For fourth-quarter 2009, Norfolk Southern today reported net income of $307 million,or $0.82 per diluted share (slightly below Wall Street’s estimate of $0.84), vs. $452 million, or $1.21 per diluted share, a 32% decline from the same quarter of 2008. Revenue fell 16% to $2.1 billion.
NS’s fourth-quarter operating ratio was 73.9% compared with 67.5% in the same period last year. For the year, the operating ratio was 75.4% vs. 71.1% for 2008.
“We expect to build upon the sequential volume gains we experienced in the third and fourth quarters driven by anticipated improvement in economic conditions combined with project growth,” said CEO Wick Moorman. “We plan to invest about $1.4 billion, slightly higher than our 2009 capital spending, in our rail network in 2010, including leveraging technology to improve operational efficiency and service, and support the business growth we expect in future years.”
Fourth-quarter merchandise revenue was $1.1 billion, down 9% compared with fourth-quarter 2008. Coal revenue was $580 million, down 27%. Intermodal revenue was $407 million, off 15% from the prior-year period. For the full year, intermodal revenue was $1.5 billion, down 26% compared with 2008. Railway operating expenses were $1.6 billion for the quarter, 8% lower compared with fourth-quarter 2008.
President Obama and Vice President Biden are speaking at the
Tampa during a town hall meeting Thursday, Jan. 28, beginning at
12:30 p.m., to announce the recipients of $8 billion in ARRA (American Recovery
and Reinvestment Act) high speed rail grants awarded by the Federal Railroad
Administration. According to the Tampa Bay Business Journal, the event is open
to the public, with a limited number of tickets available. Announcements will
be made concurrently in other states.
The White House has confirmed that the grants will be
announced Thursday. “Thirteen major corridors will receive awards on Thursday
to help develop new high speed rail infrastructure or begin the transition to
high speed rail,'” the White House said in a statement. “In addition, smaller
awards will also be made for improvements to portions of existing rail lines.
Overall, 31 states will benefit from the awards, which will lay the groundwork
for a nationwide high speed rail system. The $8 billion in Recovery Act awards
is part of an overall $13 billion high speed rail investment the President
announced last year as part of his strategic plan for high speed rail. The
other $5 billion would be funded through the annual budget process.”
Why Florida for Obama’s high speed rail announcement? One
Florida legislator, Democratic Congresswoman Kathy Castor from the 11th
District (which includes Tampa), distributed a press release today that claims the
HSR project in her state—essentially, the Orland-Tampa segment of the FOX
(Florida Overland eXpress) project, killed by former Governor Jeb Bush, but now
dusted off and polished—will receive federal grant money. Obama and Biden will
announce a “monumental” jobs initiative involving the ARRA and $8 billion in
HSR grants, Castor’s release said. “President Obama wants to increase the pace
of recovery. Creation of thousands of jobs for Floridians will accelerate
better times in Florida. Construction workers will be needed to build rail lines.
Engineers will be needed to lay the groundwork. Operations and maintenance
workers will be needed to keep the line running smoothly. The ripple effect
cannot be understated.” Castor said she is traveling with Obama on Air Force
One from Washington to Tampa for the event. Florida has requested $2.5 billion.
Other local news outlets expressed optimism for Florida’s
chances. “As widely assumed, President Obama will use Thursday’s visit to Tampa
to announce that Florida has secured high speed rail funding,” said the St.
Petersburg Times. “A White House official did not say how much of the total $8
billion in stimulus funds Florida will get. The state asked for $2.5 billion
for the line that would run from Orlando to Tampa and, possibly, Miami. Florida
officials were optimistic the state would get most, if not all, of the $2.5
billion requested. . . . Obama will allude to the high speed rail initiative
Wednesday night during his State of the Union address, but the details will not
be released until Thursday.”
According to Bloomberg News, “Obama will give $8 billion in
economic stimulus money to 13 U.S. rail corridors tomorrow, mostly for high speed
passenger service, an Administration official said. The money will benefit 31
states, including a small portion of the $8 billion that will go to
improvements of existing [freight] rail lines, the official said. In addition
to Florida, leading contenders for funds include Illinois, California, and
Amtrak's Northeast Corridor.”
APTA President Bill Millar said the announcement of the
first federal grants for high speed rail “is the beginning of our nation’s
journey in implementing high speed rail and higher speed rail and creating a
world-class, multi-modal transportation system. This time will be remembered
as the beginning of a new era in transportation. . . . These grants . . . mean
that we are much closer to a world-class transportation system that
demonstrates the vision of a connected America. They put us on the right
track to connecting our transportation network so that people can take high speed
rail and easily transfer to local public transportation services to reach their
Said National Association of Railroad Passengers Executive
Director Ross capon, “NARP urges the Administration to further strengthen its
commitment by investing at least $4 billion annually for intercity passenger
trains. Congress took a first step by including $2.5 billion for high speed
rail in the regular 2010 appropriations law. Twenty-four states demonstrated
pent-up demand for intercity passenger train funding by inundating the Federal
Railroad Administration (FRA) with 45 applications totaling about $50 billion.
In addition, FRA received 214 applications from 34 states totaling $7 billion
for corridor planning and smaller projects. We encourage those states whose
projects were not selected to resubmit applications in the future.”
So, just how far will 8 billion go? The President will
answer that question tomorrow.
Claude Mongeau (top left), CN’s newly
appointed president and chief executive officer, has taken some key steps in
putting together his Leadership Team, “a key step in driving CN to the next
Keith Creel (bottom left), previously CN’s
Executive Vice President-Operations, has been appointed Executive Vice
President and Chief Operating Officer. Jean-Jacques Ruest (right), previously
Senior Vice President-Marketing has been appointed Executive Vice President and
Chief Marketing Officer. Both report to Mongeau. “Keith and JJ are key players
at CN,” Mongeau said “Keith brings a deep understanding of our Precision
Railroading model and sound knowledge of what is needed in the marketplace. JJ
has acquired vast experience with CN’s customer base and knows the intricacies
of our rail operations. Together they will contribute their experience and
strategic thinking to keep CN at the forefront of the rail industry.”
Also part of Mongeau’s Leadership Team are
Executive Vice President and Chief Financial Officer Luc Jobin, who joined CN
mid-2009 to oversee financial management and strategic planning and has added
responsibility for information technology; Executive Vice President-Corporate
Services and Chief Legal Officer Sean Finn, who assumed full leadership of
government and public affairs in addition to his responsibilities for the law,
risk mitigation, security, and corporate secretary functions; and Kim Madigan,
who has been appointed Vice President Human Resources. Other key members of the
Leadership Team are Vice President Investor Relations Robert Noorigian, and
Gordon Trafton, previously Senior Vice President-Strategic Acquisitions and
Integration, who has been appointed Special Advisor to the CN Leadership Team
until he retires at the end of 2010.
Mongeau also announced the appointments of Jeff
Liepelt, previously Vice President-Eastern Region, to Senior Vice
President-Eastern Region, reporting to Creel; and Karen Phillips, previously Vice
President-North American Government Affairs, to Vice President-Public and
Government Affairs, reporting to Finn.
“The strength of CN’s great franchise is its
people,” Mongeau said. “I have complete confidence that this Leadership Team is
the right one to guide the 22,000 railroaders across our network and continue
building on the company’s success. Together we will create and seize business
opportunities, and face the challenges of 2010 and beyond.”
CN Tuesday reported that net income and diluted earnings per share for the final quarter of 2009 increased 2.0% from the year-earlier period to C$582 million and C$1.23, respectively. Fourth-quarter 2009 revenue declined 14% from a year earlier to C$1,882 million. The fourth-quarter operating ratio was 65.3%, compared with 62.7% for the same quarter of 2008.
CN said results included an after-tax gain of C$59 million(C$0.12 per diluted share) from a line sale to Metrolinx, greater Toronto’s regional transit authority, and a deferred income tax recovery of C$99 million (C$0.21 per diluted share). Excluding these items, adjusted fourth-quarter net income was C$424 million,or C$0.90 per diluted share, compared with adjusted net income of C$531 million, or C$1.12 per diluted share, excluding a deferred income tax recovery, for the year-earlier period.
Free cash flow for full-year 2009 was C$790 million, compared with 2008's C$794 million. Net income for full-year 2009 decreased 2.0% from 2008.
Claude Mongeau, CN president and chief executive officer, said: "CN overcame a number of challenges during the fourth quarter, ranging from weather and operational disruptions in Western Canada to a five-day strike by locomotive engineers in Canada. In addition, the stronger Canadian dollar adversely affected our earnings. Despite these challenges, the final quarter of 2009 saw continued sequential improvement in CN's traffic levels and an easing in year-over-year volume comparisons. Carloadings were flat year-over-year, but up 4.0% versus the third quarter of 2009."
Fourth-quarter year-over-year growth was in coal, automotive, grain and fertilizers, and petroleum and chemicals volumes as the economic recovery began taking hold. Intermodal volumes declined 3%, metals and mineral carloadings were down 2%, and forest products markets remain depressed.
Mongeau said: "Throughout the year, the CN team raised the bar on operational execution, tightly controlled costs, and generated solid free cash flow and increased shareholder value through the monetization of underutilized assets. As we go forward, we will build on the improvements in operating metrics we achieved in 2009, including train velocity, lower freight car dwell times in terminals, and improved locomotive fuel efficiency."
Demolition of two existing short rail bridges is now under way at the Ft. Eustis Army Transportation Corp. base in Virginia to make way for two new bridges that will consist almost entirely of heavy-duty recycled plastic parts.
The prime contractor for the project is Parsons Brinckerhoff.
Axion International Holdings, Inc., is providing holdings, I-beams for pilecaps and main girders, and crossties/curbing. "All parts of the bridges will be made from Axion products except the steel fasteners and bolts,” said the company.
“We are pleased to announce the Ft. Eustis project is under way as we demolish the existing wood spans and make way for two new bridges utilizing our patented thermoplastic technology,” said Axion CEO Jim Kerstein. “Being the first known structures of this kind able to support 130 tons is a milestone achievement, considering the main components of these bridges are made entirely from 100% recycled consumer and industrial plastic. In fact, the only non-recycled plastic components of these bridges will be the steel connectors holding our Axion parts together and the rubber bearing pads that provide cushion between the main girders and pile caps.
“By utilizing recycled plastic, not only will these bridges not rot, rust, or corrode like traditional building materials, they will also help divert literally tons of recycled products that would normally be destined for landfills. This includes household items such as milk jugs, detergent bottles, and car bumpers.”
The new short-span bridges will extend approximately 40 feet and 80 feet, respectively. Each of these bridges are designed to achieve a high-load rating of 130 tons (in order to transport locomotives and freight traffic for military movement and base exercises and achieve a Cooper E60 Rating).
New York State Comptroller Thomas DiNapoli has issued a statement saying the cost of an electronic security plan for the Metropolitan Transportation Authority has increased from $591 million to $833 million, with only $59 million in funding still available.
"The transit system is safer than before September 11, 2001, due in large part to the efforts of the MTA Police Department, but some security improvements are years behind schedule and the electronic security program may never be completed," DiNapoli said.
The project, originally contracted to Lockheed Martin Corp., was due to be completed in August 2008. It was planned around a system of video cameras and electronic sensors, including motion detectors.
DiNapoli noted that Lockheed sued last April to terminate its contract and collect at least $138 million, citing obstacles including scheduling problems. MTA is countersuing for $92 million.
BNSF Railway said Tuesday it has reduced transit schedules on 60% of its Domestic Intermodal Premium Container traffic, and added 16 more days of service.
The changes include a reduction in travel time by 7-to-10 hours on BNSF’s premier Transcontinental route between Los Angeles/San Bernardino and Chicago, giving customers a morning availability and allowing forsame-day delivery. BNSF says it also reduced transit time between Memphis and Los Angeles by 4-to-6 hours, and increased Houston inbound and outbound day-of-week frequency.
“These changes are a direct result of feedback from our domestic carrier customers on what they need to attract more over-the-road freight to a truck-rail intermodal solution,” said George Duggan, BNSF vice president, Domestic Intermodal.
“We’re pleased to have worked with BNSF to create improved intermodal service offerings for the marketplace,” said Paul Bergant, J.B. Hunt chief marketing officer and president, Intermodal. “These changes come just in time for bid season and allow us to attract more retailers to the efficiencies that truck-rail intermodal has to offer.”
Said Dave Howland, Schneider Intermodal vice president, Rail Management, “These changes not only better fit the needs of our customers, but they also offer customers the single most effective way to reduce emissions in their transportation service, potentially reducing carbon emissions on average by more than 50%.”
“With more capacity, speed and now better service options, these service enhancements allow Swift to continue to provide its customers with flexibility and trucklike reliability at a cost-effective price,” said Mark Young, president, Swift Intermodal.
Tulsa, Okla.-based Miratech Corp., which designs and manufactures emission control products, says it has been notified that the Patent Cooperation Treaty (PCT) application submitted for its V-CAT® catalyst has been accepted. Suchacceptance smooths the process for subsequent international patent filings, the company says.
Under the PCT, Miratech,by filing a single international patent application in one language with one patent office, will streamline the process for seeking protection for its V-CATdesign in up to 117 countries throughout the world.
“This is a huge stepin our being able to take the V-CAT technology into the international marketplace with peace of mind that our intellectual property rights can be protected,” said Miratech CEO Bill Clary. “We’ve had outstanding success with V-CAT domestically, given its ability to provide operators of EMD diesel engines used to power locomotives, gensets, and marine vessels the means to meet—and exceed—EPA Tier 0, 1, and 2 standards for exhaust emissions. We’re excited about taking that success worldwide, and this moves us forward toward doing so.”
Russian Railways Tuesday signed an agreement with Moscow-based Russian Corporation of Nanotechnologies (Rusnano) for a strategic partnership in introducing and commercializing nanotechnology in railway transportation.
The agreement sets out a mechanism for introducing and promoting innovation, including nanotechnology products, in the railway sector. Work under the agreement will allow RZD to meet rising quality demands in transport services, and increase transport volumes, freight tonnage, and track speeds.
Under the agreement, RZD and Rusnano will determine the most promising areas in which nanotechnology products can be applied, and the regions and company subdivisions in which to implement comprehensive projects.
The companies plan to develop a system for statistical monitoring of the effectiveness of nanotechnology, in order to create an information base for management decision-making.
Oregon's Department of Transportation has rejected an application for funding by the Siskiyou Regional Railroad Authority (in California) to apply toward the Siskiyou Summit line, which straddles the California-Oregon border.
The authority, formed by the cities of Weed and Montague in northern California, sought $13.4 million in funding to upgrade 80 miles and support operations for the first six months of service resumption. Only 14 miles of the track in question lie north of the California border, extending to Ashland, Ore.
Oregon DOT's development division ruled that the application does not meet feasibility criteria. The authority has one month to appeal the decision, should it so choose.
The Siskiyou Regional Railroad Authority has signed a memoof understanding with Union Pacific to acquire the line. The authority plans tohire a short line operator to operate the railroad.John Hammond, authority president, said the arrangement would benefit shipperssuch as Roseburg Forest Products and Timber Products Co. It would also allowthe authority to later develop passenger service and provide excursion trainsover the “spectacular Siskiyou mountains,” Hammond said.