Norfolk Southern's Q1 earnings fell 18.2% year-over-year to US$368M as extreme winter weather affected Q1 results; revenues down 2% to US$2.7B

NORFOLK, Virginia , April 23, 2014 (press release) – Norfolk Southern (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 (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.

Connect with NS
http://www.nscorp.com/  
http://www.facebook.com/NorfolkSouthern  
http://www.flickr.com/photos/norfolksouthern  
http://www.twitter.com/nscorp  
http://www.youtube.com/user/norfolksoutherncorp

 

 

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.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.