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Norfolk Southern reports third-quarter 2014 results

NORFOLK, Va., Oct. 22, 2014 /PRNewswire/ -- Norfolk Southern (NYSE: NSC) reported third-quarter net income of $559 million, 16 percent higher than $482 million for the same period of 2013. Diluted earnings per share were $1.79, up 17 percent compared with $1.53 per diluted share in the same period last year.

"Norfolk Southern reported another record-setting quarter during which we achieved our best third-quarter results in revenues, operating income, net income, earnings per share, and operating ratio," said CEO Wick Moorman. "Higher traffic volumes along with continued gains in productivity drove these excellent results. We remain focused on ensuring we can support continued demand for freight rail transportation by hiring additional employees, investing in new equipment, and completing capacity projects in order to provide our customers with the freight rail service they expect today and in the future."

Third-Quarter Results Set Quarterly Records

  • Railway operating revenues increased 7 percent to $3.0 billion.
  • Income from railway operations improved 18 percent to $998 million.
  • Net income increased 16 percent to $559 million.
  • Diluted earnings per share rose 17 percent to $1.79.
  • The railway operating ratio improved 4 percent to 67.0 percent.

Third-quarter railway operating revenues climbed 7 percent compared with the same period of 2013 to top $3.0 billion for a second consecutive quarter as growth in the merchandise and intermodal markets offset a weaker coal market.

Third-Quarter Revenue by Commodity Group

  • Intermodal: $667 million, up 10 percent
  • Coal: $626 million, down 2 percent
  • Chemicals: $488 million, up 14 percent
  • Metals/Construction: $414 million, up 11 percent
  • Agriculture:  $364 million, up 5 percent
  • Automotive: $254 million, up 12 percent
  • Paper/Forest:  $210 million, up 3 percent

General merchandise revenues reached $1.7 billion, a 10 percent increase compared with the third quarter of 2013, driven by volume gains in all markets, with particular strength in chemicals, automotive, metals and construction, and agriculture.

Intermodal revenues increased to $667 million, 10 percent higher compared with third-quarter 2013. Volume rose 10 percent, fueled by robust growth in both international and domestic markets.

Coal revenues declined 2 percent to $626 million in the third quarter compared with the same period of 2013. A weak global export market and mild weather and lower natural gas prices in the utility market combined to decrease volume by 2 percent.

Railway operating expenses were $2.0 billion, 3 percent higher compared with third-quarter 2013, largely due to costs associated with higher business volumes.

Income from railway operations was $998 million, 18 percent higher compared with third-quarter 2013.

The railway operating ratio, or operating expenses as a percentage of revenue, was 67.0 percent, a 4 percent improvement compared with 69.9 percent during the same period of 2013.

Norfolk Southern Corporation 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.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

       
 

Third Quarter

 

First Nine Months

 

2014

 

2013

 

2014

 

2013

 

($ in millions, except per share amounts)

                       

Railway operating revenues

                     

Coal

$

626

 

$

641

 

$

1,839

 

$

1,902

General merchandise

  

1,730

   

1,578

   

5,002

   

4,696

Intermodal

  

667

   

605

   

1,913

   

1,766

    Total railway operating revenues

  

3,023

   

2,824

   

8,754

   

8,364

                       

Railway operating expenses

                     

Compensation and benefits

  

728

   

735

   

2,183

   

2,241

Purchased services and rents

  

429

   

420

   

1,235

   

1,223

Fuel

  

387

   

390

   

1,227

   

1,210

Depreciation

  

236

   

230

   

711

   

683

Materials and other

  

245

   

200

   

714

   

631

Total railway operating expenses

  

2,025

   

1,975

   

6,070

   

5,988

                       

Income from railway operations

 

998

   

849

   

2,684

   

2,376

                       

Other income – net (note 1)

  

32

   

30

   

76

   

194

Interest expense on debt

  

138

   

131

   

416

   

388

                       

Income before income taxes

  

892

   

748

   

2,344

   

2,182

                       

Provision for income taxes

                      

Current

  

329

   

194

   

834

   

570

Deferred

  

4

   

72

   

21

   

215

    Total income taxes

  

333

   

266

   

855

   

785

                       

Net income

$

559

   

482

   

1,489

   

1,397

                       

Earnings per share (note 1)

                      

Basic

$

1.80

 

$

1.55

 

$

4.80

 

$

4.45

Diluted

  

1.79

   

1.53

   

4.75

   

4.40

                       

Weighted average shares outstanding (note 2)

                      

Basic

  

309.4

   

310.4

   

309.5

   

313.0

Diluted

  

312.6

   

313.9

   

312.7

   

316.6

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

       
       
 

Third Quarter

 

First Nine Months

 

2014

 

2013

 

2014

 

2013

 

($ in millions)

                       

Net income

$

559

 

$

482

 

$

1,489

 

$

1,397

Other comprehensive income, before tax:

                      

Pension and other postretirement benefits

  

8

   

38

   

314

   

110

Other comprehensive income of equity investees

  

-

   

-

   

10

   

2

Other comprehensive income, before tax

  

8

   

38

   

324

   

112

Income tax expense related to items of other   

                     

comprehensive income

  

(3)

   

(15)

   

(121)

   

(43)

Other comprehensive income, net of tax

  

5

   

23

   

203

   

69

                       

Total comprehensive income

$

564

 

$

505

 

$

1,692

 

$

1,466

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

       
 

September 30,

 

December 31,

 

2014

 

2013

 

($ in millions)

Assets

             

Current assets:

              

Cash and cash equivalents

  

$

1,432

   

$

1,443

Short-term investments

    

-

     

118

Accounts receivable – net

    

1,103

     

1,024

Materials and supplies

    

249

     

223

Deferred income taxes

    

178

     

180

Other current assets

    

50

     

87

Total current assets

    

3,012

     

3,075

               

Investments

    

2,610

     

2,439

Properties less accumulated depreciation of $10,740 and

              

$10,387, respectively

    

27,230

     

26,645

Other assets

    

354

     

324

               

Total assets

 

$

33,206

   

$

32,483

               

Liabilities and stockholders' equity

             

Current liabilities:

              

Accounts payable

  

$

1,387

   

$

1,265

Short-term debt

    

-

     

100

Income and other taxes

    

301

     

225

Other current liabilities

    

392

     

270

Current maturities of long-term debt

    

2

     

445

Total current liabilities

    

2,082

     

2,305

               

Long-term debt

    

8,919

     

8,903

Other liabilities

    

1,084

     

1,444

Deferred income taxes

    

8,682

     

8,542

Total liabilities

   

20,767

     

21,194

               

Stockholders' equity:

              

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

              

authorized; outstanding 309,441,867 and 308,878,402 shares,

              

respectively, net of treasury shares

    

311

     

310

Additional paid-in capital

    

2,150

     

2,021

Accumulated other comprehensive loss

    

(178)

     

(381)

Retained income

    

10,156

     

9,339

               

Total stockholders' equity

   

12,439

     

11,289

               

     Total liabilities and stockholders' equity

 

$

33,206

   

$

32,483

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

   
   
 

First Nine Months

 

2014

 

2013

 

($ in millions)

Cash flows from operating activities

         

Net income

$

1,489

 

$

1,397

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

          

Depreciation

  

715

   

687

Deferred income taxes

  

21

   

215

Gains and losses on properties and investments (note 1)

  

(13)

   

(100)

Changes in assets and liabilities affecting operations:

          

Accounts receivable

  

(79)

   

26

Materials and supplies

  

(26)

   

(8)

Other current assets

  

47

   

48

Current liabilities other than debt

  

258

   

121

Other – net

  

(66)

   

18

Net cash provided by operating activities

  

2,346

   

2,404

           

Cash flows from investing activities

         

Property additions

  

(1,379)

   

(1,470)

Property sales and other transactions

  

69

   

109

Investments, including short-term

  

(4)

   

(29)

Investment sales and other transactions

  

60

   

21

Net cash used in investing activities

  

(1,254)

   

(1,369)

           

Cash flows from financing activities

         

Dividends

  

(511)

   

(476)

Common stock issued – net

  

119

   

92

Purchase and retirement of common stock (note 2)

  

(166)

   

(564)

Proceeds from borrowings – net

  

100

   

492

Debt repayments

  

(645)

   

(248)

Net cash used in financing activities

  

(1,103)

   

(704)

           

Net increase (decrease) in cash and cash equivalents

  

(11)

   

331

           

Cash and cash equivalents

         

At beginning of period

  

1,443

   

653

           

At end of period

$

1,432

 

$

984

           

Supplemental disclosures of cash flow information

         

Cash paid during the period for:

          

Interest (net of amounts capitalized)

$

340

 

$

305

Income taxes (net of refunds)

  

733

   

485

 

 

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
    We repurchased 1.7 million shares of common stock in the first nine months of 2014, totaling $166 million, and 7.5 million shares at a cost of $564 million for the same period of 2013.  We have remaining authorization from our Board of Directors to repurchase up to 36.6 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 138.4 million shares at a total cost of $8.3 billion.

 

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/norfolk-southern-reports-third-quarter-2014-results-890026454.html

SOURCE Norfolk Southern Corporation

For further information: Norfolk Southern contacts: (Media) Frank Brown, 757-629-2710 (fsbrown@nscorp.com); (Investors) Katie Cook, 757-629-2861 (InvestorRelations@nscorp.com)