NS Net Income Up in 1st Quarter

Norfolk Southern said on Wednesday that its first quarter 2021 net income was $673 million, or $2.66 earnings per diluted share, compared with $381 million, or $1.47 per diluted share during the same period in 2020.

Railway operating revenue of $2.6 billion was up 1 percent, or $14 million, compared with last year.

In a news release, NS said this gain was driven primarily by a 3 percent increase in volume.

The quarter’s diluted earnings per share was a first quarter record. Likewise, NS set an operating ratio record during the first quarter of 61.5 percent.

A year ago, the operating ratio for the first quarter was an adjusted 63.7 percent. The operating ratio is the percentage of revenue devoted to paying expenses.

First quarter 2021 railway operating expenses were $1.6 billion, down 21 percent or $433 million, compared with the same period last year.

The first quarter 2020 results included a $385 million non-cash locomotive rationalization charge as a result of productivity gains achieved through implementing the precision scheduled railroading operating model.

Last year NS sold 703 locomotives “deemed excess and no longer needed for railroad operations,” and thereby recorded a $385 million loss “to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit,” NS said in a news release.

Excluding the locomotive rationalization charge, operating expenses were down 3 percent, or $48 million, compared with adjusted operating expenses in 2020.

NS said it benefited from lower fuel, compensation and benefits, and materials expenses.

Income from railway operations reached a first-quarter record of $1 billion, an increase of 79 percent or $447 million compared to 2020.

Excluding the effect of the locomotive rationalization charge last year, income from railway operations was up 7 percent or $62 million.

“The reopening of the economy provides meaningful tailwinds for continued strength in both the consumer and manufacturing sectors, and our long history of delivering sustainable transportation solutions for customers will continue to drive long-term value for our shareholders, customers, and the communities we serve,” said NS CEO James Squires.

NS executives expect 9 percent year-over-year growth in revenue, with intermodal and merchandise as the leading drivers, and coal continuing a “secular decline.”

The company anticipates a “greater than 300 basis points improvement” for the operating ratio in 2021, vs. the 2020 adjusted operating ratio of 64.4 percent

Capital expenditures are expected to be $1.6 billion.

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