Norfolk Southern Corp. today reported first-quarter 2019 net income rose 23 percent year over year to $677 million, as a result of a 16 percent increase in income from railway operations and a boost in other income.
Diluted earnings per share jumped 30 percent to $2.51 compared with Q1 2018. The Class I logged operating revenue of $2.8 billion, a first-quarter record and a 5 percent year over year increase. NS attributed the revenue growth to a rise in revenue per unit, resulting from higher rates and fuel surcharges.
Operating expenses totaled $2.8 billion, a decrease of $8 million compared with the same period last year, as fuel price declines and lower compensation expenses were offset by increased purchased services and rents.
NS reported income from railway operations of $966 million, up 16 percent and a first-quarter record. The railroad's operating ratio of 66 percent — compared with 69.3 percent in Q1 2018 — was a first-quarter record, as well, company officials said.
“Our first-quarter results reflect the initial steps in the implementation of our new strategic plan that are transforming our company,” said Chairman, President and Chief Executive Officer James Squires in a press release. "We set company records for many financial measures in the first quarter."
NS drove "significant service improvements" for customers during the quarter, said Executive Vice President and Chief Operating Officer Michael Wheeler during an earnings conference call this morning with investors and analysts.
"We have established an excellent foundation for our new TOP 21 operating plan that will be fully implemented by the end of July," Wheeler said. The railroad's new operating plan calls for implementing precision scheduled railroading practices.
Meanwhile, NS yesterday announced some executive changes as part of a restructuring of the railroad's engineering department. Effective May 1, Thomas Schnautz will become vice president of advanced train control, a new position, and Edward Boyle Jr. will become vice president of engineering to succeed Phil Merilli, who is retiring.
Under the restructuring, Schnautz will be responsible for the deployment and maintenance of positive train control (PTC) and other advanced technologies, communications and signal systems and locomotives. Boyle will be responsible for the design, construction, inspection and maintenance of railroad infrastructure. Both will report to Wheeler.
“Tom and Ed are proven leaders who bring valuable experience and energy to their new roles as they help Norfolk Southern reimagine possible in all aspects of our operations,” said Wheeler in a press release. “As they advance our initiatives into next-generation railroading, I extend thanks to Phil for his strong leadership and efforts in developing a diverse and deeply talented team, ensuring a strong foundation for the future.”
Schnautz joined NS in 1993 as an engineering management trainee. Since June 2018, he has served in the engineering department as assistant VP of communications and signals and advanced train control, leading the railroad's efforts to install and implement PTC.
Boyle joined the company in 1994 as an engineering management trainee. Since October 2015, he has served in the engineering department as assistant VP of maintenance of way and structures.
Merilli will retire after more than four decades in railroading. He joined an NS predecessor line in 1981 as an assistant roadmaster. During his years at NS, he served in a variety of engineering positions. He was named VP of engineering in October 2015.