Norfolk Southern Corporation · NYSE:NSC
Norfolk Southern — Q1 2024 Earnings Presentation
22 slides from Norfolk Southern's earnings presentation, Apr 24, 2024
Slide 1: Q1 2024 Earnings Call
Q1 2024 EARNINGS CALL April 24, 2024
Slide 2: Forward-Looking Statements / Non-GAAP Measures
FORWARD-LOOKING STATEMENTS / NON-GAAP MEASURES This presentation and the related materials contain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or future perfor
Slide 3: Opening Remarks
01 Insert New Pictures OPENING REMARKS Alan Shaw President & Chief Executive Officer
Slide 4: Q1 Financial Results
02 Q1 FINANCIAL RESULTS Mark George Executive Vice President & Chief Financial Officer
Slide 5: First Quarter Results
FIRST QUARTER RESULTS $ in millions, except EPS GAAP E. Ohio Restructuring Favorable Adjusted Advisory Incident and Other Deferred Tax Costs Q1’24 Costs Charges Adjustment Q1’24 Revenues $3,004 - - - - $3,004 Operating expenses ($2,791) $592 $99 - - ($2,100) Operating ratio 92.9% (1970) bps (330) bp
Slide 6: First Quarter Adjusted Results
FIRST QUARTER ADJUSTED RESULTS (1) $ in millions, except EPS favorable / unfavorable Adjusted (1) Y-o-Y Q1’24-Q4’23 Q1’24 Q1’23 Q4’23 Variances Variances Revenues $3,004 $3,132 $3,073 ($128) (4%) ($69) (2%) Operating expenses ($2,100) ($2,034) ($2,115) ($66) (3%) $15 1% Operating ratio 69.9% 64.9% 6
Slide 7: Sequential Railway Operating Revenues
SEQUENTIAL RAILWAY OPERATING REVENUES Q1 2024 vs. Q4 2023 $ millions favorable / unfavorable $3,073 $3,004 $54 $30 $21 $36 $69 ↓17% ↓2% ↓7% ↓3% ↑2% -2% Vol. -3% Vol. +1% Vol. -5% RPU -1% RPU +1% RPU Price Price Price MIX: Unit Change above avg RPU +5k -23k +7k Unit Change below avg RPU -9k -3k -1k Q
Slide 8: Sequential Operating Expense Components
SEQUENTIAL OPERATING EXPENSE COMPONENTS Adjusted Q1 2024(1) vs. Adjusted Q4 2023(1) $ millions favorable / unfavorable $2,115 $2,100 $23 ↓4% $19 $5 $7 $15 $15 ↓6% ↑2% ↑2% ↑2% ↓1% Purch Svcs $31 Price $23 Prop gains ($12) Inc. Comp ($21) Rents ($8) Other ($9) Payroll ($13) Taxes Materials ($7) Effici
Slide 9: Meaningful Year-on-Year Margin Improvement Will Be Evident As We Progress Through the Year
MEANINGFUL YEAR-ON-YEAR MARGIN IMPROVEMENT WILL BE EVIDENT AS WE PROGRESS THROUGH THE YEAR • Despite revenue and cost headwinds in the first quarter of 2024, we expect to deliver ~400-450 basis points of operating ratio improvement during the second half of 2024(1) • This is consistent with our plan
Slide 10: Market Overview
03 MARKET OVERVIEW Ed Elkins Executive Vice President & Chief Marketing Officer
Slide 11: Volume Growth Accompanied by Unfavorable Mix
VOLUME GROWTH ACCOMPANIED BY UNFAVORABLE MIX Q1 2024 vs. Q1 2023 / Revenue change $ millions / favorable / unfavorable $3,132 $3,004 ($15) ($69) ($44) Q1 2023 Q1 2024 Merchandise Intermodal Coal Total Revenue $1,863M (1%) $745M (8%) $396M (10%) $3,004M (4%) Volume 563,500 - 988,800 8% 167,100 (4%) 1
Slide 12: Railway Operating Revenues
RAILWAY OPERATING REVENUES Q1 2024 vs. Q1 2023 $ millions favorable / unfavorable $3,132 ↑3% ↑1% $46 $7 $3,004 $115 $35 $128 ↓31% ↓47% $31 ↓4% ↓7% -4% Vol. --% Vol. +8% Vol. -4% RPU +3% RPU -6% RPU Price MIX: Unit Change above Avg RPU +3k -6k -8k Unit Change below Avg RPU -9k +4k +80k Q1 2023 Fuel I
Slide 13: Market Outlook
Merchandise • Price Gains • Network fluidity MARKET OUTLOOK • Manufacturing Activity Full year revenue up ~3% Intermodal • Import/Export Volumes • Truck Rates • Consumer Demand Coal • Baltimore Port Shutdown • Commodity Prices • Stockpiles A BETTER WAY 13
Slide 14: Operations Overview
04 OPERATIONS OVERVIEW John Orr Executive Vice President & Chief Operating Officer
Slide 15: Safety Update
SAFETY UPDATE FRA Personal Injury Index FRA Accident Rate FRA Mainline Accident Rate 1.28 4.50 0.90 0.85 3.90 1.09 3.80 1.03 3.40 Better Better Better 0.56 0.95 0.30 2021 2022 2023 2024 2021 2022 2023 2024 2021 2022 2023 2024 YTD YTD YTD FRA Personal Injury Index calculates the number of FRA Train A
Slide 16: Closing the Margin Gap
Past 30 Days Actions Outcomes • Current state assessment – defined KPI’s, ✓ 200+ additional locomotives stored or offline Financial Impacts, Safety Blitzes & ✓ System dwell improved 8% Operational Audits ✓ Car velocity improved 8% • Eliminated terminal imbalances ✓ Recrews reduced 22% • Reduced unne
Slide 17: Network Update
NETWORK UPDATE Car Miles per Day Terminal Dwell (hours) Intermodal Svc Composite 91% 106 28.1 102 86% 101 101 26.3 Better 84% Better Better 98 24.6 83% 23.9 82% 23.2 22.5 91 78% Q1 Q2 Q3 Q4 Q1 Q2* Q1 Q2 Q3 Q4 Q1 Q2* Q1 Q2 Q3 Q4 Q1 Q2* 2023 2023 2023 2023 2024 2024 2023 2023 2023 2023 2024 2024 2023
Slide 18: Thank You
Thank You www.norfolksouthern.com
Slide 19: Appendix
APPENDIX A BETTER WAY 19
Slide 20: Operating Expense Components
OPERATING EXPENSE COMPONENTS Adjusted Q1 2024(1) vs. Adjusted Q1 2023(1) $ millions favorable / unfavorable $2,100 $16 $3 $2,034 ↑5% ↑1% $31 $32 $66 ↑6% ↓10% $46 ↑3% ↑7% EE Levels ($26) Purch Svcs. ($21) Materials ($7) Price $36 Pay rates ($24) Rents ($11) Other ($2) Claims $6 1 1 Q1 2023 Compensati
Slide 21: Reconciliation of 2023 Non-GAAP Measures
RECONCILIATION OF 2023 NON-GAAP MEASURES $ in millions, except EPS GAAP E. Ohio Adjusted (1) Incident Q1’23 Costs Q1’23 Revenues $3,132 N/A N/A Operating expenses $2,421 ($387) $2,034 Operating ratio 77.3% (1240) bps 64.9% Operating income $711 $387 $1,098 Net income $466 $293 $759 EPS - diluted $2.
Slide 22: Reconciliation of 2023 Non-GAAP Measures
RECONCILIATION OF 2023 NON-GAAP MEASURES $ in millions, except EPS GAAP E. Ohio Adjusted (1) Incident Q4’23 Costs Q4’23 Revenues $3,073 N/A N/A Operating expenses $2,265 ($150) $2,115 Operating ratio 73.7% (490) bps 68.8% Operating income $808 $150 $958 Net income $527 $113 $640 EPS - diluted $2.32