Norfolk Southern’s fourth-quarter net income moves up 1%

A photograph of a Norfolk Southern train crossing a bridge.

Norfolk Southern’s (NYSE: NSC) fourth-quarter net income rose 1% as an 8% decrease in operating expenses helped to offset a 4% decline in operating revenues.

Norfolk Southern’s (NS) net profit was $671 million, or $2.64 per diluted share, for the fourth quarter of 2020, compared with $666 million, or $2.55 per diluted share, for the fourth quarter of 2019.

Operating revenues were $2.57 billion, compared with $2.69 billion year-over-year. A 2% revenue gain in NS’ metals and construction segment and a 5% increase in its intermodal segment weren’t enough to offset a 20% decline in coal revenue.

Indeed, merchandise revenues fell 5% year-over-year to $1.55 billion, while intermodal revenues were $730 million.

(Norfolk Southern)

Operating expenses were $1.59 billion, compared with $1.73 billion in the fourth quarter of 2019.

The decline in operating expenses helped NS to reach a lower operating ratio (OR) for the fourth quarter. OR was 61.8% in the fourth quarter of 2020, compared with 64.2% a year ago. 

Investors sometimes use OR to gauge the financial health of a company, with a lower OR implying improved financial health. OR is a company’s expenses as a percentage of revenue.

Meanwhile, service metrics slipped in the fourth quarter, with terminal dwell up 16% to 21.2 hours and train speeds down 5% to 21.9 mph.

Norfolk Southern

2020 Value 2019 Value Y/Y Gross Change Y/Y % Change
Freight revenue (in millions) $2,573.0 $2,690.0 ($117.0) -4.3%
Carloads incl intermodal (000s) 1,781 1,803 -21.60 -1.2%
Revenue per carload $1,445 $1,492 ($47.0) -3.2%
Intermodal shipments 1,084 1027.8 56.00 5.4%
Intermodal revenue per carload $674 $678 ($4.0) -0.6%
Gross ton miles (in billions) 83.0 88.4 -5.40 -6.1%
Revenue tonmile (in billions) $43 $45 ($2.7) -5.9%
Employee counts (average) 19192 22,478 -3,286.00 -14.6%
Train velocity (mph) 21.9 23 -1.10 -4.8%
Dwell time (hours) 21.2 18.3 2.90 15.8%
OR% 61.8% 64.2% -2.40% -3.7%
EPS $2.64 $2.55 $0.1 3.5%

“During a year of unprecedented market disruption and uncertainty, the Norfolk Southern team delivered record productivity levels while providing safe and reliable freight solutions for our customers,” said NS President and CEO Jim Squires in a release. “As we take stock of what we achieved in 2020 while managing both the pandemic and energy market challenges, including the successful idling of four additional hump operations while driving productivity to record levels, we see much more opportunity ahead.” 

He continued, “We have set the stage to drive further efficiency and profitable growth in 2021 through our precision scheduled railroading operating plan, which will deliver long-term value for both our shareholders and customers.”

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