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[CNJRoss]

NS news release:

 

Norfolk Southern declares quarterly dividend

 

NORFOLK, Va., Oct. 25, 2016 – Norfolk Southern Corporation (NYSE: NSC) today announced the regular quarterly dividend of 59 cents per share on its common stock, payable on Dec. 10 to stockholders of record on Nov. 4.

 

Since its inception in 1982, Norfolk Southern has paid dividends on its common stock for 137 consecutive quarters.

[CNJRoss]

CN news release:

 

CN reports Q3-2016 net income of C$972 million, or C$1.25 per diluted share

Another outstanding quarter with continued focus on advancing safety, service and productivity

 

 

MONTREAL, Oct. 25, 2016 /CNW/ - CN (TSX: CNR) (NYSE: CNI) today reported its financial and operating results for the third quarter ended Sept. 30, 2016.

 

Third-quarter 2016 financial highlights

• Net income was C$972 million, or C$1.25 per diluted share, compared with net income of C$1,007 million, or C$1.26 per diluted share for the third quarter of 2015.
• Operating income declined five per cent to C$1,407 million.
• Revenues decreased by six per cent to C$3,014 million. Carloadings declined four per cent and revenue ton-miles declined three per cent.
• Operating expenses declined seven per cent to C$1,607 million.
• A record 53.3 per cent operating ratio, a 0.5-point improvement over the prior-year quarter's performance.
• Free cash flow ⁽¹⁾ for the first nine months of 2016 was C$1,743 million, compared with C$1,741 million for the year-earlier period.

 

Luc Jobin, CN president and chief executive officer, said: "With solid execution from our industry-leading operating team and a network-wide focus on providing quality service, CN delivered outstanding results in the third quarter while facing a still sluggish North American and global economy.

 

"Despite shifting traffic demands, including a delayed Canadian grain harvest, we remained flexible and service-focused. We also continued to reinvest in our business and infrastructure, investments that are driving ongoing safety, service and productivity improvements, while we maintained our commitment to providing the long-term value that helps CN and its customers succeed."

 

CN is raising its financial outlook and now expects 2016 adjusted diluted EPS to be up approximately one per cent versus last year's adjusted diluted EPS ⁽¹⁾ of C$4.44 ⁽²⁾ (compared with its July 25, 2016, financial outlook calling for 2016 adjusted EPS to be in line with last year). 

 

Foreign currency impact on results
Although CN reports its earnings in Canadian dollars, a large portion of its revenues and expenses is denominated in U.S. dollars. The fluctuation of the Canadian dollar relative to the U.S. dollar affects the conversion of the Company's U.S.-dollar-denominated revenues and expenses. On a constant currency basis, ⁽¹⁾ CN's net income for the third quarter of 2016 would have been lower by C$2 million, or unchanged per diluted share. 

 

Third-quarter 2016 revenues, traffic volumes and expenses
Revenues for the third quarter of 2016 were C$3,014 million, a decrease of six per cent, when compared to the same period in 2015. Revenues increased for grain and fertilizers (four per cent), automotive (three per cent), and forest products (two per cent), but were more than offset by revenue declines for coal (32 per cent), metals and minerals (20 per cent), petroleum and chemicals (13 per cent), and intermodal (four per cent).

 

The revenue decline was mainly attributable to lower volumes of crude oil, coal, and frac sand, and lower applicable fuel surcharge rates.

Carloadings for the quarter declined by four per cent to 1,332 thousand.

 

Revenue ton-miles (RTMs), measuring the relative weight and distance of rail freight transported by CN, declined by three per cent from the year-earlier quarter. Rail freight revenue per RTM, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, decreased by three per cent over the year-earlier period, mainly driven by an increase in the average length of haul and lower applicable fuel surcharge rates.

 

Operating expenses for the third quarter decreased by seven per cent to C$1,607 million, mainly due to lower costs resulting from decreased volumes of traffic and cost-management initiatives, and lower pension expense.

 

(1) Non-GAAP Measures
CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN also uses non-GAAP measures in this news release that do not have any standardized meaning prescribed by GAAP including adjusted performance measures, constant currency, and free cash flow. These non-GAAP measures may not be comparable to similar measures presented by other companies. For further details of these non-GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures, refer to the attached supplementary schedule, Non-GAAP Measures.

 

CN's full-year adjusted EPS guidance ⁽²⁾ excludes the expected impact of certain income and expense items, as well as those items noted in the reconciliation tables provided in the attached supplementary schedule, Non-GAAP Measures. However, management cannot individually quantify on a forward-looking basis the impact of these items on its EPS because these items, which could be significant, are difficult to predict and may be highly variable. As a result, CN does not provide a corresponding GAAP measure for, or reconciliation to, its adjusted EPS guidance.

[CNJRoss]

NS news release 10/26:

 

Norfolk Southern reports third-quarter 2016 results

 

• Diluted earnings per share were $1.55.
• Operating ratio improved to 67.5 percent, reflecting a 10 percent reduction in operating expenses coupled with a 7 percent decline in operating revenues.

 

NORFOLK, Va., Oct. 26, 2016 – Norfolk Southern Corporation (NYSE: NSC) today reported financial results for third-quarter 2016. Net income was $460 million, 2 percent higher compared with $452 million during the same period of 2015. Diluted earnings per share were $1.55, 4 percent higher compared with $1.49 per diluted share earned in the third quarter last year.

 

“Our continued focus on efficiency and asset utilization, balanced with our commitment to customer service, drove an operating ratio of 67.5 percent for the quarter and a record 68.7 percent for the first nine months, setting us well on the way to achieving productivity savings of about $250 million and an operating ratio below 70 percent for the year -- even in the face of economic headwinds,” said Chairman, President and CEO James A. Squires. “As we move forward, we are well positioned for growth opportunities longer term and confident in our ability to drive shareholder value.”

 

Third-quarter summary

 

• Railway operating revenues were $2.5 billion, down 7 percent compared with third-quarter 2015, due to reduced volumes and lower fuel surcharge revenues. Overall volume declined 4 percent to 1.9 million units for the quarter.
• General merchandise revenues were $1.6 billion, 4 percent lower than the same period last year. Volume declined 4 percent, due to fewer crude oil, vehicles, pulpboard, and feed market shipments. The five merchandise commodity groups reported the following year-over-year revenue results:

 

• Chemicals: $408 million, down 10 percent
• Agriculture: $380 million, even
• Metals/Construction: $337 million, up 2 percent
• Automotive: $236 million, down 4 percent
• Paper/Forest: $191 million, down 6 percent

 

• Intermodal revenues were $575 million, 7 percent lower compared with third-quarter 2015. Volume declined one percent due to lower Triple Crown Services volume, a result of last year’s restructuring. Domestic volume, excluding Triple Crown Services, and International volume were up 8 percent and one percent, respectively.
• Coal revenues were $397 million, 18 percent lower compared with the same quarter last year. Above-normal stockpiles and low natural gas prices combined to decrease volume by 15 percent.
• Railway operating expenses declined 10 percent to $1.7 billion, primarily due to targeted expense reduction initiatives, reduced fuel expenses, the absence of last year’s restructuring costs, and gains from the disposition of operating property. These decreases were partially offset by higher incentive compensation expense related to improved operating results.

• Income from railway operations was $820 million, flat compared with third-quarter 2015.
• The composite service metric, which measures train performance, terminal operations, and operating plan adherence, improved 8 percent in the quarter, and 14 percent for the first nine months, compared with the same periods last year.
• The railway operating ratio, or operating expenses as a percentage of revenue, was 67.5 percent, a 220 basis point improvement compared with 69.7 percent in the third quarter of last year.

 

[CNJRoss]

BNSF Quarterly Performance Summary:

 

BNSF's Third-Quarter 2016 Financial Performance: Volumes,

Revenues and Expenses

 

Volumes and Revenues

 

Third quarter and first nine months of 2016 operating income were $1.9 billion and $4.9 billion, respectively, a decrease of $209 million (10 percent) and $880 million (15 percent), respectively, compared to the same periods in 2015. Our lower earnings for the third quarter and first nine months of 2016 were primarily a result of a continued decline in demand for coal, energy-related commodities and certain other industrial products categories. Additionally, Consumer Products volumes were lower in the third quarter.    

 

Total revenues for the third quarter and first nine months of 2016 were down 8 percent and 12 percent, respectively, compared with the same periods in 2015. This is a result of a decline in unit volume for the third quarter and first nine months of 2016 of 5 percent and 7 percent, respectively, compared with the same periods in 2015, as well as business mix changes and the impact of lower fuel prices on our fuel surcharge revenues.   

  

Business unit third quarter and first nine months of 2016 volume highlights:

• Consumer Products volumes were down 4 percent and relatively flat for the third quarter and first nine months of 2016, respectively, compared with the same periods in 2015. The change in volume was primarily due to lower international intermodal volume due to the impact of soft economic activity, inflated retail inventories and share shift away from West Coast ports, offset by increased automotive volumes due to the addition of a new automotive customer and increased domestic intermodal volume.

• Industrial Products volumes decreased 8 percent and 7 percent for the third quarter and the first nine months of 2016, respectively, compared with the same periods in 2015, primarily due to lower petroleum products, reflecting pipeline displacement of U.S. crude rail traffic and lower U.S. production. This decline was partially offset by increased plastics products volume. In addition, year to date, we also experienced lower demand for taconite and steel products, partially offset by increased movements of non-owned rail equipment.   

• Agricultural Products volumes were up 13 percent and 7 percent for the third quarter and the first nine months of 2016, respectively, compared with the same periods in 2015, due to higher corn, soybean and wheat exports.

• Coal volumes decreased 13 percent and 26 percent for the third quarter and the first nine months of 2016, respectively, compared with the same periods in 2015 due to lower demand driven by low natural gas prices, coal unit retirements and elevated utility coal inventories.  

     

Expenses

 

Operating expenses for the third quarter and first nine months of 2016 were down 6 percent and 11 percent, respectively, compared with the same periods in 2015, as a result of lower volume, lower fuel prices and productivity improvements. A significant portion of the decrease is due to the following factors:

• Compensation and benefits decreased 2 percent and 8 percent for the third quarter and first nine months of 2016, respectively, compared with the same periods in 2015, due to lower average headcounts (furloughs and attrition) driven by lower volumes and productivity improvements, partially offset by wage and benefits inflation.

• Purchased services expense was down 11 percent and 6 percent for the third quarter and first nine months of 2016, compared to the same periods in 2015, primarily due to lower volumes and cost reductions.  

• Fuel expense was down 20 percent and 35 percent in the third quarter and first nine months of 2016, respectively, compared with the same periods in 2015 due to lower average fuel prices and lower volumes.  Additionally, fuel efficiency was an all-time record for the third quarter. Locomotive fuel price per gallon decreased 15 percent for the third quarter of 2016 to $1.54 and decreased 27 percent for the first nine months of 2016 to $1.37.

• Materials and other expense was down 5 percent and 11 percent for the third quarter and first nine months of 2016, compared to the same periods in 2015, primarily due to lower crew transportation, lodging and other travel costs, locomotive and freight car materials in both periods as well as lower derailment and other casualty related costs for the nine-month period.  

• Depreciation and amortization and equipment rents expense did not change significantly from the prior year.

 

BNSF continues to invest in its network, with a focus on ensuring BNSF continues to operate a safe and reliable network that meets our customers’ expectations. Our 2016 capital commitments forecast was reduced by $100 million to $4.05 billion as we completed certain projects at a lower cost, delayed the timing of certain projects, and reduced projects that are no longer needed due to current volume.

 

The 2016 capital program reflects BNSF having sufficient capacity to support customer demand while investing $2.7 billion to continue to maintain and renew our core network and related assets to keep the railroad infrastructure in top condition. These projects will go toward replacing and upgrading rail, ties and ballast on BNSF’s network. BNSF will spend $200 million for continued implementation of positive train control and will invest $600 million for locomotives, freight cars and other equipment acquisitions. This includes the acquisition of 150 locomotives under a minimum purchase agreement with the manufacturer. BNSF will spend approximately $500 million on various capacity expansion projects, primarily a continuation of projects that were started in 2015.  

 

With these investments, we will have invested more than $23 billion in our railroad over the last five years. Our railroad has never been in better shape, and we have the capacity and strong franchise we need to consistently meet our customers’ expectations as well as grow with our customers as conditions improve.