Benzinga | Oct 27, 2021 10:38AM EDT

Norfolk Southern Operating Ratio Improves In Q3, Beats Wall Street Consensus

* Norfolk Southern Corp (NYSE:NSC) reported third-quarter railway operating revenue growth of 14% year-over-year to $2.85 billion, beating the consensus of $2.75 billion. Revenue was driven by a 14% increase in revenue per unit.

* Sales by segments: Merchandise $1.71 billion (+10% Y/Y), Intermodal $812 million (+16% Y/Y) and Coal $330 million (+32% Y/Y).

* Total railway operating expense increased by 3% Y/Y to $1.72 billion.

* EPS improved to $3.06 from $2.22 in 3Q20, beating the consensus of $2.91.

* Income from railway operations increased by 35% Y/Y to $1.14 billion, and the margin expanded to 39.8%. On a year-over-year adjusted basis, income from railway operations was up 21%.

* Railway operating ratio was 60.2% in the quarter, an improvement of 630 bps compared to 3Q20.

* Norfolk Southern generated a YTD operating cash flow of $3.31 billion, compared to $2.77 billion a year ago. It held cash and equivalents of $1.5 billion as of September 30, 2021.

* FY Outlook: Norfolk Southern expects revenue to grow more than 12% year-over-year (prior view ~9% to ~12% growth) with Intermodal and Merchandise as lead drivers and Operating ratio improvement of 400-440 bps.

* Price Action: NSC shares traded higher by 2.21% at $293.08 on the last check Wednesday.