Norfolk Southern Railway today reported third-quarter 2020 net income of $569 million and diluted earnings per share of $2.22, compared with net income of $657 million and diluted earnings per share of $2.49 in the same quarter a year ago.
This year's Q3 results included a previously announced $99 million non-cash impairment charge. Excluding the charge, adjusted Q3 net income was $643 million and adjusted diluted earnings per share were $2.51, NS officials said in a press release.
The Class I posted an operating ratio (OR) of 66.5%, and an adjusted OR of 62.5%. In Q3 2019, NS posted an OR of 64.9%.
Railway operating revenue for the quarter totaled $2.5 billion, down 12% from a year ago, driven by a 7% decline in total volume and 5% decline in revenue per unit.
Operating expenses were $1.7 billion, including the non-cash impairment charge related to an equity-method investment. Excluding the charge, adjusted operating expenses declined $278 million, or 15% percent, compared with Q3 2019, driven by lower compensation and benefits, fuel, purchased services, materials and the absence of last year's $32 million receivable write-off, NS officials said.
Income from railway operations during the quarter was $840 million, down from $996 million a year ago. Excluding the impairment charge, Q3 operating income was $939 million.
NS' operational and financial performance has been "significantly enhanced" since the company launched its precision scheduled railroading strategy, said Chairman, President and Chief Executive Officer James Squires.
"Given the impact of the COVID-19 pandemic on our industry and the broader economy, we quickly executed a plan to align our assets and resources with demand and generate sustainable margin improvement," Squires said. "In addition to maintaining outstanding service levels with fewer resources and reduced headcount, we successfully idled our fifth hump in the last five quarters, helping Norfolk Southern achieve record productivity."
NS executives are confident in the company's ability to eventually achieve its goal of a 60% OR, he said.