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Norfolk Southern reports third-quarter 2017 results
Achieves record quarterly operating ratio of 65.9 percent

 

NORFOLK, Va., Oct. 25, 2017 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported third-quarter financial results.

Third-quarter net income was $506 million, up 10 percent year-over-year, driven by an 11 percent increase in income from railway operations – yielding a record quarterly operating ratio of 65.9 percent. Diluted earnings per share were $1.75, up 13 percent year-over-year.

"Norfolk Southern continues to deliver strong financial results through execution of our strategic plan. We are unwavering in our commitment to improve productivity as demonstrated by seven consecutive quarters of year-over-year improvement in our operating ratio," said James A. Squires, Norfolk Southern chairman, president and CEO. "Our balanced approach focuses on increasing efficiency and delivering a strong customer service product, giving us the ability to achieve our goals and deliver sustainable shareholder value."

For the first nine months of 2017, net income was $1.4 billion, up 15 percent compared with the same period of 2016. Record diluted earnings per share of $4.93 were 17 percent higher. The strong results reflected 11 percent growth in income from railway operations and a record nine-month operating ratio of 67.4 percent.

Third-quarter summary

  • Railway operating revenues of $2.7 billion increased 6 percent compared with third-quarter 2016, as overall volumes were 4 percent higher, reflecting growth within our major commodity categories of coal and intermodal.
  • Railway operating expenses increased $55 million, or 3 percent, compared with third-quarter 2016, to $1.8 billion as targeted expense reductions and gains from the disposition of operating property helped offset volume and inflation-related expenses and higher incentive compensation.
  • Income from railway operations was $911 million, up 11 percent year-over-year, and the operating ratio, or operating expenses as a percentage of revenues, was 65.9 percent, an all-time quarterly 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.

 

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 
 

Third Quarter

 

First Nine Months

 

2017

 

2016

 

2017

 

2016

 

($ in millions, except per share amounts)

                       

Railway operating revenues

                     

Merchandise

$

1,600

      

$

1,552

      

$

4,781

      

$

4,678

    

Intermodal

  

621

        

575

        

1,785

        

1,635

    

Coal

  

449

        

397

        

1,316

        

1,085

    

Total railway operating revenues

  

2,670

        

2,524

        

7,882

        

7,398

    
                       

Railway operating expenses

                     

Compensation and benefits

  

755

        

691

        

2,201

        

2,081

    

Purchased services and rents

  

377

        

386

        

1,146

        

1,149

    

Fuel

  

198

        

181

        

601

        

504

    

Depreciation

  

265

        

258

        

788

        

767

    

Materials and other

  

164

        

188

        

574

        

584

    
                       

Total railway operating expenses

  

1,759

        

1,704

        

5,310

        

5,085

    
                       

Income from railway operations

 

911

        

820

        

2,572

        

2,313

    
                       

Other income – net

  

23

        

29

        

79

        

49

    

Interest expense on debt

  

134

        

144

        

416

        

421

    
                       

Income before income taxes

  

800

        

705

        

2,235

        

1,941

    
                       

Provision for income taxes

                      

Current

  

189

        

169

        

580

        

512

    

Deferred

  

105

        

76

        

219

        

177

    

Total income taxes

  

294

        

245

        

799

        

689

    
                       

Net income

$

506

      

$

460

      

$

1,436

      

$

1,252

    
                       

Earnings per share

                     

Basic

$

1.76

      

$

1.56

      

$

4.96

      

$

4.23

    

Diluted

  

1.75

        

1.55

        

4.93

        

4.21

    
                       

Weighted average shares outstanding

                     

Basic

  

287.1

        

292.7

        

288.8

        

294.9

    

Diluted

  

289.5

        

294.7

        

291.2

        

296.7

    

 

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 
 

Third Quarter

 

First Nine Months

 

2017

 

2016

 

2017

 

2016

 

($ in millions)

                       

Net income

$

506

      

$

460

      

$

1,436

      

$

1,252

    

Other comprehensive income, before tax:

                      

Reclassification adjustments for costs

                              

included in net income

  

7

        

7

        

21

        

20

    

Other comprehensive loss of

                      

equity investees

  

—

        

—

        

(1)

        

—

    

Other comprehensive income, before tax

  

7

        

7

        

20

        

20

    
                               

Income tax expense related to reclassification

                      

adjustments for costs included in net income

  

(2)

        

(3)

        

(8)

        

(8)

    
                       

Other comprehensive income, net of tax

  

5

        

4

        

12

        

12

    
                       

Total comprehensive income

$

511

      

$

464

      

$

1,448

      

$

1,264

    

 

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 
 

September 30,

 

December 31,

 

2017

 

2016

 

($ in millions)

Assets

             

Current assets:

              

Cash and cash equivalents

$

  

724

      

$

  

956

    

Accounts receivable – net

    

973

          

945

    

Materials and supplies

    

245

          

257

    

Other current assets

    

57

          

133

    

Total current assets

    

1,999

          

2,291

    
               

Investments

    

2,888

          

2,777

    

Properties less accumulated depreciation of $11,987 and

              

$11,737, respectively

    

30,163

          

29,751

    

Other assets

    

103

          

73

    
               

Total assets

$

  

35,153

      

$

  

34,892

    
               

Liabilities and stockholders' equity

             

Current liabilities:

              

Accounts payable

$

  

1,287

      

$

  

1,215

    

Short-term debt

    

—

          

100

    

Income and other taxes

    

206

          

245

    

Other current liabilities

    

320

          

229

    

Current maturities of long-term debt

    

600

          

550

    

Total current liabilities

    

2,413

          

2,339

    
               

Long-term debt

    

9,280

          

9,562

    

Other liabilities

    

1,366

          

1,442

    

Deferred income taxes

    

9,367

          

9,140

    

Total liabilities

   

22,426

          

22,483

    
               

Stockholders' equity:

              

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

              

  authorized; outstanding 286,148,766 and 290,417,610 shares,

              

  respectively, net of treasury shares

    

288

          

292

    

Additional paid-in capital

    

2,249

          

2,179

    

Accumulated other comprehensive loss

    

(475)

          

(487)

    

Retained income

    

10,665

          

10,425

    
               

Total stockholders' equity

   

12,727

          

12,409

    
               

Total liabilities and stockholders' equity

$

  

35,153

      

$

  

34,892

    

 

See accompanying notes to consolidated financial statements.

 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 
 

First Nine Months

 

2017

 

2016

 

($ in millions)

Cash flows from operating activities

         

Net income

$

1,436

      

$

1,252

    

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

          

Depreciation

  

791

        

770

    

Deferred income taxes

  

219

        

177

    

Gains and losses on properties

  

(62)

        

(38)

    

Changes in assets and liabilities affecting operations:

          

Accounts receivable

  

(59)

        

8

    

Materials and supplies

  

12

        

(30)

    

Other current assets

  

68

        

130

    

Current liabilities other than debt

  

165

        

149

    

Other – net

  

(105)

        

(106)

    
           

Net cash provided by operating activities

  

2,465

        

2,312

    
           

Cash flows from investing activities

         

Property additions

  

(1,315)

        

(1,304)

    

Property sales and other transactions

  

137

        

87

    

Investment purchases

  

(4)

        

(119)

    

Investment sales and other transactions

  

8

        

6

    
           

Net cash used in investing activities

  

(1,174)

        

(1,330)

    
           

Cash flows from financing activities

         

Dividends

  

(529)

        

(523)

    

Common stock transactions

  

75

        

33

    

Purchase and retirement of common stock

  

(712)

        

(603)

    

Proceeds from borrowings – net

  

293

        

594

    

Debt repayments

  

(650)

        

(600)

    
           

Net cash used in financing activities

  

(1,523)

        

(1,099)

    
           

Net decrease in cash and cash equivalents

  

(232)

        

(117)

    
           

Cash and cash equivalents

         

At beginning of year

  

956

        

1,101

    
           

At end of period

$

724

      

$

984

    
           

Supplemental disclosures of cash flow information

         

Cash paid during the period for:

          

Interest (net of amounts capitalized)

$

345

      

$

337

    

Income taxes (net of refunds)

  

594

        

409

    

 

See accompanying notes to consolidated financial statements.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1.   Stock Repurchase Program
We repurchased and retired 6.0 million and 7.2 million shares of common stock under our stock repurchase program in the first nine months of 2017 and 2016, respectively, at a cost of $712 million and $603 million, respectively.  Since the beginning of 2006, we have repurchased and retired 166.3 million shares at a total cost of $11.0 billion.

 

View original content:http://www.prnewswire.com/news-releases/norfolk-southern-reports-third-quarter-2017-results-300542528.html

SOURCE Norfolk Southern Corporation

For further information: Media Inquiries: Susan Terpay, 757-823-5204 (susan.terpay@nscorp.com) or Investor Inquiries: Clay Moore, 757-629-2861 (clay.moore@nscorp.com), http://www.norfolksouthern.com