nsc-20230930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to___________

Commission File Number: 1-8339

NORFOLK SOUTHERN CORPORATION

(Exact name of registrant as specified in its charter)


Virginia						52-1188014
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


650 West Peachtree Street NW		30308-1925
Atlanta,	Georgia
(Address of principal executive offices)		(Zip Code)
(855)		667-3655
(Registrant’s telephone number, including area code)


No change
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Norfolk Southern Corporation Common Stock (Par Value $1.00)	NSC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding at September 30, 2023
Common Stock ($1.00 par value per share)	226,136,334	(excluding 20,320,777 shares held by the registrant’s
	consolidated subsidiaries)

TABLE OF CONTENTS

NORFOLK SOUTHERN CORPORATION AND SUBSIDIARIES


		Page
Part I.	Financial Information:
	Item 1.	Financial Statements:
		Consolidated Statements of Income Third Quarter and First Nine Months of 2023 and 2022	3
		Consolidated Statements of Comprehensive Income Third Quarter and First Nine Months of 2023 and 2022	4
		Consolidated Balance Sheets At S eptember 30, 2023 and December 31, 2022	5
		Consolidated Statements of Cash Flows First Ni n e Months of 2023 and 2022	6
		Consolidated Statements of Changes in Stockholders’ Equity Third Quarter and First Ni ne Months of 2023 and 2022	7
		Notes to Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4.	Controls and Procedures	34

Part II.	Other Information:
	Item 1.	Legal Proceedings	35
	Item 1A.	Risk Factors	35
	Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	36
	Item 3.	Defaults Upon Senior Securities	36
	Item 4.	Mine Safety Disclosures	36
	Item 5.	Other Information	36
	Item 6.	Exhibits	37

		Signatures	38

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


	Third Quarter				First Nine Months
	2023		2022		2023		2022
	($ in millions, except per share amounts)

Railway operating revenues	$	2,971	$	3,343	$	9,083	$	9,508

Railway operating expenses
Compensation and benefits	715		735		2,098		1,968
Purchased services and rents	517		484		1,519		1,402
Fuel	289		383		867		1,092
Depreciation	326		306		968		912
Materials and other	205		163		622		506
Eastern Ohio incident	163		—		966		—

Total railway operating expenses	2,215		2,071		7,040		5,880

Income from railway operations	756		1,272		2,043		3,628

Other income (expense) – net	40		(2)		153		(21)
Interest expense on debt	182		177		527		515

Income before income taxes	614		1,093		1,669		3,092

Income taxes	136		135		369		612

Net income	$	478	$	958	$	1,300	$	2,480

Earnings per share
Basic	$	2.11	$	4.11	$	5.71	$	10.49
Diluted	2.10		4.10		5.70		10.45

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)


	Third Quarter				First Nine Months
	2023		2022		2023		2022
	($ in millions)

Net income	$	478	$	958	$	1,300	$	2,480
Other comprehensive income (loss), before tax:
Pension and other postretirement benefit (expense)	(6)		6		(17)		17
Other comprehensive income (loss) of equity investees	(1)		5		(1)		13

Other comprehensive income (loss), before tax	(7)		11		(18)		30
Income tax benefit (expense) related to items of other
comprehensive income (loss)	2		—		5		(5)

Other comprehensive income (loss), net of tax	(5)		11		(13)		25

Total comprehensive income	$	473	$	969	$	1,287	$	2,505

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


	September 30, 2023		December 31, 2022
	($ in millions)
Assets
Current assets:
Cash and cash equivalents	$	1,506	$	456

Accounts receivable – net	1,210		1,148
Materials and supplies	303		253
Other current assets	123		150
Total current assets	3,142		2,007

Investments	3,824		3,694
Properties less accumulated depreciation of $13,162
and $12,592, respectively	32,668		32,156
Other assets	1,105		1,028

Total assets	$	40,739	$	38,885

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,499	$	1,293
Short-term debt	—		100
Income and other taxes	213		312
Other current liabilities	797		341
Current maturities of long-term debt	405		603
Total current liabilities	2,914		2,649

Long-term debt	16,179		14,479
Other liabilities	1,824		1,759
Deferred income taxes	7,207		7,265

Total liabilities	28,124		26,152

Stockholders’ equity:
Common stock $1.00 per share par value, 1,350,000,000 shares
authorized; outstanding 226,136,334 and 228,076,415 shares,
respectively, net of treasury shares	227		230
Additional paid-in capital	2,163		2,157
Accumulated other comprehensive loss	(364)		(351)
Retained income	10,589		10,697

Total stockholders’ equity	12,615		12,733

Total liabilities and stockholders’ equity	$	40,739	$	38,885

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


		First Nine Months
		2023		2022
		($ in millions)
Cash flows from operating activities
	Net income	$	1,300	$	2,480
	Reconciliation of net income to net cash provided by operating activities:
	Depreciation	968		912
	Deferred income taxes	(53)		23
	Gains and losses on properties	(34)		(54)
	Changes in assets and liabilities affecting operations:
	Accounts receivable	(65)		(174)
	Materials and supplies	(50)		(58)
	Other current assets	37		57
	Current liabilities other than debt	538		273
	Other – net	(135)		(35)

	Net cash provided by operating activities	2,506		3,424

Cash flows from investing activities
	Property additions	(1,496)		(1,282)
	Property sales and other transactions	62		193
	Investment purchases	(120)		(8)
	Investment sales and other transactions	160		37

	Net cash used in investing activities	(1,394)		(1,060)

Cash flows from financing activities
	Dividends	(920)		(881)
	Common stock transactions	(9)		(5)
	Purchase and retirement of common stock	(503)		(2,284)
	Proceeds from borrowings	2,303		1,732
	Debt repayments	(933)		(551)

	Net cash used in financing activities	(62)		(1,989)

	Net increase in cash and cash equivalents	1,050		375

Cash and cash equivalents
	At beginning of year	456		839

	At end of period	$	1,506	$	1,214

Supplemental disclosures of cash flow information
	Cash paid during the period for:
	Interest (net of amounts capitalized)	$	451	$	425
	Income taxes (net of refunds)	521		578

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accum. Other Comprehensive Loss		Retained Income		Total
	($ in millions, except per share amounts)

Balance at December 31, 2022	$	230	$	2,157	$	(351)	$	10,697	$	12,733

Comprehensive income:
Net income							466		466
Other comprehensive loss					(4)				(4)
Total comprehensive income									462
Dividends on common stock,
$1.35 per share							(307)		(307)
Share repurchases	(1)		(6)				(156)		(163)
Stock-based compensation			4				(2)		2

Balance at March 31, 2023	229		2,155		(355)		10,698		12,727

Comprehensive income:
Net income							356		356
Other comprehensive loss					(4)				(4)
Total comprehensive income									352
Dividends on common stock,
$1.35 per share							(308)		(308)
Share repurchases	(1)		(4)				(135)		(140)
Stock-based compensation			9						9

Balance at June 30, 2023	228		2,160		(359)		10,611		12,640

Comprehensive income:
Net income							478		478
Other comprehensive loss					(5)				(5)
Total comprehensive income									473
Dividends on common stock,
$1.35 per share							(305)		(305)
Share repurchases	(1)		(9)				(195)		(205)
Stock-based compensation			12						12

Balance at September 30, 2023	$	227	$	2,163	$	(364)	$	10,589	$	12,615

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Common Stock		Additional Paid-in Capital		Accum. Other Comprehensive Loss		Retained Income		Total
	($ in millions, except per share amounts)

Balance at December 31, 2021	$	242	$	2,215	$	(402)	$	11,586	$	13,641

Comprehensive income:
Net income							703		703
Other comprehensive income					8				8
Total comprehensive income									711
Dividends on common stock,
$1.24 per share							(297)		(297)
Share repurchases	(2)		(19)				(579)		(600)
Stock-based compensation			7				(1)		6

Balance at March 31, 2022	240		2,203		(394)		11,412		13,461

Comprehensive income:
Net income							819		819
Other comprehensive income					6				6
Total comprehensive income									825
Dividends on common stock,
$1.24 per share							(294)		(294)
Share repurchases	(4)		(29)				(821)		(854)
Stock-based compensation			16						16

Balance at June 30, 2022	236		2,190		(388)		11,116		13,154

Comprehensive income:
Net income							958		958
Other comprehensive income					11				11
Total comprehensive income									969
Dividends on common stock,
$1.24 per share							(290)		(290)
Share repurchases	(3)		(31)				(796)		(830)
Stock-based compensation			22				(1)		21

Balance at September 30, 2022	$	233	$	2,181	$	(377)	$	10,987	$	13,024

See accompanying notes to consolidated financial statements.

Norfolk Southern Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly Norfolk Southern Corporation (Norfolk Southern) and subsidiaries’ (collectively, NS, we, us, and our) financial position at September 30, 2023 and December 31, 2022, our results of operations, comprehensive income and changes in stockholders’ equity for the third quarters and first nine months of 2023 and 2022, and our cash flows for the first nine months of 2023 and 2022 in conformity with U.S. Generally Accepted Accounting Principles (GAAP).

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our latest Annual Report on Form 10-K.

1. Railway Operating Revenues

The following table disaggregates our revenues by major commodity group:


	Third Quarter				First Nine Months
	2023		2022		2023		2022
	($ in millions)
Merchandise:
Agriculture, forest and consumer products	$	611	$	642	$	1,891	$	1,839
Chemicals	498		570		1,542		1,620
Metals and construction	417		442		1,232		1,237
Automotive	274		276		839		759
Merchandise	1,800		1,930		5,504		5,455
Intermodal	737		942		2,296		2,768
Coal	434		471		1,283		1,285

Total	$	2,971	$	3,343	$	9,083

SEC Form 10-Q filed by Norfolk Southern Corporation