Latest news with #MarkGeorge
Yahoo
24-04-2025
- Business
- Yahoo
NSC Q1 Earnings Call: Norfolk Southern Stresses Productivity Amid Weather Disruption and Market Uncertainty
Freight transportation company Norfolk Southern (NYSE:NSC) met Wall Street's revenue expectations in Q1 CY2025, but sales were flat year on year at $2.99 billion. Its non-GAAP profit of $2.69 per share was 0.5% above analysts' consensus estimates. The stock traded up 2.9% to $226.68 after reporting and hosting the earnings call. Is now the time to buy NSC? Find out in our full research report (it's free). Revenue: $2.99 billion vs analyst estimates of $2.98 billion (flat year on year, in line) Adjusted EPS: $2.69 vs analyst estimates of $2.68 (0.5% beat) Adjusted EBITDA: $1.31 billion vs analyst estimates of $1.32 billion (43.7% margin, 0.7% miss) Operating Margin: 38.3%, up from 7.1% in the same quarter last year Free Cash Flow Margin: 7.2%, down from 9.4% in the same quarter last year Sales Volumes rose 1.2% year on year (3.8% in the same quarter last year) Market Capitalization: $50.04 billion Norfolk Southern's first quarter results were shaped by both operational resilience and challenging external conditions, particularly severe winter weather that affected its network. Management emphasized that rapid restoration efforts and improved safety metrics—such as a 13% year-over-year reduction in injury rates—helped mitigate service disruptions. The team highlighted productivity initiatives, including $55 million in labor savings, as key factors supporting adjusted earnings growth despite $35 million in storm-related costs. Looking ahead, management's forward guidance is anchored in ongoing cost discipline and a $150 million annual productivity improvement goal. CEO Mark George noted continued uncertainty in the macroeconomic environment, especially around potential tariff impacts and broader economic risks. He reiterated the company's scenario planning approach, stating, 'We are scenario planning and just stay tuned,' while maintaining a focus on controlling costs and pursuing share gains through enhanced service and customer engagement. Network resilience and operational efficiency were at the forefront of Norfolk Southern's performance, with management attributing service gains and cost savings to targeted transformation initiatives. The company's Zero-Based operating plan was rolled out, streamlining train plans and resource allocation, which leadership identified as critical to maintaining service levels during disruptive weather events and supporting commercial share gains. Severe winter weather response: Norfolk Southern faced 18 major storms, incurring $35 million in restoration expenses, but restored critical mainlines in under three days and minimized customer disruptions. Zero-Based operating plan debut: The company introduced a new operating model that simplified train scheduling, reduced over 100 weekly crew starts, and trimmed final mile dwell for more than 600 customers, enabling faster network recovery and improved cost control. Productivity and cost savings initiatives: Management highlighted $55 million in labor productivity gains and cited improvements in fuel efficiency, with a 13% year-over-year boost, as evidence of progress toward the $150 million cost takeout target for the year. Share gains via service improvements: Enhanced service reliability led to meaningful market share gains, especially in chemicals and intermodal, as customers sought alternatives amid competitor disruptions and sought to reduce supply chain costs. Customer engagement amid uncertainty: Management reported that close collaboration with customers helped mitigate the impact of weather and market volatility, with proactive planning enabling the company to adapt to tariff-related shipment fluctuations and volume shifts. Norfolk Southern's management expects future performance to hinge on disciplined cost control, continued operational reliability, and the ability to respond to uncertain macroeconomic and trade developments. Cost discipline and productivity: The company's $150 million productivity improvement target underpins its guidance, with management prioritizing efficiency gains across labor, fuel, and purchased services to offset potential volume and pricing headwinds. Market share and service quality: Ongoing improvements in network performance and customer service are viewed as levers for capturing additional market share, particularly as competitors experience operational challenges and customers seek to optimize logistics costs. Tariff and economic risks: Management identified tariffs and broader economic uncertainty as key risks, noting that changes in trade policy could affect shipment patterns, especially in autos and metals, while a general slowdown in industrial activity could present broader headwinds. Kenneth Hoexter (Bank of America): Asked about the sustainability of operating margin improvements in light of storm costs; management emphasized seasonality and cost takeout momentum but declined to provide specific quarterly margin targets. Christian Wetherbee (Wells Fargo): Inquired about the pricing environment for merchandise and intermodal; management cited improved service as a driver of price gains in merchandise and described intermodal pricing as stable but uncertain due to market conditions. Scott Group (Wolfe Research): Questioned the mix versus price impacts in merchandise yields and the company's ability to flex costs if volumes decline; management explained both factors contributed and highlighted ongoing productivity efforts rather than specific cost cuts in a downturn scenario. Stephanie Moore (Jefferies): Sought details on the project pipeline and potential shipment pull-forwards due to tariffs; management noted an expanding pipeline but did not see material evidence of tariff-driven pull-forward in the quarter. Richa Harnain (Deutsche Bank): Asked about the stickiness of recent share gains and the company's ability to grow operating profit with flat or declining revenue; management expressed confidence in maintaining share through service and in offsetting revenue pressures with cost discipline. Over the next several quarters, the StockStory team will focus on (1) execution of the Zero-Based operating plan and whether productivity improvements continue to meet or exceed the $150 million annual target, (2) the ability of Norfolk Southern to sustain recent market share gains in chemicals and intermodal as competitor networks recover, and (3) the impact of potential tariff changes and broader economic fluctuations on shipping volumes and pricing. Additional attention will be paid to operational metrics, such as service reliability and customer satisfaction, as indicators of the company's resilience in a volatile market. Norfolk Southern currently trades at a forward P/E ratio of 17.3×. Should you double down or take your chips? The answer lies in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today.
Yahoo
23-04-2025
- Business
- Yahoo
Cost savings boost Norfolk Southern profits despite impact of winter storms
Norfolk Southern posted higher profits in the first quarter despite flat revenue and the impact of harsh winter weather. 'There's a lot to be pleased with this quarter,' CEO Mark George said, including delivering financial results in line with expectations despite a 'vicious winter' that included 18 storms. 'Our network resiliency was evident again thanks to great planning and execution by our team,' George told investors and analysts on the railroad's Wednesday morning earnings call. Adjusted for the ongoing financial impact of the 2023 East Palestine, Ohio, derailment, the railroad's first-quarter operating income increased 6%, to $961 million, on flat revenue of $2.9 billion. The operating ratio improved 2 points, to 67.9%. Adjusted earnings per share was up 8%, to $ uncertainty regarding tariffs and the potential for an economic slowdown, NS (NYSE: NSC) is sticking with its forecast of 3% revenue growth for the year, along with 1.5 points of improvement to its operating ratio. 'At this time, there's no clear information on how tariffs may impact our end markets and revenues,' George said. About 75% of Norfolk Southern's traffic is domestic business. 'How tariffs play out is going to be hard to say, but I don't think it's going to be as meaningful as the risk we have on the broader economy,' he said. Thanks to improved service, NS continues to regain market share lost during congestion related to crew shortages in 2021 and 2022 and the East Palestine derailment. And the ongoing share gains may help insulate NS from the economic fallout of tariffs or a recession. 'Our intense focus on recapturing market share gives us confidence that we are well positioned to mitigate some of the uncertain market conditions that we see,' Chief Commercial Officer Ed Elkins expenses declined by 3% in the quarter thanks to $55 million in savings from labor productivity improvements, which more than offset the $35 million in costs related to winter storm repairs on its Heartland Corridor in West Virginia. A February storm caused flash flooding on the Tug River, affecting a 100-mile stretch of the Pocahontas District west of Bluefield, West Virginia, which carries 50 trains per day. NS was able to repair more than three dozen washouts and bridge damage over a four-day period. 'I'm never satisfied with how the operating environment is at any given time. So that's a curse my team has to endure. But I can tell you I'm very, very pleased at the strength and resilience that we demonstrated coming out of the storms,' Chief Operating Officer John Orr said. Despite the storm damage, NS was able to improve first-quarter operations compared to a year ago, with average train speed up 4% and terminal dwell down 6%. Merchandise trip plan compliance of 79% was up a point, while the intermodal service composite was down 2 points. NS rolled out the first phase of a new operating plan during the quarter, which simplified train plans, tightened connection standards, cut crew starts by 100 per week and reduced final-mile dwell for more than 600 customers, Orr says. The railroad's key safety metrics improved for the quarter as well, with the personal injury rate reaching its best level in more than a decade. Overall traffic was up 1% for the quarter. Intermodal volume was up 3%, while coal was down 1% and merchandise declined 2%. 'We successfully navigated the first quarter to recover from the significant weather impacts to our network. At the same time, we delivered better service on higher volume all while continuing to drive greater productivity,' George intermodal volume was up 4% for the quarter, while domestic intermodal grew 3%. Domestic utility coal traffic increased 4% for the quarter thanks to higher natural gas prices, while export metallurgical coal volume declined 6%. The railroad's industrial development pipeline sits at a record high, with 517 projects in the works. That's up 25% from a year ago. Over the next three years, NS expects to gain 150,000 new carloads from 116 projects that are expected to come online. 'Industrial development activity continues to increase, with strong interest from firms seeking to expand domestic production as well as international companies seeking to locate new manufacturing facilities in the United States,' Elkins said. 'Sectors such as steel manufacturing, metals, fabrication, food production and construction materials saw an increase in project activity through the latter half of the first quarter, with momentum continuing to build through April. However, we're also noting cases where decision timelines appear to be extending as customers evaluate the macroeconomic environment.' Related: Supreme Court turns down CSX antitrust suit against Norfolk Southern The post Cost savings boost Norfolk Southern profits despite impact of winter storms appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
23-04-2025
- Business
- Yahoo
First look: Norfolk Southern earnings
Norfolk Southern Corp. on Wednesday reported a rebound in first-quarter profits despite slightly weaker revenue from a year ago as it recovered from severe winter weather across its network. The Atlanta-based railroad (NYSE: NSC) reported railway operating revenues of $3 billion, down $11 million compared to the first quarter of 2024. Income from railway operations was $1.1 billion, an increase of $933 million. Operating ratio in the quarter was 61.7% compared to 92.9% in the first quarter of 2024. Diluted earnings per share was $3.31, up from 23 cents, when the company agreed to a $600 million settlement following a major derailment in East Palestine, Ohio, in 2023. The company since the second quarter of 2024 continues to benefit from insurance payouts related to East Palestine. Those payments totaled $141 million in the first quarter. Income would have been $609 million, or $2.69 per share, compared to $2.49 per share a year ago, without the payments. 'Our service performance is increasing our customers' confidence in Norfolk Southern and allowing us to gain share,' said President and Chief Executive Mark George, in an earnings release. The improvement comes after a rocky 2024 when investor Ancora Holdings won three board seats in a failed bid to take over the carrier. Norfolk Southern later fired CEO Alan Shaw after it was discovered he had had an inappropriate relationship with a subordinate. Find more articles by Stuart Chirls Court turns down CSX antitrust suit against Norfolk Southern Congestion nicks CSX's earnings, volume and revenue Autonomous rail intermodal cars to begin testing this month The post First look: Norfolk Southern earnings appeared first on FreightWaves.
San Francisco Chronicle
23-04-2025
- Business
- San Francisco Chronicle
Norfolk Southern's East Palestine insurance payments continue to lift profits in first quarter
Norfolk Southern's quarterly profits were again inflated by insurance payments related to its disastrous 2023 derailment in eastern Ohio, but even without that, the railroad's profits still grew. The Atlanta-based railroad reported a major rebound in its results Wednesday with $750 million profit, or $3.31 per share, in the first quarter. Last year, the first quarter results of $53 million, or 23 cents per share, were held down by the $600 million class action settlement the railroad agreed to pay residents near the East Palestine derailment. Since last year's second quarter, Norfolk Southern has been consistently collecting more in insurance payments than it was spending on the derailment cleanup and response, so it's bottom line has received a boost each of the last several quarters. In the first quarter, the railroad received $141 million in insurance payments. Without that, it would have earned $609 million, or $2.69 per share, compared to $2.49 per share last year. Wall Street analysts focus on ongoing operations, which strips out the insurance windfall, and by that measure the railroad beat the average estimate reported by FactSet Research by 3 cents per share. Norfolk Southern CEO Mark George said the railroad overcame disruptive winter weather during the first three months of the year to improve service and efficiency. The railroad also delivered about 1% more shipments in the quarter. 'Our service performance is increasing our customers' confidence in Norfolk Southern and allowing us to gain share,' George said in a statement. The Atlanta-based railroad is one of the biggest in the nation with tracks throughout the Eastern United States. A year ago, Norfolk Southern was also in the midst of a fight with an outside investor that wanted to fire management and overhaul the railroad's operations. That investor, Ancora Holdings, won three board seats, and Norfolk Southern later changed CEOs after the board learned that former CEO Alan Shaw had an inappropriate relationship with a subordinate.
Associated Press
23-04-2025
- Business
- Associated Press
Norfolk Southern's East Palestine insurance payments continue to lift profits in first quarter
Norfolk Southern's quarterly profits were again inflated by insurance payments related to its disastrous 2023 derailment in eastern Ohio, but even without that, the railroad's profits still grew. The Atlanta-based railroad reported a major rebound in its results Wednesday with $750 million profit, or $3.31 per share, in the first quarter. Last year, the first quarter results of $53 million, or 23 cents per share, were held down by the $600 million class action settlement the railroad agreed to pay residents near the East Palestine derailment. Since last year's second quarter, Norfolk Southern has been consistently collecting more in insurance payments than it was spending on the derailment cleanup and response, so it's bottom line has received a boost each of the last several quarters. In the first quarter, the railroad received $141 million in insurance payments. Without that, it would have earned $609 million, or $2.69 per share, compared to $2.49 per share last year. Wall Street analysts focus on ongoing operations, which strips out the insurance windfall, and by that measure the railroad beat the average estimate reported by FactSet Research by 3 cents per share. Norfolk Southern CEO Mark George said the railroad overcame disruptive winter weather during the first three months of the year to improve service and efficiency. The railroad also delivered about 1% more shipments in the quarter. 'Our service performance is increasing our customers' confidence in Norfolk Southern and allowing us to gain share,' George said in a statement. The Atlanta-based railroad is one of the biggest in the nation with tracks throughout the Eastern United States. A year ago, Norfolk Southern was also in the midst of a fight with an outside investor that wanted to fire management and overhaul the railroad's operations. That investor, Ancora Holdings, won three board seats, and Norfolk Southern later changed CEOs after the board learned that former CEO Alan Shaw had an inappropriate relationship with a subordinate.
