Norfolk Southern reports fourth-quarter and full-year 2018 results

28-Jan-2019

Norfolk Southern Corporation reported fourth-quarter and 2018 financial results. Net income was $702 million and diluted earnings per share were $2.57 for the fourth quarter and $2,666 million and $9.51, respectively, for the full year.

“Norfolk Southern’s financial results in 2018 clearly demonstrate improved financial performance and our commitment to delivering shareholder value,” said James A. Squires, chairman, president and CEO. “Our confidence to deliver improved value to our shareholders – as underscored by our recently announced dividend increase – is heightened by NS’ momentum heading into 2019 and by an array of initiatives to serve customers better and operate more efficiently.”

The 2017 results for the fourth quarter and full year included the effects of remeasurement of net deferred tax liabilities (“2017 tax adjustments”) resulting from the enactment of the Tax Cuts and Jobs Act of 2017, which added $3,482 million to net income in both periods and increased diluted earnings per share by $12.10 for the fourth quarter and $12.00 for the full year. Fourth-quarter 2018 net income decreased by $3,266 million and diluted earnings per share decreased by $11.22 compared to 2017. For the full year, net income in 2018 decreased by $2,738 million and diluted earnings per share decreased by $9.10 compared to 2017.

Absent the 2017 tax adjustments to the 2017 results, fourth-quarter 2018 net income increased $216 million, or 44 percent, and diluted earnings per share increased by $0.88, or 52 percent, while full-year 2018 net income increased by $744 million, or 39 percent, and diluted earnings per share increased by $2.90, or 44 percent.

Fourth-quarter summary

Railway operating revenues of $2.9 billion increased 9 percent, due to an increase in revenue per unit, including increased rates, higher fuel-surcharge revenue, and higher volumes. Overall volumes were up 3 percent, reflecting growth in the major commodity categories of intermodal and coal, while merchandise was relatively flat.

Railway operating expenses increased $147 million, or 9 percent, to $1.8 billion. Prior year expenses were impacted by the 2017 tax adjustments, which decreased railway operating expenses by $151 million. Excluding the 2017 tax adjustments, railway operating expenses compared with last year’s results were $4 million lower, driven by higher property sales, which were primarily offset by higher inflation-driven costs and increased volume-related expenses.

Income from railway operations was $1.1 billion, an 8 percent increase year-over-year, and an all-time record. Income from railway operations compared to prior year’s results, excluding $151 million in the 2017 tax adjustments, increased $231 million, or 27 percent. The railway operating ratio, or operating expenses as a percentage of revenues, was 62.8 percent.

2018 summary

Railway operating revenues of $11.5 billion increased 9 percent compared with 2017, due to an increase in revenue per unit, including increased rates as well as higher fuel surcharge revenue and higher volumes. Overall volumes were up 4 percent, reflecting growth in the major commodity categories of intermodal and merchandise, which offset a decline in coal.

Railway operating expenses of $7.5 billion increased $470 million, or 7 percent, compared with last year. Prior year expenses were impacted by the 2017 tax adjustments, which decreased railway operating expenses by $151 million. Railway operating expenses compared with last year’s results, excluding the 2017 tax adjustments, were higher by $319 million, or 4 percent, due to higher diesel fuel prices, volume-related expenses, and increased costs associated with overall lower network velocity. These expenses were partially offset by higher property sales.

Income from railway operations was $4 billion, a 12 percent increase year-over-year, and an all-time record. Income from railway operations compared to prior year’s results excluding $151 million in the 2017 tax adjustments, increased $588 million, or 17 percent.

The railway operating ratio was a record 65.4 percent.

Source: PR NEWSWIRE

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