Litigation costs impact BNSF's Q2 net income

BNSF Railway Co. reported second-quarter 2024 net income of $1.2 billion, down 3% from $1.3 billion in the same quarter a year ago.

Quarterly earnings were negatively impacted by cost accruals primarily related to a recent judgment in an ongoing legal case, BNSF officials reported in a Q2 financial performance summary.

In June, a federal judge ordered BNSF to pay nearly $400 million to the Swinomish Tribe after finding the railroad trespassed when it repeatedly operated 100-car crude oil trains across the tribe’s reservation in Washington. BNSF is appealing the judge’s ruling.

Excluding the impact of litigation costs, BNSF’s earnings and operating ratio (OR) in Q2 “showed solid improvement,” company officials said. BNSF posted operating income of $1.8 billion, a 1% increase  compared to Q2 2023. BNSF’s OR came in at 68.2%, unchanged from a year ago.

BNSF reported total revenue of $5.7 billion in the quarter, down 2% year over year. The decrease reflected lower average revenue per car/unit for the quarter, resulting from lower fuel surcharge revenue and business mix changes. Volume climbed 4%.

Revenue changes during Q2 also resulted form the following:

• Consumer products rose 15% due to higher intermodal shipments from West Coast imports and volume from a new intermodal customer;
• Agricultural projects increased 11%, due to higher grain exports, renewable fuels and fertilizer shipments, partially offset by lower domestic grain volume; 
• Industrial products fell 1% in the quarter, due to lower aggregates, taconite, minerals and waste shipments, partially offset by higher volumes in petroleum products and plastics; and
• Coal volumes decreased 29% due to lower natural gas prices, which displaces coal as a fuel used by utilities.

Q2 operating expenses dipped 3% to $3.9 billion.