Norfolk Southern Corporation Q1 FY2026 earnings call

1. Successfully navigated challenging winter with weather events affecting territory in February, but recovered in March. 2. Safety performance excelled: FRA reportable accident rate down, FRA accident ratio improved 37% year over year in Q1, FRA mainline accident ratio 0.26 and led Class 1 railroads in mainline incident reliability. 3. Network demonstrated resilience: moved 1.1% more gross ton miles, terminal dwell improved, 8.6% fewer re-crews, improved locomotive reliability, continued reductions in unscheduled train stops. 4. PSR 2.0 transformation: disciplined execution compounding over time, achieved fuel efficiency record, war rooms translating discipline into measurable results. 5. Introduced innovative new short-line and transload partnership with Jaguar Transport Holdings in Doraville, Georgia, focused on growth in high density switching corridor.

Overall, volume finished down 1%, primarily due to challenging intermodal market conditions as well as merger-related losses. However, revenue ended the quarter flat year over year, and RPU was up 2%. Within merchandise, volume and revenue increased 1% from a year ago, driven by continued share gains in chemicals and automotive markets; RPU less fuel was flat year over year. In intermodal business, volumes decreased 4%, intermodal revenue declined 1% and revenue-less fuel decreased 2%, while RPU higher by 3% and RPU-less fuel higher by 2%. For coal, volume increased substantially (9%), but revenue declined 2% as RPU down by 9% due to mixed headwinds from utility growth and continued overhang of export pricing.

Last quarter provided adjusted operating cost envelope of $8.2 to $8.4 billion for 2026. Maintaining current cost guidance while acknowledging near-term volatility and uncertainty on fuel prices; team will monitor fuel situation in Q2 and update accordingly. Remain on track to refile merger application by end of the month, revised application will stronger articulate benefits of single-line transcontinental railroad.

Fuel price volatility uncertainty, competitive dynamics impacting market share, macroeconomic environment uncertainties affecting demand and supply chains.

Q: Chris Weatherby asked about OR seasonality and intermodal competitive activity.

A: Jason mentioned headwinds like inflation, lower land sales, competitive merger responses and fuel headwinds, expecting ~200 basis points sequential OR improvement; Ed said intermodal competition is primarily within intermodal.

Q: Scott Group asked about merchandise pricing and merger feedback.

A: Ed said merchandise price is mixed, satisfied with core price and incremental revenue from low-rated commodities; Mark said feeling better about merger application after clarifying with customers.

Q: Brian Assenbeck asked about fuel and weather costs and 26 market outlook.

A: Jason talked about fuel price increase and consumption story, John talked about storm costs and Ed talked about optimism in intermodal, coal, industrial markets.

Q: Jason Seidel asked about intermodal customer discussions and new short-line partnership.

A: Mark is bullish on domestic non-premium intermodal; Ed said new partnership is innovative and could be replicated.

Q: Jonathan Chappell asked about fuel consumption and labor productivity.

A: John talked about fuel productivity being a journey, labor productivity benefiting from fuel recruits and zero-based plan, and complexity of hiring across 90 crew bases.

Q: David Vernon asked about export thermal coal impact.

A: Ed said export thermal coal would be helpful to RPU mix and optimistic about it.

Q: Richard Harney asked about cost initiatives.

A: John talked about fuel efficiency, labor productivity, safety driving cost benefits.

Q: Jordan Alliger asked about intermodal service.

A: John said sequentially pacing slightly ahead of last year, focused on lane-level service.

Q: Tom Wadowitz asked about competitive dynamic and international/domestic intermodal.

A: Mark said competitive position is good, international has uncertainty, domestic has potential share shift.

Q: Walter Spracklin asked about freight recession.

A: Ed said freight recession may not be over yet but there are green shoots in manufacturing.

Q: Brandon Olinsky asked about sequential OR change and margin.

A: Jason said expected ~200 basis points sequential OR benefit from Q1 to Q2, and capacity to capture incremental margin when freight market turns