Norfolk Southern reports record first-quarter 2017 results

Achieved first-quarter record operating ratio, income from operations, and earnings per share

News provided by

Norfolk Southern Corporation

Apr 26, 2017, 08:00 ET

NORFOLK, Va., April 26, 2017 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported first-quarter financial results.

First-quarter net income was $433 million, up 12 percent year-over-year, a result of a 7 percent rise in income from railway operations, as well as a lower effective income tax rate. Diluted earnings per share were $1.48, up 15 percent year-over-year and a first-quarter record.

"Norfolk Southern's record results for the first quarter demonstrate the efficacy of our strategic plan, under which we are enhancing our service quality and network performance while driving significant efficiency improvements," said James A. Squires, Norfolk Southern chairman, president and CEO. "Our focus on providing a superior service product has positioned us for growth and, coupled with our cost discipline, has contributed to a solid start to the year. Our strategy provides a strong foundation for growth at low incremental costs, a powerful formula for enhanced shareholder value."

First-quarter summary

Railway operating revenues of $2.6 billion increased 6 percent compared with first-quarter 2016, as overall volumes were 5 percent higher, reflecting growth within our major commodity categories of coal, intermodal, and merchandise.

Railway operating expenses increased $105 million, or 6 percent, to $1.8 billion as targeted expense reductions and efficiencies were offset by inflation, particularly within fuel expenses, which were higher by $64 million.

Income from railway operations was a first-quarter record $773 million, up 7 percent year-over-year.

The railway operating ratio, or operating expenses as a percentage of revenues, was 70.0 percent, a first-quarter 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)



First Quarter

2017

2016

($ in millions, except per share
amounts)





Railway operating revenues



Merchandise

$

1,584

$

1,549

Intermodal

571

522

Coal

420

349

Total railway operating revenues

2,575

2,420





Railway operating expenses



Compensation and benefits

743

723

Purchased services and rents

377

379

Fuel

213

149

Depreciation

259

252

Materials and other

210

194





Total railway operating expenses

1,802

1,697





Income from railway operations

773

723





Other income – net

24

16

Interest expense on debt

142

139





Income before income taxes

655

600





Provision for income taxes



Current

166

169

Deferred

56

44

Total income taxes

222

213





Net income

$

433

$

387





Earnings per share



Basic

$

1.49

$

1.30

Diluted

1.48

1.29





Weighted average shares outstanding



Basic

290.3

297.2

Diluted

292.8

298.9






See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)



First Quarter

2017

2016

($ in millions)




Net income

$

433

$

387

Other comprehensive income, before tax:


Reclassification adjustments for costs included in net income

7

7

Other comprehensive loss of equity investees

(2)

(1)




Other comprehensive income, before tax

5

6

Income tax expense related to reclassification adjustments


for costs included in net income

(3)

(3)




Other comprehensive income, net of tax

2

3




Total comprehensive income

$

435

$

390






See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)





March 31,

December 31,

2017

2016

($ in millions)

Assets



Current assets:



Cash and cash equivalents

$

955

$

956

Accounts receivable – net

998

945

Materials and supplies

281

257

Other current assets

93

133

Total current assets

2,327

2,291





Investments

2,809

2,777

Properties less accumulated depreciation of $11,872 and



$11,737, respectively

29,927

29,751

Other assets

82

73





Total assets

$

35,145

$

34,892





Liabilities and stockholders' equity



Current liabilities:



Accounts payable

$

1,211

$

1,215

Short-term debt

—

100

Income and other taxes

379

245

Other current liabilities

303

229

Current maturities of long-term debt

550

550

Total current liabilities

2,443

2,339





Long-term debt

9,569

9,562

Other liabilities

1,407

1,442

Deferred income taxes

9,199

9,140





Total liabilities

22,618

22,483





Stockholders' equity:



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



  authorized; outstanding 289,782,660 and 290,417,610 shares,



respectively, net of treasury shares

291

292

Additional paid-in capital

2,228

2,179

Accumulated other comprehensive loss

(485)

(487)

Retained income

10,493

10,425





Total stockholders' equity

12,527

12,409





Total liabilities and stockholders' equity

$

35,145

$

34,892

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



First Quarter

2017

2016

($ in millions)

Cash flows from operating activities



Net income

$

433

$

387

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



Depreciation

260

253

Deferred income taxes

56

44

Gains and losses on properties

(9)

(2)

Changes in assets and liabilities affecting operations:



Accounts receivable

(53)

(15)

Materials and supplies

(24)

(44)

Other current assets

31

84

Current liabilities other than debt

188

200

Other – net

(36)

(28)





Net cash provided by operating activities

846

879





Cash flows from investing activities



Property additions

(438)

(398)

Property sales and other transactions

35

12

Investment purchases

(2)

(23)

Investment sales and other transactions

1

1





Net cash used in investing activities

(404)

(408)





Cash flows from financing activities



Dividends

(177)

(176)

Common stock transactions

34

(7)

Purchase and retirement of common stock

(200)

(200)

Debt repayments

(100)

(600)





Net cash used in financing activities

(443)

(983)





Net decrease in cash and cash equivalents

(1)

(512)





Cash and cash equivalents



At beginning of year

956

1,101





At end of period

$

955

$

589





Supplemental disclosures of cash flow information



Cash paid during the period for:



Interest (net of amounts capitalized)

$

70

$

70

Income taxes (net of refunds)

12

2

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. Stock Repurchase Program
    We repurchased and retired 1.7 million and 2.6 million shares of common stock under our stock repurchase program in the first quarters of 2017 and 2016, respectively, at a cost of $200 million in each period.  Since the beginning of 2006, we have repurchased and retired 162.0 million shares at a total cost of $10.5 billion.

SOURCE Norfolk Southern Corporation

Related Links

http://www.norfolksouthern.com