Summary
Norfolk Southern Corporation (NSC) reported a decrease in net income for the third quarter and first nine months of 2015 compared to the same periods in 2014. This decline was primarily driven by lower railway operating revenues, which were impacted by reduced fuel surcharge revenues and significant weakness in the coal markets. While operating expenses also decreased, largely due to lower fuel costs, the drop in revenue outpaced these savings, leading to a higher operating ratio. Despite the revenue challenges, the company continued to invest in its infrastructure, with property additions for the first nine months of 2015 increasing compared to the prior year, including a notable acquisition of the Delaware & Hudson Railway line. NSC also demonstrated a commitment to returning capital to shareholders through substantial share repurchases, totaling $997 million for the first nine months of 2015, and continued dividend payments. The company is also navigating regulatory requirements, including the impending deadline for Positive Train Control (PTC) implementation, which presents both operational and financial considerations.
Financial Highlights
46 data points| Revenue | $2.71B |
| Operating Expenses | $1.89B |
| Operating Income | $822.00M |
| Interest Expense | $137.00M |
| Net Income | $452.00M |
| EPS (Basic) | $1.50 |
| EPS (Diluted) | $1.49 |
| Shares Outstanding (Basic) | 300.10M |
| Shares Outstanding (Diluted) | 302.50M |
Key Highlights
- 1Net income for Q3 2015 decreased by 19% to $452 million, or $1.49 per diluted share, compared to $559 million, or $1.79 per diluted share, in Q3 2014.
- 2Nine-month net income decreased by 20% to $1.2 billion, or $3.90 per diluted share, compared to $1.49 billion, or $4.75 per diluted share, in the same period of 2014.
- 3Railway operating revenues declined 10% in Q3 2015 and 9% for the first nine months of 2015, primarily due to lower fuel surcharge revenues and a significant drop in coal volumes.
- 4Operating expenses decreased by 7% in Q3 2015 and 5% for the first nine months, largely driven by a 43% and 40% reduction in fuel costs, respectively.
- 5The company repurchased $997 million of common stock in the first nine months of 2015, a significant increase from $166 million in the prior year, indicating a strong focus on capital return to shareholders.
- 6Property additions increased to $1.7 billion in the first nine months of 2015 from $1.3 billion in the prior year, including the acquisition of the Delaware & Hudson Railway line.
- 7The operating ratio, a key efficiency metric, increased to 69.7% for Q3 2015 from 67.0% in Q3 2014, and rose to 72.0% for the first nine months of 2015 from 69.3% in the prior year.