Norfolk Southern Agrees To $600M Settlement Over East Palestine Derailment Class Action: Details

Zinger Key Points
  • Norfolk Southern reaches agreement in principle to settle East Palestine derailment class action.
  • Norfolk Southern's Q1 preliminary Adjusted EPS Of $2.49 misses estimates Amid $600M settlement.

Norfolk Southern Corporation NSC reported its preliminary financial outcomes for the first quarter of 2024, revealing adjusted earnings per share of $2.49, slightly below the estimated $2.61, with railway operating revenues reaching $3.004 billion (consensus $3.048 billion).

The report highlights a significant financial impact from a $600 million settlement related to the East Palestine derailment class action lawsuit, compensating without admitting fault. This move reflects their commitment to aid affected communities and pursue insurance for the settlement.

If approved by the court, the arrangement will resolve all class action claims within a 20-mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10-mile radius from the derailment.

The quarter’s finances were also affected by expenses of $691 million from workforce cuts, appointing a new COO, shareholder expenses, and a tax adjustment. These contributed to the increase in operating ratio by 2,300 basis points and reduced earnings per share by $2.26.

Despite a 4% rise in volume, revenue fell by 4% mainly due to lower fuel surcharges, a challenging service mix, and issues like domestic truck market over-capacity and falling seaborne coal prices. Yet, strong pricing and better service aided revenues in the Merchandise markets, excluding fuel.

“We are encouraged that non-GAAP margin improved each month throughout the quarter. Looking ahead, we have strong momentum in our effort to achieve a full year 100-150 basis points improvement, including 400+ basis points of year-over-year improvement in the second half of the year,” commented Alan H. Shaw, Norfolk Southern’s President and Chief Executive Officer.

Earlier, Norfolk Southern launched new measures to boost efficiency, such as Operations restructuring, new projects, making two hump yards “High Performance Terminals” to cut dwell times by 33% in 60 days, and a lane rationalization effort. These steps have led to an 8% better Terminal Dwell, 10% faster Merchandise Train Speed, and 11% fewer Active Trains.

Norfolk Southern will announce its first quarter 2024 financial results on Wednesday, April 24, 2024.

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Price Action: NSC shares are trading higher by 0.59% at $251.74 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Wikimedia Commons

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