UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 25, 2023 (
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(Exact name of registrant as specified in its charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Common Stock (Par Value $1.00) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
Item 7.01. Regulation FD Disclosure
On October 25, 2023, the Registrant issued a Press Release, attached hereto as Exhibit 99.1, reporting
third-quarter results for 2023. Attached hereto, as Exhibit 99.2, is the Quarterly Financial Data for the third quarter of 2023. This
information is available on the Registrant’s website, www.norfolksouthern.com, on the “Investors” page under “Financial
Reports.” This unaudited financial information and summary of certain notes to the consolidated financial statements should be read
in conjunction with: (a) the consolidated financial statements and notes included in the Registrant's latest Annual Report on Form 10-K
and in subsequent Quarterly Reports on Form 10-Q; and (b) any Current Reports on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | |
| 99.1 | Press Release dated October 25, 2023 | |
| 99.2 | 2023 Q3 Financial Data | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SIGNATURES | ||
| NORFOLK SOUTHERN CORPORATION | ||
| (Registrant) | ||
| /s/ Denise W. Hutson | ||
| Name: Denise W. Hutson | ||
| Title: Corporate Secretary | ||
Date: October 25, 2023
Exhibit 99.1
FOR IMMEDIATE RELEASE
Norfolk Southern reports third quarter 2023 results
ATLANTA, October 25, 2023 – Norfolk Southern Corporation (NYSE: NSC) announced Wednesday its third quarter 2023 financial results. For the quarter, income from railway operations was $756 million and diluted earnings per share were $2.10. These results include a $163 million charge associated with the incident in Eastern Ohio which includes an initial insurance recovery of $25 million.
Adjusting for the effects of the incident charge, third quarter results included income from railway operations of $919 million and diluted earnings per share of $2.65 – declines of 28% and 35%, respectively, compared to the third quarter of 2022.
“In the third quarter, we continued to invest in our people and our assets to lay the foundation for our innovative strategy,” said Norfolk Southern President and Chief Executive Officer Alan H. Shaw. “Part of charting a better way forward for Norfolk Southern is building solid operational disciplines that move us toward consistency, all to enable productivity enhancements and growth in the quarters ahead. We are building the safe, reliable, and resilient railroad our customers and shareholders expect, and we have an incredibly bright future.”
Third Quarter Summary
| · | Railway operating revenues of $3.0 billion, down $372 million, or 11%, compared to third quarter 2022. |
| · | Income from railway operations was $756 million inclusive of a $163 million charge associated with the Eastern Ohio Incident, a 41% decline compared to $1.3 billion in the third quarter of 2022. |
| o | Adjusting for the Eastern Ohio Incident, income from railway operations was $919 million, down $353 million, or 28%, compared to third quarter 2022. |
| · | Diluted earnings per share were $2.10, a decline of 49% compared to third quarter 2022. |
| o | Adjusting for the Eastern Ohio Incident, diluted earnings per share were $2.65, down $1.45, or 35%, compared to third quarter 2022. |
###
Norfolk Southern Corporation | 1
About Norfolk Southern
Since 1827, Norfolk Southern Corporation (NYSE: NSC) and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Today, it operates a customer-centric and operations-driven freight transportation network. Committed to furthering sustainability, Norfolk Southern helps its customers avoid approximately 15 million tons of yearly carbon emissions by shipping via rail. Its dedicated team members deliver more than 7 million carloads annually, from agriculture to consumer goods, and is the largest rail shipper of auto products and metals in North America. Norfolk Southern also has the most extensive intermodal network in the eastern U.S., serving a majority of the country’s population and manufacturing base, with connections to every major container port on the Atlantic coast as well as the Gulf of Mexico and Great Lakes. Learn more by visiting www.NorfolkSouthern.com.
Media Inquiries:
Media Relations, 404-420-4444
Investor Inquiries:
Luke Nichols, 470-867-4807
Forward-looking statements
Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements may be identified by the use of words like “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, beliefs, and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond our control. These and other important factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the SEC), as supplemented in Part II, Item 1A of our Form 10-Q to be filed with the SEC on the same date as this press release, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward- looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Norfolk Southern Corporation | 2
Reconciliation of Non-GAAP Financial Measures
Information included within this filing includes non-GAAP financial measures, as defined by SEC Regulation G. Non-GAAP financial measures should be considered in addition to, not as a substitute for, the financial measures reported in accordance with U.S. generally accepted accounting principles (GAAP).
GAAP financial results are adjusted to exclude the effects of a February 3, 2023 train derailment in East Palestine, Ohio that included 11 non-Company-owned tank cars carrying hazardous materials, fires associated with the derailment that threatened certain of the tank cars, and a controlled vent and burn procedure conducted on February 6, 2023 on the five derailed tank cars containing vinyl chloride (the Incident). The Company recognized $163 million of expenses during the third quarter related to the Incident. The income tax effects of this non-GAAP adjustment were calculated based on the applicable tax rates to which the non-GAAP adjustment related. The Company uses these non-GAAP financial measures internally and believes this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the effects of the Incident.
While the Company believes that these non-GAAP financial measures are useful in evaluating the Company’s business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, or as a substitute for, the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.
| ($ in millions except per share amounts) | Third Quarter 2023 | |||
| Income from railway operations | $ | 756 | ||
| Effect of the Incident | 163 | |||
| Adjusted income from railway operations | $ | 919 | ||
| Diluted earnings per share | $ | 2.10 | ||
| Effect of the Incident | 0.55 | |||
| Adjusted diluted earnings per share | $ | 2.65 | ||
###
Norfolk Southern Corporation | 3
Exhibit 99.2
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| Third Quarter | First Nine Months | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||
| Railway operating revenues | ||||||||||||||||
| Merchandise | $ | 1,800 | $ | 1,930 | $ | 5,504 | $ | 5,455 | ||||||||
| Intermodal | 737 | 942 | 2,296 | 2,768 | ||||||||||||
| Coal | 434 | 471 | 1,283 | 1,285 | ||||||||||||
| Total railway operating revenues | 2,971 | 3,343 | 9,083 | 9,508 | ||||||||||||
| Railway operating expenses | ||||||||||||||||
| Compensation and benefits | 715 | 735 | 2,098 | 1,968 | ||||||||||||
| Purchased services and rents | 517 | 484 | 1,519 | 1,402 | ||||||||||||
| Fuel | 289 | 383 | 867 | 1,092 | ||||||||||||
| Depreciation | 326 | 306 | 968 | 912 | ||||||||||||
| Materials and other | 205 | 163 | 622 | 506 | ||||||||||||
| Eastern Ohio incident | 163 | — | 966 | — | ||||||||||||
| Total railway operating expenses | 2,215 | 2,071 | 7,040 | 5,880 | ||||||||||||
| Income from railway operations | 756 | 1,272 | 2,043 | 3,628 | ||||||||||||
| Other income (expense) – net | 40 | (2 | ) | 153 | (21 | ) | ||||||||||
| Interest expense on debt | 182 | 177 | 527 | 515 | ||||||||||||
| Income before income taxes | 614 | 1,093 | 1,669 | 3,092 | ||||||||||||
| Income tax expense (benefit) | ||||||||||||||||
| Current | 154 | 223 | 422 | 589 | ||||||||||||
| Deferred | (18 | ) | (88 | ) | (53 | ) | 23 | |||||||||
| Total income tax expense | 136 | 135 | 369 | 612 | ||||||||||||
| Net income | $ | 478 | $ | 958 | $ | 1,300 | $ | 2,480 | ||||||||
| Earnings per share – diluted | $ | 2.10 | $ | 4.10 | $ | 5.70 | $ | 10.45 | ||||||||
| Weighted average shares outstanding – diluted | 227.0 | 234.0 | 227.8 | 237.2 | ||||||||||||
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ($ in millions) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,506 | $ | 456 | ||||
| Accounts receivable – net | 1,210 | 1,148 | ||||||
| Materials and supplies | 303 | 253 | ||||||
| Other current assets | 123 | 150 | ||||||
| Total current assets | 3,142 | 2,007 | ||||||
| Investments | 3,824 | 3,694 | ||||||
| Properties less accumulated depreciation of $13,162 and $12,592, respectively | 32,668 | 32,156 | ||||||
| Other assets | 1,105 | 1,028 | ||||||
| Total assets | $ | 40,739 | $ | 38,885 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,499 | $ | 1,293 | ||||
| Short-term debt | — | 100 | ||||||
| Income and other taxes | 213 | 312 | ||||||
| Other current liabilities | 797 | 341 | ||||||
| Current maturities of long-term debt | 405 | 603 | ||||||
| Total current liabilities | 2,914 | 2,649 | ||||||
| Long-term debt | 16,179 | 14,479 | ||||||
| Other liabilities | 1,824 | 1,759 | ||||||
| Deferred income taxes | 7,207 | 7,265 | ||||||
| Total liabilities | 28,124 | 26,152 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 226,136,334 and 228,076,415 shares, respectively, net of treasury shares | 227 | 230 | ||||||
| Additional paid-in capital | 2,163 | 2,157 | ||||||
| Accumulated other comprehensive loss | (364 | ) | (351 | ) | ||||
| Retained income | 10,589 | 10,697 | ||||||
| Total stockholders’ equity | 12,615 | 12,733 | ||||||
| Total liabilities and stockholders’ equity | $ | 40,739 | $ | 38,885 | ||||
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| First Nine Months | ||||||||
| 2023 | 2022 | |||||||
| ($ in millions) | ||||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 1,300 | $ | 2,480 | ||||
| Reconciliation of net income to net cash provided by operating activities: | ||||||||
| Depreciation | 968 | 912 | ||||||
| Deferred income taxes | (53 | ) | 23 | |||||
| Gains and losses on properties | (34 | ) | (54 | ) | ||||
| Changes in assets and liabilities affecting operations: | ||||||||
| Accounts receivable | (65 | ) | (174 | ) | ||||
| Materials and supplies | (50 | ) | (58 | ) | ||||
| Other current assets | 37 | 57 | ||||||
| Current liabilities other than debt | 538 | 273 | ||||||
| Other – net | (135 | ) | (35 | ) | ||||
| Net cash provided by operating activities | 2,506 | 3,424 | ||||||
| Cash flows from investing activities | ||||||||
| Property additions | (1,496 | ) | (1,282 | ) | ||||
| Property sales and other transactions | 62 | 193 | ||||||
| Investment purchases | (120 | ) | (8 | ) | ||||
| Investment sales and other transactions | 160 | 37 | ||||||
| Net cash used in investing activities | (1,394 | ) | (1,060 | ) | ||||
| Cash flows from financing activities | ||||||||
| Dividends | (920 | ) | (881 | ) | ||||
| Common stock transactions | (9 | ) | (5 | ) | ||||
| Purchase and retirement of common stock | (503 | ) | (2,284 | ) | ||||
| Proceeds from borrowings | 2,303 | 1,732 | ||||||
| Debt repayments | (933 | ) | (551 | ) | ||||
| Net cash used in financing activities | (62 | ) | (1,989 | ) | ||||
| Net increase in cash and cash equivalents | 1,050 | 375 | ||||||
| Cash and cash equivalents | ||||||||
| At beginning of year | 456 | 839 | ||||||
| At end of period | $ | 1,506 | $ | 1,214 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest (net of amounts capitalized) | $ | 451 | $ | 425 | ||||
| Income taxes (net of refunds) | 521 | 578 | ||||||
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Eastern Ohio Incident
On February 3, 2023, a train operated by Norfolk Southern derailed in East Palestine, Ohio. During the first nine months of 2023, we recognized $966 million of expense for costs primarily associated with environmental matters and legal proceedings resulting from the incident ($163 million of which was recognized in the third quarter). These amounts are net of $25 million in insurance recoveries recorded during the third quarter related to the incident. Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods in which recovery is considered probable. No amounts have been recorded related to potential third-party recoveries, which may reduce amounts payable by our insurers under applicable insurance coverage.
2. Stock Repurchase Program
We repurchased and retired 2.2 million and 9.2 million shares of common stock under our stock repurchase programs in the first nine months of 2023 and 2022, respectively, at a cost of $508 million and $2.3 billion, inclusive of excise taxes.