Norfolk Southern Posts Record Revenue as Freight Volumes Rebound
Adjusted earnings rose 7% to $3.52 a share in the second quarter.
The freight railroad Norfolk Southern Corp. (NSC) posted record second-quarter revenue as volume returned to growth after two consecutive quarters of declines.
The quarter marked a sharp change in trajectory. Revenue growth accelerated to 11% from flat growth in the first quarter and a 2% decline in the fourth quarter of 2024, while volume swung to 4% growth from declines of 1% and 4%, respectively.
Railway operating revenue reached $3.465 billion, up $355 million from a year earlier and about 16% sequentially. Diluted earnings fell 4% to $3.26 a share, though adjusted earnings increased 7% to $3.52 a share, reversing the first quarter’s 1% year-over-year decline.
Fuel surcharges supplied six percentage points of the quarter’s 11% revenue increase, accounting for more than half of the gain. Fuel expense climbed 85% to $405 million and created a 110-basis-point year-over-year headwind to the operating ratio.
Intermodal led the revenue increase, rising 22% to $908 million. Merchandise revenue grew 8% to $2.133 billion, while coal revenue increased 7% to $424 million.
Adjusted railway operating income rose 5% from a year earlier and 27% sequentially to $1.196 billion. The adjusted operating ratio improved 320 basis points from the first quarter to 65.5%, near the fourth quarter’s 65.3%, though it remained 210 basis points worse than a year earlier.
The results included $51 million of merger-related expenses and a $15 million expense tied to the Eastern Ohio incident, compared with $47 million of net recoveries a year earlier. Norfolk Southern also recorded a $6 million severance charge related to organizational changes.
First-half operating cash flow fell 31% to $1.398 billion even as property additions declined. Norfolk Southern repurchased no shares during the period after spending $455 million to retire 1.9 million shares a year earlier.