Norfolk Southern racks up initial $387 million charge for Ohio disaster
The Norfolk Southern derailment happened in early February
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Norfolk Southern said Wednesday how large the initial financial charge it was accruing in connection to the derailment in Ohio’s East Palestine area.
The rail operator’s initial charge has come in at an eye-popping $387 million, according to its latest quarterly earnings release. The reporting of the $387 million charge came roughly nearly three months after the train derailment in the small Ohio town took place.
In early February, Norfolk Southern experienced a 28-car derailment, 11 of which held "hazardous materials that subsequently ignited," according to the National Transportation Safety Board.
This photo taken with a drone shows portions of a Norfolk Southern freight train that derailed Feb. 3, in East Palestine, Ohio, are still on fire on Feb. 4, 2023. A Senate committee is holding a hearing Thursday, March 9, to look into the train derai (AP Photo/Gene J. Puskar, File / AP Newsroom)
CFO Mark George said the $387 million figure "includes costs associated with the cleanup of the site, community support and restoration payments, legal and advisory expenses, and a preliminary estimate of claims and settlements." A "likely" reimbursement to the government for oversight has been factored into total as well, he added.
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The amounts of money "potentially recoverable" via insurance have not been included in the charge’s initial total, the company said in the release. That "would be reflected in future periods in which recovery is considered probable."
A view of the scene Friday, Feb. 24, 2023, as the cleanup continues at the site of a Norfolk Southern freight train derailment that happened on Feb. 3, in East Palestine, Ohio. On Tuesday, Feb. 28, in the wake of a fiery Ohio derailment and other rec (AP Photo/Matt Freed, File / AP Newsroom)
"Of that $387 million, cash out the door has really been $55 million," he said at one point.
The company’s first-quarter earnings took the derailment-related charge into account.
In the first quarter, Norfolk Southern generated $3.13 billion in total railway operating revenues, an increase from the $2.92 billion during the same three-months last year. Its diluted earnings per share felling 30% year-over-year, hitting $2.04.
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"From the beginning, we have been guided by one principle: we are going to do whatever it takes to make it right for East Palestine and the surrounding areas," CEO Alan Shaw told analysts and investors. "We are claiming the site safely, thoroughly and with urgency. We are assisting families, supporting local businesses and non-profits, and investing in long-term projects for the area’s future prosperity."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NSC | NORFOLK SOUTHERN CORP. | 261.27 | -3.59 | -1.36% |
East Palestine and its residents have been dealing with both health and environmental worries since the incident, Fox News previously reported.
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Norfolk Southern is facing a special investigation launched last month by the National Transportation Safety Board that it said will look into the company’s organization and safety.
The price of Norfolk Southern’s stock on Wednesday fell nearly 3% lower than it started and has gone down nearly 19% from the start of 2023.