01—Abstract
Summary
Summary of the 10-Q filed April 24, 2013. Cited figures are marked; the original filing is the authoritative source.
Norfolk Southern Corporation reported net income of $450 milliona for the first quarter of 2013, an increase of 10% compared to $410 million in the same period of 2012.
Diluted earnings per share rose to $1.41b from $1.23. This improvement was significantly bolstered by a $60 million after-tax gain from the sale of assets to the Michigan Department of Transportation. However, income from railway operations declined by $54 million, largely due to a 2% decrease in railway operating revenues, primarily driven by a slump in the coal business that overshadowed growth in intermodal and general merchandise segments.
02—Key points
Key Highlights
- Net income increased by 10% to $450 million year-over-year, aided by a $60 million after-tax gain on asset sales.
- Diluted earnings per share grew to $1.41 in Q1 2013 from $1.23 in Q1 2012.
- Railway operating revenues decreased by 2% to $2.7 billion, primarily due to a 17% decline in coal revenues driven by lower volumes and average revenue per unit.
- Operating expenses remained relatively flat year-over-year, increasing only slightly to $2.047 billion.
- The railway operating ratio increased to 74.8% from 73.3% in the prior year's quarter, indicating a less efficient use of revenues to cover expenses.
- Cash provided by operating activities decreased to $723 million from $1.0 billion in the prior year's quarter, impacting overall liquidity.
- The company repurchased approximately 0.5 million shares of common stock for $33 million in Q1 2013, a significant decrease from $400 million in Q1 2012, indicating a shift in capital allocation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed April 24, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $2.74B$2.79B | −1.8% |
| Operating Expenses | $2.05B$2.04B | +0.1% |
| Operating Income | $691.00M$745.00M | −7.2% |
| Interest Expense | $129.00M$120.00M | +7.5% |
| Net Income | $450.00M$410.00M | +9.8% |
| EPS (Basic) | $1.43$1.24 | +15.3% |
| EPS (Diluted) | $1.41$1.23 | +14.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of the increase in net income for the first quarter of 2013?
The primary driver of the increase in net income was a $60 million after-tax gain recognized from the sale of certain assets to the Michigan Department of Transportation. Without this one-time gain, the core operating performance showed a decrease in income from railway operations.
Why did railway operating revenues decline, particularly in the coal segment?
Railway operating revenues decreased by 2% overall, mainly due to a 17% drop in coal revenues. This decline was driven by a combination of lower average revenue per unit and a 4% decrease in carload volume. Factors contributing to the coal segment's weakness include natural gas displacement impacting utility coal demand and the closure of a steel plant affecting domestic metallurgical coal shipments.
How did Norfolk Southern manage its expenses in the first quarter of 2013?
Total railway operating expenses remained largely stable, increasing by only $3 million to $2.047 billion compared to the prior year's first quarter. This stability was achieved despite an increase in fuel expenses, which was offset by decreases in materials and other expenses, and compensation and benefits.
What is the company's outlook on its financial condition and liquidity?
Norfolk Southern expects its cash on hand combined with cash generated from operating activities to be sufficient to meet its ongoing obligations. While cash from operations decreased in the first quarter compared to the prior year, the company maintains a healthy liquidity position and has credit facilities available.
06—Continue