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Norfolk Southern reports first-quarter 2014 results

NORFOLK, Va., April 23, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC) reported first-quarter net income of $368 million, or $1.17 per diluted share, compared with $450 million, or $1.41 per diluted share, earned in the same period of 2013. First-quarter 2013 net income included a $60 million, or $0.19 per diluted share, gain from a land sale.

First-Quarter 2014 Results

  • Railway operating revenues totaled $2.7 billion.
  • Income from railway operations was $667 million.
  • Net income totaled $368 million.
  • Diluted earnings per share of $1.17.
  • The railway operating ratio was 75.2 percent.

"Following the extreme winter weather across the U.S. rail network which impacted first-quarter results, we are seeing a rebound in shipments across all of our business," said Norfolk Southern CEO Wick Moorman. "Our people responded admirably to meet the challenges of the harsh conditions, and we remain focused on delivering superior service to our customers."

Railway operating revenues were $2.7 billion, 2 percent lower compared with first-quarter 2013, and shipment volumes decreased 1 percent.

First-Quarter Revenue by Commodity

  • Chemicals, up 12 percent.
  • Intermodal, up 4 percent.
  • Agriculture, even.
  • Metals/Construction, down 1 percent.
  • Paper/Forest, down 3 percent.
  • Automotive, down 7 percent
  • Coal, down 15 percent.

For the first quarter, general merchandise revenues were $1.6 billion, 1 percent higher than the same period last year, despite overall volume declining 1 percent. Increased crude and liquefied petroleum gas shipments were offset by declines in automotive, metals/construction, and paper/forest shipments.

Intermodal revenues improved 4 percent, to $596 million, compared with first-quarter 2013. Growth primarily in domestic business pushed traffic volume up 3 percent in the quarter compared with the same period of 2013.

First-quarter coal revenues were $541 million, 15 percent lower compared with the same quarter of 2013, the result of a 13 percent volume decrease due primarily to lower utility and export shipments. 

Railway operating expenses for the first quarter were $2 billion, 1 percent lower than in the same period of 2013.

Income from railway operations was $667 million, 3 percent lower compared with first-quarter 2013.

The quarterly railway operating ratio, or operating expenses as a percentage of revenue, was 75.2 percent versus 74.8 percent in the same period of 2013.

Norfolk Southern Corporation (NYSE: NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 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.

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Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 
 

First Quarter

 

2014

 

2013

 

($ in millions, except per share
amounts)
           

Railway operating revenues

         

   Coal

$

541

  

$

635

   General merchandise

  

1,552

    

1,530

   Intermodal

  

596

    

573

   Total railway operating revenues

  

2,689

    

2,738
           

Railway operating expenses

         

   Compensation and benefits

  

740

    

780

   Purchased services and rents

  

392

    

393

   Fuel

  

432

    

429

   Depreciation

  

237

    

227

   Materials and other

  

221

    

218

      Total railway operating expenses

  

2,022

    

2,047
           

      Income from railway operations

 

667

    

691
           

Other income – net (note 1)

  

26

    

135

Interest expense on debt

  

139

    

129
           

   Income before income taxes

  

554

    

697
           

Provision for income taxes

          

   Current

  

194

    

173

   Deferred

  

(8)

    

74

       Total income taxes

  

186

    

247
           

     Net income

$

368

  

$

450
           

Earnings per share (note 1)

          

   Basic

$

1.18

  

$

1.43

   Diluted

  

1.17

    

1.41
           

Weighted average shares outstanding (note 2)

          

   Basic

  

309.5

    

314.5

   Diluted

  

312.6

    

318.1

See accompanying notes to consolidated financial statements.

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 
 

First Quarter

 

2014

 

2013

 

($ in millions)
           

Net income

$

368

  

$

450

Other comprehensive income, before tax:

          

     Pension and other postretirement benefits

  

299

    

36

     Other comprehensive income of equity investees

  

3

    

1

Other comprehensive income, before tax

  

302

    

37

Income tax expense related to items of other   

         

     comprehensive income

  

(114)

    

(14)

     Other comprehensive income, net of tax

  

188

    

23
           

           Total comprehensive income

$

556

  

$

473

See accompanying notes to consolidated financial statements.

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 
 

March 31,

 

December 31,

 

2014

 

2013

 

($ in millions)

Assets

             

Current assets:

              

   Cash and cash equivalents

$

  

1,522

  

$

  

1,443

   Short-term investments

    

10

      

118

   Accounts receivable – net

    

1,109

      

1,024

   Materials and supplies

    

240

      

223

   Deferred income taxes

    

179

      

180

   Other current assets

    

70

      

87

   Total current assets

    

3,130

      

3,075
               

Investments

    

2,466

      

2,439

Properties less accumulated depreciation of $10,512 and $10,387,

              

   respectively

    

26,768

      

26,645

Other assets

    

336

      

324
               

      Total assets

$

  

32,700

  

$

  

32,483
               

Liabilities and stockholders' equity

             

Current liabilities:

              

   Accounts payable

$

  

1,194

  

$

  

1,265

   Short-term debt

    

-

      

100

   Income and other taxes

    

323

      

225

   Other current liabilities

    

359

      

270

   Current maturities of long-term debt

    

445

      

445

      Total current liabilities

    

2,321

      

2,305
               

Long-term debt

    

8,909

      

8,903

Other liabilities

    

1,130

      

1,444

Deferred income taxes

    

8,647

      

8,542

      Total liabilities

   

21,007

      

21,194
               

Stockholders' equity:

              

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

              

      authorized; outstanding 309,646,086 and 308,878,402 shares,

              

      respectively, net of treasury shares

    

311

      

310

   Additional paid-in capital

    

2,085

      

2,021

   Accumulated other comprehensive loss

    

(193)

      

(381)

   Retained income

    

9,490

      

9,339
               

     Total stockholders' equity

   

11,693

      

11,289
               

     Total liabilities and stockholders' equity

$

  

32,700

  

$

  

32,483

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 
 

First Quarter

 

2014

 

2013

 

($ in millions)

Cash flows from operating activities

         

   Net income

$

368

  

$

450

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

          

   Depreciation

  

238

    

228

   Deferred income taxes

  

(8)

    

74

   Gains and losses on properties and investments (note 1)

  

(2)

    

(99)

   Changes in assets and liabilities affecting operations:

          

   Accounts receivable

  

(85)

    

(49)

   Materials and supplies

  

(17)

    

(30)

   Other current assets

  

17

    

17

   Current liabilities other than debt

  

86

    

96

   Other – net

  

(9)

    

36

   Net cash provided by operating activities

  

588

    

723
           

Cash flows from investing activities

         

   Property additions

  

(381)

    

(379)

   Property sales and other transactions

  

22

    

19

   Investments, including short-term

  

(3)

    

(5)

   Investment sales and other transactions

  

108

    

(1)

   Net cash used in investing activities

  

(254)

    

(366)
           

Cash flows from financing activities

         

   Dividends

  

(167)

    

(157)

   Common stock issued – net

  

62

    

55

   Purchase and retirement of common stock (note 2)

  

(50)

    

(33)

   Debt repayments

  

(100)

    

(203)

   Net cash used in financing activities

  

(255)

    

(338)
           

   Net increase in cash and cash equivalents

  

79

    

19
           

Cash and cash equivalents

         

   At beginning of period

  

1,443

    

653
           

   At end of period

$

1,522

  

$

672
           

Supplemental disclosures of cash flow information

         

   Cash paid during the period for:

          

   Interest (net of amounts capitalized)

$

75

  

$

62

   Income taxes (net of refunds)

  

60

    

23

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. Other Income – Net
                  In first quarter 2013, we recognized a $97 million gain on a land sale, which increased net income by $60 million or $0.19 per share.
  2. Stock Repurchase Program    
              In each of the first quarters of 2014 and 2013, we repurchased 0.5 million shares of common stock, totaling $50 million and $33 million, respectively. We have remaining authorization from our Board of Directors to repurchase up to 37.7 million shares through December 31, 2017.  The timing and volume of purchases is guided by our assessment of market conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with internally generated cash, cash on hand, or proceeds from borrowings.  Since the beginning of 2006, we have repurchased and retired 137.3 million shares at a total cost of $8.2 billion.

SOURCE Norfolk Southern Corporation

For further information: (Media) Frank Brown, 757-629-2710 (fsbrown@nscorp.com); (Investors) Michael Hostutler, 757-629-2861 (michael.hostutler@nscorp.com)