Norfolk Southern reaches agreement to settle East Palestine derailment class action

By James Rogers

Norfolk Southern announced the East Palestine settlement and gave first-quarter guidance early Tuesday

Norfolk Southern Corp. has reached an agreement in principle to settle a class action lawsuit brought after last year's derailment of one of the company's trains in East Palestine, Ohio.

In a statement released Tuesday, Norfolk Southern (NSC) said it has reached a $600 million agreement in principle to settle the lawsuit. "If approved by the court, the agreement 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," the company said. No one was killed or injured in the derailment, but the incident was described as a "PR nightmare" for Norfolk Southern and the rail industry.

Norfolk Southern also gave first-quarter guidance Tuesday. The carrier expects operating revenue of $3.004 billion, and diluted earnings per share of 23 cents. On an adjusted basis, Norfolk Southern expects earnings of $2.49 a share. Analysts surveyed by FactSet are looking for revenue of $3.051 billion and earnings of $2.60 a share. Norfolk Southern reports first-quarter results on April 24.

Related: One year after Norfolk Southern's East Palestine derailment, rail safety is still in the spotlight

In a statement, Norfolk Southern also said that its second-quarter revenue will be impacted by the recent collapse of the Francis Scott Key bridge in Baltimore. "Despite ongoing mitigation efforts, and depending on the duration of the port outage, we expect there to be a $50 - 100 million impact on revenue in the second quarter," it said.

Norfolk Southern is taking proactive steps to mitigate supply chain disruptions and ensure uninterrupted service for customers, the company said. "Already, the company has launched a new dedicated service to facilitate the flow of freight between the Elizabeth Marine Terminal at the Port of New York and New Jersey and the Seagirt Marine Terminal in Baltimore," it said, in the statement.

Norfolk Southern shares are down 1.3% in premarket trades Tuesday. Shares of rival CSX Corp. (CSX), which has been described as the most affected by the Baltimore bridge collapse among major North American railroad operators, are down 0.1 % in premarket trades.

Related: This railroad operator is most impacted by the Baltimore bridge collapse

Norfolk Southern shares have gained 21.6% in the last 12 months, compared with the S&P 500 index's SPX gain of 26.6%. CSX shares have risen 18.9% in the last 12 months.

-James Rogers

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04-09-24 0903ET

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