Norfolk Southern(NSC)2023-04-26 16:45Financial Performance - First quarter 2023 income from railway operations was $711 million, down 34% from $1,085 million in 2022, with net income also decreasing by 34% to $466 million[85]. - The railway operating ratio increased to 77.3% in Q1 2023, compared to 62.8% in Q1 2022, reflecting a 23% rise[85]. - Total railway operating revenues for Q1 2023 were $3,132 million, a 7% increase from $2,915 million in Q1 2022, driven by higher average revenue per unit[90]. - Adjusted net income for Q1 2023, excluding the incident costs, was $759 million, an 8% increase from $703 million in Q1 2022[88]. - The average revenue per unit increased by 8% to $1,891 in Q1 2023, compared to $1,758 in Q1 2022[90]. Revenue Breakdown - Coal revenues rose by 13% to $440 million in Q1 2023, driven by increased export volumes and higher average revenue per unit[90]. - Intermodal revenues decreased by 5% to $814 million, with a 4% decline in total intermodal units transported[90]. Expenses and Costs - Expenses related to the Eastern Ohio incident amounted to $387 million, significantly impacting net income and diluted earnings per share[82]. - Compensation and benefits expenses increased by 11% to $690 million, attributed to a rise in average rail headcount by over 1,400 employees[103]. - Purchased services increased by 14% to $399 million in Q1 2023 from $349 million in Q1 2022, while equipment rents rose by 10% to $97 million from $88 million[105]. - Fuel expenses increased by 5% due to higher locomotive fuel prices, with consumption remaining flat compared to the previous year[106]. - Materials expenses surged by 47% to $91 million in Q1 2023 from $62 million in Q1 2022, contributing to a total increase in materials and other expenses of 24% to $212 million[108]. - The company recorded $387 million in costs related to environmental matters and legal proceedings during the first quarter[109]. Cash Flow and Financing - Cash provided by operating activities was $1.2 billion for Q1 2023, up from $1.0 billion in Q1 2022, despite negative working capital of $702 million[112]. - Cash used in investing activities increased to $391 million in Q1 2023 from $335 million in the same period last year, primarily due to higher property additions[113]. - Cash used in financing activities was $686 million in Q1 2023, compared to cash provided of $73 million in Q1 2022, reflecting higher debt repayments[114]. Debt and Capitalization - The debt-to-total capitalization ratio was 54.1% at March 31, 2023, slightly down from 54.4% at December 31, 2022[117]. - The company issued $500 million of 4.45% senior notes due 2033 in February 2023[116]. Taxation - The effective tax rate for Q1 2023 was 21.3%, down from 22.9% in the same period last year, reflecting the recognition of certain business tax credits[111]. Future Outlook - Future revenue growth is expected to face challenges due to economic uncertainty, including lower fuel prices and declining coal pricing[94].