Thank you. Thank you. Thank you for watching. Thank you. Thank you for watching! Thank you. Good morning, ladies and gentlemen, and welcome to the Norfolk Southern Corporation Q2 2026 earnings conference call. At this time, all participant lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Thursday, July 23rd, 2026. And I would like to turn the conference over to Luke Nichols. Please go ahead, sir.

Thank you, and good morning, everyone. Please note that during today's call, we will make certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future performance of Norfolk Southern Corporation, which are subject to risks and uncertainties and may differ materially from actual results. Please refer to our annual and quarterly reports filed with the SEC for a full discussion of those risks and uncertainties we view as most important. Our presentation slides are available at NorfolkSouthern.com in the investor section, along with a reconciliation of any non-GAAP measures used today to the comparable GAAP measures including adjusted or non-GAAP operating ratio. Please note that all references to our prospective operating ratio during today's call are being provided on an adjusted basis. Turning to slide three, I'll now turn the call over to Norfolk Southern's President and Chief Executive Officer, Mark George.

Good morning everyone and thanks for joining us. Here in Atlanta with me are Brian Barr, our Chief Operating Officer, Ed Elkins, our Chief Commercial Officer, and Jason Zampi, our Chief Financial Officer. Look, a lot's changed since our last call. Most importantly, the sharp inflection in volumes. Initially, catalyzed by the Iran conflict that bolstered our energy markets, and that strength has now spread into other markets, including domestic, intermodal, and industrial products. With that backdrop, we delivered a strong second quarter with results that exceeded our own expectations. Starting with strong volume and revenue growth, culminating in 7% net income and EPS growth. The results are thanks to the dedication of our railroaders and a special shout out to our commercial team who stayed close to our customers during this dynamic environment. As demand strengthened in several markets, our team continued to focus on operating safely while serving our customers. absorbing the higher volumes coming out of the winter disruptions put pressure on the network. But we've addressed these issues head on. Our team has worked hard to execute with urgency and discipline. We already drove acceleration of the network here in July, and we will continue to progress. Brian will give more detail on these actions in his remarks. Bottom line, I'm holding our team to a high standard. Our customers count on us to maintain consistent, reliable service, and as such, We have to be resilient. Whether it's bouncing back from weather events or absorbing volume surges, we need to deliver the service our customers expect from Norfolk Southern. And our priorities remain clear. Safety, service, discipline, cost control, and earning the trust of our customers. Those priorities guided our decisions throughout the quarter and will continue to guide the company moving forward. Now before we move on, I'd like to touch on the recent appointment of Brian as our chief operating officer. While he may be a new face to many of you, he's certainly not new to Norfolk Southern. Over the last two years, he's led our mechanical organization where his team helped deliver industry-leading locomotive fleet reliability, and he played an important role in optimizing network performance while earning the trust and respect of our organization. He has had a long and successful history on the transportation side as well, at our Eastern Pier, and he started his career at Conrail. So he knows our network well. It's another example of the leadership depth we have across the organization and our commitment to developing strong operators who are ready to lead. In his new role, he's building on the progress he himself helped us deliver. Now leading the broader operations organization with a strong foundation in safety and a shared commitment to creating a faster, more reliable network while continuing to innovate and drive more productivity. So with that, let me turn it over to Brian to discuss our operational results in more detail.

Thanks, Mark, and good morning, everyone. It's my privilege to be with you today. Before I begin, I want to recognize the men and women of Norfolk Southern. They worked through a challenging quarter, continue serving our customers, and remain committed to operating safely. NS Railroaders are the heartbeat of this network, and their efforts continue to propel our results. Successful railroading demands doing the simple things exceptionally well. I have learned that throughout my career, including my time working directly for Hunter Harrison. Planning and execution are built on discipline, accountability, and staying relentlessly focused on the operating plan. The reality is railroading is a grind. Doing the small things over and over again very well. That is what delivers results. Those principles still apply today, which is why I'm spending as much time as possible in the field, leading from the front, not the top, working with our teams, understanding challenges firsthand, and driving the actions necessary to improve service and strengthen network performance. This is not about changing our operating strategy. It's about continuously improving our results. The primary levers for improving service and productivity across the network are running the plan, aligning the resources with demand, improving terminal performance, and eliminating unnecessary variability. We've got more work to do and we know it. Turning to slide five, to be the best run railroad, you have to be the safest. Safety remains the foundation of Norfolk Southern. Our teams delivered another quarter of strong safety performance with continued improvements in FRA accident and personal injury rates. Let me be very clear, safety has no finish line. This is not about ratios, it's about our employees. No matter how strong our results are, we approach every incident with humility and discipline. As you can see on the slide, the first half comparisons for our FRA personal injury index, accident rates, and mainline accident rates are all improving. Specifically in the quarter, our personal injury index was down 16% year-over-year. I want to acknowledge my former department, Mechanical, for going two consecutive months injury-free, a significant step for an entire department operating in shops and yards across our entire network. Our accident rate was down approximately 25% in the quarter year-over-year. while our near best in class mainline accident rate remained flat. We're proud of the progress, but we're not satisfied as we still have work to do. Strong safety performance drives strong operating performance. Discipline, accountability, and consistent execution. The two go hand in hand. Turning to slide six, demand remained strong throughout the quarter. At the same time, recovering from several network disruptions while supporting that level of volume placed additional pressure on crew resources and created variability in portions of the network. We have a clear understanding of what we need to do to create real resilience and deliver on our strategy. Improve originations, reduce terminal dwell, increase velocity, run the railroad to plan. That's where our attention is focused. When we do those things consistently, velocity improves, the network becomes more fluid, and the railroad performs at a very high level. I'm highly confident in our team, and many of the actions we have taken in these past six weeks are already starting to demonstrate tangible benefits. In the last month, on-time originations have increased 20%. Terminal performance is improving as we have balanced our resources which is leading to a reduction in terminal dwell. And train velocity is rising as we are reducing recruits and getting the railroad back on plan. Our priority remains executing the fundamentals exceptionally well. Turning to slide seven, operating safely and efficiently, optimizing asset utilization, driving cost discipline, delivering consistently for customers, and developing our team of railroaders will drive our long-term success. We remain committed to at least 150 million in cost takeout during 2026, which will deliver at least 650 million in cumulative savings over the three-year period, exceeding our original target. One of the most powerful levers we have is velocity. When the railroad moves quickly and consistently, service improves and cost comes out of the system. Recruits decline, crew productivity increases, terminal congestion eases, asset utilization improves, locomotives cycle more efficiently and spend less time sitting in yards. The more efficiently we move freight across the network, the more value we create for our customers and shareholders. The opportunity in front of us is straightforward. Their disciplined execution with the strong commercial momentum Ed and his team continue to generate across the business. That combination is how we improve service, grow the franchise, and create long-term value. I am exceptionally confident in our team and the potential of this railroad. There is no shortage of talent, experience, or commitment across our organization. We know where the opportunities are, We know what needs to improve, and we have the people in resolve to get it done. When we do those things consistently, the results will follow. With that, I'll turn it over to Ed.

Hey, thanks a lot, Brian, and good morning, everyone. Let's move to slide number nine. We can see that fuel surcharge was a major factor in the second quarter, helping to blunt some of the fuel expense pressures. Now, if you look past these headline numbers, you'll see that even without fuel, we achieved record revenue in the quarter. Volume increased 4% year-over-year, driven by strength in several commodity markets that benefited from elevated global energy prices, as well as very favorable trucking market dynamics that bolstered our intermodal business. RPU less fuel was up 1%, as steady pricing was partially offset by some high-level mix. Within merchandise, volume increased 2%, and revenue less fuel achieved another record Thank you for joining us. So overall, intermodal revenue less fuel increased substantially by 7%, and RPU less fuel increased 1%, marking the beginning of a positive shift in intermodal pricing. Turning to coal, volume increased 3%, benefiting from the continued ramp-up of our new metallurgical coal export customer, as well as incremental export thermal business opportunities, reflecting volatile global energy markets. RPU less fuel increased 1% due to favorable seaborne coal pricing, and this was partially offset by some negative mix within the commodity group. On slide 10, we highlight several dynamic factors that are influencing our market outlook. The war in Iran impacted many energy-related commodities in the second quarter. These impacts could carry forward for the duration of the conflict, bringing volume and revenue opportunities. Overall, we're positive on the growth potential across the markets that we serve. Now, as you would expect, however, energy prices, the consumer, and interest rates all remain wild cards and factors that we will be monitoring. In merchandise, we have a subdued but positive outlook for vehicle production. Industrial activity has shown solid momentum with manufacturing continuing its expansion for the sixth consecutive month, and we maintain a cautious but optimistic outlook despite volatility in a shifting economic landscape. Additionally, and specifically, we can continue to see near-term opportunities in markets like natural gas liquids, export plastics, and crude oil. Turning to our intermodal markets, the truck market has turned positive with drive-in rates trending upward and capacity continues to tighten as demand is also firming. Demand has been supportive for our domestic and premium segments in the near term, as new orders are rising and retail sales have shown some modest growth. This has been partially offset by tariff and trade uncertainty that's going to continue to weigh on international volumes. Taken together, we have a bullish view of intermodal, an outlook which is only reinforced by elevated fuel prices that will continue to make truck conversion more attractive to our customers. Considering coal, we expect to see continued overall strength led by our export metallurgical coal business. and while our outlook for utility coal remains positive due to growing electricity demand and a favorable regulatory backdrop, natural gas prices and growing renewable energy production does create some uncertainty for utilities heading into the second half. Now let's look at slide 11, where industrial development remains a key strategic priority for Norfolk Southern. Our project pipeline continues to gain momentum with the number of new manufacturing facilities and expansion projects that are expected to enter the design and construction phase in 2026, projected to be nearly double last year's level. As you would expect, we're also projecting substantially more carload potential to materialize as a result across multiple commodity groups. All of this bodes well for the long-term value of our network and for the American economy. To highlight just a few examples, So, DCO Apico Joint Venture will build a new manufacturing facility in Orangeburg County, South Carolina to produce ladder frames for Scout Motors. Additionally, Virginia Transformer, the largest transformer manufacturer in North America, will build a state-of-the-art power transformer plant in Muscle Shoes, Alabama to support growing demand in heavy manufacturing, mining, energy infrastructure, grid expansion, and Behind the Meter Power Generation in the USA. And lastly, Sylvie Materials is constructing a new cement terminal in Columbus, Ohio, Piedmont, South Carolina, Greensboro, North Carolina and in Charlotte, North Carolina to support increased construction demand. As always and finally, we want to thank all of our customers for their continued partnership and business. The entire NF team is aligned around delivering the service that our customers need every day, building trust as a vital partner in their supply chains. And with that, I'll turn it over to Jason Zampi to review financial results.

Thanks, Ed. I'll start on slide 13 with the reconciliation of our GAAP results to the adjusted numbers that I will speak to today. We incurred $51 million in merger-related expenses during the quarter, while total costs related to the Eastern Ohio incident were $15 million. Additionally, we incurred $6 million of restructuring costs. Adjusting for these items, the operating ratio for the quarter was 65.5, and earnings per share was $3.52. Moving to slide 14, you'll find the comparison of our adjusted results versus last year. As expected, Higher fuel prices were a significant driver of both the revenue and expense increases. Overall, the operating ratio increased 210 basis points versus last year, with fuel price headwinds driving an approximate 110 basis point increase. In addition, inflationary pressures drove another 190 basis point headwind compared to last year. That said, higher volumes in RPU in the quarter helped mitigate these expenses, leading to a 5% improvement in operating income. Last quarter, we had highlighted our expectation to match normal operating ratio sequential seasonality of 200 basis points despite the known fuel pressures. The team did a great job capitalizing on the sustained volume trends in the quarter while managing our controllable cost to deliver a 320 basis point sequential improvement. Taking a closer look at our expense profile for the quarter on slide 15, costs were up 15%, over two-thirds of which was driven by the substantial rise in fuel expense this quarter. In addition, inflationary pressures continued, notably as you see in comp and benefits, but also within purchase services and materials. Finally, volumetric and some network fluidity-related costs drove increases in overtime, rents, and materials. So to summarize our financial results on slide 16, despite the cost headwinds we faced, higher fuel prices, inflationary pressures, and volumetric expenses, we drove a 5% increase in operating income. Importantly, we also delivered a 7% increase in both net income and earnings per share in the quarter. We are pleased to see the continued strength in volumes, and we will continue to focus on opportunities to improve our service product, which will generate incremental revenue and drive cost efficiency. Mark, I'll turn it back over to you.

Okay, thanks, Jason. All right, closing on slide 18, as we move into the second half of the year, our priorities remain clear. First, we will continue to focus on operating a safe and reliable railroad As Brian said, safety is paramount. Our metrics are good relative to history, but we will never be satisfied or done seeking improvements. Second, we remain focused on disciplined execution. There's more work to do to fortify service, but we are making progress and are driving improvements across the network that you'll notice in the weekly data. The stronger than expected results we delivered this quarter reflect the hard work of our team. delivering continued productivity improvements, and managing through a dynamic operating environment, all while positioning the company for long-term success. Looking ahead, as Ed laid out, we remain optimistic about the demand environment. We are seeing encouraging trends across key markets, including domestic intermodal, chemicals, and coal. And while there is uncertainty in the broader economy, We are well positioned to capitalize on profitable growth opportunities while continuing to improve operational performance. Now, regarding the financial guidance, our original OpEx guidance was $8.2 billion to $8.4 billion, which we are updating to account for the large swing in fuel, estimated to be $400 to $500 million of incremental expense compared to our view at the beginning of the year. So our new 2026 operating expense outlook is $8.8 to $8.9 billion. Now neutralizing for the fuel impact, our core operating costs are trending toward the higher end of the prior range due to a stronger volume outlook. But overall, I am pleased with our team's cost performance in this dynamic and volatile environment. Our CapEx guidance of approximately $1.9 billion this year is unchanged. We are maintaining discipline while continuing to invest in the safety, reliability, and capacity of our network. And finally, while we are fully focused on running the business and serving our customers every day, we continue to make progress on the proposed combination with Union Pacific. We are even more confident about the unique opportunity to strengthen America's supply chain, delivering greater value for customers and communities with single-line frictionless service that will create benefits for all stakeholders. You'll have seen our agreement with CN, which is a win-win-win scenario that further enhances competition in the freight rail space on top of the additional enhancement features that we will be presenting in the STB response here shortly. And with that, we'll open the call to questions. Operator?

Yes, sir? Ladies and gentlemen, if you do have any questions, please press star followed by one on your touchstone phone. You will then hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if using a speakerphone, you'll need to lift the handset first before pressing any keys. And we also ask that out of consideration to other callers on the line today, as well as time allotted, that you please limit yourself to one question. Thank you. and your first question will be from Chris Weatherby at Wells Fargo. Please go ahead.

Hey, thanks. Good morning, guys. Maybe I could start with a question just on sort of the pricing environment and the opportunity that maybe you guys can see. You know, we tend to think about the sort of truck markets being a little bit more of an interplay with the rails in the eastern part of the U.S. and obviously you have a very robust intermodal franchise. I guess as we think about the tightness we're seeing in the truck market, can you talk about how we might see that sort of transition into pricing opportunity for you, both in the intermodal side of the business, but also merchandise as well?

Thanks, Chris. Sure. It's a great question and one that we're dealing with every day here. It's really an encouraging freight environment right now, not only for truck freight and competing with the highway, but also in general for freight in the U.S., I look at a few key indicators and all of them have improved themselves since the beginning of the year when we really laid out our plan. That includes GDP as well as manufacturing and housing start shockingly, which has also improved in terms of outlook. And when I think about manufacturing, we've seen six months of sequential improvement now in the ISM manufacturing index. And that's the best post-COVID performance that we've seen. So I think that's very encouraging. for the U.S. economy. You couple that with what I just talked about regarding industrial development and what we're seeing with our pipeline moving, and I feel like that that also bodes very well. Thinking of trucking specifically, you look at outbound tender rejections, right? Up at around 15% now on average, I think, across all truck types across the U.S. That is a multi-year high in and of itself. And then we look at flatbed rejections, which are a subset of that, That's about 40% right now, which is about as high as I've ever seen it. That means construction, really. And so I think that bodes well in general. And then, of course, we've talked about fuel, as have other people. That, too, sets the stage for our intermodal business, but also our merchandise and bulk franchises to compete very ably. So we are... We are very optimistic for the outlook going forward, both in terms of volume opportunity, but also the opportunity to price in several key markets.

All right. Thanks, Chris. Next question?

Next question will be from Scott Group at Wolf Research. Please go ahead.

Hey, thanks. Good morning. So it sounds like you're confident about making progress on the service side. I'm just wondering, do you feel like you need to add a lot of headcount and other resources in order to get that service improvement? And so maybe just along those lines, like, I don't know, Jason, if you have any thoughts about, like, how to think about the just near-term cost and margin trends into Q3 and Q4?

Yeah, I'd start first regarding headcount. I think overall system-wide, we're probably at an area where we can absorb volume, but we do have pockets where we are a little bit tight on T&E. So those are the areas where we're focusing on. So we probably have a little bit more hiring to do there. But again, we have to continue to hire to replace attrition. because we do run at around 8% attrition a year out of our T&E rank. So we're always going to be hiring system-wide, but we've got a handful of core locations that we probably need to augment, and that's where we're putting our more immediate focus. Brian, I don't know if you have any other comments on that.

Yeah, so going through the operations here, I mean, where we're at in the second quarter and transitioning to the third quarter now, we're seeing improvements in originations. We're up 20% right now from where we were in the second quarter. We're seeing improvements in the velocity, the car miles per day. So as we go through the operation, that's really generating some efficiencies for us where there won't be a massive add to resources other than the natural attrition that occurs on the second half of this year, you know, going into 2027. But there doesn't need to be an add. We're really running the plan, refining our processes. getting back to basic fundamental railroading of on-time, over-the-road to help us pick up speed.

You got to remember, Scott, when you slow a network down, which is what happened to us for a couple reasons, it requires more resources to dig back out. So the quicker we can accelerate the network, the fewer additional incremental resources you actually need to add. It actually frees up resources on the human side and on the locomotive side. So these are encouraging trends that Brian has driven here in the past month and a half or so to actually spool the network up a little bit. So we're in less deficit than we otherwise would be if we were still stuck in that call it 18 mile an hour range, 19 mile an hour range. Jason, is there something you want to add?

Yeah, I think, Scott, the last part of your question, just kind of talking about what we should think about from margins here on out. Obviously, like we talked, we're pleased where we finished the second quarter. outperforming both historical seasonality and our own expectations. But what I would say if you think about the third quarter, typical seasonality on average, call it flat to 50 basis points worse as you move from second quarter to third quarter. But two things I'd call out here specifically. First, we've talked about that fuel price headwind that we've been experiencing here in the second quarter and that switching to a tailwind in the third quarter. That's both true from a year-over-year and a sequential perspective. So we will have that benefit sequentially going from second to third. However, we do have some, you know, almost about a 4% wage increase that's going into effect, that, excuse me, did go into effect in July here. So that will temper a little bit of that tailwind. So you put that all together, you know, I think we're at a place where we believe we can beat that normal sequential seasonality. and I'd put that up to 100 basis points better than normal.

Okay, thanks a lot, Scott. Next question.

From Brian Assenbeck at JPMorgan Chase. Please go ahead.

Hey, good morning. Thanks for taking the question. Maybe just a follow-up for Ed. I mean, looking at the RPU ex-fuel, not a whole lot of movement so far in the quarter, so maybe you can give us a sense in terms of Thank you. Thank you. For sure, and appreciate the question.

You know, I think, as I said earlier, it's a very optimistic freight market out there, and I think we have the right tools in place to really be able to capitalize from that and deliver value for our customers. So when I think about price right now on the highway, you're hearing it from some of our customers and probably some of your other channel checks that it's a really good environment. Spot price has been putting pressure upward now for several months. And that's exactly what it takes to drive that contract price, which is longer term, up as well. I typically say you need three to six months of upward pressure to start moving that line up or downward pressure to move it down. We're solidly in a place where there's upward pressure being applied now on the highway, and that will flow through over time into our long-term contracts as well as our short-term contracts with our animal customers and with others. So we see, and I think I've talked to you guys a lot over the past four years about a cold spring and all that stuff. Well, we're right here ready to uncoil now. And I think as the year progresses and we move into 27, a lot of the work that we've done over the past three or four years to really restructure our contracts to make us more responsive to that pressure that I was talking about from the spot price into the contract price is going to manifest itself.

All right, thanks a lot. Go ahead. Next question, please.

Jason Seidel at TD Cowan. Please go ahead.

Thank you, operator. Mark and team, hope you guys are well. How should we think about the intermodal conversions that are coming off the highway? In other words, when you guys take this business back to the red,