Summary
Norfolk Southern Corporation (NSC) reported its third-quarter and nine-month results for the period ending September 30, 2007. For the third quarter, railway operating revenues saw a slight decrease of 2% year-over-year to $2.35 billion, primarily due to a 4% reduction in traffic volume, partially offset by higher average revenue per unit. Net income for the quarter was $386 million, a 7% decrease from the prior year, influenced by lower income from railway operations and an increase in deferred tax expense due to Illinois tax legislation. For the first nine months of 2007, railway operating revenues also decreased by 2% to $6.98 billion, with net income at $1.07 billion, down 3% from the same period in 2006. The company continued to manage its capital through share repurchases, acquiring 6.7 million shares in the third quarter. Despite revenue pressures, NSC maintained a strong operating cash flow of $1.8 billion for the nine-month period. The company faces ongoing regulatory scrutiny, particularly concerning fuel surcharges, and is managing various legal and environmental matters.
Key Highlights
- 1Railway operating revenues decreased by 2% to $2.35 billion for the third quarter of 2007, driven by a 4% decline in traffic volume, while average revenue per unit saw a modest increase.
- 2Net income for the third quarter was $386 million, a 7% decrease compared to the prior year, impacted by reduced operating income and a $19 million increase in deferred tax expense due to new Illinois tax legislation.
- 3For the first nine months of 2007, net income was $1.07 billion, down 3% from the prior year, with railway operating revenues also down 2% to $6.98 billion.
- 4Operating expenses remained relatively stable year-over-year, but the operating ratio increased to 71.1% from 70.1% in the third quarter of 2006, indicating higher expenses relative to revenue.
- 5The company repurchased 6.7 million shares of common stock in the third quarter for $341 million as part of its ongoing share repurchase program.
- 6Cash provided by operating activities was robust at $1.8 billion for the first nine months of 2007.
- 7NSC is subject to ongoing investigations and litigation, including a significant settlement related to an environmental spill in Pennsylvania and ongoing legal actions concerning fuel surcharges.