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Norfolk Southern reports fourth-quarter and full-year 2019 results

January 29, 2020 GMT

NORFOLK, Va., Jan. 29, 2020 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) today reported fourth-quarter and full-year 2019 financial results.

Net income was $666 million and diluted earnings per share were $2.55 for the fourth quarter and $2,722 million and $10.25, respectively, for the full year. During the first year of a three-year strategic plan, Norfolk Southern produced a record operating ratio of 64.7% while managing the headwinds of a 5% decline in carload volumes.

“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” said James A. Squires, Norfolk Southern chairman, president and CEO. “With efficiency-related cost savings gaining steam in the third quarter and increasing in the fourth quarter, we achieved a record full-year operating ratio while also producing all-time best delivery performance for customers. This was the result of extensive systemwide planning integrated with customer communications during the first half of the year that created a foundation for the flawless execution of the initial two phases of our PSR-based operating plan, TOP21, in the second half. The momentum we’re carrying into 2020 will support continued value creation as we remain dedicated to the operational transformation of our business while ensuring we have a platform for growth as we look beyond the current freight cycle.”

Fourth-quarter summary

2019 summary

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 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 statements
This 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. 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.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)



Fourth Quarter


Years Ended December 31,


2019


2018


2019


2018


($ in millions, except per share amounts)









Railway operating revenues








Merchandise

$

1,630


$

1,684


$

6,803


$

6,744

Intermodal

697


755


2,824


2,893

Coal

363


457


1,669


1,821

Total railway operating revenues

2,690


2,896


11,296


11,458









Railway operating expenses








Compensation and benefits

630


757


2,751


2,925

Purchased services and rents

460


449


1,725


1,730

Fuel

223


275


953


1,087

Depreciation

285


281


1,138


1,102

Materials and other

130


56


740


655

Total railway operating expenses

1,728


1,818


7,307


7,499









Income from railway operations

962


1,078


3,989


3,959









Other income – net

18



106


67

Interest expense on debt

152


148


604


557









Income before income taxes

828


930


3,491


3,469









Income taxes








Current

57


193


439


630

Deferred

105


35


330


173

Total income taxes

162


228


769


803









Net income

$

666


$

702


$

2,722


$

2,666









Earnings per share – diluted

$

2.55


$

2.57


$

10.25


$

9.51









Weighted average shares outstanding – diluted

261.6


273.5


265.6


280.2









See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)



At December 31,


2019


2018


($ in millions)

Assets




Current assets:




Cash and cash equivalents

$

580


$

358

Accounts receivable – net

920


1,009

Materials and supplies

244


207

Other current assets

337


288

Total current assets

2,081


1,862





Investments

3,428


3,109

Properties less accumulated depreciation of $11,982 and




$12,374, respectively

31,614


31,091

Other assets

800


177





Total assets

$

37,923


$

36,239





Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$

1,428


$

1,505

Income and other taxes

229


255

Other current liabilities

327


246

Current maturities of long-term debt

316


585

Total current liabilities

2,300


2,591





Long-term debt

11,880


10,560

Other liabilities

1,744


1,266

Deferred income taxes

6,815


6,460

Total liabilities

22,739


20,877





Stockholders' equity:




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




authorized; outstanding 257,904,956 and 268,098,472 shares,




respectively, net of treasury shares

259


269

Additional paid-in capital

2,209


2,216

Accumulated other comprehensive loss

(491)


(563)

Retained income

13,207


13,440





Total stockholders' equity

15,184


15,362





Total liabilities and stockholders' equity

$

37,923


$

36,239





See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)



Years Ended December 31,


2019


2018


($ in millions)

Cash flows from operating activities




Net income

$

2,722


$

2,666

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




Depreciation

1,139


1,104

Deferred income taxes

330


173

Gains and losses on properties

(42)


(171)

Changes in assets and liabilities affecting operations:



Accounts receivable

87


(70)

Materials and supplies

(37)


15

Other current assets

(4)


(46)

Current liabilities other than debt

(185)


223

Other – net

(118)


(168)




Net cash provided by operating activities

3,892


3,726





Cash flows from investing activities




Property additions

(2,019)


(1,951)

Property sales and other transactions

377


204

Investment purchases

(18)


(10)

Investment sales and other transactions

(104)


99




Net cash used in investing activities

(1,764)


(1,658)




Cash flows from financing activities




Dividends

(949)


(844)

Common stock transactions

27


40

Purchase and retirement of common stock

(2,099)


(2,781)

Proceeds from borrowings – net of issuance costs

2,192


2,023

Debt repayments

(1,188)


(750)

Other

23





Net cash used in financing activities

(1,994)


(2,312)




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

134


(244)





Cash, cash equivalents, and restricted cash




At beginning of year

446


690





At end of year

$

580


$

446





Supplemental disclosures of cash flow information




Cash paid during the year for:




Interest (net of amounts capitalized)

$

555


$

496

Income taxes (net of refunds)

543


519





See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

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SOURCE Norfolk Southern Corporation