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Oct 25, 2017 9:50 PM ET

Norfolk Southern reports third-quarter 2017 results

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iCrowdNewswire - Oct 25, 2017

NORFOLK, Va.,– 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.

Contact Information:

Norfolk Southern Corporation

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