ATLANTA — Norfolk Southern, which remains under pressure from an activist investor, today took the unusual step of releasing preliminary first quarter financial results, which included a $600 million proposed settlement of a class action lawsuit related to the East Palestine, Ohio, hazardous materials wreck.
Including the impact of the settlement, the railroad’s operating income declined 70%, to $213 million, as revenue declined 4%, to $3 billion. Earnings per share was 23 cents. The operating ratio was 92.9%.
Adjusted for the settlement, operating income was $904 million and the operating ratio was 69.9%, while earnings per share was $2.49.
“In the first quarter, we delivered an adjusted operating ratio in line with our guidance …,” CEO Alan Shaw said in a statement. “We achieved this result despite macroeconomic challenges and the continued impact of our revenue mix being weighted towards lower-rated traffic, including international intermodal, which continues to be a significant driver of volume growth.”
Freight volume increased 4% for the quarter compared to a year ago.
The railroad is scheduled to release its first-quarter earnings on April 24. NS said the preliminary results were subject to change.
The unadjusted financial results also include charges associated with the involuntary and voluntary separation programs that will eliminate management positions, as well as costs associated with the recruitment of a new chief operating officer, expenses associated with shareholder matters, and a deferred tax adjustment.
The settlement agreement with East Palestine residents is subject to court approval. If approved, the $600 million deal will resolve all class action claims within a 20-mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10-mile radius from the derailment.
NS has previously tallied $1.1 billion in costs related to the Feb. 3, 2023, derailment.
NS affirmed its full-year 2024 operating ratio outlook, which calls for a 4-point improvement in the second half of the year when adjusted for one-time items. The railroad also expected continued improvement in its profit margins.
“Our recently appointed Chief Operating Officer, John Orr, is executing precision scheduled railroading principles and accelerating our operational improvements, which are already yielding positive results,” Shaw said. “We are moving with urgency, and we are confident in our ability to achieve our near- and long-term operating and financial targets.”
Following the derailment, the railroad and the shipper both stated they could safely transfer the affected material. The federal and state “safety” authorities chose to burn it, overriding the railroad’s desire. Thus the massive fire, smoke and fume damage. Now the railroad is paying the price.
Yeah, NS did the right thing and continues to do so. Ancora, they don’t give a damn about safety or the people of East Palestine. All they want is more money and don’t care who gets hurt or looses their job. Such is the case in America these days. The rich get richer and everyone else pays the freight.
You can say that again!
“Including the impact of the settlement, the railroad’s operating income declined 70%, to $213 million, as revenue declined 4%, to $3 billion. Earnings per share was 23 cents. The operating ratio was 92.9%.”
Hey Ancora, need a press release on this now, right? Don’t forget they settled a major class action in record time!
Plaintiffs were smart to settle now before Ancora gets its hands on NS. Once they get NS, the suit would be dragged-out by Ancora until the eventual bankruptcy of NS. After which, plaintiffs -and their lawyers- wouldn’t receive a dime.