8-K
Norfolk Southern Corp (NSC)
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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):
October 22, 2024 (October
22, 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 October 22, 2024, Norfolk Southern Corporation (the “Company”) issued a press release and its Quarterly Financial Data for the third quarter of 2024. A copy of the press release is attached as Exhibit 99.1 and a copy of the Quarterly Financial Data is attached as Exhibit 99.2, each of which is incorporated by reference herein. These documents are also available on the Company’s website, www.norfolksouthern.com.* 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.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibits are furnished as part of this Current Report on Form 8-K:
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release dated October 22, 2024 |
| 99.2 | 2024 Q3 Financial Data |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Internet addresses are provided for informational purposes only and are not intended to be hyperlinks.
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/ Jason M. Morris |
| Name: Jason M. Morris |
| Title: SVP, CLO & Corporate Secretary |
Date: October 22, 2024
Exhibit 99.1
FOR IMMEDIATE RELEASE
Norfolk Southern reports strong third quarter 2024results
Productivity initiatives drive further margin improvement
On track to meet adjusted operating ratio targetsfor second half and full year 2024
ATLANTA, October22, 2024 – Norfolk Southern Corporation (NYSE: NSC) announced Tuesday its third quarter 2024 financial results. For the quarter, income from railway operations was $1.6 billion, the operating ratio was 47.7%, and diluted earnings per share were $4.85.
After adjusting the results to exclude the impact of railway line sales, the Eastern Ohio incident as well as restructuring and other charges, railway operating income was $1.1 billion, the operating ratio was 63.4%, and diluted earnings per share were $3.25.
During the quarter, the company closed two railway line sales resulting in cash proceeds of nearly $400 million and gains of $380 million. For the second consecutive quarter, insurance recoveries related to the Eastern Ohio incident exceeded incremental costs.
"The Norfolk Southern team continues to build momentum, producing strong results for our shareholders and customers, and delivering on our safety culture for our employees" said Norfolk Southern President and CEO Mark R. George. “Working together, our team drove productivity and grew volumes while demonstrating resiliency in dealing with weather challenges. Thanks to our team’s hard work, we delivered sequential and year-over-year margin improvement putting us on track to achieve our adjusted operating ratio targets for the second half and full year 2024, and we are well positioned for long-term value creation.”
Third Quarter Summary
| • | Railway operating revenues of 3.1 billion, up 80 million, or 3%, compared to the third quarter 2023. |
|---|---|
| • | Income from railway operations was 1.6 billion, an increase of 840 million, or 111%, compared to the third quarter 2023. |
| ° |
All values are in US Dollars.
| • | Operating ratio in the quarter was 47.7% compared to 74.6% in third quarter 2023. |
|---|---|
| ° | |
| • | Diluted earnings per share were 4.85, an increase of 131% compared to third quarter 2023. |
| ° |
All values are in US Dollars.
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
Cautionary Statementon Forward-Looking Statements
Certain statements in this press release are "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," "anticipate," "believe," "project," or other comparable terminology. While the Company has based these forward-looking statements on those expectations, assumptions, estimates, beliefs, and projections it views as 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 the Company's control, including but not limited to: (i) the Company's ability to successfully implement its operational and productivity initiatives; (ii) changes in domestic or international economic, political or business conditions, including those affecting the transportation industry; (iii) natural events such as severe weather conditions; (iv) the outcome of claims, litigation, and governmental proceedings involving or affecting the Company, including those with respect to the Eastern Ohio incident; and (v) the nature and extent of the Company’s environmental remediation obligations with respect to the Eastern Ohio incident. 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, 2023, as well as the Company's subsequent filings with the SEC, 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, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
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 third quarter 2024 non-GAAP financial results exclude the effects of certain expenses related to the impact of railway line sales, the Eastern Ohio incident, and restructuring and other charges. The following table adjusts our third 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) | Third | ||
|---|---|---|---|
| Quarter 2024 | |||
| Income from railway operations | $ | 1,596 | |
| Effect of railway line sales | (380 | ) | |
| Effect of Eastern Ohio incident | (159 | ) | |
| Effect of restructuring and other charges | 60 | ||
| Adjusted income from railway operations | $ | 1,117 | |
| Operating ratio | 47.7 | % | |
| Effect of railway line sales | 12.5 | % | |
| Effect of Eastern Ohio incident | 5.2 | % | |
| Effect of restructuring and other charges | (2.0 | %) | |
| Adjusted operating ratio | 63.4 | % | |
| Diluted earnings per share | $ | 4.85 | |
| Effect of railway line sales | (1.27 | ) | |
| Effect of Eastern Ohio incident | (0.53 | ) | |
| Effect of restructuring and other charges | 0.20 | ||
| Adjusted diluted earnings per share | $ | 3.25 |
Exhibit 99.2
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| Third Quarter | First Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||||||
| (in millions, except per share amounts) | |||||||||
| Railway operating revenues | |||||||||
| Merchandise | $ | 1,861 | $ | 1,800 | $ | 5,628 | $ | 5,504 | |
| Intermodal | 763 | 737 | 2,250 | 2,296 | |||||
| Coal | 427 | 434 | 1,221 | 1,283 | |||||
| Total railway operating revenues | 3,051 | 2,971 | 9,099 | 9,083 | |||||
| Railway operating expenses | |||||||||
| Compensation and benefits | 690 | 715 | 2,126 | 2,098 | |||||
| Purchased services and rents | 497 | 517 | 1,541 | 1,519 | |||||
| Fuel | 216 | 289 | 757 | 867 | |||||
| Depreciation | 339 | 326 | 1,011 | 968 | |||||
| Materials and other | (188 | ) | 205 | 200 | 622 | ||||
| Restructuring and other charges | 60 | — | 156 | — | |||||
| Eastern Ohio incident | (159 | ) | 163 | 368 | 966 | ||||
| Total railway operating expenses | 1,455 | 2,215 | 6,159 | 7,040 | |||||
| Income from railway operations | 1,596 | 756 | 2,940 | 2,043 | |||||
| Other income – net | 34 | 40 | 69 | 153 | |||||
| Interest expense on debt | 203 | 182 | 608 | 527 | |||||
| Income before income taxes | 1,427 | 614 | 2,401 | 1,669 | |||||
| Income taxes | 328 | 136 | 512 | 369 | |||||
| Net income | $ | 1,099 | $ | 478 | $ | 1,889 | $ | 1,300 | |
| Earnings per share – diluted | $ | 4.85 | $ | 2.10 | $ | 8.34 | $ | 5.70 | |
| Weighted average shares outstanding – diluted | 226.5 | 227.0 | 226.3 | 227.8 |
See accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Balance 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 13,855 and 13,265, respectively | 33,326 | |||
| Other assets | 1,216 | |||
| Total assets | $ | 41,652 | ||
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,638 | ||
| 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;<br> outstanding 226,239,662 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 accompanying notes to consolidated financial statements.
Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| First Nine Months | |||||
|---|---|---|---|---|---|
| 2024 | 2023 | ||||
| ( in millions) | |||||
| Cash flows from operating activities | |||||
| Net income | $ | 1,300 | |||
| Reconciliation of net income to net cash provided by operating activities: | |||||
| Depreciation | 968 | ||||
| Deferred income taxes | (53 | ) | |||
| Gains and losses on properties | ) | (34 | ) | ||
| Changes in assets and liabilities affecting operations: | |||||
| Accounts receivable | ) | (65 | ) | ||
| Materials and supplies | ) | (50 | ) | ||
| Other current assets | 37 | ||||
| Current liabilities other than debt | 538 | ||||
| Other – net | ) | (135 | ) | ||
| Net cash provided by operating activities | 2,506 | ||||
| Cash flows from investing activities | |||||
| Property additions | ) | (1,491 | ) | ||
| Acquisition of assets of CSR | ) | (5 | ) | ||
| Property sales and other transactions | 62 | ||||
| Investment purchases | ) | (120 | ) | ||
| Investment sales and other transactions | 160 | ||||
| Net cash used in investing activities | ) | (1,394 | ) | ||
| Cash flows from financing activities | |||||
| Dividends | ) | (920 | ) | ||
| Common stock transactions | (9 | ) | |||
| Purchase and retirement of common stock | (503 | ) | |||
| Proceeds from borrowings | 2,303 | ||||
| Debt repayments | ) | (933 | ) | ||
| Net cash used in financing activities | ) | (62 | ) | ||
| Net increase (decrease) in cash and cash equivalents | ) | 1,050 | |||
| Cash and cash equivalents | |||||
| At beginning of year | 456 | ||||
| At end of period | $ | 1,506 | |||
| Supplemental disclosures of cash flow information | |||||
| Cash paid during the period for: | |||||
| Interest (net of amounts capitalized) | $ | 451 | |||
| Income taxes (net of refunds) | 521 |
All values are in US Dollars.
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Sales of Railway Lines
During the third quarter of 2024, we completed sales of two railway lines in the states of Virginia and North Carolina resulting in gains of $380 million on operating property sales included in “Materials and other” expense. The gains from these transactions are reflected in “Gains and losses on properties” and cash proceeds of $389 million are included in “Property sales and other transactions” on the Consolidated Statement of Cash Flows.
2. Restructuring and Other Charges
We recognized $60 million in the third quarter of 2024 related to expenses associated with the rationalization of certain software development projects that had not been placed into service and reflecting certain equipment at its net realizable value in advance of the planned disposition of that asset class. The $156 million recognized during first nine months of 2024, also includes $96 million of costs associated with our voluntary and involuntary separation programs that reduced our management workforce and costs associated with the appointment of our chief operating officer. Additionally, “Other income – net” for the first nine months includes a $20 million curtailment gain on our other postretirement benefit plan resulting from the restructuring, recorded in the second quarter of 2024.
3. Eastern Ohio Incident
On February 3, 2023, a train operated by us derailed in East Palestine, Ohio (the Incident). We recognized expenses of $368 million and $966 million during the first nine months of 2024 and 2023, respectively, for costs related to the Incident. Insurance recoveries exceeded expenses by $159 million in the third quarter of 2024 compared to expenses of $163 million in the third quarter of 2023. The total expense recognized in the first nine months of 2024 includes the impact of $552 million in insurance recoveries, of which $288 million was recognized in the third quarter 2024. During the first nine months of 2023, $25 million in recoveries were recorded. 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.
4. Shareholder Advisory Costs
“Other income – net” includes costs associated with shareholder advisory matters, which amounted to $1 million and $51 million during the third quarter and first nine months of 2024, respectively.
5. Deferred Income Taxes
During the first nine 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.
6. Stock Repurchase Program
We did not repurchase shares of common stock under our stock repurchase program in the first nine months of 2024, while we repurchased and retired 2.2 million shares of common stock at a cost of $508 million in the first nine months of 2023, inclusive of excise taxes.