Executive Summary

Q2 2025 delivered modest top-line growth and continued cost control: revenue $3.11B (+2% YoY), operating ratio 62.2% (adjusted 63.4%), and diluted EPS $3.41; adjusted EPS $3.29 (+8% YoY) .
Versus S&P Global consensus, NSC slightly missed: revenue $3.11B vs $3.13B*, and adjusted/normalized EPS $3.29 vs $3.31*; volume grew 3% YoY and fuel surcharge headwinds persisted .
Guidance was recalibrated: FY25 revenue growth now 2–3% (from 3%), adjusted OR improvement 100–150 bps (from 150 bps), and productivity savings raised to $175M+; Q3 OR expected to be pressured on early-quarter revenue softness .
Strategic catalyst: NSC announced a combination with Union Pacific, valuing NSC at $320 per share (EV ~$85B) with ~$2.75B annualized synergy opportunity; NSC did not hold a standard earnings call, deferring to a joint investor call on the transaction .

What Went Well and What Went Wrong

Adjusted earnings quality improved: adjusted EPS rose 8% YoY to $3.29; adjusted OR improved 170 bps YoY to 63.4%, reflecting productivity gains and cost discipline .
Segment resilience: merchandise revenue increased to $1.972B (+$68M YoY), with intermodal holding steady despite lower fuel surcharge revenue .
Incident recoveries continued to exceed costs, with net positive impact ($47M) aiding GAAP profitability and cash generation .

Small misses versus consensus: revenue ($3.11B vs $3.13B*) and adjusted/normalized EPS ($3.29 vs $3.31*), reflecting softer pricing and lower fuel surcharges despite volume growth .
Management flagged near-term revenue softness: Q3 2025 adjusted OR is expected to be pressured due to weaker-than-expected early-quarter demand trends .
Share repurchases ceased following transaction announcement, limiting buyback support; though NSC repurchased 1.9M shares ($455M) in 1H 2025 prior to cessation .

Metric	Q2 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus
Revenue ($USD Billions)	$3.044	$2.993	$3.110	$3.132*
Diluted EPS ($USD)	$3.25	$3.31	$3.41	$3.306* (Primary)
Adjusted Diluted EPS ($USD)	$3.06	$2.69	$3.29	$3.306* (Normalized)
Operating Ratio (%)	62.8%	61.7%	62.2%	N/A
Adjusted Operating Ratio (%)	65.1%	67.9%	63.4%	N/A
Income from Railway Operations ($USD Billions)	$1.131	$1.146	$1.175	N/A
Adjusted Income from Railway Operations ($USD Billions)	$1.063	$0.961	$1.138	N/A

S&P Global disclaimer: Consensus values marked with an asterisk were retrieved from S&P Global.

Segment Revenue ($USD Billions)	Q2 2024	Q2 2025
Merchandise	$1.904	$1.972
Intermodal	$0.742	$0.743
Coal	$0.398	$0.395
Total	$3.044	$3.110

KPI	Q2 2024	Q1 2025	Q2 2025
Railway operating revenues less fuel surcharge ($USD Billions)	$2.785	$2.791	$2.907
Fuel surcharge revenue ($USD Millions)	$259	$202	$203
Net Eastern Ohio incident (recoveries minus expenses, $USD Millions)	$65	$185	$47
Weighted avg diluted shares (Millions)	226.4	226.5	225.2
Share repurchases YTD 2025 (Shares/Spend)	N/A	1.0M / $250M	1.9M / $455M (1H25)

EPS impact: Incident and restructuring reduced EPS by $0.12, yielding adjusted EPS $3.29 .
OR impact: Adjustments added 120 bps to OR, yielding adjusted OR 63.4% .
Operating income: Adjusted operating income $1.138B after removing $47M net incident recovery and $10M restructuring .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth (YoY)	FY 2025	~3%	2–3%	Lowered
Adjusted Operating Ratio Improvement	FY 2025	~150 bps	100–150 bps	Lowered/Narrowed
Productivity Savings	FY 2025	$150M+	$175M+	Raised
Q3 2025 Adjusted OR	Q3 2025	N/A	“Pressured” due to softer early-quarter revenue	New commentary
Share Repurchase Program	FY 2025	Active (1.9M shares repurchased in 1H)	Ceased	Ceased
Dividend	Q3 2025	N/A	$1.35 per share payable Aug 20, 2025	Announced

NSC did not hold a standard Q2 2025 earnings call due to the Union Pacific transaction; a joint investor call was held instead .

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Productivity & Cost Takeout	“Productivity initiatives drive results” with adjusted OR improvement; Q4 adj. OR 64.9% (+390 bps YoY) . Q1 delivered improved OR despite winter storms (adj. OR 67.9%) .	Raised FY25 productivity savings to $175M+; continued OR improvement YoY (adj. OR 63.4%) .	Improving
Eastern Ohio Incident	Q4: insurance recoveries exceeded expenses; FY24 incident expense $325M . Q1: recoveries exceeded expenses by $185M .	Q2: recoveries exceeded expenses by $47M; continued net positive effect .	Recoveries ongoing
Revenue/Volume/Macro	Q4: revenue down 2% YoY; ex-fuel revenue +2% on 3% volume growth . Q1: revenue down $11M; ex-fuel +2% on 1% volume growth .	Q2: revenue +$66M YoY; volume +3% YoY; but Q3 guidance flags early-quarter softness .	Mixed near term
Strategic M&A	N/A in prior quarters.	Announced UP–NSC combination; $320/share value, ~$2.75B synergies, STB review, target close by early 2027 .	New strategic pivot
Capital Allocation	No buybacks in 2024 ; Q1 2025: 1.0M shares repurchased ($250M) .	Ceased buybacks post-announcement; 1.9M shares repurchased in 1H 2025 ($455M) .	Buybacks halted

“Norfolk Southern delivered another set of strong results — growing volumes, managing costs, and delivering 8% EPS growth… ahead of schedule on our productivity targets thanks to the exceptional efforts of our Thoroughbred team.” — President & CEO Mark George .
NSC updated its 2025 outlook to 2–3% revenue growth and 100–150 bps adjusted OR improvement, while raising productivity savings to $175M+ and warning of Q3 pressure on adjusted OR due to early-quarter revenue softness .

NSC did not host a Q2 earnings call due to the Union Pacific transaction; instead, a joint investor call focused on transaction rationale, synergies (~$2.75B), regulatory process (STB review), timeline (target close by early 2027), and consideration ($320 per share implied value) .

Q2 2025 vs S&P Global consensus: revenue $3.110B vs $3.132B*, adjusted/normalized EPS $3.29 vs $3.31*, with 16 revenue estimates and 20 EPS estimates*; modest misses amidst lower fuel surcharges and softer early-Q3 demand signals .
Implication: Estimates may edge lower for Q3 on management’s caution about early-quarter revenue softness and the expected adjusted OR pressure; FY25 adjusted OR target narrowed while productivity uplift increased .

S&P Global disclaimer: Consensus values marked with an asterisk were retrieved from S&P Global.

Operational execution remains solid: adjusted OR improved 170 bps YoY and adjusted EPS rose 8% despite fuel surcharge headwinds; productivity savings target raised to $175M+ .
Slight consensus misses indicate near-term caution; management flagged Q3 adjusted OR pressure due to softer demand early in the quarter .
The UP–NSC transaction reframes the investment case: $320/share implied value, ~$2.75B synergies, STB review, target close by early 2027; expect deal-related headlines and regulatory milestones to drive stock narrative .
Capital allocation pivot: buybacks ceased following transaction announcement; dividend remains intact at $1.35, offering yield support .
Incident tailwinds continue: net recoveries exceeded expenses again in Q2, reducing P&L volatility and supporting cash generation .
Segment mix steady: merchandise strength offset flattening intermodal and slight coal decline; watch macro/fuel surcharge trajectory for pricing tailwinds .
Trading setup: near-term catalysts include regulatory updates on the transaction and Q3 demand trends; medium-term thesis hinges on cost/productivity execution and merger approval/process dynamics .