Norfolk Southern Earnings Come Right In Line At $1.24

Norfolk Southern Train Locomotive

Photo: Wikimedia Commons

UPDATE: Norfolk Southern earnings are out.Earnings were $1.24 versus expectations of $1.23.

Revenue was $2.7 billion, slightly below estimates of $2.73 billion.

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Full press release below:

NORFOLK, Va., Oct. 23, 2012 /PRNewswire/ — For the third quarter of 2012, Norfolk Southern (NSC) reported net income of $402 million, or $1.24 per diluted share, 27 per cent lower compared with $554 million, or $1.59 per diluted share, in the third quarter of 2011.

“Third-quarter results reflect weak market conditions, which resulted in declines in our coal and merchandise shipments,” said Norfolk Southern CEO Wick Moorman. “We remain focused on controlling costs while continuing to provide high service levels for our customers and invest in projects that will support future growth.”

Railway operating revenues totaled $2.7 billion, down 7 per cent compared with third-quarter 2011, primarily as the result of volume declines in coal and merchandise and lower revenues from fuel surcharges. Third-quarter 2012 fuel surcharge revenues were impacted by a $21 million unfavorable lag effect, while third-quarter 2011 fuel surcharge revenues included a favourable lag effect of $52 million.

General merchandise revenues were $1.4 billion, 1 per cent lower than third-quarter 2011 results. Coal revenues fell 22 per cent, to $701 million, compared with the same period last year. Intermodal revenues were $567 million, 3 per cent higher compared with the third quarter of 2011.

Railway operating expenses for the third quarter increased 1 per cent to $2.0 billion, compared with 2011.

Income from railway operations was $731 million, 22 per cent lower compared with the same period last year.

The third-quarter railway operating ratio increased to 72.9 per cent compared with 67.5 per cent during the third quarter of 2011.

Norfolk Southern Corporation is one of the nation’s premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal and industrial products.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:

  1. MATERIALS AND OTHER  During the first quarter of 2011, NS received an unfavorable ruling for an arbitration claim with an insurance carrier, and was denied recovery of the contested portion ($43 million) of the claim.  As a result, NS recorded a $43 million charge during the first quarter of 2011 for the receivables associated with the contested portion of the claim and a $15 million charge for other receivables affected by the ruling for which recovery was no longer probable. 
  2. INCOME TAXES   During the second quarter of 2011, the Internal Revenue Service (IRS) completed its examination of NS’ 2008 tax return and review of certain claims for refund for prior years that resulted in a decrease in income tax expense of $40 million.  Also during the second quarter of 2011, three states enacted tax law changes that decreased deferred income tax expense by $19 million. 
  3. EARNINGS PER SHARE    For basic earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the third quarter, $3 million in 2012 and $2 million in 2011; and for the first nine months, $7 million in 2012 and $6 million in 2011.        For diluted earnings per share, income available to common stockholders reflects reductions for the effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows:  for the third quarter, $1 million in 2012 and less than $1 million in 2011; and for the first nine months, $3 million in 2012 and $2 million in 2011.
  4. STOCK REPURCHASE PROGRAM   NS repurchased and retired 16.5 million shares of Common Stock in the first nine months of 2012, at a cost of $1.2 billion, and 23.8 million shares at a cost of $1.6 billion for the same period of 2011.  On August 1, 2012, NS’ Board of Directors authorised the repurchase of up to an additional 50 million shares of Common Stock through December 31, 2017.  The timing and volume of purchases is guided by management’s assessment of market conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with internally generated cash, cash on hand, or proceeds from borrowings.  Since the beginning of 2006, NS has repurchased and retired 126.1 million shares at a total cost of $7.4 billion.

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ORIGINAL: Rail freight giant Norfolk Southern Corporation reports third-quarter earnings after the closing bell.

Analysts expect earnings per share of $1.23 and total sales of $2.73 billion, down from $1.60 and $2.87 billion in Q2, respectively.

Investors will also study the release for clues on the health of the U.S. economy – which big rail companies like Norfolk Southern are uniquely positioned to give.

We will have the release LIVE on Money Game after the closing bell. Click here for live updates >

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