8-K
Norfolk Southern Corp (NSC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 8-K
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 25, 2024 (July
25, 2024)
________________________________
NORFOLK
SOUTHERN CORPORATION
(Exact name of registrant as specified in its charter)
______________________________________
| Virginia | 1-8339 | 52-1188014 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission File Number) | (IRS<br> Employer Identification Number) |
| 650 West Peachtree Street NW | ||
| --- | --- | |
| Atlanta, Georgia<br><br> <br>30308-1925 | (855) 667-3655 | |
| (Address of principal<br> executive offices, including zip code) | (Registrant’s telephone<br> number, including area code) |
No Change
(Former name or former address, if changed since last report)
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:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| ****<br><br> <br>Title of each class | ****<br><br> <br>Trading Symbol | Name of each exchange<br><br> <br>on which registered |
|---|---|---|
| Norfolk Southern Corporation <br><br>Common Stock (Par Value $1.00) | NSC | New York Stock Exchange |
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 FinancialCondition
Item 7.01. Regulation FD Disclosure
On July 25, 2024, Norfolk Southern Corporation (the “Company”) issued a press release, attached hereto as Exhibit 99.1, reporting second-quarter results for 2024. Attached hereto, as Exhibit 99.2, is the Quarterly Financial Data for the second quarter of 2024. This information is available on the Company’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 Company'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 July 25, 2024 |
| 99.2 | 2024 Q2 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/ Nabanita C. Nag |
| Name: Nabanita C. Nag |
| Title: EVP Corporate Affairs, CLO & Corporate Secretary |
Date: July 25, 2024
Exhibit 99.1
FORIMMEDIATE RELEASE
Norfolk Southernreports second quarter 2024 results;
reaffirms full year adjusted operating ratio guidance
ATLANTA,July 25, 2024 – Norfolk Southern Corporation (NYSE: NSC) announced Thursday its second quarter 2024 financial results. For the quarter, income from railway operations was $1.1 billion, the operating ratio was 62.8%, and diluted earnings per share were $3.25.
After adjusting the results to exclude the impact of the Eastern Ohio incident, restructuring and other charges, and shareholder advisory costs from the proxy contest, railway operating income was $1.1 billion, the operating ratio was 65.1%, and diluted earnings per share were $3.06. Notably, in the second quarter, the impact of the Eastern Ohio incident included insurance recoveries which were greater than the costs incurred in the quarter.
“The Norfolk Southern team delivered strong results, including on operating ratio and expenses, that are directly in-line with the targets we committed to our shareholders,” said Norfolk Southern President and CEO Alan H. Shaw. “During the quarter, we demonstrated that we are leveraging our service product to secure volume growth, enhancing our safety culture, and accelerating operational improvements, while eliminating service recovery costs. These results show that our strategy is working and that our momentum is building. We are committed to accomplishing even more in the second half of 2024, and we reaffirm our guidance of a full year adjusted operating ratio of approximately 66%.”
SecondQuarter Summary
| · | Railway operating revenues of $3.0 billion, up $64 million, or 2%, compared to the second quarter of 2023. |
|---|---|
| · | Income from railway operations was $1.1 billion, an increase of $555 million, or 96%, compared to second quarter of 2023. |
| --- | --- |
| o | Adjusting for the Eastern Ohio incident and restructuring and other costs, income from<br>railway operations was $1.1 billion, up $71 million, or 7%, compared to second quarter 2023. |
| --- | --- |
| · | Operating ratio in the quarter was 62.8% compared to 80.7% in second quarter 2023. |
| --- | --- |
| o | On an adjusted basis, the operating ratio for second quarter 2024 was 65.1%. This represents 160 basis points of improvement<br>from second quarter 2023 which was 66.7%. |
| --- | --- |
| · | Diluted earnings per share were $3.25, an increase of 108% compared to second quarter 2023. |
| --- | --- |
| o | Adjusting for the Eastern Ohio incident, restructuring and other costs, diluted earnings per share were $3.06, up $0.11, or<br>4%, compared to second quarter 2023. |
| --- | --- |
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 Norfolk Southern originates more automotive traffic than any other Class I Railroad. Norfolk Southern also has the most extensive intermodal network in the eastern U.S. It serves a majority of the country’s population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf of Mexico and Great Lakes. Learn more by visiting www.NorfolkSouthern.com.
Media Inquiries:
Media Relations
Investor Inquiries:
Investor Relations
Non-GAAP Financial Measures
Information included within this press release contains non-GAAP financial measures, including adjusted income from railway operations, adjusted operating ratio, and adjusted diluted earnings per share. 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).
Our second quarter 2024 non-GAAP financial results exclude the effects of certain expenses related to the Eastern Ohio incident, restructuring and other charges, and shareholder advisory costs. The following table adjusts our second quarter 2024 GAAP financial results to exclude the effects of those items. The income tax effects of the non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these costs. While we believe that these non-GAAP financial measures are useful in evaluating our 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. With respect to our full-year 2024 adjusted operating ratio guidance, we are unable to predict or estimate with reasonable certainty the ultimate outcome of certain items required for the GAAP measure without unreasonable effort. Information about the adjustments that are not currently available to us could have a potentially unpredictable and significant impact on future GAAP results.
| ($ in millions, except per share amounts) | Second<br> Quarter 2024 | ||
|---|---|---|---|
| Income from railway operations | $ | 1,131 | |
| Effect of the Incident and restructuring and other charges | (68 | ) | |
| Adjusted income from railway operations | $ | 1,063 | |
| Operating ratio | 62.8 | % | |
| Effect of the Incident and restructuring and other charges | 2.3 | % | |
| Adjusted operating ratio | 65.1 | % | |
| Diluted earnings per share | $ | 3.25 | |
| Effect of the Incident, restructuring and other charges, and shareholder advisory costs | (0.19 | ) | |
| Adjusted diluted earnings per share | $ | 3.06 |
Norfolk Southern Corporation | 2
Exhibit 99.2
Norfolk SouthernCorporation and Subsidiaries
ConsolidatedStatements of Income
(Unaudited)
| Second Quarter | First Six Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||||||
| (in millions, except per share amounts) | |||||||||
| Railway operating revenues | |||||||||
| Merchandise | $ | 1,904 | $ | 1,826 | $ | 3,767 | $ | 3,704 | |
| Intermodal | 742 | 745 | 1,487 | 1,559 | |||||
| Coal | 398 | 409 | 794 | 849 | |||||
| Total railway operating revenues | 3,044 | 2,980 | 6,048 | 6,112 | |||||
| Railway operating expenses | |||||||||
| Compensation and benefits | 700 | 693 | 1,436 | 1,383 | |||||
| Purchased services and rents | 516 | 506 | 1,044 | 1,002 | |||||
| Fuel | 257 | 263 | 541 | 578 | |||||
| Depreciation | 335 | 321 | 672 | 642 | |||||
| Materials and other | 173 | 205 | 388 | 417 | |||||
| Restructuring and other charges | (3 | ) | — | 96 | — | ||||
| Eastern Ohio incident | (65 | ) | 416 | 527 | 803 | ||||
| Total railway operating expenses | 1,913 | 2,404 | 4,704 | 4,825 | |||||
| Income from railway operations | 1,131 | 576 | 1,344 | 1,287 | |||||
| Other income – net | 17 | 57 | 35 | 113 | |||||
| Interest expense on debt | 204 | 170 | 405 | 345 | |||||
| Income before income taxes | 944 | 463 | 974 | 1,055 | |||||
| Income taxes | 207 | 107 | 184 | 233 | |||||
| Net income | $ | 737 | $ | 356 | $ | 790 | $ | 822 | |
| Earnings per share – diluted | $ | 3.25 | $ | 1.56 | $ | 3.48 | $ | 3.60 | |
| Weighted average shares outstanding – diluted | 226.4 | 228.0 | 226.3 | 228.1 |
See accompanyingnotes to consolidated financial statements.
Norfolk SouthernCorporation and Subsidiaries
ConsolidatedBalance Sheets
(Unaudited)
| December 31, | ||||
|---|---|---|---|---|
| 2023 | ||||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,568 | ||
| Accounts receivable – net | 1,147 | |||
| Materials and supplies | 264 | |||
| Other current assets | 292 | |||
| Total current assets | 3,271 | |||
| Investments | 3,839 | |||
| Properties less accumulated depreciation of 13,630 and 13,265, respectively | 33,326 | |||
| Other assets | 1,216 | |||
| Total assets | $ | 41,652 | ||
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,638 | ||
| Short-term debt | — | |||
| Income and other taxes | 262 | |||
| Other current liabilities | 728 | |||
| Current maturities of long-term debt | 4 | |||
| Total current liabilities | 2,632 | |||
| Long-term debt | 17,175 | |||
| Other liabilities | 1,839 | |||
| Deferred income taxes | 7,225 | |||
| Total liabilities | 28,871 | |||
| Stockholders’ equity: | ||||
| Common stock 1.00 per share par value, 1,350,000,000 shares authorized; outstanding 226,096,433 and 225,681,254 shares, respectively, net of treasury shares | 227 | |||
| Additional paid-in capital | 2,179 | |||
| Accumulated other comprehensive loss | ) | (320 | ) | |
| Retained income | 10,695 | |||
| Total stockholders’ equity | 12,781 | |||
| Total liabilities and stockholders’ equity | $ | 41,652 |
All values are in US Dollars.
See accompanyingnotes to consolidated financial statements.
Norfolk SouthernCorporation and Subsidiaries
ConsolidatedStatements of Cash Flows
(Unaudited)
| First Six Months | |||||
|---|---|---|---|---|---|
| 2024 | 2023 | ||||
| ( in millions) | |||||
| Cash flows from operating activities | |||||
| Net income | $ | 822 | |||
| Reconciliation of net income to net cash provided by operating activities: | |||||
| Depreciation | 642 | ||||
| Deferred income taxes | (35 | ) | |||
| Gains and losses on properties | ) | (25 | ) | ||
| Changes in assets and liabilities affecting operations: | |||||
| Accounts receivable | ) | 57 | |||
| Materials and supplies | ) | (19 | ) | ||
| Other current assets | 36 | ||||
| Current liabilities other than debt | 460 | ||||
| Other – net | ) | (92 | ) | ||
| Net cash provided by operating activities | 1,846 | ||||
| Cash flows from investing activities | |||||
| Property additions | ) | (948 | ) | ||
| Acquisition of assets of CSR | ) | — | |||
| Property sales and other transactions | 61 | ||||
| Investment purchases | ) | (6 | ) | ||
| Investment sales and other transactions | 152 | ||||
| Net cash used in investing activities | ) | (741 | ) | ||
| Cash flows from financing activities | |||||
| Dividends | ) | (615 | ) | ||
| Common stock transactions | ) | (9 | ) | ||
| Purchase and retirement of common stock | (303 | ) | |||
| Proceeds from borrowings | 724 | ||||
| Debt repayments | ) | (802 | ) | ||
| Net cash used in financing activities | ) | (1,005 | ) | ||
| Net increase (decrease) in cash and cash equivalents | ) | 100 | |||
| Cash and cash equivalents | |||||
| At beginning of year | 456 | ||||
| At end of period | $ | 556 | |||
| Supplemental disclosures of cash flow information | |||||
| Cash paid during the period for: | |||||
| Interest (net of amounts capitalized) | $ | 318 | |||
| Income taxes (net of refunds) | 315 |
All values are in US Dollars.
See accompanyingnotes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS
1. Eastern Ohio Incident
On February 3, 2023, a train operated by us derailed in East Palestine, Ohio (the Incident). We recognized expenses of $527 million and $803 million during the first six months of 2024 and 2023, respectively, for costs related to the Incident. Insurance recoveries exceeded expenses by $65 million in the second quarter of 2024 compared to expenses of $416 million in the second quarter of 2023. The total expense recognized in the first six months of 2024 includes the impact of $264 million in insurance recoveries, of which $156 million was recognized in the second quarter 2024. No insurance recoveries were recorded during the first six months of 2023. 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. Restructuring and Other Charges
During the first six months of 2024, the Company executed a voluntary and an involuntary separation program that resulted in a reduction of approximately 350 management employees. In the first six months of 2024, “Restructuring and other charges” includes $61 million of costs related to these programs which primarily consists of separation payments to the impacted management employees. The Company also incurred $35 million of costs associated with the March 2024 appointment of our chief operating officer. Additionally, “Other income – net” includes a $20 million curtailment gain on our other postretirement benefit plan resulting from the restructuring, recorded in the second quarter of 2024.
3. Shareholder Advisory Costs
“Other income – net” includes costs associated with shareholder advisory matters, which amounted to $29 million and $50 million during the second quarter and first six months of 2024, respectively.
4. Deferred Income Taxes
During the first six months of 2024, we recorded a $27 million reduction to deferred income taxes, the result of a subsidiary restructuring that reduced our estimated deferred state income tax rate.
5. Stock Repurchase Program
We did not repurchase shares of common stock under our stock repurchase program in the first six months of 2024, while we repurchased and retired 1.3 million shares of common stock at a cost of $305 million in the first six months of 2023, inclusive of excise taxes.