Norfolk Southern Corporation · NYSE:NSC
Norfolk Southern — Q4 2024 Earnings Presentation
29 slides from Norfolk Southern's earnings presentation, Jan 29, 2025
Slide 1: Q4 2024 Earnings Call
Q4 2024 EARNINGS CALL January 29, 2025
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" provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or future p
Slide 3: Opening Remarks
01 OPENING REMARKS Mark George President & Chief Executive Officer
Slide 4: 2024 Operating Ratio Commitments Achieved
2024 OPERATING RATIO COMMITMENTS (1) ACHIEVED NS delivered on its commitments throughout 2024 as transformation Actual ∆ 170 bps 480 bps 160 bps drove safety, operational excellence, and productivity gains. Actual Actual Actual 67.5% 64.1% 65.8% (1) The operating ratio improvements discussed and pre
Slide 5: Operations Overview
02 OPERATIONS OVERVIEW John Orr Executive Vice President & Chief Operating Officer
Slide 6: Safety Update
SAFETY UPDATE Sustained positive performance has significantly reduced the mainline accident rate. Focus remains on leading causes of injuries. FRA Personal Injury Index FRA Accident Rate FRA Mainline Accident Rate 1.28 4.53 1.15 4.09 1.10 3.73 1.04 Better Better Better 3.00 0.93 0.83 0.59 0.33 2021
Slide 7: Network Update
NETWORK UPDATE Network Health Asset Efficiency Customer Facing Terminal Dwell (hours) Car Miles per Day Intermodal Svc Composite 91% 89% 117 118 87% 86% 113 24.6 79% 23.9 107 Better Better Better 23.0 104 22.5 22.1 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2023 2024 2024 2024 2024 2023 2024 2024
Slide 8: Update: Closing the Margin Gap
Setting and Achieving Challenging Goals Propelled Us in 2024… Goals Committed to and Achieved in 2024 • Terminal dwell improvement by 10%+ • Reduce overtime by 20% • Reduce recrew rate by 20% • Increase AAR train speed by 10% • Reduce AAR terminal dwell by 15% • Store 500 locomotives by end of 2024
Slide 9: Market Overview
03 MARKET OVERVIEW Ed Elkins Executive Vice President & Chief Marketing Officer
Slide 10: 4th Quarter 2024 Results
4TH QUARTER 2024 RESULTS Q4 2024 vs. Q4 2023 / Revenue change $ millions / favorable / unfavorable Q4 2023 Q4 2024 Merchandise Intermodal Coal Fuel Total Volume 560,500 - 1,063,200 5% 169,500 (1%) 1,793,200 3% Revenue $1,842M - $792M - $390M (9%) $3,024M (2%) RPU $3,287 (1%) $744 (5%) $2,297 (9%) $1
Slide 11: Volume Strength Offset by Adverse Mix Impacted FY Results
VOLUME STRENGTH OFFSET BY ADVERSE MIX IMPACTED FY RESULTS Overall revenue flat for the year despite higher shipments due to mix and lower fuel surcharge 7.1 Million Units 5% ($140) $12.1 Billion Revenue - $1,718 Revenue per Unit 5% $1,582 RPU Less Fuel(1) 2% Record Annual Merchandise Revenue, RPU, R
Slide 12: Market Outlook
Merchandise • Vehicle Production • Manufacturing Activity MARKET OUTLOOK • Chemicals (Non-Energy) Intermodal • East Coast Port Rebalancing • Import/Export Demand • Truck Capacity Coal • Seaborne Prices • Export Demand • Utility Demand Sentiment versus prior expectation A BETTER WAY 12
Slide 13: Q4 Financial Results
04 Q4 FINANCIAL RESULTS Jason Zampi Executive Vice President & Chief Financial Officer
Slide 14: Fourth Quarter Results
FOURTH QUARTER RESULTS $ in millions, except EPS Non-GAAP adjustments Increase / (Decrease) (1) GAAP Gains on Restructuring Shareholder Adjusted E. Ohio Railway Line and Other Advisory Incident Q4’24 Transactions Charges Costs Q4’24 Revenues $3,024 - - - - $3,024 Operating expenses $1,893 $43 $53 ($
Slide 15: Eastern Ohio Incident-Related Costs
Expense Paid to 2023 2024 Total date Environmental-related costs $836 $190 $1,026 $782 • Environmental response efforts and expected remediation and monitoring EASTERN OHIO activity INCIDENT-RELATED Legal and other costs 381 785 1,166 722 COSTS • Legal-related activities and community assistance $ m
Slide 16: Fourth Quarter Adjusted Results
FOURTH QUARTER ADJUSTED RESULTS (1) $ in millions, except EPS favorable / unfavorable Adjusted (1) Y-o-Y Q4-Q3 Q4’24 Q4’23 Q3’24 Variances Variances Revenues $3,024 $3,073 $3,051 ($49) (2%) ($27) (1%) Operating expenses $1,962 $2,115 $1,934 ($153) (7%) $28 1% Operating ratio 64.9% 68.8% 63.4% 390 bp
Slide 17: Railway Operating Expenses
RAILWAY OPERATING EXPENSES Adjusted Q4 2024 vs. 2023 (1) $ millions favorable / unfavorable $2,115 ↑4% $73 $1,962 $44 $12 ↓24% ↓8% $24 ↓3% $24 $153 ↓11% ↑7% Price $59 Purch Svcs $40 ↓Employees $58 Other $18 Efficiency $10 Rents $4 Overtime $11 Materials $8 Inc. Comp $25 Claims $2 Pay rates $25 (1) (
Slide 18: Adjusted Full-Year Results
ADJUSTED(1) FULL-YEAR RESULTS 2024 vs. 2023 favorable / unfavorable $ millions except per share OPERATING OPERATING NET EARNINGS REVENUE OPERATING RATIO INCOME INCOME PER SHARE EXPENSE $33 --% $212 $12,156 $12,123 3% 160 $8,189 $7,977 bps $0.11 67.4% 1% 65.8% $179 $11 5% -% $11.74 $11.85 $3,967 $4,1
Slide 19: Closing Remarks
05 CLOSING REMARKS Mark George President & Chief Executive Officer
Slide 20: 2025 Guidance
2025 GUIDANCE ➢ 3% revenue growth ➢ Building on operational momentum across the network ▪ >$150M of year-over-year productivity savings in 2025 on the back of nearly $300M in 2024 ➢ 150bps of year-over year Operating Ratio improvement ▪ Focused on closing the gap with peers ➢ Improving cash flow and
Slide 21: Thank You
Thank You www.norfolksouthern.com
Slide 22: Appendix
APPENDIX A BETTER WAY 22
Slide 23: Sequential Operating Revenues
SEQUENTIAL OPERATING REVENUES Q4 2024 vs. Q3 2024 $ millions favorable / unfavorable ↑7% $41 $3,051 $3 $32 $3,024 --% ↓8% $33 ↓14% $27 ↓1% +1% Vol. -1% Vol. -9% Vol. -% Vol. +5% RPU -% RPU -% RPU -1% RPU Q3 2024 Intermodal Merchandise Coal Fuel Surcharge Q4 2024 (ex fuel) (ex fuel) (ex fuel) Revenue
Slide 24: Sequential Operating Expenses
SEQUENTIAL OPERATING EXPENSES Adjusted Q4 2024(1) vs. Adjusted Q3 2024(1) $ millions favorable / unfavorable ↑2% ↑1% ↑1% ↑6% $10 $7 $3 $1,962 $1,934 $14 $28 $6 ↓3% ↑1% Q3 recoveries $20 Purch Svcs $6 Inc. Comp $23 Materials $13 Usage $3 Rents $4 Payroll tax $11 Claims $7 Price $13 ↓Employees $7 (1)
Slide 25: Reconciliation of Q3 2024 Non-GAAP Measures
RECONCILIATION OF Q3 2024 NON-GAAP MEASURES $ in millions, except EPS Non-GAAP adjustments Increase / (Decrease) GAAP Gains on Restructuring Adjusted (1) E. Ohio Railway Line and Other Incident Q3’24 Transactions Charges Q3’24 Revenues $3,051 - - - $3,051 Operating expenses $1,455 $159 $380 ($60) $1
Slide 26: Reconciliation of Q4 2023 Non-GAAP Measures
RECONCILIATION OF Q4 2023 NON-GAAP MEASURES $ in millions, except EPS Non-GAAP adjustment Increase / (Decrease) GAAP E. Ohio Adjusted (1) Incident Q4’23 Costs Q4’23 Revenues $3,073 - $3,073 Operating expenses $2,265 ($150) $2,115 Operating ratio 73.7% (490) bps 68.8% Operating income $808 $150 $958
Slide 27: Reconciliation of 2024 Non-GAAP Measures
RECONCILIATION OF 2024 NON-GAAP MEASURES $ in millions, except EPS Non-GAAP adjustments Increase / (Decrease) GAAP Gains on Restructuring Shareholder Favorable Adjusted (1) E. Ohio Railway Line and Other Advisory Deferred Tax 2024 Incident 2024 Transactions Charges Costs Adjustment Revenues $12,123
Slide 28: Reconciliation of 2023 Non-GAAP Measures
RECONCILIATION OF 2023 NON-GAAP MEASURES $ in millions, except EPS Non-GAAP adjustment Increase / (Decrease) GAAP E. Ohio Adjusted (1) Incident 2023 Costs 2023 Revenues $12,156 - $12,156 Operating expenses $9,305 ($1,116) $8,189 Operating ratio 76.5% (910) bps 67.4% Operating income $2,851 $1,116 $3
Slide 29: Network Metrics (Definitions)
NETWORK METRICS (DEFINITIONS) • Terminal Dwell: The average time a car resides at the specified terminal location expressed in hours. The measurement begins with a customer release, received interchange, or train arrival event and ends with a customer placement (actual or constructive), delivered or