Key Takeaways
- Norfolk Southern shares rose Tuesday after the railway company announced a $600 million settlement to class-action litigation stemming from the East Palestine, Ohio, train derailment.
- In Feb. 2023, a Norfolk Southern train derailed near East Palestine, which is near the Ohio-Pennsylvania border.
- In a Jan. 2024 earnings call, the company said it incurred about $1.1 billion in costs related to the accident.
Shares of Norfolk Southern (NSC) moved higher in intraday trading Tuesday after the railway company announced a $600 million settlement that could resolve class-action litigation over the Feb. 2023 train derailment in East Palestine, Ohio.
If approved in court, the settlement would resolve class-action litigation within 20 miles of the derailment site, as well as personal injury claims within 10 miles of the site, the company said in a press release. The derailment happened in East Palestine, which lies next to the border between Ohio and Pennsylvania.
The derailment caused a large fire and eventually required a controlled burn of hazardous chemicals that were on the train and had leaked into the surrounding environment, raising health concerns for the residents of East Palestine, with some still reporting health problems over a year later.
Residents and regulators have been critical of Norfolk Southern’s response, while the company has said it is committed to “making it right,” with over $100 million in spending on repairs and community assistance around the site.
In an earnings call earlier this year, Norfolk Southern Chief Executive Officer Alan Shaw said 2023 was a “historically challenging year,” with total costs for the accident amounting to $1.1 billion.
Norfolk Southern also released preliminary first-quarter results Tuesday, reporting $3 billion in revenue, and adjusted earnings per share (EPS) of $2.49 after accounting for the settlement and other one-time costs. Aside from the settlement, Norfolk Southern said it also anticipates a hit of $50 million to $100 million to second-quarter revenue from last month’s collapse of the Francis Scott Key Bridge in Baltimore, depending on the duration of the port outage.
If the settlement is approved once it’s submitted to the U.S. District Court for the Northern District of Ohio later this month, Norfolk Southern said payments could start being distributed to class-action members by the end of the year. The agreement “does not include or constitute any admission of liability, wrongdoing, or fault,” the company said.
Norfolk Southern stock was up 1.7% to $254.58 at around 12:45 p.m. ET Tuesday. Shares are up about 25% from a year ago, when the stock was suffering the effects of the accident.