Norfolk Southern Corporation · NYSE:NSC
Norfolk Southern — Q2 2024 Earnings Presentation
24 slides from Norfolk Southern's earnings presentation, Jul 25, 2024
Slide 1: Q2 2024 Earnings Call
Q2 2024 EARNINGS CALL July 25, 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 OPENING REMARKS Alan Shaw President & Chief Executive Officer
Slide 4: Operations Overview
02 OPERATIONS OVERVIEW John Orr Executive Vice President & Chief Operating Officer
Slide 5: Safety Update
SAFETY UPDATE FRA Personal Injury Index FRA Accident Rate FRA Mainline Accident Rate 1.28 4.50 0.92 0.83 1.20 4.05 1.10 3.73 3.66 Better Better Better 0.58 1.04 0.31 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 6: Network Update
NETWORK UPDATE Car Miles per Day Terminal Dwell (hours) Intermodal Svc Composite 108 28.1 91% 102 86% 101 101 Better Better 24.6 Better 23.9 84% 23.2 23.0 82% 91 78% Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2023 2023 2023 2024 2024 2023 2023 2023 2024 2024 2023 2023 2023 2024 2024 Train Speed (m
Slide 7: Update: Closing the Margin Gap
DRIVING URGENT, SUSTAINABLE COST CONTROL Q1 NOW • 320+ locomotives moved into storage or offline • Reduced fuel consumption • Reduced maintenance expense • Improved reliability key to velocity flywheel • Total T&E expense per GTM improved 8% • Restructured Merchandise operating plan UPDATE: CLOSING
Slide 8: Velocity Driving Merchandise Gains
1.15 Automotive Car Miles per Day +16% 1.10 Automotive Shipments +7% VELOCITY DRIVING 1.05 MERCHANDISE GAINS 1.00 • Automotive network enhancements 0.95 driving strong sequential gains • Car velocity +16% 0.90 • Carloads +7% 0.85 Q2 Q3 Q4 Q1 Q2 2023 2024 Capturing growth and providing enhanced servi
Slide 9: Intermodal Flywheel Driving Productivity and Growth
1.15 Intermodal 1.10 Shipments +8% Intermodal INTERMODAL FLYWHEEL 1.05 Service Composite +8% DRIVING PRODUCTIVITY AND 1.00 GROWTH Intermodal Crew Starts 0.95 • Growing volumes while reducing costs 0.90 • Improved operating performance maximizing value of robust franchise 0.85 • Rationalization of 15
Slide 10: Market Overview
03 MARKET OVERVIEW Ed Elkins Executive Vice President & Chief Marketing Officer
Slide 11: 2nd Quarter 2024 Results
2ND QUARTER 2024 RESULTS Q2 2024 vs. Q2 2023 / Revenue change $ millions / favorable / unfavorable $78 $2,980 $3,044 ($3) ($11) Q2 2023 Q1 2024 Q2 Merchandise Intermodal Coal Total Revenue $1,904M 4% $742M - $398M (3%) $3,044M 2% Volume 576,400 2% 1,003,500 8% 162,900 (2%) 1,742,800 5% RPU $3,304 3%
Slide 12: Market Outlook
Merchandise • Manufacturing Activity • Agriculture Markets MARKET OUTLOOK • Network Fluidity Intermodal • Import/Export Demand Lowering FY Revenue Growth Guidance to ~1% from ~3% • Truck Rates • Mix Coal • Stockpiles • Seaborne Coal Prices • Export Demand A BETTER WAY 12
Slide 13: Investing in Safe and Sustainable Growth
INVESTING IN SAFE AND SUSTAINABLE GROWTH • We are delivering comprehensive, sustainable solutions, aligning with our broader vision for customer-centric operations and growth. • One project involves a high-volume metallurgical grade coal customer. Set to be developed in 2025, this new originating co
Slide 14: Q2 Financial Results
04 Q2 FINANCIAL RESULTS Mark George Executive Vice President & Chief Financial Officer
Slide 15: Second Quarter Results
SECOND QUARTER RESULTS $ in millions, except EPS Non-GAAP adjustments Increase / (Decrease) GAAP E. Ohio Restructuring Shareholder Adjusted Incident and Other Advisory Q2’24 Costs Charges Costs Q2’24 Revenues $3,044 - - - $3,044 Operating expenses $1,913 $65 $3 - $1,981 Operating ratio 62.8% 220 bps
Slide 16: Second Quarter Adjusted Results
SECOND QUARTER ADJUSTED RESULTS (1) $ in millions, except EPS favorable / unfavorable Adjusted (1) Y-o-Y Q2-Q1 Q2’24 Q2’23 Q1’24 Variances Variances Revenues $3,044 $2,980 $3,004 $64 2% $40 1% Operating expenses $1,981 $1,988 $2,100 ($7) -% ($119) (6%) Operating ratio 65.1% 66.7% 69.9% 160 bps 480 b
Slide 17: Sequential Railway Operating Revenues
SEQUENTIAL RAILWAY OPERATING REVENUES Q2 2024 vs. Q1 2024 $ millions favorable / unfavorable ↑2% ↑1% $41 $3,044 $3,004 $4 $1 $4 $40 ↑1% -% ↓1% +1% Vol. -2% Vol. +2% Vol. +1% Vol. -2% RPU +4% RPU -% RPU -% RPU MIX: Unit Change above avg RPU -8k -10k +3k Unit Change below avg RPU +20k +6k +10k Q1 2024
Slide 18: Sequential Operating Expense Components
SEQUENTIAL OPERATING EXPENSE COMPONENTS Adjusted Q2 2024(1) vs. Adjusted Q1 2024(1) $ millions favorable / unfavorable $2,100 $42 ↓35% $36 $1,981 ↓5% $27 ↓2% $12 $2 ↓2% ↓ 1% $119 ↓6% Prop gains $25 ↓ Employees $18 Usage $17 Rents $11 Other $11 Overtime $7 Price $9 Purch Svcs $1 Materials $6 Q1 20241
Slide 19: Closing Remarks
05 CLOSING REMARKS Alan Shaw President & Chief Executive Officer
Slide 20: 1H Commitment Met, Reaffirming FY Operating Ratio Guide
1H COMMITMENT MET, REAFFIRMING FY OPERATING RATIO GUIDE (1) Despite pressure from lower volume, Actual we remain committed to OR guidance 67.5% range due to additional cost takeout (1) The operating ratio improvements discussed and presented on this page represent adjusted operating ratio. See recon
Slide 21: Thank You
Thank You www.norfolksouthern.com
Slide 22: Appendix
APPENDIX A BETTER WAY 22
Slide 23: Reconciliation of 2023 Non-GAAP Measures
RECONCILIATION OF 2023 NON-GAAP MEASURES $ in millions, except EPS GAAP E. Ohio Adjusted (1) Incident Q2’23 Costs Q2’23 Revenues $2,980 N/A N/A Operating expenses $2,404 ($416) $1,988 Operating ratio 80.7% (1400) bps 66.7% Operating income $576 $416 $992 Net income $356 $317 $673 EPS - diluted $1.56
Slide 24: Reconciliation of Q1 2024 Non-GAAP Measures
RECONCILIATION OF Q1 2024 NON-GAAP MEASURES $ in millions, except EPS Non-GAAP adjustments Increase / (Decrease) GAAP E. Ohio Restructuring Shareholder Favorable Adjusted (1) Incident and Other Advisory Deferred Tax Q1’24 Costs Charges Costs Adjustment Q1’24 Revenues $3,004 - - - - $3,004 Operating