Norfolk Southern (NSC) investor relations material

Executive summary

• Achieved record Q2 2026 revenues of $3.5 billion, up 11% year-over-year, driven by a 4% increase in volume and higher fuel surcharges.

• Adjusted net income rose 7% to $793 million, with adjusted EPS at $3.52, also up 7% from Q2 2025.

• Adjusted income from railway operations increased 5% to $1.2 billion, despite higher operating expenses.

• Operational improvements included enhanced safety metrics, network velocity, and terminal performance, despite winter disruptions and higher volumes.

• Leadership changes included the appointment and resignation of COOs, with executive transitions and consulting agreements.

Financial highlights

• Railway operating revenues reached a record $3.5 billion in Q2 2026, up 11% year-over-year.

• Adjusted operating ratio for the quarter was 65.5%, up 210 basis points from adjusted Q2 2025.

• Adjusted income from railway operations was $1.2 billion, up 5% year-over-year.

• Adjusted diluted EPS was $3.52, up 7% year-over-year; reported EPS was $3.26, down 4%.

• Adjusted operating expenses rose 15%, mainly due to higher fuel prices, inflation, and increased volumes.

Outlook and guidance

• 2026 adjusted operating expense guidance is $8.8–$8.9 billion, reflecting $400–$500 million in incremental fuel costs.

• CapEx guidance for 2026 is $1.9 billion, a reduction of ~$300 million from 2025, maintaining investment in safety, reliability, and capacity.

• Management expects continued volume and revenue growth, especially in Intermodal and Coal, but merger-related competition and fuel costs are expected to pressure results.

• Margin improvement anticipated in Q3, with fuel costs shifting from headwind to tailwind and wage increases partially offsetting gains.

• Management remains committed to maintaining industry-competitive margins and operational efficiency.