Domestic Intermodal

International Intermodal

Utility Coal

Export Coal

Domestic Metallurgical Coal

Industrial Coal

1a928a7995e7285d5ad9086767159158ecbebf63c76feac1535152b4d25863e2

7a2fdf432cd0b75c5549d69e62c187f9ffd3a55cdda219db405c740193cce82d

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD]

EPS - Diluted [USD]

c5a07c36e6f943bee45fe27784c86748bc659ec1f63a4f3cbc30b8831ecc8a1e

Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

904a3c610eae80328c7b7b1bf44221e57c55d737ca3922e55fd6273332bdbb9f

61f55095e2dc7bc2172db1e40ba1680fa14a2ecabb2ce763caa08cb6bef6ee13

| Segment/Metric | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Merchandise Revenue (Million $)** | **1,900**  **[NSC_3160497_4]**  | **1,878**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **1,826**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **1,800**  **[0000702165-23-000037_nsc-20230930.htm:27]**  | N/A | **1,863**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **1,904**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **1,861**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| - Agriculture, Forest, and Consumer Products | N/A | **653**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **627**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **611**  **[0000702165-23-000037_nsc-20230930.htm:8]**  | N/A | **629**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **622**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **624**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| - Chemicals | N/A | **541**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **503**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **498**  **[0000702165-23-000037_nsc-20230930.htm:8]**  | N/A | **527**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **532**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **543**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| - Metals and Construction | N/A | **400**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **415**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **417**  **[0000702165-23-000037_nsc-20230930.htm:8]**  | N/A | **430**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **440**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **420**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| - Automotive | N/A | **284**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **281**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **274**  **[0000702165-23-000037_nsc-20230930.htm:8]**  | N/A | **277**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **310**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **274**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| **Intermodal Revenue (Million $)** | N/A | **814**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **745**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **737**  **[0000702165-23-000037_nsc-20230930.htm:27]**  | N/A | **745**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **742**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **763**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| **Coal Revenue (Million $)** | N/A | **440**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **409**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **434**  **[0000702165-23-000037_nsc-20230930.htm:27]**  | N/A | **396**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **398**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **427**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |
| **Total Revenue (Million $)** | **3,200**  **[0001552781-23-000024_e23027_ex99-1.htm:0]**  | **3,132**  **[0000702165-23-000017_nsc-20230331.htm:23]**  | **2,980**  **[0000702165-23-000032_nsc-20230630.htm:8]**  | **2,971**  **[0000702165-23-000037_nsc-20230930.htm:27]**  | **3,100**  **[0001552781-24-000021_e24025_ex99-1.htm:0]**  | **3,004**  **[0001193125-24-114084_d796292ddefa14a.htm:2]**  | **3,044**  **[0000702165-24-000028_nsc-20240630.htm:8]**  | **3,051**  **[0000702165-24-000035_nsc-20240930.htm:8]**  |

15a972c1696e9d5bc541cfb8a84fe8ddef1b7f27dacc1cda6d8d35ef759af8c8

Norfolk Southern Corporation (NSC) is a major transportation company primarily engaged in the rail transportation business, operating 19,100 route miles across the Southeast, East, and Midwest of the United States. The company transports a variety of commodities, categorized into three main groups: merchandise, intermodal, and coal **[0000702165-24-000005_nsc-20231231.htm:54]** **[0000702165-24-000005_nsc-20231231.htm:4]**. NSC's operations include handling agricultural, chemical, metal, construction, automotive products, intermodal shipments, and coal, contributing to its total railway operating revenues of $12.156 billion in 2023 **[0000702165-24-000005_nsc-20231231.htm:58]**.

1. **Merchandise** - Transports a diverse range of products, including agriculture, forest and consumer products; chemicals; metals and construction materials; and automotive goods, accounting for the largest share of NSC's railway operating revenues.
   - **Agriculture, Forest, and Consumer Products** - Includes the transportation of agricultural goods, forest products, and various consumer items.
   - **Chemicals** - Involves the shipment of chemical products across the rail network.
   - **Metals and Construction** - Handles metals and construction materials for various industrial applications.
   - **Automotive** - Focuses on the transportation of vehicles and automotive parts.

2. **Intermodal** - Involves the shipment of domestic and international containers and trailers, serving intermodal marketing companies and international steamship lines, contributing significantly to the company's revenues.

3. **Coal** - Supports the electric generation and other industrial markets by transporting coal, making up a substantial portion of NSC's railway operating revenues.

50b9569db33225a34ca3735c0662e0736f816533c69d45b8de08575a701c9ca4

| Metric (thousand units/tons) | Q1 2023 | Q2 2023 | Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|------------------------------|---------|---------|---------|---------|---------|---------|
| Domestic Intermodal          | 587.7 **[0000702165-23-000017_nsc-20230331.htm:24]** | 577.0 **[0000702165-23-000032_nsc-20230630.htm:28]** | 583.1 **[0000702165-23-000037_nsc-20230930.htm:28]** | 590.4 **[0000702165-24-000009_nsc-20240331.htm:28]** | 616.3 **[0000702165-24-000028_nsc-20240630.htm:33]** | 637.7 **[0000702165-24-000035_nsc-20240930.htm:34]** |
| International Intermodal     | 329.1 **[0000702165-23-000017_nsc-20230331.htm:24]** | 348.4 **[0000702165-23-000032_nsc-20230630.htm:28]** | 382.3 **[0000702165-23-000037_nsc-20230930.htm:28]** | 398.4 **[0000702165-24-000009_nsc-20240331.htm:28]** | 387.2 **[0000702165-24-000028_nsc-20240630.htm:33]** | 414.5 **[0000702165-24-000035_nsc-20240930.htm:34]** |
| Total Intermodal             | 916.8 **[0000702165-23-000017_nsc-20230331.htm:24]** | 925.4 **[0000702165-23-000032_nsc-20230630.htm:28]** | 965.4 **[0000702165-23-000037_nsc-20230930.htm:28]** | 988.8 **[0000702165-24-000009_nsc-20240331.htm:28]** | 1,003.5 **[0000702165-24-000028_nsc-20240630.htm:33]** | 1,052.2 **[0000702165-24-000035_nsc-20240930.htm:34]** |
| Utility Coal                 | 8,210 **[0000702165-23-000017_nsc-20230331.htm:24]** | 6,852 **[0000702165-23-000032_nsc-20230630.htm:29]** | 7,342 **[0000702165-23-000037_nsc-20230930.htm:29]** | 7,019 | 7,555 **[0000702165-24-000028_nsc-20240630.htm:34]** | 8,272 **[0000702165-24-000035_nsc-20240930.htm:35]** |
| Export Coal                  | 8,206 **[0000702165-23-000017_nsc-20230331.htm:24]** | 7,697 **[0000702165-23-000032_nsc-20230630.htm:29]** | 7,563 **[0000702165-23-000037_nsc-20230930.htm:29]** | 8,749 | 7,247 **[0000702165-24-000028_nsc-20240630.htm:34]** | 8,816 **[0000702165-24-000035_nsc-20240930.htm:35]** |
| Domestic Metallurgical Coal  | 2,331 **[0000702165-23-000017_nsc-20230331.htm:24]** | 3,059 **[0000702165-23-000032_nsc-20230630.htm:29]** | 2,906 **[0000702165-23-000037_nsc-20230930.htm:29]** | 2,193 | 2,573 **[0000702165-24-000028_nsc-20240630.htm:34]** | 2,706 **[0000702165-24-000035_nsc-20240930.htm:35]** |
| Industrial Coal              | 689 **[0000702165-23-000017_nsc-20230331.htm:24]** | 882 **[0000702165-23-000032_nsc-20230630.htm:29]** | 913 **[0000702165-23-000037_nsc-20230930.htm:29]** | 786 | 863 **[0000702165-24-000028_nsc-20240630.htm:34]** | 991 **[0000702165-24-000035_nsc-20240930.htm:35]** |
| Total Coal                   | 19,436 **[0000702165-23-000017_nsc-20230331.htm:24]** | 18,490 **[0000702165-23-000032_nsc-20230630.htm:29]** | 18,724 **[0000702165-23-000037_nsc-20230930.htm:29]** | 18,747 | 18,238 **[0000702165-24-000028_nsc-20240630.htm:34]** | 20,785 **[0000702165-24-000035_nsc-20240930.htm:35]** |

5ca697ddd92a5a293c41d7af3a598848b4549294b1bae436fdd3e56eaf0587f4

1. You mentioned improvements in safety despite volume increases and weather events, but John Orr noted that the FRA personal injury rate has increased—can you explain the reasons behind this increase and what steps you're taking to address it?
2. With the sale of major rail lines providing cash proceeds to accelerate balance sheet repair, can you provide details on which lines were sold and how these sales will affect your long-term operational capacity?
3. Given the reductions in capital expenditures, including postponing locomotive purchases and reevaluating IT projects, how will these cost-saving measures impact your ability to maintain service quality and handle future growth?
4. Considering the ongoing headwinds in markets like automotive, metals, and coal, how do you plan to mitigate these challenges and drive revenue growth in the face of tempered demand?
5. Despite volume growth, ARPU has declined due to pricing pressures, especially in the intermodal segment—what strategies are you implementing to address these pricing challenges and improve profitability in this area?

40aead3cbd52b956e836ed71d5e60bd583c1a8e30ec2eaf6ac9633a90c422c08

Merchandise

- Agriculture, forest and consumer products

- Chemicals

- Metals and construction

- Automotive

- Forest and consumer

- Paper/clay/forest

Intermodal

Coal

Total Revenue

de936f513744270a6bfe86235b67a0041cb8fa1571ab00ef5eb43e37a388a202

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** Second half of 2024 and FY 2024
- **Guidance:**
  1. **Operating Ratio (OR):** Confident in meeting the **64% to 65% operating ratio** for the second half of the year.
  2. **Revenue Growth:** Expect full-year revenue to be up roughly **1%**.
  3. **Cost Reduction:** Committed to **$250 million of cost reduction for 2024** and another **$150 million for 2025**.
  4. **Volume Growth:** Expect continued growth in the intermodal product.
  5. **Coal Pricing:** Anticipate coal prices to continue drifting lower but not by double digits.
  6. **Productivity Improvements:** On track for **100 to 150 basis points of annual improvement** in operating ratio over the next few years, with a potential sub-60% OR in 3 to 4 years if volume contributes.

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** Second half of 2024
- **Guidance:**
  1. **Revenue Growth:** Lowered full-year revenue growth guidance to approximately **1%**.
  2. **Operating Ratio (OR):** Reaffirmed guidance for the second half operating ratio in the **64% to 65%** range.
  3. **Volume Growth:** Expect sequential volume improvement in the third quarter.
  4. **Cost Takeout Commitment:** On track for a **$250 million** cost takeout commitment.
  5. **Locomotive Productivity:** Targeting locomotive productivity improvements of an additional **8%**.
  6. **Car Velocity Improvement:** Aiming for at least a **7% to 10%** improvement in car velocity.
  7. **Employee Levels:** On track to reduce employee levels by **2%** by the end of the year.
  8. **Real Estate Gains:** Typically guides to **$30 million to $40 million** a year on real estate gains.

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** Q2 2024 and second half of 2024
- **Guidance:**
  1. **Operating Ratio (OR) Improvement:** Committed to a **400 to 450 basis point improvement** in the operating ratio in the second half of the year.
  2. **Volume and Revenue:** Anticipate a modest seasonal volume increase going into the second quarter.
  3. **Cost Reduction:** Targeting a **7% reduction in non-agreement headcount**.
  4. **Productivity Initiatives:** Set a target of **$250 million in productivity improvements** over the next 6 months.
  5. **Fuel Efficiency:** Expect benefits from fuel efficiency improvements.
  6. **Headcount:** Total headcount expected to be down around **2% by the end of the year**.

### Q4 2023 Earnings Call
- **Issued Period:** Q4 2023
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Revenue Growth:** Anticipate roughly **3% revenue growth** in 2024.
  2. **Operating Income and Margins:** Expect operating income to grow in excess of revenues with **100 to 150 basis points of margin improvement annually**.
  3. **Net Income and EPS:** Growth will be suppressed in 2024 due to higher interest expenses and temporary suspension of the share repurchase program.
  4. **Seasonality:** Strongest margin performance expected in Q2 and Q3.
  5. **Volume Growth:** Modest volume growth expected, driven by gains in steel shipments and automotive markets.
  6. **Pricing:** Strong pricing conditions in merchandise markets expected.
  7. **Coal Volume:** Expected to remain relatively flat.
  8. **Cost Structure:** Plan to reduce management headcount by roughly **7%**.
  9. **Productivity Initiatives:** Targeting a **double-digit percentage improvement in terminal dwell** in 2024.

d2db179c7b3c922009e9903685f040ce9acb1abcb317eb3e3e20425efd64c2c9

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

| Name               | Position                                           | Start Date          | Short Bio                                                                                                                                                                                                 |
|--------------------|----------------------------------------------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Alan H. Shaw       | President and Chief Executive Officer              | May 2022            | Alan H. Shaw joined NSC in **1994** and became CEO in **December 2021**, effective **May 2022**. He has over 30 years of experience at NSC, including roles in finance, marketing, and operations  **[0000702165-24-000005_nsc-20231231.htm:25]** **[0001193125-24-072121_d774854ddefc14a.htm:41]** **[0001193125-24-072856_d756973ddefa14a.htm:6]** .                                      |
| Ann A. Adams       | Executive Vice President and Chief Transformation Officer | April 1, 2019       | Ann A. Adams has been the EVP and Chief Transformation Officer since **April 1, 2019**. She was previously the Vice President of Human Resources from **April 1, 2016**, to **April 1, 2019**  **[0000702165-24-000005_nsc-20231231.htm:25]** .                                               |
| Paul B. Duncan     | Executive Vice President and Chief Operating Officer | January 1, 2023     | Paul B. Duncan has been EVP and COO since **January 1, 2023**. He previously served as Senior VP of Transportation and Network Operations and VP of Network Planning and Operations  **[0000702165-24-000005_nsc-20231231.htm:25]** .                                                         |
| Claude E. Elkins, Jr. | Executive Vice President and Chief Marketing Officer | December 1, 2021    | Claude E. Elkins, Jr. has been EVP and CMO since **December 1, 2021**. He joined NSC in **1988** and has over 35 years of industry experience in various roles  **[0000702165-24-000005_nsc-20231231.htm:25]** **[0001193125-24-072856_d756973ddefa14a.htm:6]** .                                                                           |
| Mark R. George     | Executive Vice President and Chief Financial Officer | 2019                | Mark R. George has been EVP and CFO since **2019**. He oversees Finance, Investor Relations, Sourcing, and Corporate Strategy teams. He previously held roles at United Technologies Corporation  **[0000702165-24-000005_nsc-20231231.htm:25]** **[0001193125-24-217556_d846772dex991.htm:1]** .                                         |
| Nabanita C. Nag    | Executive Vice President and Chief Legal Officer   | July 1, 2022        | Nabanita C. Nag has been EVP and CLO since **July 1, 2022**. She previously served as Senior VP and CLO and as General Counsel - Corporate  **[0000702165-24-000005_nsc-20231231.htm:25]** **[0000702165-23-000010_nsc-20221231.htm:20]** .                                                                                                |
| Claiborne L. Moore | Vice President and Controller                      | March 1, 2022       | Claiborne L. Moore has been VP and Controller since **March 1, 2022**. He previously served as Assistant VP Corporate Accounting and Director of Investor Relations  **[0000702165-24-000005_nsc-20231231.htm:25]** **[0000702165-23-000010_nsc-20221231.htm:20]** .                                                                      |
| John Orr           | Executive Vice President and Chief Operating Officer | March 20, 2024 (expected) | John Orr will be EVP and COO effective **March 20, 2024**. He has a four-decade career in railroading and previously served as EVP and Chief Transformation Officer at Canadian Pacific Kansas City  **[0001193125-24-072821_d807025ddefa14a.htm:1]** **[0001193125-24-072054_d801570ddefa14a.htm:3]** **[0001193125-24-072054_d801570ddefa14a.htm:1]** . |

ea337dd04772388172a2678c480a37e288f97c4a763c92f78edde6ed8f09bba4

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | March 29, 2022  **[0000702165-24-000035_nsc-20240930.htm:47]**  |
| End Date/Duration        | N/A (Began April 1, 2022)  **[0000702165-24-000035_nsc-20240930.htm:47]**  |
| Total additional amount  | $10.0 billion  **[0000702165-24-000035_nsc-20240930.htm:47]**  |
| Remaining authorization amount | $6.9 billion (as of September 30, 2024)  **[0000702165-24-000035_nsc-20240930.htm:47]**  |
| Details                  | The program allows for the repurchase of up to $10.0 billion of Common Stock.  **[0000702165-24-000035_nsc-20240930.htm:47]**  |

0bd198db082f1067e98292a2a27fc8a52edf3db84c6037e72963860c63b4d6a7

**Guidance for the second half of 2024:**
- **Operating ratio (OR)**: 64% to 65%    (no change from 64% to 65%   )  
- **Volume growth**: Expect continued growth in the intermodal product    (no change from prior guidance   )  
- **Coal pricing**: Anticipate coal prices to continue drifting lower but not by double digits    (no prior guidance)

**Annual guidance for 2024:**
- **Revenue growth**: ~1%    (no change from ~1%   )  
- **Cost reduction (2024)**: $250 million    (no change from $250 million   )  
- **Productivity improvements**: 100 to 150 bps of annual improvement in operating ratio over the next few years    (no prior guidance)

**Annual guidance for 2025:**
- **Cost reduction (2025)**: $150 million    (no prior guidance)

5a578a918890d7cbad6e3b72ae326a69c8670c11452117e510ab9e98c0826af1

1. **Margin Improvement Plan**  
   **Q:** Are you narrowing the margin gap with peers?  
   **A:** We've committed to industry competitive margins and plan to improve margins by **100 to 150 basis points per year** over three years.  **[NSC_3370977_11]** **[NSC_3370977_17]**  While we've made progress in enhancing safety, service, and attracting new business in 2023, we acknowledge our cost structure is too high for our revenue base.  **[NSC_3370977_12]**  We're focusing on productivity improvements, especially as we get into the second half of the year.  **[NSC_3370977_11]**  This isn't an endpoint; we aim for continuous productivity improvement as part of our balanced strategy.  **[NSC_3370977_11]** 

2. **Cost Structure Reduction**  
   **Q:** Will costs come down from here?  
   **A:** Yes, our cost structure is too high, and we're addressing this by focusing on productivity.  **[NSC_3370977_14]**  We're looking at every cost, including discretionary and management costs.  **[NSC_3370977_12]**  As we move into 2024, operating on plan will help drive out service recovery costs and improve productivity.  **[NSC_3370977_14]** **[NSC_3370977_15]** 

3. **Pricing Impact on Margins**  
   **Q:** Is pricing accretive to margins in 2024?  
   **A:** Yes, we have a strong price plan for 2024 that will produce value every quarter.  **[NSC_3370977_12]**  We feel good about where we are with price, and it will be part of the equation in achieving better margins.  **[NSC_3370977_12]** **[NSC_3370977_13]** 

4. **Volume and Growth Outlook**  
   **Q:** How will volumes trend in 2024?  
   **A:** We see sedate volume opportunities in the first quarter due to uncertainty, but expect a steady progression of volume improvement throughout the year.  **[NSC_3370977_18]**  Volume improvement will lead revenue and yield improvement for us.  **[NSC_3370977_18]** 

5. **Productivity Initiatives**  
   **Q:** What are the key productivity initiatives?  
   **A:** We're focusing on driving discipline and rigor inside our merchandise network, our biggest opportunity for productivity.  **[NSC_3370977_16]** **[NSC_3370977_17]**  Initiatives include reducing recrews, taxis, hotels, overtime, and equipment expense.  **[NSC_3370977_17]**  We'll improve capacity as cars per carload improves, creating a flywheel effect.  **[NSC_3370977_17]** 

6. **Operating Ratio Outlook**  
   **Q:** What is the OR outlook for 2024?  
   **A:** We expect OR to step back in the first half due to seasonality but anticipate much stronger incrementals and drop-through in the second half as headwinds unwind.  **[NSC_3370977_15]**  We're committed to improving OR by **100 to 150 basis points per year**.  **[NSC_3370977_11]** **[NSC_3370977_19]** 

7. **Service Improvements**  
   **Q:** How is service performance impacting growth?  
   **A:** We've delivered the best intermodal service in several years, and customers are rewarding us with volume.  **[NSC_3370977_20]**  Improvements in service and safety have led to attracting business from our most service-sensitive customers.  **[NSC_3370977_27]** 

8. **Capital Allocation and Share Repurchases**  
   **Q:** Is share repurchase suspended?  
   **A:** Yes, we don't expect to have remaining cash to do share repurchases in 2024 due to the CSR purchase and other cash uses.  **[NSC_3370977_26]**  We aim to resume a more normal capital allocation cycle in 2025.  **[NSC_3370977_26]** 

9. **Eastern Ohio Incident Impact**  
   **Q:** How does the Eastern Ohio incident affect costs?  
   **A:** While there are lingering incremental costs from safety measures implemented after the incident, they are not consequential.  **[NSC_3370977_32]**  We're running a safer railroad with a **42% reduction in mainline accident rate this year**.  **[NSC_3370977_32]** 

10. **Structural Margin Gap**  
    **Q:** Is there a structural margin gap with peers?  
    **A:** We believe we have significant runway for cost improvement and are focused on narrowing the margin gap.  **[NSC_3370977_20]**  Each franchise has unique strengths, and we are committed to industry competitive margins.  **[NSC_3370977_16]** **[NSC_3370977_20]** 

b59ff9e50a761e9b15dbee386e4abfd8702c3001f9c0f393e0d41475506187d6

| Name     | Start Date | End Date | Reason for Change |
|----------|------------|----------|-------------------|
| KPMG LLP | 1982  **[0000702165-24-000005_nsc-20231231.htm:48]**  | Present  | Current auditor   |

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6a0e57945446d2bac60d0c3dd0c2abcd58256f0a8f0b3085b0f7c6be872bca1a

- **Norfolk Southern has a robust pipeline of industrial development projects expected to add approximately 150,000 incremental carloads.** The volumes from these projects will manifest throughout 2025, representing full production for these facilities and contributing to growth not just this year but in the years to come.  **[NSC_3413522_22]**
- **The company plans to resume share repurchases in 2025 due to improved profitability and a rebuilt balance sheet.** This resumption is critical to their value creation framework and indicates strong financial health and commitment to shareholder returns.  **[NSC_3413522_3]**
- **Norfolk Southern is focusing on operational efficiencies, targeting significant improvements in fuel and mechanical infrastructure.** By unlocking productivity value, they aim to drive further cost reductions and margin improvements, closing the service and productivity gap with peers.  **[NSC_3413522_3]** **[NSC_3413522_14]**

260492f1d3ec475b3ff271bdb89d298f15df4492a9cef5c2c7c6c2d376215799

- **Continued pressure on coal prices and declining coal demand** pose a downside risk to NSC's coal revenues. The company noted that **coal prices have been under pressure now for a couple of quarters**, with a "**downside risk for the market**" due to reduced seaborne demand and high utility stockpiles impacted by low natural gas prices.  **[NSC_3413522_19]** ,  **[NSC_3413522_20]**
- **Headwinds from fuel prices and coal pricing**, along with **coal volume declines**, may limit revenue growth and operating ratio improvements. NSC expects these headwinds to offset gains, leading to a guidance of only **3% revenue growth**.  **[NSC_3413522_6]** ,  **[NSC_3413522_9]** ,  **[NSC_3413522_20]**
- **Constraints on the pace of operating ratio improvement** due to inflation, fuel price increases, and depreciation may hinder NSC's ability to close the margin gap with peers swiftly. The company faces **nearly 200 basis points of pressure on the OR from inflation, fuel price, and depreciation headwinds**.  **[NSC_3413522_14]** ,  **[NSC_3413522_20]**

7f4d73dd8463d5c8d6edbbd86d8252f691cb2977ee17cf0bf13af0de19e49285

1. **Productivity Initiatives and OR Improvement**  
   **Q:** How will you exceed productivity targets and improve OR?  
   **A:** Management is confident in exceeding the **$150 million** productivity target for 2025 by identifying opportunities across all expense categories.  **[NSC_3413522_7]**  They foresee a **150 basis point** OR improvement through self-help initiatives, aiming for an OR around **60%** once economic recovery boosts volumes.  **[NSC_3413522_7]**  Key areas include efficiency gains in manpower, reductions in overtime (an **18.5%** reduction in Q4 2024 vs. 2023), asset utilization improvements, fuel efficiency, and reductions in purchased services and rents.  **[NSC_3413522_7]** **[NSC_3413522_8]** 

2. **Revenue Growth Outlook**  
   **Q:** Is the 3% revenue growth driven by volume or yield?  
   **A:** The **3%** revenue growth guidance for 2025 is a combination of volume growth and solid core pricing, particularly in merchandise.  **[NSC_3413522_8]** **[NSC_3413522_9]**  Management expects volume growth in most markets except coal and anticipates executing their price plan despite headwinds from fuel and coal prices.  **[NSC_3413522_8]** **[NSC_3413522_9]**  They project a few percentage points of volume growth with good core pricing and less intermodal pricing headwind compared to prior years.  **[NSC_3413522_9]** 

3. **Labor Productivity Opportunity**  
   **Q:** What is the incremental labor productivity opportunity in 2025?  
   **A:** Management sees continued benefits and runway in labor productivity across all operating ranks.  **[NSC_3413522_8]**  In Q4 2024, they achieved an **18.5%** reduction in overtime compared to Q4 2023 and a full-year reduction of almost **15%**.  **[NSC_3413522_8]**  They are focusing on discipline within terminals, developing supervisors, and engaging with craft employees to drive solid productivity initiatives.  **[NSC_3413522_8]** 

4. **Capital Allocation and Share Buybacks**  
   **Q:** What are your plans for share repurchases in 2025?  
   **A:** Management plans to resume share repurchases at a measured pace in 2025, following a path to deleverage the balance sheet throughout the year.  **[NSC_3413522_9]**  They have rebuilt the balance sheet through improved profitability, insurance recoveries, and line sales.  **[NSC_3413522_9]**  Their capital distribution philosophy remains to invest in the business first, pay dividends, and then repurchase shares.  **[NSC_3413522_9]** 

5. **Service Improvement and Pricing**  
   **Q:** Will better service lead to market share gains or yield improvement?  
   **A:** Management aims to expand wallet share with customers by improving service reliability, leading to both market share gains and pricing opportunities.  **[NSC_3413522_10]**  They are focused on increasing their share with existing customers and attracting new business due to the value of their improved service.  **[NSC_3413522_10]**  They expect to continue recognizing value through price, particularly in merchandise markets.  **[NSC_3413522_10]** 

6. **Operational Plan Changes**  
   **Q:** What changes are you making to the operating plan?  
   **A:** The company is implementing the next iteration of continuous improvement in their operating plan, tightening standards in terminals, optimizing train weights, and customizing services to grow the business.  **[NSC_3413522_12]**  They are leveraging speed increases, extending train lengths, and right-sizing the fleet to enhance productivity, reduce fuel consumption, and improve operational discipline.  **[NSC_3413522_12]** 

09a513a9859c3156d73bb02fae3de35affc21b4797ed32b603ba7c8c032471c5

NSC projects 3% revenue growth for 2025 with ~150,000 new carloads from industrial expansions. Management aims for a 150 bps OR boost through $150M+ productivity gains. Coal weakness lingers, but share buybacks to resume, signaling restored financial strength.

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**Annual guidance for FY 2025:**
- **Revenue Growth**: 3%  **[NSC_3413522_6]**  (no prior guidance)  
- **Operating Ratio**: margin expansion of 150 basis points  **[NSC_3413522_6]**  (raised from 100–150 basis points  **[NSC_3413522_4]** )  
- **Cost Takeout**: aiming to exceed $150 million  **[NSC_3413522_6]**  (raised from $150 million  **[NSC_3413522_4]** )  
- **Capital Expenditures**: $2.2 billion  **[NSC_3413522_6]**  (no prior guidance)  
- **Free Cash Flow & Share Repurchases**: plan to resume share repurchases  **[NSC_3413522_6]**  (no prior guidance)  
- **Volume Growth**: modest volume growth  **[NSC_3413522_6]**  (no prior guidance)  
- **Coal RPU**: continued pressure  **[NSC_3413522_6]**  (no prior guidance)  
- **Labor Productivity**: continued improvements  **[NSC_3413522_6]**  (no prior guidance)  
- **Intermodal & Merchandise Markets**: growth expected  **[NSC_3413522_6]**  (no prior guidance)  
- **Safety & Operational Metrics**: further improvements  **[NSC_3413522_6]**  (no prior guidance)

b9cddeec0f1f387b71b59db8639ffc159e7a653bd8737ab343cbe4ced4078401

- Total Revenue: $3,024 million (-2% YoY)  **[0001193125-25-014968_d945030dex992.htm:0]**   
- Coal: $39 million (**-9% YoY**)  **[0001193125-25-014968_d945030dex992.htm:0]** 

56ff420341b99c800bcf202e41ccd090654f8850510658ab4d3ac6dd1cfa5f07

1. **Operating Ratio Guidance and Cost Savings**  
   **Q:** Why aren't bigger OR improvements expected despite cost initiatives?  
   **A:** Despite revenue headwinds and an expected **$25 million** wage increase in Q3 \[1\], we're confident in achieving a second-half OR of **64% to 65%**, driven by productivity gains and operational improvements \[1\]\[2\]. Headwinds from wage increases and fuel costs total about **140 basis points** \[2\]\[3\].

2. **Intermodal Yields and Volume Outlook**  
   **Q:** Have intermodal yields bottomed? When will they improve?  
   **A:** Intermodal yields are likely at the bottom, with mix and price causing **6 to 7 points** of weakness \[0\]. We expect stability in the second half and are nearing an inflection point, as customers anticipate a real peak season this year \[0\].

3. **Service Improvements and Regaining Merchandise Share**  
   **Q:** How will you win back lost merchandise volume?  
   **A:** By leveraging our improved service and increased capacity, we're focused on providing customers with reliability and cost savings \[11\]. Even in a challenging freight environment, our enhanced service is attracting customers back from the highway \[11\].

4. **Impact of East Coast Port Labor Issues**  
   **Q:** How are East Coast port actions affecting customer behavior?  
   **A:** With the ILA contract expiring on September 30, shippers are hedging by increasing activity on the West Coast \[9\]. We anticipate higher demand for domestic intermodal from the West Coast, as steamship lines may limit inland movements \[9\].

5. **STB Hearings and Regulatory Impact**  
   **Q:** How might STB changes affect your operations?  
   **A:** The STB is focused on service, aligning with our strategy \[4\]. Recent meetings reinforced our business plan and the importance of resiliency in driving the U.S. economy \[4\].

6. **Productivity Initiatives and Headcount Reductions**  
   **Q:** Will headcount reduce further with operational progress?  
   **A:** While T&E headcount is down **2%**, this isn't a headcount reduction exercise \[5\]. We're rightsizing service and aligning asset efficiencies, focusing on reducing waste without impacting service \[5\]\[6\]. We're on track to be down **2%** by year-end versus last year \[5\].

7. **Coal Yield Expectations**  
   **Q:** Are coal yields expected to decline in the back half?  
   **A:** Coal rates are expected to continue drifting slightly lower \[8\]. While slight gains occurred due to global disruptions, those have mostly eroded \[8\].

8. **Land Sales and Financial Impact**  
   **Q:** Should we factor land sales into the OR outlook?  
   **A:** Large land gains are not part of the OR path forward \[8\]. We typically guide to **$30 million to $40 million** a year in real estate gains absorbed within the OR \[8\].

9. **Opportunities in Mexico and Nearshoring**  
   **Q:** Do you see new opportunities from Mexico's nearshoring trend?  
   **A:** Yes, we're discussing opportunities with Grupo Mexico and CPKC, including connecting Mexico to the Southeast via the Meridian Speedway \[13\]. With manufacturing shifting to Mexico, we anticipate growth in this area \[13\]\[14\].

10. **Future Operating Ratio Improvements**  
    **Q:** Does current productivity set up better future OR improvements?  
    **A:** We're executing a multiyear plan to reduce OR to below **60%** \[14\]. Current productivity gains, despite a weak freight environment, position us for accelerating OR improvements in coming years \[14\].

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- **Norfolk Southern is implementing significant productivity initiatives under new Chief Operating Officer John Orr, aiming to close the profitability gap with peers and achieve substantial operating ratio improvement in the second half of the year.**  **[NSC_3380426_11]** **[NSC_3380426_6]** **[NSC_3380426_17]**
- **The company is improving service levels significantly, leading to positive customer response and opening opportunities for volume growth, especially in the merchandise and intermodal segments.**  **[NSC_3380426_15]** **[NSC_3380426_12]** **[NSC_3380426_17]**
- **Norfolk Southern is successfully optimizing its network by rationalizing low-density lanes and focusing on high-growth areas, which, combined with operational efficiencies, is expected to enhance profitability and mix.**  **[NSC_3380426_12]** **[NSC_3380426_17]**

d7ebec3c3c6f276218206784d06c949d6f8dfcd021e37367a9676f641dcd2602

- **Significant cost reductions leading to improved profitability and Operating Ratio (OR):** Norfolk Southern is on track to achieve **$250 million** in cost reductions this year and an additional **$150 million** next year, aiming for an adjusted OR below **60%** in the next **3 to 4 years**, enhancing profitability even in challenging economic environments.  **[NSC_3403172_11]** **[NSC_3403172_10]**
- **Operational excellence and productivity gains driving growth:** The company is implementing operational excellence practices, resulting in **labor productivity improvements** (volume up **7%**, headcount down **3%**) and is well-positioned to capture growth opportunities and recapture market share through improved service and efficiency.  **[NSC_3403172_9]** **[NSC_3403172_11]** **[NSC_3403172_10]**
- **Reduced capital intensity and planned share repurchases:** By taking over **500 locomotives** offline and reprioritizing capital projects, Norfolk Southern is reducing capital expenditures. Combined with proceeds from line sales and expected cash buildup, the company anticipates resuming **share repurchases** next year, enhancing shareholder value.  **[NSC_3403172_7]**

e8f41fed068e3eabe20e435d2254a2c924f47697512d8853506f38e109c25fbb

- **Norfolk Southern lowered its full-year revenue growth guidance from approximately 3% to approximately 1%**, citing continuing market headwinds.  **[NSC_3394347_5]** **[NSC_3394347_0]**
- The company is facing **increased labor costs** due to contractual wage increases effective July 1, resulting in a **$25 million step-up in compensation and benefits** in the third quarter, equating to an **80 basis points sequential operating ratio headwind**. Additionally, **fuel costs are expected to be a headwind of 50-60 basis points**.  **[NSC_3394347_7]** **[NSC_3394347_11]**
- Norfolk Southern has **lost market share in its merchandise segment over an extended period** and acknowledges the need to **earn back customers**, which could pressure revenues and margins.  **[NSC_3394347_21]** **[NSC_3394347_24]**

8cbc83e4495ea00044eacce9e9a5af9ff56df211546b12466777a88164274135

- **Significant operational changes, such as reducing the locomotive fleet by up to 500 units and rationalizing Intermodal lanes by 15%, may lead to customer disruption and potential loss of volume growth opportunities.**  **[NSC_3380426_11]** ,  **[NSC_3380426_14]** ,  **[NSC_3380426_12]**
- **Implementing Precision Scheduled Railroading (PSR) without causing customer service issues is challenging; despite management's assurances, there is a risk of service deterioration impacting customer relationships and revenue.**  **[NSC_3380426_14]** ,  **[NSC_3380426_16]**
- **New paid time off (PTO) and sick leave regulations could negatively affect crew availability and operational efficiency, posing challenges to productivity improvements and profitability targets.**  **[NSC_3380426_13]**

7f683b928e2fb9a5e33e2a0c4803a28940a8877c17b9fec87a88d3c2cf8f060f

1. **2025 Margin Outlook**  
   **Q:** Can margins improve in 2025 without market improvement?  
   **A:** Management is confident they can improve margins in 2025 through cost reductions, even if markets don't improve. They committed to **$250 million** of cost reductions this year and are on track to hit that number.  **[NSC_3403172_10]**  They've also committed to another **$150 million** next year and plan to beat that target.  **[NSC_3403172_10]**  They see opportunities to accelerate cost reductions from 2026 into 2025.  **[NSC_3403172_10]**  Despite potential market softness, they believe there are idiosyncratic opportunities to recapture market share.  **[NSC_3403172_10]** 

2. **Operating Ratio Guidance**  
   **Q:** Will you meet the 64%-65% operating ratio target for Q4?  
   **A:** Management is confident in meeting the **64%-65% operating ratio** guidance for the second half of the year.  **[NSC_3403172_6]**  While they expect a sequential uptick in OR in Q4 due to factors like reduced fuel recoveries and normal seasonality (historically about **100 basis points** headwind from Q3 to Q4)  **[NSC_3403172_6]** , they have operational momentum and productivity improvements that support their confidence in the guidance.  **[NSC_3403172_6]** 

3. **Capital Expenditure and Buybacks**  
   **Q:** Is capital intensity decreasing, and will you resume share buybacks?  
   **A:** With over **500 locomotives** taken offline, management expects to reduce capital expenditures next year.  **[NSC_3403172_7]**  They've reprioritized projects to focus on high-return ones.  **[NSC_3403172_7]**  With cash buildup from line sales, they expect to resume modest share repurchases next year.  **[NSC_3403172_7]** 

4. **Volume Growth and Market Share**  
   **Q:** Where are you winning volumes despite market headwinds?  
   **A:** The company has capitalized on market dislocations and spot opportunities in agricultural markets like soybeans, corn, and grain.  **[NSC_3403172_12]**  These gains have offset weaknesses in other industrial markets.  **[NSC_3403172_12]**  Intermodal volumes have shown solid growth both domestically and internationally.  **[NSC_3403172_12]**  The new reservation system enhances agility and reliability, allowing them to attract new business at low incremental cost.  **[NSC_3403172_12]** 

5. **Coal Pricing and Export Demand**  
   **Q:** Are you concerned about coal pricing and export demand in 2025?  
   **A:** While acknowledging geopolitical uncertainties impacting commodity prices, management believes the U.S. remains competitive in export markets.  **[NSC_3403172_16]**  They expect strong demand for export thermal coal to continue.  **[NSC_3403172_16]**  China will play a significant role in determining export met coal demand.  **[NSC_3403172_16]**  They are prepared to deliver tonnage to customers globally as needed.  **[NSC_3403172_16]** 

6. **Pricing Strategy Against Inflation**  
   **Q:** How much pricing is needed to counter inflation next year?  
   **A:** Management is confident in their ability to outpace inflation across major markets.  **[NSC_3403172_15]**  They've had success pricing to the value of their service, which is increasing.  **[NSC_3403172_15]**  While commodity prices like seaborne coal may present headwinds, the core product's value is growing, and customers are saving money.  **[NSC_3403172_15]** 

7. **Labor Productivity Gains**  
   **Q:** Is there more runway for labor productivity improvements?  
   **A:** Management believes they are just getting started with disciplined operations enhancing labor productivity.  **[NSC_3403172_9]**  Gains are gaining traction and will continue.  **[NSC_3403172_9]**  Collaborative engagement with labor has been positive, and the team is embracing continuous improvement.  **[NSC_3403172_9]** 

8. **Impact of New Labor Agreements**  
   **Q:** How will new labor agreements help you meet targets?  
   **A:** Providing clarity on payment structures and work schedules boosts workforce confidence.  **[NSC_3403172_13]**  This predictability aids in modeling pricing and customer predictability.  **[NSC_3403172_13]**  The agreements support their goals in PSR 2.0, enhancing disciplined service and value delivery.  **[NSC_3403172_13]** 

9. **Premium Intermodal Outlook**  
   **Q:** Are you seeing recovery in premium intermodal?  
   **A:** There are still headwinds in the premium intermodal segment due to challenges in the trucking market.  **[NSC_3403172_17]**  However, indicators like rising truck utilization and declining numbers of motor carriers suggest we're near the bottom.  **[NSC_3403172_17]**  Feedback from key partners like J.B. Hunt and Hub Group indicates pricing may eventually inflect.  **[NSC_3403172_17]**  The company focuses on delivering the exact product needed by this segment.  **[NSC_3403172_17]** 

10. **Network Resiliency**  
    **Q:** What is working well on network resiliency, and what needs improvement?  
    **A:** Decongesting terminals and networks by removing **500 locomotives** and over **8,000 cars** since Q1 has improved fluidity.  **[NSC_3403172_14]**  This allows for quicker recovery from disruptions, as seen after recent storms where they returned to record speeds within a week.  **[NSC_3403172_14]**  Achieving resiliency while lowering costs demonstrates a successful model.  **[NSC_3403172_14]** 

d33e928a6a6d09983b323892314cbdcefc8f9993fe92d69ff002bc054330662a

- **Norfolk Southern enters 2024 with a safer and more fluid network that attracts business from their most service-sensitive customers, positioning the company for outperformance during the up cycle.**  **[NSC_3370977_2]** ,  **[NSC_3370977_28]**
- **The company is focusing on improving productivity by driving discipline and rigor in their merchandise network, which presents the single biggest opportunity and accounts for two-thirds of operating costs.**  **[NSC_3370977_17]**
- **Investments in service and resiliency are expected to lead to cost savings and support growth, as a faster network reduces costs such as recrews, overtime, equipment rentals, and improves fuel efficiency.**  **[NSC_3370977_25]**

adccbfdedfc42dfa058991971926864769ffeba977b7ab3636e7eeb197d86947

1. **Operating Ratio Improvement**  
   **Q:** What's driving the 400–500 bps OR improvement guidance?  
   **A:** Management expects a sequential improvement of **400 to 500 basis points** in Q2 operating ratio, driven by modest seasonal volume increase and significant cost reductions. They highlighted cost relief in compensation and benefits due to unwinding service costs and restructuring benefits from reducing **300+ non-agreement workers**. Fuel efficiency and productivity gains, including crew start savings and overtime reduction, will further contribute to the improvement. The company anticipates **$250 million** in productivity over the next six months.  **[NSC_3380426_9]** 

2. **Operational Changes Under New COO**  
   **Q:** How does the aggressive approach affect operations and risks?  
   **A:** New COO John Orr emphasized that enhancing productivity and service are complementary goals. He is focused on restructuring yard and local plans to improve efficiency and reduce dwell times. The company is confident that these changes will drive performance without compromising service or safety. Management believes that accelerating operational improvements is necessary to meet their strategic objectives.  **[NSC_3380426_10]** 

3. **Intermodal Lane Rationalization**  
   **Q:** Is the intermodal lane rationalization complete?  
   **A:** The company has completed a rationalization of about **15%** of its intermodal lane portfolio, focusing on low-density and non-strategic lanes, which represented a small portion of intermodal revenue. This allows them to redeploy capacity to high-growth lanes delivering exceptional value. Management continues to evaluate the network to ensure resources are allocated to areas with the greatest growth potential.  **[NSC_3380426_12]** 

4. **Customer Response to Operational Changes**  
   **Q:** How are customers reacting to the changes?  
   **A:** Customers are encouraged by the improved service levels, with intermodal service described as the best in a generation and sustainable. The company is earning trust and seeing positive responses, including new volume converting from the highway. The improved service reliability is expected to support growth in both intermodal and merchandise segments.  **[NSC_3380426_11]** 

5. **Impact of PTO and Sick Leave Regulations**  
   **Q:** How does new sick leave impact operations?  
   **A:** Management acknowledges that new sick leave regulations are a national issue and is focusing on crew productivity and yard efficiency to mitigate any impact. They are increasing the capabilities of each assignment and balancing crew availability commitments with labor organizations. Everything is being scrutinized, including yard operations, to ensure they meet operational needs efficiently.  **[NSC_3380426_13]** 

6. **Potential Yard Closures**  
   **Q:** Will any yards be closed?  
   **A:** John Orr stated that all aspects of the network are being evaluated, including yard operations. He is challenging the historic reasons for each yard to ensure they meet current and future operational needs. The company is open to changes and will roll out a redefined yard operating plan in the next 30 days, which may include yard closures.  **[NSC_3380426_13]** 

7. **Management's Confidence in Targets**  
   **Q:** How confident is management in achieving targets?  
   **A:** John Orr expressed high confidence in achieving the set targets sustainably. He emphasized that by improving execution, plan compliance, and reducing waste, the company is already on the path to delivering impressive results without compromising service or safety.  **[NSC_3380426_16]** 

8. **Meridian Speedway Concession**  
   **Q:** Does the Meridian Speedway impact Mexico traffic?  
   **A:** Management clarified that the agreement related to the Meridian Speedway is not a consequential concession and does not impact Mexico. It affects the Dallas business, which is largely defined by abundant truck capacity.  **[NSC_3380426_8]** 

8c113a80488a845a686823c291074be457abaa5880f4ca1559de2d2df6e9b2b2

- **Norfolk Southern is executing on a multi-year plan to reduce its Operating Ratio to below 60%**, demonstrating strong commitment to improving efficiency and profitability despite a weak freight environment.  **[NSC_3394347_25]**
- **The company is achieving significant operational improvements, driving productivity gains and cost reductions**, including a commitment to take out **$450 million** in costs, which is accelerating improvements and allowing the company to reaffirm its guidance even amidst market weaknesses.  **[NSC_3394347_11]** **[NSC_3394347_22]**
- **NSC is experiencing growth in its most service-sensitive markets, such as Automotive (up 7%) and Intermodal (up 8%)**, due to improved service product and alignment between marketing and operations, indicating strong customer support and potential for volume growth.  **[NSC_3394347_17]**

2d077609323596b571af873e0e92a878c653c1ac6837fd57f28000ecda93c8e6

- **Persistent operating margin gap:** Despite efforts to improve efficiency and reduce costs, Norfolk Southern continues to lag behind peers in operating margins. Even with a planned improvement of **100 to 150 basis points annually** over the next three years, analysts question whether this will be sufficient to narrow the margin gap with competitors.  **[NSC_3370977_17]** ,  **[NSC_3370977_28]** ,  **[NSC_3370977_31]**
- **Modest revenue growth outlook amid macroeconomic uncertainties:** The company projects revenue growth of approximately **3% in 2024**, which analysts deem conservative given easy volume comparisons and pricing opportunities. Macroeconomic uncertainties and a weak freight environment, particularly in the first half, may limit revenue growth.  **[NSC_3370977_18]**
- **Near-term cost challenges impacting operating ratio:** Norfolk Southern anticipates operating ratio deterioration in the first quarter due to seasonality and lingering cost pressures. Higher expenses related to service recovery efforts and other headwinds are expected to keep costs elevated in the near term.  **[NSC_3370977_15]** ,  **[NSC_3370977_17]**

ded1070dba9c4c5701753b99c0c248473f542b4accf22a572468f1e517465e9b

- **Norfolk Southern may face volume and revenue pressures due to weakness in key markets, including industrial and automotive sectors.** Ed Elkins acknowledged "some of the weakness that we've seen in some of the other industrial markets," and "deceleration in some of our auto markets."  **[NSC_3403172_12]**
- **Achieving operating ratio improvement targets may be challenging without volume growth, especially if market conditions remain weak.** Mark George stated, "We can't control the top line and the economic environment... there is share recapture opportunity out there. So even if you have a softer market, we still have some idiosyncratic opportunities to recapture some share to help mitigate any pressure that might be there."  **[NSC_3403172_10]**
- **Reliance on cost reductions for financial performance may be insufficient if market headwinds persist.** Mark George mentioned, "Regardless of the economic environment, we committed to another $150 million next year... So we feel really, really confident there... We can't control the top line and the economic environment."  **[NSC_3403172_10]**

39c03ade7e9df96b40aab664099b26f87a6a5d5a325e636a4a0db19d21fea15d

Norfolk Southern Corp (NSC)

Financials