Norfolk Southern Corporation today reported first-quarter financial results of net income equal to $381 million, diluted earnings per share of $1.47, and an operating ratio of 78.4%. These results include a $385 million non-cash locomotive rationalization charge related to the ongoing disposition and marketing of excess locomotives not required for future operations due to the successful introduction of Precision Scheduled Railroading. Excluding the effects of the asset rationalization charge, adjusted first-quarter net income was $669 million, adjusted diluted earnings per share were $2.58, and the adjusted operating ratio improved by 230 basis points compared with first-quarter 2019 to 63.7%.
“During the first quarter, Norfolk Southern’s determination to transform our operations once again produced all-time best service delivery levels accompanied by productivity improvements, despite volumes being impacted by weak energy prices and the onset of the COVID-19 pandemic,” said James A. Squires, Norfolk Southern chairman, president and CEO. “While it is unclear how long economic activity will remain suppressed, we are dedicated to serving our customers and keeping our employees healthy and safe while navigating the downturn so that we can emerge strong and resilient for our shareholders. I am extremely proud of the commitment and strength the Norfolk Southern team has displayed by keeping our nation’s freight moving during this challenging start to 2020 while also enhancing our financial position.”
- Railway operating revenues of $2.6 billion decreased 8% compared with first-quarter 2019, driven by an 11% decline in total volume.
- Railway operating expenses were $2.1 billion, including a $385 million non-cash locomotive rationalization charge related to locomotives marketed for sale and/or disposed of as a result of productivity gains achieved through the successful introduction of Precision Scheduled Railroading.
- Excluding the locomotive rationalization charge, adjusted operating expenses declined $202 million, or 11%, driven by lower compensation and benefits, fuel, purchased services, and materials.
- Income from railway operations was $568 million and the operating ratio was 78.4%.
- Adjusted income from railway operations of $953 million declined by 1%, while the adjusted operating ratio improved to 63.7% versus the first-quarter record of 66.0% set in 2019.
- Second-quarter volumes have continued to decline across all of Norfolk Southern’s commodity segments, down 30% quarter-to-date, setting up for a very soft revenue outlook. With uncertainty on both the cadence of reopening the U.S. economy and the slope of recovery, we withdraw the previously-issued outlook for flat full year revenue.
- As a result of the current volume environment, we also withdraw core operating ratio guidance for 2020.
- “While the COVID-19 pandemic will effect business volumes for the year, the PSR implementation that our team is executing upon will generate significant operating expense savings in 2020,” said Chief Financial Officer Mark R. George. “In this challenging environment our team is doubling down on examination of our structural cost opportunities to ensure that we remain positioned to drive enhanced profitability for the long term.”
-via Press Release (courtesy Randy Kotuby)