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PRNewswire 24-Jan-2019 4:05 PM
NORFOLK, Va., Jan. 24, 2019 /PRNewswire/ -- Norfolk Southern Corporation (NYSE:NSC) today reported fourth-quarter and 2018 financial results.
Net income was $702 million and diluted earnings per share were $2.57 for the fourth quarter and $2,666 million and $9.51, respectively, for the full year.
"Norfolk Southern's financial results in 2018 clearly demonstrate improved financial performance and our commitment to delivering shareholder value," said James A. Squires, chairman, president and CEO. "Our confidence to deliver improved value to our shareholders – as underscored by our recently announced dividend increase – is heightened by NS' momentum heading into 2019 and by an array of initiatives to serve customers better and operate more efficiently."
The 2017 results for the fourth quarter and full year included the effects of remeasurement of net deferred tax liabilities ("2017 tax adjustments") resulting from the enactment of the Tax Cuts and Jobs Act of 2017, which added $3,482 million to net income in both periods and increased diluted earnings per share by $12.10 for the fourth quarter and $12.00 for the full year. Fourth-quarter 2018 net income decreased by $3,266 million and diluted earnings per share decreased by $11.22 compared to 2017. For the full year, net income in 2018 decreased by $2,738 million and diluted earnings per share decreased by $9.10 compared to 2017.
Absent the 2017 tax adjustments to the 2017 results, fourth-quarter 2018 net income increased $216 million, or 44 percent, and diluted earnings per share increased by $0.88, or 52 percent, while full-year 2018 net income increased by $744 million, or 39 percent, and diluted earnings per share increased by $2.90, or 44 percent.
Fourth-quarter summary
2018 summary
About Norfolk Southern
Norfolk Southern Corporation (NYSE:NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 19,500 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 is a major transporter of industrial products, including chemicals, agriculture, and metals and construction materials. In addition, the railroad operates the most extensive intermodal network in the East and is a principal carrier of coal, automobiles, and automotive parts.
Non-GAAP Financial Measures
This news release includes certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures is provided in the table below, entitled "Reconciliation of Non-GAAP Financial Measures."
Forward-looking statements
This news release contains forward-looking statements that may be identified by the use of words like "believe," "expect," "anticipate," "estimate," "plan," "consider," "project," and similar references to the future. Forward-looking statements reflect our good-faith evaluation of information currently available. These forward-looking statements are subject to a number of risks and uncertainties, and our actual results may differ materially from those projected. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements.
http://www.norfolksouthern.com
Reconciliation of Non-GAAP Financial Measures
Information included within this press release includes non-GAAP financial measures, as defined by SEC Regulation G. Non-GAAP financial measures should be considered in addition to, not as a substitute for, the financial measures reported in accordance with U.S. generally accepted accounting principles (GAAP).
The following table adjusts the 2017 GAAP results to exclude the effects of remeasurement of net deferred tax liabilities related to the reduction of the federal tax rate from 35 percent to 21 percent (2017 tax adjustments).
The Company uses these non-GAAP financial measures internally and believes this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding the effects of 2017 tax adjustments. While the Company believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.
($ in millions except per share amounts) |
Fourth- |
Year-Ended |
||
Railway operating expenses |
$ |
1,671) |
$ |
7,029) |
Effect of 2017 tax adjustments |
151) |
151) |
||
Adjusted railway operating expenses |
$ |
1,822) |
$ |
7,180) |
Income from railway operations |
$ |
998) |
$ |
3,522) |
Effect of 2017 tax adjustments |
(151) |
(151) |
||
Adjusted income from railway operations |
$ |
847) |
$ |
3,371) |
Net income |
$ |
3,968) |
$ |
5,404) |
Effect of 2017 tax adjustments |
(3,482) |
(3,482) |
||
Adjusted net income |
$ |
486) |
$ |
1,922) |
Diluted earnings per share |
$ |
13.79) |
$ |
18.61) |
Effect of 2017 tax adjustments |
(12.10) |
(12.00) |
||
Adjusted diluted earnings per share |
$ |
1.69) |
$ |
6.61) |
Norfolk Southern Corporation and Subsidiaries |
|||||||||||||||||||
Consolidated Statements of Income |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
Fourth Quarter |
Years Ended December 31, |
||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||||
($ in millions, except per share amounts) |
|||||||||||||||||||
Railway operating revenues |
|||||||||||||||||||
Merchandise |
$ |
1,684 |
$ |
1,576 |
$ |
6,744 |
$ |
6,357 |
|||||||||||
Intermodal |
755 457 |
667 |
2,893 |
2,452 |
|||||||||||||||
Coal |
426 |
1,821 |
1,742 |
||||||||||||||||
Total railway operating revenues |
2,896 |
2,669 |
11,458 |
10,551 |
|||||||||||||||
Railway operating expenses |
|||||||||||||||||||
Compensation and benefits |
757 |
730 268 |
2,925 |
2,979 |
|||||||||||||||
Purchased services and rents |
449 |
1,730 |
1,414 |
||||||||||||||||
Fuel |
275 281 |
239 |
1,087 |
840 |
|||||||||||||||
Depreciation |
267 |
1,102 |
1,055 |
||||||||||||||||
Materials and other |
56 |
167 |
655 |
741 |
|||||||||||||||
Total railway operating expenses |
1,818 |
1,671 |
7,499 |
7,029 |
|||||||||||||||
Income from railway operations |
1,078 |
998 |
3,959 |
3,522 |
|||||||||||||||
Other income – net |
— |
29 |
67 |
156 |
|||||||||||||||
Interest expense on debt |
148 |
134 |
557 |
550 |
|||||||||||||||
Income before income taxes |
930 |
893 |
3,469 |
3,128 |
|||||||||||||||
Income taxes |
|||||||||||||||||||
Current |
193 |
3 |
630 |
583 |
|||||||||||||||
Deferred |
35 |
(3,078) |
173 |
(2,859) |
|||||||||||||||
Total income taxes |
228 |
(3,075) |
803 |
(2,276) |
|||||||||||||||
Net income |
$ |
702 |
$ |
3,968 |
$ |
2,666 |
$ |
5,404 |
|||||||||||
Earnings per share – diluted |
$ |
2.57 |
$ |
13.79 |
$ |
9.51 |
$ |
18.61 |
|||||||||||
Weighted average shares outstanding – diluted |
273.5 |
287.8 |
280.2 |
290.3 |
|||||||||||||||
See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
|||||||||||||||||||
Consolidated Statements of Comprehensive Income |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
Fourth Quarter |
Years Ended December 31, |
||||||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||||
($ in millions) |
|||||||||||||||||||
Net income |
$ |
702 |
$ |
3,968 |
$ |
2,666 |
$ |
5,404 |
|||||||||||
Other comprehensive income (loss), before tax: |
|||||||||||||||||||
Pension and other postretirement benefits |
(157) |
134 |
(148) |
155 |
|||||||||||||||
Other comprehensive income (loss) of |
|||||||||||||||||||
equity investees |
(11) |
20 |
(9) |
19 |
|||||||||||||||
Other comprehensive income (loss), before tax |
(168) |
154 |
(157) |
174 |
|||||||||||||||
Income tax benefit (expense) related to items of |
|||||||||||||||||||
other comprehensive income (loss) |
40 |
(35) |
38 |
(43) |
|||||||||||||||
Other comprehensive income (loss), net of tax |
(128) |
119 |
(119) |
131 |
|||||||||||||||
Total comprehensive income |
$ |
574 |
$ |
4,087 |
$ |
2,547 |
$ |
5,535 |
|||||||||||
See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
|||||||||||
Consolidated Balance Sheets |
|||||||||||
(Unaudited) |
|||||||||||
At December 31, |
|||||||||||
2018 |
2017 |
||||||||||
($ in millions) |
|||||||||||
Assets |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ |
358 |
$ |
690 |
|||||||
Accounts receivable – net |
1,009 |
955 |
|||||||||
Materials and supplies |
207 |
222 |
|||||||||
Other current assets |
288 |
282 |
|||||||||
Total current assets |
1,862 |
2,149 |
|||||||||
Investments |
3,109 |
2,981 |
|||||||||
Properties less accumulated depreciation of $12,374 and |
|||||||||||
$11,909, respectively |
31,091 |
30,330 |
|||||||||
Other assets |
177 |
251 |
|||||||||
Total assets |
$ |
36,239 |
$ |
35,711 |
|||||||
Liabilities and stockholders' equity |
|||||||||||
Current liabilities: |
|||||||||||
Accounts payable |
$ |
1,505 |
$ |
1,401 |
|||||||
Short-term debt |
— |
100 |
|||||||||
Income and other taxes |
255 |
211 |
|||||||||
Other current liabilities |
246 |
233 |
|||||||||
Current maturities of long-term debt |
585 |
600 |
|||||||||
Total current liabilities |
2,591 |
2,545 |
|||||||||
Long-term debt |
10,560 |
9,136 |
|||||||||
Other liabilities |
1,266 |
1,347 |
|||||||||
Deferred income taxes |
6,460 |
6,324 |
|||||||||
Total liabilities |
20,877 |
19,352 |
|||||||||
Stockholders' equity: |
|||||||||||
Common stock $1.00 per share par value, 1,350,000,000 shares |
|||||||||||
authorized; outstanding 268,098,472 and 284,157,187 shares, |
|||||||||||
respectively, net of treasury shares |
269 |
285 |
|||||||||
Additional paid-in capital |
2,216 |
2,254 |
|||||||||
Accumulated other comprehensive loss |
(563) |
(356) |
|||||||||
Retained income |
13,440 |
14,176 |
|||||||||
Total stockholders' equity |
15,362 |
16,359 |
|||||||||
Total liabilities and stockholders' equity |
$ |
36,239 |
$ |
35,711 |
|||||||
See accompanying notes to consolidated financial statements. |
Norfolk Southern Corporation and Subsidiaries |
|||||||||
Consolidated Statements of Cash Flows |
|||||||||
(Unaudited) |
|||||||||
Years Ended December 31, |
|||||||||
2018 |
2017 |
||||||||
($ in millions) |
|||||||||
Cash flows from operating activities |
|||||||||
Net income |
$ |
2,666 |
$ |
5,404 |
|||||
Reconciliation of net income to net cash provided by operating activities: |
|||||||||
Depreciation |
1,104 |
1,059 |
|||||||
Deferred income taxes |
173 |
(2,859) |
|||||||
Gains and losses on properties |
(171) |
(92) |
|||||||
Changes in assets and liabilities affecting operations: |
|||||||||
Accounts receivable |
(70) |
(41) |
|||||||
Materials and supplies |
15 |
35 |
|||||||
Other current assets |
(46) |
(71) |
|||||||
Current liabilities other than debt |
223 |
135 |
|||||||
Other – net |
(168) |
(317) |
|||||||
Net cash provided by operating activities |
3,726 |
3,253 |
|||||||
Cash flows from investing activities |
|||||||||
Property additions |
(1,951) |
(1,723) |
|||||||
Property sales and other transactions |
204 |
202 |
|||||||
Investment purchases |
(10) |
(7) |
|||||||
Investment sales and other transactions |
99 |
47 |
|||||||
Net cash used in investing activities |
(1,658) |
(1,481) |
|||||||
Cash flows from financing activities |
|||||||||
Dividends |
(844) |
(703) |
|||||||
Common stock transactions |
40 |
89 |
|||||||
Purchase and retirement of common stock |
(2,781) |
(1,012) |
|||||||
Proceeds from borrowings – net of issuance costs |
2,023 |
290 |
|||||||
Debt repayments |
(750) |
(702) |
|||||||
Net cash used in financing activities |
(2,312) |
(2,038) |
|||||||
Net decrease in cash, cash equivalents, and restricted cash |
(244) |
(266) |
|||||||
Cash, cash equivalents, and restricted cash |
|||||||||
At beginning of year |
690 |
956 |
|||||||
At end of year |
$ |
446 |
$ |
690 |
|||||
Supplemental disclosures of cash flow information |
|||||||||
Cash paid during the period for: |
|||||||||
Interest (net of amounts capitalized) |
$ |
496 |
$ |
528 |
|||||
Income taxes (net of refunds) |
519 |
705 |
|||||||
See accompanying notes to consolidated financial statements. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
View original content:http://www.prnewswire.com/news-releases/norfolk-southern-reports-fourth-quarter-and-full-year-2018-results-300784020.html
SOURCE Norfolk Southern Corporation