10-KPeriod: FY2021

NORFOLK SOUTHERN CORP Annual Report, Year Ended Dec 31, 2021

Filed February 4, 2022For Securities:NSC

Summary

Norfolk Southern Corporation (NSC) reported a significant increase in financial performance for the year ended December 31, 2021. Railway operating revenues grew by 14% to $11.1 billion, driven by higher average revenue per unit and increased volumes across most commodity groups, particularly in Merchandise and Intermodal segments. This robust top-line growth, coupled with a focus on operational efficiency and the absence of significant one-time charges recorded in the prior year, led to a substantial 48% increase in income from railway operations to $4.4 billion. Diluted earnings per share also saw a significant rise of 54% to $12.11. The company's operational efficiency is highlighted by a reduced railway operating ratio of 60.1% in 2021, down from 69.3% in 2020, indicating improved cost management relative to revenue. NSC maintained substantial capital investment in its infrastructure, with property additions totaling $1.5 billion in 2021, reflecting a commitment to long-term asset health and service reliability. The company also returned significant capital to shareholders through share repurchases totaling $3.4 billion in 2021, underscoring its strong cash flow generation and financial flexibility.

Financial Highlights

47 data points
Beta

Revenue

$11.14B

Net Income

$3.00B

27.0% Net Margin

EPS (Diluted)

$12.11

Total Assets

$38.49B

Cash & Equivalents

$839.00M

Free Cash Flow

$2.79B

Financial Statements
Beta
Revenue$11.14B
Operating Expenses$6.70B
Operating Income$4.45B
Interest Expense$646.00M
Net Income$3.00B
EPS (Basic)$12.16
EPS (Diluted)$12.11
Shares Outstanding (Basic)246.90M
Shares Outstanding (Diluted)248.10M

Key Highlights

  • 1Revenue growth of 14% to $11.1 billion in 2021, driven by increased average revenue per unit and higher volumes.
  • 2Significant increase in Income from Railway Operations by 48% to $4.4 billion, indicating strong profitability.
  • 3Diluted Earnings Per Share (EPS) surged by 54% to $12.11, reflecting improved financial performance.
  • 4Railway Operating Ratio improved to 60.1% in 2021, down from 69.3% in 2020, demonstrating enhanced operational efficiency.
  • 5Merchandise segment led revenue growth, up 10%, followed by Intermodal (19%) and Coal (25%), showcasing diverse revenue streams.
  • 6Capital expenditures remained robust at $1.5 billion, supporting long-term infrastructure health.
  • 7Share repurchases of $3.4 billion in 2021 demonstrate a commitment to returning capital to shareholders.

Frequently Asked Questions

Norfolk Southern's revenue growth in 2021 was driven by a combination of increased average revenue per unit, attributed to pricing gains and higher fuel surcharge revenue, and volume growth across most commodity groups. The Merchandise and Intermodal segments were particularly strong contributors.

Operating expenses saw a slight decrease of 1% to $6.7 billion. This was primarily due to the absence of significant charges incurred in 2020, such as a loss on asset disposal and an investment impairment charge. However, higher fuel costs and increased compensation and benefits partially offset these reductions.

For 2022, Norfolk Southern anticipates continued revenue growth, particularly in Merchandise, Intermodal, and Metals & Construction segments, driven by pricing gains and volume increases. However, the company expects a decline in Coal revenues due to supply challenges and lower average revenue per unit. Capital expenditures are projected to be between $1.8 billion and $1.9 billion, and the effective income tax rate is expected to be between 23% and 24%.

Norfolk Southern demonstrated a strong commitment to returning capital to shareholders in 2021, with $3.4 billion in share repurchases. The company also issued new debt, including $600 million in senior notes due 2051, to support its capital structure and operations. A total of $1.5 billion was invested in property additions to maintain and improve its rail network.