Norfolk Southern (NSC) investor relations material

Executive summary

• Q1 2026 revenue was $2,998M–$3.0B, flat year-over-year, with a 1% volume decline and adjusted net income of $597M; adjusted EPS was $2.65, down 1–2% year-over-year.

• Net income declined 27% to $547M due to higher expenses, merger costs, and absence of prior-year insurance recoveries.

• Safety and operational metrics improved, including lower FRA personal injury and accident rates, reduced terminal dwell, and higher locomotive productivity.

• Disciplined cost control and productivity initiatives offset inflation and fuel headwinds, with $150M+ in additional cost reductions targeted for 2026.

• Entered into a merger agreement with Union Pacific, incurring $52M in related expenses in Q1 2026; merger subject to regulatory approval.

Financial highlights

• Adjusted operating ratio was 68.7%, up 80 basis points year-over-year; GAAP operating ratio was 70.7%.

• Adjusted operating expenses rose 1% to $2,059M, with productivity gains partially offsetting inflation and fuel headwinds.

• Adjusted operating income was $939M, down 2% year-over-year; operating income (GAAP) was $877M, down 23%.

• Diluted EPS was $2.43, down 27% year-over-year; adjusted EPS was $2.65.

• Cash provided by operating activities was $344M, down from $950M in Q1 2025.

Outlook and guidance

• 2026 adjusted operating expense guidance is $8.2B–$8.4B, with capex projected at $1.9B, down ~$300M from 2025.

• Expecting typical sequential margin improvement of about 200 basis points in Q2.

• Fuel surcharge revenues and expenses expected to rise for the remainder of 2026 due to commodity prices.

• Enhanced competitive environment from merger activity expected to pressure volumes in the short and medium term.