NORFOLK SOUTHERN CORP Quarterly Report for Q1 Ended Mar 31, 2018

Summary

Norfolk Southern Corporation (NSC) reported strong first-quarter 2018 results, exceeding previous year's performance across key metrics. Railway operating revenues increased by 6% to $2.72 billion, driven by robust growth in intermodal traffic and improved pricing across most segments. Net income saw a significant jump of 27% to $552 million, translating to a 30% increase in diluted earnings per share to $1.93. The company achieved a record first-quarter operating ratio of 69.3%, indicating improved operational efficiency. Key drivers for the strong performance include higher average revenue per unit, fueled by pricing gains and increased fuel surcharge revenues, alongside a 3% rise in overall traffic volume. While the company faced increased fuel and network velocity-related expenses, these were effectively managed. NSC also benefited from a lower effective tax rate following the 2017 tax reform. The company continued its commitment to shareholder returns through significant share repurchases, while also managing its debt levels and maintaining a strong liquidity position, expecting sufficient cash to meet ongoing obligations.

Key Highlights

• 1Railway operating revenues increased 6% to $2.72 billion, driven by intermodal growth and pricing.
• 2Net income surged 27% to $552 million, with diluted EPS up 30% to $1.93.
• 3Achieved a record first-quarter operating ratio of 69.3%, indicating improved efficiency.
• 4Traffic volume increased by 3% year-over-year.
• 5Benefited from a lower effective tax rate due to 2017 tax reform, leading to a significant reduction in income taxes paid.
• 6Repurchased $300 million of common stock in Q1 2018, a substantial increase from $200 million in Q1 2017.
• 7Maintained a healthy liquidity position with $1.07 billion in cash and cash equivalents at quarter-end.

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