e21590_nsc-8k.htm

Exhibit 99.1

(LOGO)

Norfolk Southern Corporation, 650 W. Peachtree Street NW, Atlanta, Ga. 30308

FOR IMMEDIATE RELEASE

Norfolk Southern reports third-quarter 2021 results

Railroad achieves record low third-quarter operating ratio

ATLANTA, October 27, 2021 – Norfolk Southern Corporation (NYSE: NSC) today reported third-quarter 2021 financial results, which included third-quarter records for net income, diluted earnings per share, income from railway operations, and operating ratio.

Third-quarter net income was $753 million, diluted earnings per share was $3.06, income from railway operations was $1.1 billion, and the operating ratio was 60.2%.

“Our team delivered a strong financial performance in the quarter, producing a number of third-quarter records,” said James A. Squires, Norfolk Southern chairman, president, and CEO. “The actions taken by our employees show our commitment to find sustainable solutions for our customers and shareholders in the face of significant supply chain disruptions.”

Third-Quarter Summary

Railway operating revenues of $2.85 billion increased 14%, or $346 million, compared with third-quarter 2020, driven by a 14% increase in revenue per unit.

Railway operating expenses were $1.7 billion, an increase of 3%, or $50 million, compared with the same period last year.

Last year’s results included a $99 million impairment charge related to an equity method investment. Excluding the impairment charge, operating expenses were up 10%, or $149 million, compared with adjusted operating expenses in the third quarter of 2020, driven by higher fuel, purchased services and compensation and benefits expenses.

Income from railway operations was a third-quarter record of $1.1 billion, an increase of 35%, or $296 million, on a year-over-year basis.

Excluding the effect of the impairment charge in third-quarter 2020, income from railway operations was up 21%, or $197 million on a year-over-year adjusted basis.

Railway operating ratio was 60.2%, a third-quarter record, and an improvement of 630 basis points over third-quarter 2020.

Excluding the effect of the impairment charge in third-quarter 2020, the operating ratio improved 230 basis points over the adjusted results for third-quarter 2020.

About Norfolk Southern

Norfolk Southern Corporation (NYSE: NSC) is one of the nation’s premier transportation companies, moving the goods and materials that drive the U.S. economy. Norfolk Southern connects customers to markets and communities to economic opportunity, with safe, reliable, and cost-effective shipping solutions. The company’s service area includes 22 states and the District of Columbia, every major container port in the eastern United States, and a majority of the U.S. population and manufacturing base.

Media Inquiries:

Media Relations, 404-420-4444

Investor Inquiries:

Meghan Achimasi, 470-867-4807

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.

Reconciliation of Non-GAAP Financial Measures

Information included within this filing 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).

GAAP financial results are adjusted to exclude the effects of an impairment charge in the third quarter of 2020 related to an equity method investment.

Norfolk Southern believes that these non-GAAP financial measures provide valuable information regarding its earnings and business trends by excluding specific items that it believes are not indicative of the ongoing operating results of its business, providing a useful way for investors to make a comparison of our performance over time and against other companies in our industry by excluding the effects of the impairment charge. These non-GAAP financial measures are being provided as supplemental information to Norfolk Southern’s GAAP financial measures, and Norfolk Southern believes these measures provide investors with additional meaningful financial information regarding our operational performance. Norfolk Southern also uses these non-GAAP measures as supplemental measures to evaluate its business and performance.

($ in millions except per share amounts)
	Third Quarter 2020

Railway operating expenses	$	1,666
Effect of impairment charge		(99	)
Adjusted railway operating expenses	$	1,567

Income from railway operations	$	840
Effect of impairment charge		99
Adjusted income from railway operations	$	939

Operating ratio (%)		66.5
Effect of impairment charge (%)		(4.0	)
Adjusted operating ratio (%)		62.5

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Exhibit 99.2

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Third Quarter				First Nine Months
	2021		2020		2021		2020
	(in millions, except per share amounts)

Railway operating revenues
Merchandise	$	1,710	$	1,556	$	4,998	$	4,535
Intermodal		812		700		2,332		1,924
Coal		330		250		960		757
Total railway operating revenues		2,852		2,506		8,290		7,216

Railway operating expenses
Compensation and benefits		609		578		1,844		1,786
Purchased services and rents		432		486		1,254		1,261
Fuel		208		126		573		399
Depreciation		297		293		883		867
Materials and other		170		183		418		500
Loss on asset disposal		—		—		—		385
Total railway operating expenses		1,716		1,666		4,972		5,198

Income from railway operations		1,136		840		3,318		2,018

Other income – net		14		39		56		110
Interest expense on debt		164		155		481		465

Income before income taxes		986		724		2,893		1,663

Income taxes
Current		182		133		490		243
Deferred		51		22		158		78
Total income taxes		233		155		648		321

Net income	$	753	$	569	$	2,245	$	1,342

Earnings per share – diluted	$	3.06	$	2.22	$	8.99	$	5.21

Weighted average shares outstanding – diluted		246.4		256.1		249.7		257.2

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2021			2020
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,465		$	1,115
Accounts receivable – net		945			848
Materials and supplies		235			221
Other current assets		77			134
Total current assets		2,722			2,318

Investments		3,684			3,590
Properties less accumulated depreciation of $11,867 and $11,985, respectively		31,429			31,345
Other assets		769			709

Total assets	$	38,604		$	37,962

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,196		$	1,016
Income and other taxes		272			263
Other current liabilities		384			302
Current maturities of long-term debt		558			579
Total current liabilities		2,410			2,160

Long-term debt		13,274			12,102
Other liabilities		1,944			1,987
Deferred income taxes		7,089			6,922

Total liabilities		24,717			23,171

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares authorized; outstanding 243,344,509 and 252,095,082 shares, respectively, net of treasury shares		244			254
Additional paid-in capital		2,224			2,248
Accumulated other comprehensive loss		(571	)		(594	)
Retained income		11,990			12,883

Total stockholders’ equity		13,887			14,791

Total liabilities and stockholders’ equity	$	38,604		$	37,962

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	First Nine Months
	2021			2020
	($ in millions)
Cash flows from operating activities
Net income	$	2,245		$	1,342
Reconciliation of net income to net cash provided by operating activities:
Depreciation		883			867
Deferred income taxes		158			78
Gains and losses on properties		(80	)		(14	)
Loss on asset disposal		—			385
Impairment of investment		—			99
Changes in assets and liabilities affecting operations:
Accounts receivable		(102	)		36
Materials and supplies		(14	)		(3	)
Other current assets		57			55
Current liabilities other than debt		294			104
Other – net		(128	)		(182	)

Net cash provided by operating activities		3,313			2,767

Cash flows from investing activities
Property additions		(1,025	)		(1,053	)
Property sales and other transactions		135			291
Investment purchases		(5	)		(6	)
Investment sales and other transactions		48			(50	)

Net cash used in investing activities		(847	)		(818	)

Cash flows from financing activities
Dividends		(764	)		(722	)
Common stock transactions		8			53
Purchase and retirement of common stock		(2,460	)		(960	)
Proceeds from borrowings		1,676			784
Debt repayments		(576	)		(325	)

Net cash used in financing activities		(2,116	)		(1,170	)

Net increase in cash and cash equivalents		350			779

Cash and cash equivalents
At beginning of year		1,115			580

At end of period	$	1,465		$	1,359

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amounts capitalized)	$	391		$	395
Income taxes (net of refunds)		468			118

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Impairment of Investment

During 2020, we recorded an other-than-temporary impairment of $99 million related to the carrying value of an equity method investment. This non-cash impairment charge is recorded in “Purchased services and rents” on the Consolidated Statements of Income and had a $74 million impact on net income for the third quarter and first nine months of 2020.

2. Loss on Asset Disposal

In 2020, we sold 703 locomotives deemed excess and no longer needed for railroad operations. We evaluated these locomotive retirements and concluded they were abnormal. Accordingly, we recorded a $385 million loss to adjust their carrying amount to their estimated fair value, which resulted in a $97 million tax benefit.

3. Stock Repurchase Program

We repurchased and retired 9.4 million and 5.3 million shares of common stock under our stock repurchase program during the first nine months of 2021 and 2020, respectively, at a cost of $2.5 billion and $960 million, respectively.

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