Summary
Norfolk Southern Corporation (NSC) reported a decrease in net income for the second quarter and the first six months of 2015 compared to the prior year. This decline was primarily driven by lower railway operating revenues, which fell due to reduced fuel surcharge revenues stemming from lower oil prices and weaker coal volumes. While operating expenses also decreased, largely due to lower fuel costs, this reduction did not fully offset the revenue decline, leading to a higher operating ratio. Despite the revenue challenges, the company maintained positive cash flow from operations, which, along with existing cash reserves, supported significant investments in property additions, substantial share repurchases, and dividend payments. Management highlighted improvements in network fluidity and indicated that cash on hand and operating cash flow are expected to be sufficient for ongoing obligations. Key financial metrics reflect a challenging revenue environment, but the company's operational adjustments and financial management appear to be mitigating some of the negative impacts.
Financial Highlights
47 data points| Revenue | $2.71B |
| Operating Expenses | $1.90B |
| Operating Income | $814.00M |
| Interest Expense | $134.00M |
| Net Income | $433.00M |
| EPS (Basic) | $1.43 |
| EPS (Diluted) | $1.41 |
| Shares Outstanding (Basic) | 302.90M |
| Shares Outstanding (Diluted) | 305.50M |
Key Highlights
- 1Net income decreased by 23% in Q2 2015 and 20% for the first six months of 2015 compared to the prior year, primarily due to lower railway operating revenues.
- 2Railway operating revenues declined 11% in Q2 and 8% for the first six months, driven by reduced fuel surcharge revenues and weaker coal volumes.
- 3Operating expenses decreased by 6% in Q2 and 5% for the first six months, largely due to a 38% drop in fuel costs.
- 4The operating ratio increased by 3.5 percentage points to 70.0% in Q2 2015, indicating higher operating expenses relative to revenues.
- 5Cash provided by operating activities remained strong at $1.5 billion for the first six months of 2015.
- 6The company repurchased 7.4 million shares of common stock for $765 million in the first six months of 2015, a significant increase from the prior year's $100 million.
- 7Long-term debt remained stable, with a new issuance of $500 million in senior notes in Q2 2015.