Norfolk Southern reports Q1 2024 earnings

Norfolk Southern Corporation (NYSE: NSC) has released its preliminary first quarter 2024 financial results, reflecting a strong performance despite macroeconomic challenges and revenue mix shifts. The company reported railway operating revenues of $3,004 million and adjusted railway operating expenses of $2,100 million. This resulted in an income from railway operations of $904 million and an adjusted operating ratio of 69.9%.

The company's diluted earnings per share stood at $2.49, showcasing an improvement over the same period last year. Norfolk Southern President and CEO Alan H. Shaw highlighted that the company achieved an adjusted operating ratio in line with guidance, despite facing challenges from a revenue mix weighted towards lower-rated traffic.

The results also include the impact of a $600 million agreement in principle to resolve a consolidated class action lawsuit related to the East Palestine derailment. Additionally, the company's preliminary GAAP results include charges associated with separation programs, recruitment of a new chief operating officer, shareholder matters, and a deferred tax adjustment.

Despite a 4% volume growth, revenues were down 4% due to various headwinds, including lower fuel surcharge, adverse mix, lower intermodal storage fees, over-capacity in the domestic truck market, and lower seaborne coal prices. However, the company's focus on strong core pricing, supported by improved service, led to all-time quarterly records for revenue less fuel and revenue per unit less fuel in merchandise markets.

Furthermore, Norfolk Southern announced additional initiatives to accelerate strategic and operational progress, including changes in reporting structure, establishment of high-performance terminals, and a lane rationalization program. These changes have already resulted in tangible improvements, such as an 8% increase in terminal dwell, a 10% increase in merchandise train speed, and an 11% decrease in active train count.

Looking ahead, the company is taking proactive steps to mitigate supply chain disruptions following the Baltimore bridge collapse. Norfolk Southern expects a $50 – 100 million impact on revenue in the second quarter depending on the duration of the port outage.

In a separate announcement, Norfolk Southern revealed a $600 million agreement in principle to resolve a class action lawsuit related to the East Palestine derailment, furthering its efforts to address the incident and provide finality for settlement class members.

Norfolk Southern's full first quarter 2024 financial results will be announced during a live conference call on April 24, 2024.

Following these announcements, the company's shares moved 0.9%, and are now trading at a price of $252.59. For more information, read the company's full 8-K submission here.

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