8-KEarnings & ResultsExhibits & Filings

NORFOLK SOUTHERN CORP 8-K Report, Financial Results (Oct 7, 2020)

Filed October 7, 2020For Securities:NSC

Summary

Norfolk Southern Corporation (NSC) has filed an 8-K report to disclose preliminary third-quarter 2020 financial results and a significant non-cash impairment charge. The company anticipates a non-cash impairment charge of approximately $99 million related to an equity method investment, which will affect its reported GAAP results. Investors are advised that NSC will present both GAAP and non-GAAP financial results, with the latter excluding this impairment charge to provide a clearer view of ongoing operational performance. Preliminary estimates for the third quarter of 2020 indicate railway operating revenues of around $2.5 billion. The reported operating ratio under GAAP is expected to be 66.5%. However, when excluding the impairment charge, the adjusted railway operating expenses are projected at approximately $1.567 billion, leading to a more favorable adjusted operating ratio of 62.5%. The company will provide its full third-quarter financial details and further analysis during its earnings conference call on October 28, 2020.

Key Highlights

  • 1Anticipates a non-cash impairment charge of approximately $99 million in Q3 2020 related to an equity method investment.
  • 2Will report financial results on both a GAAP and a non-GAAP basis, excluding the impairment charge.
  • 3Preliminary Q3 2020 railway operating revenues are estimated at approximately $2.5 billion.
  • 4Expected GAAP operating ratio for Q3 2020 is 66.5%.
  • 5Excluding the impairment, the adjusted operating ratio for Q3 2020 is expected to be 62.5%.
  • 6Full Q3 2020 financial results and conference call scheduled for October 28, 2020.

Frequently Asked Questions

The $99 million charge is a non-cash impairment charge related to the value of one of Norfolk Southern's equity method investments. This means the carrying value of the investment on their books has been reduced.

Norfolk Southern is providing non-GAAP measures to exclude the impact of the non-cash impairment charge. The company believes these adjusted figures offer a more accurate representation of its ongoing operational performance and allow for better comparison over time and against industry peers.

The impairment charge increases railway operating expenses, thus raising the GAAP operating ratio to an expected 66.5%. When the charge is excluded, the adjusted operating ratio is significantly lower at 62.5%, indicating better operational efficiency from core business activities.

Norfolk Southern plans to release its full third-quarter financial results after 8:00 a.m. EDT on Wednesday, October 28, 2020. A press release will be available on their investor relations website, and the company will host a conference call and webcast at 8:45 a.m. EDT on the same day.