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):
July 29, 2020 (
________________________________
(Exact name of registrant as specified in its charter)
______________________________________
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No Change
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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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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 July 29, 2020, the Registrant issued a Press Release, attached hereto as Exhibit 99.1, reporting second quarter results for 2020. Quarterly financial data is attached hereto as Exhibit 99.2. These documents are available on the Registrant’s website, www.norfolksouthern.com, in the “Invest in NS” section, under “Financial Reports.”
The accompanying 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
The following exhibits are filed as part of this Current Report on Form 8-K:
| Exhibit Number | Description |
| 99.1 | Press Release dated July 29, 2020 |
| 99.2 | 2020 2Q 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: July 29, 2020
FOR IMMEDIATE RELEASE
Norfolk Southern reports second-quarter 2020 results
NORFOLK, Va., July 29, 2020 – 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 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. 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.
Media Inquiries:
Media Relations, 404-420-4444 (media.relations@nscorp.com)
Investor Inquiries:
Pete Sharbel, 470-867-4807 (peter.sharbel@nscorp.com)
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 – diluted | 256.7 | 267.1 | 257.7 | 268.3 | ||||||||||||
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 cash | 563 | (86 | ) | |||||
| 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 Program
We 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 Disposal
In 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 Cash
The "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.