Summary
Norfolk Southern Corporation (NSC) reported a decrease in net income for the third quarter and the first nine months of 2012 compared to the same periods in 2011. This decline was primarily attributed to lower coal volumes and reduced fuel surcharge revenue, leading to a higher operating ratio. Despite the decrease in profitability, the company generated significant cash flow from operations, which, along with borrowings, supported property additions, dividends, and substantial share repurchases. NSC's balance sheet shows an increase in cash and cash equivalents and a rise in total assets. The company also engaged in significant debt management activities, issuing new senior notes and refinancing existing debt. Operationally, coal revenue saw a notable decline due to decreased traffic volume and lower average revenue per unit, driven by factors such as competition from natural gas and environmental regulations impacting utility coal plants. General merchandise and intermodal segments showed more resilience, with general merchandise revenues largely flat and intermodal revenues showing a slight increase, supported by higher traffic volumes despite some pricing pressure. The company also highlighted ongoing investments in infrastructure, such as the Crescent Corridor project. Management anticipates that ongoing cash flows will be sufficient to meet obligations, though future oil price fluctuations could introduce volatility.
Financial Highlights
45 data points| Revenue | $2.69B |
| Operating Expenses | $1.96B |
| Operating Income | $731.00M |
| Interest Expense | $124.00M |
| Net Income | $402.00M |
| EPS (Basic) | $1.26 |
| EPS (Diluted) | $1.24 |
Key Highlights
- 1Net income for Q3 2012 was $402 million, a decrease from $554 million in Q3 2011, with diluted EPS at $1.24 vs. $1.59.
- 2Total railway operating revenues for Q3 2012 were $2.69 billion, down 7% year-over-year, primarily due to lower coal volumes and fuel surcharges.
- 3Railway operating expenses for Q3 2012 remained relatively flat year-over-year ($1.96 billion vs. $1.95 billion), despite higher depreciation.
- 4Cash provided by operating activities for the first nine months of 2012 was $2.5 billion, slightly down from $2.8 billion in the prior year.
- 5The company repurchased 16.5 million shares for $1.2 billion in the first nine months of 2012 and authorized an additional 50 million share repurchase program.
- 6Long-term debt increased to $8.43 billion from $7.39 billion, reflecting new debt issuances and refinancings.
- 7The company maintained significant liquidity, with cash, cash equivalents, and short-term investments totaling $708 million as of September 30, 2012.