Norfolk Southern Corporation (NSC) reported financial results for Q4 and full year 2023, revealing a mixed bag with income and earnings down due to a major incident but coal volumes holding steady.
Key Headlines:
- Q4 Income from Railway Operations: $808 million (down 32% year-over-year), adjusted to $958 million excluding a $150 million incident charge with $76 million in insurance recoveries.
- Q4 Diluted Earnings per Share: $2.32 (down 32% year-over-year), adjusted to $2.83 after excluding incident charges.
- Full Year Railroad Employee Count: 20,190, up from 18,777 in 2022.
Coal Holds Ground:
- Overall coal volume increased slightly in Q4, boosted by strong export demand that offset declines in utility coal.
- Coal revenue dropped 4% year-over-year due to lower commodity prices, fuel surcharge reductions, and tough comparisons with past seaborne coal pricing.
- NS expects 2024 coal volume to remain flat compared to 2023, with high export demand potentially met by shifting existing domestic coal to export markets.
- Utility coal demand is predicted to be driven by continued high stockpiles in 2024, barring extreme weather events.
Coal in the Spotlight:
- The utility coal market faced tough competition from persistently high stockpiles and low natural gas prices.
- Headwinds emerged from lower coal pricing and weak natural gas prices impacting revenue per unit (RPU).
Looking Ahead:
Despite the overall mixed performance, Norfolk Southern’s coal sector provides a glimmer of stability in the near term. Flat volume projections with potential export shifts indicate continued relevance for coal, although long-term trends beyond 2024 remain uncertain. The company’s ability to navigate ongoing headwinds and adapt to market shifts will be crucial in determining the future trajectory of its coal business.
NSC Overall Results
| Metric | Q4’23 | Q3’23 | Q/Q Chg | Q4’22 | Y/Y Chg | 2023 | 2022 | YoY Chg |
|---|---|---|---|---|---|---|---|---|
| Operating Revenue | $3,073 | $2,971 | 3.4% | $3,237 | -5.1% | $12,156 | $12,745 | -4.6% |
| EPS – diluted | $2.32 | $2.10 | 10.5% | $3.42 | -32.2% | $8.02 | $13.88 | -42.2% |
| Operating Ratio | 73.7% | 74.6% | -0.9% | 63.5% | 10.2% | 76.5% | 62.3% | 14.2% |
Coal Metrics
| Metric | Q4’23 | Q3’23 | Q/Q Chg | Q4’22 | Y/Y Chg | 2023 | 2022 | YoY Chg |
|---|---|---|---|---|---|---|---|---|
| Revenues ($ mm) | $430 | $434 | -0.9% | $448 | -4.0% | $1,713 | $1,733 | -1.2% |
| Revenue per unit | $2,515 | $2,602 | -3.3% | $2,636 | -4.6% | $2,530 | $2,532 | -0.1% |
| Coal volumes (mst) | 19.24 | 18.72 | 2.8% | 18.92 | 1.7% | 75.89 | 76.66 | -1.0% |
Coal Volume Breakdown
| Type | Q4’23 | Q3’23 | Q/Q Chg | Q4’22 | Y/Y Chg | 2023 | 2022 | YoY Chg |
|---|---|---|---|---|---|---|---|---|
| Utility | 8.02 | 7.34 | 9.2% | 8.57 | -6.5% | 30.42 | 35.71 | -14.8% |
| Exports | 7.54 | 7.56 | -0.3% | 6.57 | 14.8% | 31.01 | 25.89 | 19.8% |
| Domestic Metallurgical | 2.80 | 2.91 | -3.6% | 2.86 | -2.2% | 11.10 | 11.31 | -1.9% |
| Industrial | 0.89 | 0.91 | -2.7% | 0.92 | -3.1% | 3.37 | 3.77 | -10.4% |
