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Norfolk Southern Corporation (NSC - Free Report) reported lackluster fourth-quarter 2023 results, with both the top and bottom lines missing the Zacks Consensus Estimate. A weak freight market hurt results. The below-par results naturally disappointed investors, resulting in the stock losing value in early trading.
Quarterly earnings (excluding 51 cents from non-recurring items) of $2.83 per share fell short of the Zacks Consensus Estimate of $2.90 and declined 17.2% year over year. Results were hurt by high costs. Overall volumes increased 3%. Total revenue per unit declined 8% in the final quarter of 2023.
Railway operating revenues were $3,073 million in the quarter under review, lagging the Zacks Consensus Estimate of $3,109.4 million. The top line decreased 5.1% year over year, with all key segments including Merchandise, Intermodal and Coal registering deterioration in revenues. Total revenue per unit dipped 8% year over year. Income from railway operations decreased 32% to $808 million, including a charge of $150 million associated with the Eastern Ohio incident.
Railway operating expenses shot up 10% on a year-over-year basis to $2,265 million, primarily due to a double-digit increase in expenses on compensation and benefits apart from the expenditure of Ohio derailment. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 68.8% in the fourth quarter from 63.5% in the year-ago quarter due to higher costs and lackluster revenues. A lower value of the metric is preferable. Our estimate for this metric was 67.4%.
Segmental Performance
Merchandise’s revenues declined 1% year over year to $1,849 million. Actual segmental revenues were lower than our estimate of $1,896.1 million. Volumes were flat, whereas revenue per unit declined 1% year over year.
Revenues from Intermodal plunged 13% year over year to $794 million. Actual segmental revenues were higher than our projection of $765.8 million. While segmental volumes increased 5%, revenue per unit tumbled 17%.
Coal’s revenues came in at $430 million, down 4% year over year. Actual segmental revenues fell short of our anticipation of $441.1 million. Coal volumes inched up 1% year over year. Revenue per unit fell 5% in the reported quarter.
Liquidity
Norfolk Southern exited 2023 with cash and cash equivalents of $1,568 million compared with $456 million at the end of 2022. NSC had a long-term debt of $17,175 million at the end of the year compared with $14,479 million at 2022-end.
Outlook
Norfolk Southern expects 2024 revenues to increase 3% from 2023 actuals. NSC aims to take measures to increase its productivity as the year goes on.
Q4 Performances of Some Other Transportation Companies
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.5% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.9% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. Cargo revenues fell 14.8% year over year to $402 million. Revenues from other sources jumped 10.6% year over year to $803 million.
J.B. Hunt Transport Services (JBHT - Free Report) fourth-quarter 2023 earnings per share of $1.47 missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
Total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenues, decreased approximately 6% year over year.
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Norfolk Southern (NSC) Q4 Earnings & Revenues Lag, Stock Falls
Norfolk Southern Corporation (NSC - Free Report) reported lackluster fourth-quarter 2023 results, with both the top and bottom lines missing the Zacks Consensus Estimate. A weak freight market hurt results. The below-par results naturally disappointed investors, resulting in the stock losing value in early trading.
Quarterly earnings (excluding 51 cents from non-recurring items) of $2.83 per share fell short of the Zacks Consensus Estimate of $2.90 and declined 17.2% year over year. Results were hurt by high costs. Overall volumes increased 3%. Total revenue per unit declined 8% in the final quarter of 2023.
Railway operating revenues were $3,073 million in the quarter under review, lagging the Zacks Consensus Estimate of $3,109.4 million. The top line decreased 5.1% year over year, with all key segments including Merchandise, Intermodal and Coal registering deterioration in revenues. Total revenue per unit dipped 8% year over year. Income from railway operations decreased 32% to $808 million, including a charge of $150 million associated with the Eastern Ohio incident.
Railway operating expenses shot up 10% on a year-over-year basis to $2,265 million, primarily due to a double-digit increase in expenses on compensation and benefits apart from the expenditure of Ohio derailment. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 68.8% in the fourth quarter from 63.5% in the year-ago quarter due to higher costs and lackluster revenues. A lower value of the metric is preferable. Our estimate for this metric was 67.4%.
Segmental Performance
Merchandise’s revenues declined 1% year over year to $1,849 million. Actual segmental revenues were lower than our estimate of $1,896.1 million. Volumes were flat, whereas revenue per unit declined 1% year over year.
Revenues from Intermodal plunged 13% year over year to $794 million. Actual segmental revenues were higher than our projection of $765.8 million. While segmental volumes increased 5%, revenue per unit tumbled 17%.
Coal’s revenues came in at $430 million, down 4% year over year. Actual segmental revenues fell short of our anticipation of $441.1 million. Coal volumes inched up 1% year over year. Revenue per unit fell 5% in the reported quarter.
Liquidity
Norfolk Southern exited 2023 with cash and cash equivalents of $1,568 million compared with $456 million at the end of 2022. NSC had a long-term debt of $17,175 million at the end of the year compared with $14,479 million at 2022-end.
Outlook
Norfolk Southern expects 2024 revenues to increase 3% from 2023 actuals. NSC aims to take measures to increase its productivity as the year goes on.
Currently, Norfolk Southern carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q4 Performances of Some Other Transportation Companies
Delta Air Lines’ (DAL - Free Report) fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.5% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.9% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. Cargo revenues fell 14.8% year over year to $402 million. Revenues from other sources jumped 10.6% year over year to $803 million.
J.B. Hunt Transport Services (JBHT - Free Report) fourth-quarter 2023 earnings per share of $1.47 missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
Total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenues, decreased approximately 6% year over year.