PR Newswire | Jul 29, 2020 08:01AM EDT

07/29 07:00 CDT

Norfolk Southern reports second-quarter 2020 results NORFOLK, Va., July 29, 2020

NORFOLK, Va., July 29, 2020 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported second-quarter financial results.

Second-quarter net income was $392 million, diluted earnings per share were $1.53, and the operating ratio was 70.7 percent.

"In a period when working safely and delivering for our customers was abruptly redefined, our employees responded by protecting each other and innovating to serve rapidly evolving freight demand. Underscoring our commitment to shareholder value, we forged ahead with our ongoing transformation by further reducing our hump yard footprint, achieving fuel efficiency gains, and increasing train size. These are astounding achievements while managing the unprecedented economic disruption and public health crisis," said James A. Squires, Norfolk Southern chairman, president and CEO. "We are mobilized and driven to meet the challenges and opportunities that lie ahead, and we will continue to create collaborative change and relentlessly pursue increased productivity as a leading supply chain partner throughout the economic recovery and beyond."

Second-quarter summary

* Railway operating revenues of $2.1 billion decreased 29 percent compared with second-quarter 2019, driven by a 26 percent decline in total volume. * Railway operating expenses of $1.5 billion decreased 21 percent compared with second-quarter 2019, driven by lower fuel, compensation and benefits, and purchased services expenses. * Income from railway operations was $610 million and the operating ratio was 70.7 percent.

About Norfolk SouthernNorfolk 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 is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts.

Forward-looking statementsThis news release contains forward-looking statements that may be identified by the use of words like "believe," "expect," "anticipate," "estimate," "plan," "consider," "project," and similar references to the future. Forward-looking statements reflect our good-faith evaluation of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Additional risks include the impact of the COVID-19 pandemic on us, our customers, our supply chain, and our operations. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements.

http://www.norfolksouthern.com

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)



Second Quarter First Six Months

2020 2019 2020 2019

(in millions, except per share amounts)



Railway operating revenues

Merchandise $1,307$1,756$2,979$3,442

Intermodal 569 701 1,224 1,420

Coal 209 468 507 903

Total railway operating revenues 2,085 2,925 4,710 5,765



Railway operating expenses

Compensation and benefits 586 712 1,208 1,439

Purchased services and rents 372 418 775 842

Fuel 84 254 273 504

Depreciation 282 284 574 567

Materials and other 151 192 317 382

Loss on asset disposal - - 385 -

Total railway operating expenses 1,475 1,860 3,532 3,734



Income from railway operations 610 1,065 1,178 2,031



Other income - net 49 22 71 66

Interest expense on debt 156 153 310 302



Income before income taxes 503 934 939 1,795



Income taxes

Current 66 136 110 263

Deferred 45 76 56 133

Total income taxes 111 212 166 396



Net income $392 $722 $773 $1,399



Earnings per share - diluted $1.53 $2.70 $3.00 $5.21



Weighted average shares outstanding - 256.7 267.1 257.7 268.3 diluted



See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



June 30,December 31,

2020 2019

($ in millions)

Assets

Current assets:

Cash and cash equivalents $1,143 $580

Accounts receivable - net 822 920

Materials and supplies 257 244

Other current assets 128 337

Total current assets 2,350 2,081



Investments 3,590 3,428

Properties less accumulated depreciation of $11,823

and $11,982, respectively 31,217 31,614

Other assets 805 800



Total assets $37,962$37,923



Liabilities and stockholders' equity

Current liabilities:

Accounts payable $1,268 $1,428

Income and other taxes 239 229

Other current liabilities 343 327

Current maturities of long-term debt 85 316

Total current liabilities 1,935 2,300



Long-term debt 12,612 11,880

Other liabilities 1,680 1,744

Deferred income taxes 6,874 6,815



Total liabilities 23,101 22,739



Stockholders' equity:

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

authorized; outstanding 255,109,247 and 257,904,956 shares,

respectively, net of treasury shares 256 259

Additional paid-in capital 2,217 2,209

Accumulated other comprehensive loss (475) (491)

Retained income 12,863 13,207



Total stockholders' equity 14,861 15,184



Total liabilities and stockholders' equity $37,962$37,923



See accompanying notes to consolidated financial statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



First Six Months

2020 2019

($ in millions)

Cash flows from operating activities

Net income $773 $1,399

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

Depreciation 574 567

Deferred income taxes 56 133

Gains and losses on properties (11) (7)

Loss on asset disposal 385 -

Changes in assets and liabilities affecting operations:

Accounts receivable 98 (30)

Materials and supplies (13) (49)

Other current assets 30 55

Current liabilities other than debt - (30)

Other - net (134) (86)



Net cash provided by operating activities 1,758 1,952



Cash flows from investing activities

Property additions (735) (979)

Property sales and other transactions 258 214

Investment purchases (5) (12)

Investment sales and other transactions (58) (75)



Net cash used in investing activities (540) (852)



Cash flows from financing activities

Dividends (482) (458)

Common stock transactions 26 18

Purchase and retirement of common stock (669) (1,050)

Proceeds from borrowings 784 1,054

Debt repayments (314) (750)



Net cash used in financing activities (655) (1,186)



Net increase (decrease) in cash, cash equivalents, and restricted 563 (86) cash



Cash, cash equivalents, and restricted cash

At beginning of year 580 446



At end of period $1,143$360



Supplemental disclosures of cash flow information

Cash paid during the period for:

Interest (net of amounts capitalized) $287 $271

Income taxes (net of refunds) 1 215



See accompanying notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

1. Stock Repurchase ProgramWe repurchased and retired 3.9 million and 5.7 million shares of common stock under our stock repurchase program during the first six months of 2020 and 2019, respectively, at a cost of $669 million and $1.1 billion, respectively.

2. Loss on Asset DisposalIn the first quarter of 2020, we committed to a plan to dispose of certain locomotives deemed excess and no longer needed for railroad operations. Specifically, during the first six months of 2020, the Company recorded a charge related to the loss on the sale of approximately 450 locomotives disposed of in the first six months, and a write-down of approximately 250 additional locomotives that we are actively marketing to sell. Accordingly, a $385 million loss was recorded to adjust their carrying amount to their estimated fair value. The loss on asset disposal reduced "Earnings per share - diluted" for the first six months by $1.11.

3. Restricted CashThe "Cash, cash equivalents, and restricted cash" line item on the Consolidated Statements of Cash Flows includes restricted cash of $88 million in 2019, reflecting deposits held by a third-party bond agent as collateral for certain debt obligations which matured on October 1, 2019.

View original content to download multimedia: http://www.prnewswire.com/news-releases/norfolk-southern-reports-second-quarter-2020-results-301101876.html

SOURCE Norfolk Southern Corporation