


Depreciation

284



273



567



545


Materials and other

192



191



382



397


Total railway operating expenses

1,860



1,872



3,734



3,754










Income from railway operations

1,065



1,026



2,031



1,861










Other income – net

22



29



66



37


Interest expense on debt

153



131



302



267










Income before income taxes

934



924



1,795



1,631










Income taxes








Current

136



170



263



280


Deferred

76



44



133



89


Total income taxes

212



214



396



369










Net income

$

722



$

710



$

1,399



$

1,262










Earnings per share - diluted

$

2.70



$

2.50



$

5.21



$

4.43










Weighted average shares outstanding - diluted

267.1



283.7



268.3



284.8



See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



Second Quarter


First Six Months


2019


2018


2019


2018


($ in millions)









Net income

$

722



$

710



$

1,399



$

1,262


Other comprehensive income, before tax:








Pension and other postretirement benefits

5



8



10



1


Other comprehensive income (loss) of








equity investees

—



1



(1)



2


Other comprehensive income, before tax

5



9



9



3










Income tax expense related to items of








other comprehensive income

(2)



(2)



(3)



—










Other comprehensive income, net of tax

3



7



6



3










Total comprehensive income

$

725



$

717



$

1,405



$

1,265



See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



June 30,


December 31,


2019


2018


($ in millions)

Assets




Current assets:




Cash and cash equivalents

$

274



$

358


Accounts receivable – net

1,039



1,009


Materials and supplies

256



207


Other current assets

345



288


Total current assets

1,914



1,862






Investments

3,301



3,109


Properties less accumulated depreciation of $12,372




and $12,374, respectively

31,201



31,091


Other assets

756



177






Total assets

$

37,172



$

36,239






Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

1,407



$

1,505


Income and other taxes

270



255


Other current liabilities

373



246


Current maturities of long-term debt

401



585


Total current liabilities

2,451



2,591






Long-term debt

11,076



10,560


Other liabilities

1,738



1,266


Deferred income taxes

6,596



6,460






Total liabilities

21,861



20,877






Stockholders' equity:




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




  authorized; outstanding 263,406,773 and 268,098,472 shares,




  respectively, net of treasury shares

265



269


Additional paid-in capital

2,226



2,216


Accumulated other comprehensive loss

(557)



(563)


Retained income

13,377



13,440






Total stockholders' equity

15,311



15,362






Total liabilities and stockholders' equity

$

37,172



$

36,239



See accompanying notes to consolidated financial statements.


 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



First Six Months


2019


2018


($ in millions)

Cash flows from operating activities




Net income

$

1,399



$

1,262


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




Depreciation

567



546


Deferred income taxes

133



89


Gains and losses on properties

(7)



(14)


Changes in assets and liabilities affecting operations:




Accounts receivable

(30)



(92)


Materials and supplies

(49)



(38)


Other current assets

55



19


Current liabilities other than debt

(30)



134


Other – net

(86)



(80)






Net cash provided by operating activities

1,952



1,826






Cash flows from investing activities




Property additions

(979)



(836)


Property sales and other transactions

214



48


Investment purchases

(12)



(4)


Investment sales and other transactions

(75)



6






Net cash used in investing activities

(852)



(786)






Cash flows from financing activities




Dividends

(458)



(408)


Common stock transactions

18



15


Purchase and retirement of common stock

(1,050)



(700)


Proceeds from borrowings – net of issuance costs

1,054



543


Debt repayments

(750)



(750)






Net cash used in financing activities

(1,186)



(1,300)






Net decrease in cash, cash equivalents, and restricted cash

(86)



(260)






Cash, cash equivalents, and restricted cash




At beginning of year

446



690






At end of period

$

360



$

430






Supplemental disclosures of cash flow information




Cash paid during the period for:




Interest (net of amounts capitalized)

$

271



$

246


Income taxes (net of refunds)

215



126



See accompanying notes to consolidated financial statements.


 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)



Common

Stock


Additional

Paid-in

Capital


Accum. Other

Comprehensive

Loss


Retained

Income


Total


($ in millions, except per share amounts)











Balance at December 31, 2018

$

269



$

2,216



$

(563)



$

13,440



$

15,362












Comprehensive income:










Net income







677



677


Other comprehensive income





3





3


Total comprehensive income









680


Dividends on common stock,










$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












Comprehensive income:










Net income







722



722


Other comprehensive income





3





3


Total comprehensive income









725


Dividends on common stock,










$0.86 per share







(228)



(228)


Share repurchases

(2)



(22)





(526)



(550)


Stock-based compensation



35





(2)



33












Balance at June 30, 2019

$

265



$

2,226



$

(557)



$

13,377



$

15,311



See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)



Common
Stock


Additional
Paid-in
Capital


Accum. Other
Comprehensive
Loss


Retained
Income


Total


($ in millions, except per share amounts)











Balance at December 31, 2017

$

285



$

2,254



$

(356)



$

14,176



$

16,359












Comprehensive income:










Net income







552



552


Other comprehensive loss





(4)





(4)


Total comprehensive income









548


Dividends on common stock,










$0.72 per share







(205)



(205)


Share repurchases

(2)



(16)





(282)



(300)


Stock-based compensation

1



17





(2)



16


Reclassification of stranded










tax effects





(88)



88



—












Balance at March 31, 2018

284



2,255



(448)



14,327



16,418












Comprehensive income:










Net income







710



710


Other comprehensive income





7





7


Total comprehensive income









717


Dividends on common stock,










$0.72 per share







(203)



(203)


Share repurchases

(3)



(20)





(377)



(400)


Stock-based compensation



28





(1)



27












Balance at June 30, 2018

$

281



$

2,263



$

(441)



$

14,456



$

16,559



See accompanying notes to consolidated financial statements.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1.   Stock Repurchase Program
We repurchased and retired 5.7 million shares and 4.8 million shares of common stock under our stock repurchase program in the first six months of 2019 and 2018, respectively, at a cost of $1.1 billion and $700 million, respectively.  Since the beginning of 2006, we have repurchased and retired 191.3 million shares at a total cost of $15.2 billion.

2.   Leases
On January 1, 2019, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, "Leases (Topic 842)" which requires lessees to recognize right-of-use (ROU) assets and lease liabilities on the balance sheet for leases greater than twelve months.  As a result of the adoption, the Consolidated Balance Sheet at June 30, 2019 includes the recognition of ROU assets of $586 million included in "Other assets," current lease liabilities of $98 million included in "Other current liabilities," and non-current lease liabilities of $488 million included in "Other liabilities."

3.   Restricted Cash
The "Cash, cash equivalents, and restricted cash" line item in the Consolidated Statements of Cash Flows includes restricted cash of $86 million at June 30, 2019 and $88 million at December 31, 2018, reflecting deposits held by a third-party bond agent as collateral for certain debt obligations maturing in 2019.  The restricted cash balance is included as part of "Other current assets" on the Consolidated Balance Sheets in both periods.

4.   Reclassification of Stranded Tax Effects
In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income."  We adopted the provisions of ASU 2018-02 in the first quarter of 2018 resulting in an increase to "Accumulated other comprehensive loss" of $88 million and a corresponding increase to "Retained income," with no impact on "Total stockholders' equity."

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SOURCE Norfolk Southern Corporation

For further information: Media Inquiries: Media Relations, 404-420-4444 (media.relations@nscorp.com) or Investor Inquiries: Pete Sharbel, 757-629-2861 (peter.sharbel@nscorp.com), http://www.norfolksouthern.com