Summary
Norfolk Southern Corporation (NSC) reported a decrease in net income for the second quarter and the first six months of 2013 compared to the same periods in 2012. This decline was primarily driven by a reduction in railway operating revenues, notably in the coal segment, which was only partially offset by lower income taxes and some improvements in general merchandise and intermodal revenues. Despite the revenue challenges, the company continued to generate substantial cash flow from operations, which supported capital investments, dividend payments, and significant share repurchases. Operating expenses saw a slight increase, with higher purchased services and rents impacting the results. The company's financial position remained solid, with adequate liquidity and a manageable debt-to-capitalization ratio. Management expects continued strength in general merchandise and intermodal segments, while anticipating ongoing pressure in the coal market for the remainder of the year. Investors should note the company's ongoing efforts in share repurchases and capital expenditure programs aimed at enhancing its intermodal network, alongside potential risks related to regulatory matters and fluctuating commodity prices.
Financial Highlights
46 data points| Revenue | $2.80B |
| Operating Expenses | $1.97B |
| Operating Income | $836.00M |
| Interest Expense | $128.00M |
| Net Income | $465.00M |
| EPS (Basic) | $1.47 |
| EPS (Diluted) | $1.46 |
Key Highlights
- 1Net income for the second quarter of 2013 decreased by 11% to $465 million ($1.46 per diluted share) from $524 million ($1.60 per diluted share) in the prior year, primarily due to lower coal revenues.
- 2First six months net income decreased by 2% to $915 million ($2.87 per diluted share) from $934 million ($2.82 per diluted share) in the prior year.
- 3Railway operating revenues declined by 3% in Q2 2013 and 2% for the first six months, largely impacted by a significant drop in coal revenues (-17% in both periods).
- 4Operating expenses increased slightly by 1% in Q2 2013 and for the first six months, driven by higher purchased services and rents.
- 5Cash flow from operations remained strong, with $1.5 billion generated in the first six months of 2013, enabling capital expenditures, dividends, and share repurchases.
- 6The company repurchased approximately 4.2 million shares for $314 million in the first six months of 2013, a decrease from the 12.3 million shares for $850 million repurchased in the same period last year.
- 7The operating ratio worsened to 70.2% in Q2 2013 from 67.5% in Q2 2012, indicating higher operating expenses relative to revenues.