Company Reports

Norfolk Southern’s second-quarter top line surged 11% year over year on a solid intermodal rebound, stronger merchandise carload activity, and higher fuel surcharges. Consolidated adjusted margin worsened due mostly to fuel noise.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins of the US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the Great Recession and remained stuck between 69% and 73% from 2010 to 2015. This fell short of the progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017, Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision scheduled railroading principles, which yielded more efficient use of locomotive assets and labor.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins of the US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the Great Recession and remained stuck between 69% and 73% from 2010 to 2015. This fell short of the progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017, Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision scheduled railroading principles, which yielded more efficient use of locomotive assets and labor.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of the progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which yielded more efficient use of locomotive assets and labor.

Norfolk Southern’s first-quarter top line was flat year over year, as lower intermodal activity offset modest yield gains linked to favorable mix and positive core pricing. Consolidated adjusted margin worsened but wasn't far off our expected run rate.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of the progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which yielded more efficient use of locomotive assets and labor.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of the progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which yielded more efficient use of locomotive assets and labor.

Norfolk Southern’s fourth-quarter top line fell 2% year over year due to lower intermodal activity, as carloads increased slightly and yield rose 2% on positive core pricing and mix. Consolidated adjusted margin worsened relative to the year-ago period, but that wasn't a surprise.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor.

Norfolk Southern’s third-quarter top line grew 2% on a favorable yield growth comparison and core merchandise pricing gains, as consolidated volumes were flat. Total adjusted profitability improved slightly, but that was primarily driven by an unusually large land sale gain.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor.

Norfolk Southern’s second-quarter results largely met our expectations, as revenue growth was led by coal and margin improvement was driven in part by efficiency gains. Importantly, the rail inked a deal to be acquired by Union Pacific for $320 per share, as discussed in our note from July 29.

Union Pacific struck an agreement to acquire Eastern peer Norfolk Southern for $320 per share, though the transaction still faces significant regulatory hurdles. The announcement was expected as UP management recently clarified that it's been in "advanced" merger talks.

According to The Wall Street Journal's sources, Union Pacific may be in preliminary talks with eastern Class-I railroad Norfolk Southern about a potential acquisition, though a deal is far from certain, especially given regulatory hurdles.

Norfolk Southern’s first-quarter top line was roughly flat year over year as intermodal volume and core merchandise pricing gains were offset by lower export coal rates and sluggish industrial end-market demand. Profitability improved nicely despite flat revenue and weather disruption.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor.

US President Donald Trump announced sweeping tariffs on all US imports. For the North American Class-I railroads, the key threat is tariffs' impact on macroeconomic growth in terms of US real goods spending (for intermodal volumes) and industrial production (for carload volumes).

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor.

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among US Class I railroads. Its operating ratio (expenses/revenue) deteriorated in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor.

Norfolk Southern's fourth-quarter top line fell 1.5% year over year on lower fuel surcharges and softer benchmark coal rates (which hit yields), partly offset by core merchandise pricing gains and slightly higher total volume. Despite lower revenue, consolidated profitability improved nicely.