Attachment: e21590_nsc-8k.htm

Exhibit 99.1




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




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.
oLast 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.
oExcluding 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.
oExcluding 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)    
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 




Exhibit 99.2


Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income



   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



   September 30,   December 31, 
   2021   2020 
   ($ in millions) 
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



   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. 




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.