This site is protected by reCAPTCHA and the Google
Terms of Service apply.
Norfolk Southern Corp. today reported first-quarter 2020 railway operating revenue fell 8 percent to $2.6 billion compared to first-quarter last year, driven by an 11 percent decline in total volume.
Operating expenses during the quarter were $2.1 billion, which included a $385 million non-cash charge related to locomotives marketed for sale and/or disposed of as part of the Class I's introduction of a precision scheduled railroading operating model.
Excluding the charge, adjusted operating expenses were down 11 percent, driven by lower compensation benefits, fuel, purchased services and materials, NS officials said in a press release.
The Class I posted net income equal to $381 million, diluted earnings per share (EPS) of $1.47 and an operating ratio of 78.4 percent. Excluding the impact of the locomotive rationalization charge, NS posted an adjusted Q1 net income of $669 million and adjusted diluted EPS of $2.58.
The railroad's adjusted operating ratio improved to 63.7 percent from its record of 66 percent set last year.
NS' adjusted railway operations income of $953 million declined 1 percent during the quarter compared to a year ago.
"During the first quarter, Norfolk Southern's determination to transform our operations once again produced all-time best service delivery levels accompanied by productivity improvements, despite volumes being impacted by weak energy pr ices and the onset of the COVID-19 pandemic," said Chairman, President and Chief Executive Officer James Squires.
As a result of the current economic environment, the company is withdrawing its outlook for flat full-year revenue, as well as its core operating ratio guidance for 2020.
Second-quarter volumes have continued to decline across all of NS' commodity segments, down 30 percent quarter-to-date, setting up for a soft revenue outlook.
While the COVID-19 pandemic will impact business volumes for the year, the company's PSR operating model will generate significant operating savings, said Chief Financial Officer Mark George.
"In this challenging environment, our team is doubling down on examination of our structural cost opportunities to ensure that we remain positioned to drive enhanced profitability for the long term," George said.
NS also announced it has cut 2020 capital expenditures by 25 percent from 2019's level to $1.5 billion due to economic uncertainty.