Norfolk Southern (NSC) Barclays 42nd Annual Industrial Select Conference summary

Recent performance and operational changes

• Significant management changes and new leadership have driven operational turnaround and momentum after a challenging 24 months, including the East Palestine derailment and a proxy battle.

• Achieved three strong operational quarters and two strong financial quarters, with momentum expected to continue into 2025.

• $292 million in costs were removed last year, with a target of at least $150 million in additional cost reductions this year.

• Operational improvements include enhanced service reliability and resilience, even amid severe weather disruptions.

• New public service metrics, such as car miles per day, have been introduced to provide better transparency on network health.

Market outlook and volume trends

• Consumer demand remains resilient, and manufacturing is showing positive inflection after two years of weakness.

• Industrial markets, especially petrochemicals and energy, are expected to see growth, while automotive remains flat and coal faces headwinds.

• Focus is on growing share of customer wallets, particularly by competing with over-the-road transport.

• Intermodal is projected to deliver outsized growth, with agriculture, metals, and petrochemicals also as bright spots.

• Overall volume growth is expected to be around 3%, with revenue per unit (RPU) likely to remain flat due to mixed market factors.

Cost management and productivity initiatives

• Cost reductions are expected to be broad-based, impacting labor, purchased services, IT, equipment rents, and material spend.

• Labor productivity will be improved by moving 3% more volume with flat headcount.

• Customers benefit from improved service reliability, allowing them to reduce their own fleet sizes and supply chain costs.

• IT project write-offs and velocity improvements are contributing to cost savings.

• Ongoing refinement of the operating plan aims to further increase efficiency and reduce costs.