Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________

 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

October 22, 2024 (October 22, 2024)

________________________________

NORFOLK SOUTHERN CORPORATION

(Exact name of registrant as specified in its charter)

______________________________________

 

Virginia	1-8339	52-1188014
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

 

650 West Peachtree Street NW
Atlanta, Georgia 30308-1925	[phone]
(Address of principal executive offices, including zip code)	(Registrant’s telephone number, including area code)

 

No Change
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Norfolk Southern Corporation Common Stock (Par Value $1.00)		NSC		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 2.02. Results of Operations and Financial Condition

 

Item 7.01. Regulation FD Disclosure

 

On October 22, 2024, Norfolk Southern Corporation (the “Company”) issued a press release and its Quarterly Financial Data for the third quarter of 2024. A copy of the press release is attached as Exhibit 99.1 and a copy of the Quarterly Financial Data is attached as Exhibit 99.2, each of which is incorporated by reference herein. These documents are also available on the Company’s website, www.norfolksouthern.com.* This unaudited financial information and summary of certain notes to the consolidated financial statements should be read in conjunction with: (a) the consolidated financial statements and notes included in the Company's latest Annual Report on Form 10-K and in subsequent Quarterly Reports on Form 10-Q; and (b) any Current Reports on Form 8-K.

 

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits

 

The following exhibits are furnished as part of this Current Report on Form 8-K:

 

Exhibit Number		Description
99.1		Press Release dated October 22, 2024
99.2		2024 Q3 Financial Data
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Internet addresses are provided for informational purposes only and are not intended to be hyperlinks.

  

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	SIGNATURES
	NORFOLK SOUTHERN CORPORATION
	(Registrant)
	/s/ Jason M. Morris
	Name: Jason M. Morris
	Title: SVP, CLO & Corporate Secretary

 

Date:  October 22, 2024

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

Norfolk Southern reports strong third quarter 2024 results

 

Productivity initiatives drive further margin improvement

 

On track to meet adjusted operating ratio targets for second half and full year 2024

 

 

ATLANTA, October 22, 2024 – Norfolk Southern Corporation (NYSE: NSC) announced Tuesday its third quarter 2024 financial results. For the quarter, income from railway operations was $1.6 billion, the operating ratio was 47.7%, and diluted earnings per share were $4.85.

 

After adjusting the results to exclude the impact of railway line sales, the Eastern Ohio incident as well as restructuring and other charges, railway operating income was $1.1 billion, the operating ratio was 63.4%, and diluted earnings per share were $3.25.

 

During the quarter, the company closed two railway line sales resulting in cash proceeds of nearly $400 million and gains of $380 million. For the second consecutive quarter, insurance recoveries related to the Eastern Ohio incident exceeded incremental costs.

 

"The Norfolk Southern team continues to build momentum, producing strong results for our shareholders and customers, and delivering on our safety culture for our employees" said Norfolk Southern President and CEO Mark R. George. “Working together, our team drove productivity and grew volumes while demonstrating resiliency in dealing with weather challenges. Thanks to our team’s hard work, we delivered sequential and year-over-year margin improvement putting us on track to achieve our adjusted operating ratio targets for the second half and full year 2024, and we are well positioned for long-term value creation.”

 

Third Quarter Summary 

 

•	Railway operating revenues of $3.1 billion, up $80 million, or 3%, compared to the third quarter 2023.
•	Income from railway operations was $1.6 billion, an increase of $840 million, or 111%, compared to the third quarter 2023.
	°	Adjusting for the impact of railway line sales, restructuring and other charges, and the Eastern Ohio incident, income from railway operations was $1.1 billion, up $198 million, or 22%, compared to adjusted third quarter 2023.

 

 

 

•	Operating ratio in the quarter was 47.7% compared to 74.6% in third quarter 2023.
	°	On an adjusted basis, the operating ratio for third quarter 2024 was 63.4%. This represents 570 basis points of improvement from adjusted third quarter 2023 which was 69.1%.
•	Diluted earnings per share were $4.85, an increase of 131% compared to third quarter 2023.
	°	Adjusted diluted earnings per share were $3.25, up $0.60, or 23%, compared to adjusted third quarter 2023.

 

###

 

About Norfolk Southern

 

Since 1827, Norfolk Southern Corporation (NYSE: NSC) and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Today, it operates a customer-centric and operations-driven freight transportation network. Committed to furthering sustainability, Norfolk Southern helps its customers avoid approximately 15 million tons of yearly carbon emissions by shipping via rail. Its dedicated team members deliver more than 7 million carloads annually, from agriculture to consumer goods, and Norfolk Southern originates more automotive traffic than any other Class I Railroad. Norfolk Southern also has the most extensive intermodal network in the eastern U.S. It serves a majority of the country's population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf of Mexico and Great Lakes. Learn more by visiting www.NorfolkSouthern.com.

 

Media Inquiries:

Media Relations

 

Investor Inquiries:

Investor Relations

 

 

Cautionary Statement on Forward-Looking Statements

 

Certain statements in this press release are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements may be identified by the use of words like "may," "will," "could," "would," "should," "expect," "anticipate," "believe," "project," or other comparable terminology. While the Company has based these forward-looking statements on those expectations, assumptions, estimates, beliefs, and projections it views as reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control, including but not limited to: (i) the Company's ability to successfully implement its operational and productivity initiatives; (ii) changes in domestic or international economic, political or business conditions, including those affecting the transportation industry; (iii) natural events such as severe weather conditions; (iv) the outcome of claims, litigation, and governmental proceedings involving or affecting the Company, including those with respect to the Eastern Ohio incident; and (v) the nature and extent of the Company’s environmental remediation obligations with respect to the Eastern Ohio incident. These and other important factors, including those discussed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as the Company's subsequent filings with the SEC, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Non-GAAP Financial Measures

 

Information included within this press release contains non-GAAP financial measures, including adjusted income from railway operations, adjusted operating ratio, and adjusted diluted earnings per share. 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).

 

Our third quarter 2024 non-GAAP financial results exclude the effects of certain expenses related to the impact of railway line sales, the Eastern Ohio incident, and restructuring and other charges. The following table adjusts our third quarter 2024 GAAP financial results to exclude the effects of those items. The income tax effects of the non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these costs. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, 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. With respect to our full year 2024 adjusted operating ratio guidance, we are unable to predict or estimate with reasonable certainty the ultimate outcome of certain items required for the GAAP measure without unreasonable effort. Information about the adjustments that are not currently available to us could have a potentially unpredictable and significant impact on future GAAP results.

 

 

 

($ in millions, except per share amounts)		Third
		Quarter 2024
Income from railway operations		$	1,596
Effect of railway line sales			(380	)
Effect of Eastern Ohio incident			(159	)
Effect of restructuring and other charges			60
Adjusted income from railway operations		$	1,117
Operating ratio			47.7	%
Effect of railway line sales			12.5	%
Effect of Eastern Ohio incident			5.2	%
Effect of restructuring and other charges			(2.0	%)
Adjusted operating ratio			63.4	%
Diluted earnings per share		$	4.85
Effect of railway line sales			(1.27	)
Effect of Eastern Ohio incident			(0.53	)
Effect of restructuring and other charges			0.20
Adjusted diluted earnings per share		$	3.25

 

Exhibit 99.2

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

		Third Quarter								First Nine Months
		2024				2023				2024				2023
		(in millions, except per share amounts)
Railway operating revenues
Merchandise		$	1,861			$	1,800			$	5,628			$	5,504
Intermodal			763				737				2,250				2,296
Coal			427				434				1,221				1,283
Total railway operating revenues			3,051				2,971				9,099				9,083
Railway operating expenses
Compensation and benefits			690				715				2,126				2,098
Purchased services and rents			497				517				1,541				1,519
Fuel			216				289				757				867
Depreciation			339				326				1,011				968
Materials and other			(188	)			205				200				622
Restructuring and other charges			60				—				156				—
Eastern Ohio incident			(159	)			163				368				966
Total railway operating expenses			1,455				2,215				6,159				7,040
Income from railway operations			1,596				756				2,940				2,043
Other income – net			34				40				69				153
Interest expense on debt			203				182				608				527
Income before income taxes			1,427				614				2,401				1,669
Income taxes			328				136				512				369
Net income		$	1,099			$	478			$	1,889			$	1,300
Earnings per share – diluted		$	4.85			$	2.10			$	8.34			$	5.70
Weighted average shares outstanding – diluted			226.5				227.0				226.3				227.8

 

See accompanying notes to consolidated financial statements. 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

		September 30,				December 31,
		2024				2023
		($ in millions)
Assets
Current assets:
Cash and cash equivalents		$	975			$	1,568
Accounts receivable – net			1,302				1,147
Materials and supplies			288				264
Other current assets			125				292
Total current assets			2,690				3,271
Investments			3,968				3,839
Properties less accumulated depreciation of $13,855 and $13,265, respectively			35,390				33,326
Other assets			1,207				1,216
Total assets		$	43,255			$	41,652
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	1,614			$	1,638
Income and other taxes			179				262
Other current liabilities			1,329				728
Current maturities of long-term debt			555				4
Total current liabilities			3,677				2,632
Long-term debt			16,644				17,175
Other liabilities			1,786				1,839
Deferred income taxes			7,363				7,225
Total liabilities			29,470				28,871
Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 226,239,662 and 225,681,254 shares, respectively, net of treasury shares			228				227
Additional paid-in capital			2,223				2,179
Accumulated other comprehensive loss			(332	)			(320	)
Retained income			11,666				10,695
Total stockholders’ equity			13,785				12,781
Total liabilities and stockholders’ equity		$	43,255			$	41,652

 

See accompanying notes to consolidated financial statements. 

 

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

		First Nine Months
		2024				2023
		($ in millions)
Cash flows from operating activities
Net income		$	1,889			$	1,300
Reconciliation of net income to net cash provided by operating activities:
Depreciation			1,011				968
Deferred income taxes			141				(53	)
Gains and losses on properties			(425	)			(34	)
Changes in assets and liabilities affecting operations:
Accounts receivable			(156	)			(65	)
Materials and supplies			(24	)			(50	)
Other current assets			80				37
Current liabilities other than debt			774				538
Other – net			(189	)			(135	)
Net cash provided by operating activities			3,101				2,506
Cash flows from investing activities
Property additions			(1,706	)			(1,491	)
Acquisition of assets of CSR			(1,643	)			(5	)
Property sales and other transactions			527				62
Investment purchases			(318	)			(120	)
Investment sales and other transactions			349				160
Net cash used in investing activities			(2,791	)			(1,394	)
Cash flows from financing activities
Dividends			(915	)			(920	)
Common stock transactions			15				(9	)
Purchase and retirement of common stock			—				(503	)
Proceeds from borrowings			1,051				2,303
Debt repayments			(1,054	)			(933	)
Net cash used in financing activities			(903	)			(62	)
Net increase (decrease) in cash and cash equivalents			(593	)			1,050
Cash and cash equivalents
At beginning of year			1,568				456
At end of period		$	975			$	1,506
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)		$	571			$	451
Income taxes (net of refunds)			284				521

 

See accompanying notes to consolidated financial statements. 

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1. Sales of Railway Lines

 

During the third quarter of 2024, we completed sales of two railway lines in the states of Virginia and North Carolina resulting in gains of $380 million on operating property sales included in “Materials and other” expense. The gains from these transactions are reflected in “Gains and losses on properties” and cash proceeds of $389 million are included in “Property sales and other transactions” on the Consolidated Statement of Cash Flows.

 

2. Restructuring and Other Charges

 

We recognized $60 million in the third quarter of 2024 related to expenses associated with the rationalization of certain software development projects that had not been placed into service and reflecting certain equipment at its net realizable value in advance of the planned disposition of that asset class. The $156 million recognized during first nine months of 2024, also includes $96 million of costs associated with our voluntary and involuntary separation programs that reduced our management workforce and costs associated with the appointment of our chief operating officer. Additionally, “Other income – net” for the first nine months includes a $20 million curtailment gain on our other postretirement benefit plan resulting from the restructuring, recorded in the second quarter of 2024.

 

3. Eastern Ohio Incident

 

On February 3, 2023, a train operated by us derailed in East Palestine, Ohio (the Incident). We recognized expenses of $368 million and $966 million during the first nine months of 2024 and 2023, respectively, for costs related to the Incident. Insurance recoveries exceeded expenses by $159 million in the third quarter of 2024 compared to expenses of $163 million in the third quarter of 2023. The total expense recognized in the first nine months of 2024 includes the impact of $552 million in insurance recoveries, of which $288 million was recognized in the third quarter 2024. During the first nine months of 2023, $25 million in recoveries were recorded. Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods in which recovery is considered probable. No amounts have been recorded related to potential third-party recoveries, which may reduce amounts payable by our insurers under applicable insurance coverage.

 

4. Shareholder Advisory Costs

 

“Other income – net” includes costs associated with shareholder advisory matters, which amounted to $1 million and $51 million during the third quarter and first nine months of 2024, respectively.

 

5. Deferred Income Taxes

 

During the first nine months of 2024, we recorded a $27 million reduction to deferred income taxes, the result of a subsidiary restructuring that reduced our estimated deferred state income tax rate.

 

6. Stock Repurchase Program

 

We did not repurchase shares of common stock under our stock repurchase program in the first nine months of 2024, while we repurchased and retired 2.2 million shares of common stock at a cost of $508 million in the first nine months of 2023, inclusive of excise taxes.

 

Cover	Oct. 22, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 22, 2024
Entity File Number	1-8339
Entity Registrant Name	NORFOLK SOUTHERN CORPORATION
Entity Central Index Key	0000702165
Entity Tax Identification Number	52-1188014
Entity Incorporation, State or Country Code	VA
Entity Address, Address Line One	650 West Peachtree Street NW
Entity Address, City or Town	Atlanta
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30308-1925
City Area Code	855
Local Phone Number	667-3655
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Norfolk Southern Corporation
Trading Symbol	NSC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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