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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.

 

View original content:http://www.prnewswire.com/news-releases/norfolk-southern-reports-second-quarter-2017-results-300494133.html

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),