12:32 PM EDT, 04/09/2024 (MT Newswires) -- Norfolk Southern ( NSC ) on Tuesday reported preliminary first-quarter results below analysts' expectations, while the railway company struck a $600 million agreement in principle to settle a class-action lawsuit over the derailment of one of its trains in Ohio last year.

In February 2023, a Norfolk Southern ( NSC ) freight train derailed in East Palestine, Ohio, impacting about 50 of the 150 train cars and resulting in hazardous materials being released. The tentative settlement is expected to be sent to the US District Court for the Northern District of Ohio for initial approval later this month, according to the company.

The settlement, if approved, would resolve all class action claims within a 20-mile radius from the derailment and personal injury claims within a 10-mile radius of the site, the company said. Norfolk Southern ( NSC ) noted that the agreement doesn't reflect any admission of wrongdoing by the company.

In a separate statement, the company said it will recognize the $600 million hit in its first-quarter financials. It said adjusted earnings are expected to be $2.49 a share for the three-month period on operating revenue of about $3 billion, while the consensus on Visible Alpha is for EPS of $2.62 and revenue of $3.04 billion. In the prior-year quarter, per-share adjusted earnings came in at $3.32 while revenue was $3.13 billion.

Revenue per-unit headwinds tied to lower fuel surcharge and continuation of adverse mix likely dragged down revenue by 4%, despite volume gains by the same percentage, according to the company. Additionally, charges linked to the company's separation programs and costs linked to the hiring of a new chief operating officer, among other factors, are expected to have increased operating expenses by $691 million in aggregate.

"In the first quarter, we delivered an adjusted operating ratio in line with our guidance, which called for a seasonal increase of 100 to 200 basis points sequentially from the fourth quarter," Chief Executive Alan Shaw said in a statement. "We achieved this result despite macroeconomic challenges and the continued impact of our revenue mix being weighted towards lower-rated traffic, including international intermodal, which continues to be a significant driver of volume growth."

The company is scheduled to release its full first-quarter results on April 24. For the ongoing quarter, it anticipates to incur a $50 million to $100 million impact on revenue due to the recent collapse of Baltimore's Francis Scott Key Bridge.

"There is still work to be done to achieve industry-competitive margins and our target of a sub-60% adjusted operating ratio in three to four years and we are taking all the right steps to deliver on our promise," according to Shaw. "We are confident in our ability to achieve our near- and long-term operating and financial targets."

Price: 253.92, Change: +3.65, Percent Change: +1.46