NSC

- Interested in Union Pacific Corporation? Here are five stocks we like better. - Record Q3 performance: Union Pacific's net income reached $2.1 billion, while adjusted EPS rose 15% to $3.53 and operating revenue increased 15% to $7.2 billion on 6% freight-volume growth. - Strong intermodal and industrial demand: Premium revenue grew 21% and volume rose 9%, led by record domestic intermodal activity, while industrial revenue increased 14%. Operational productivity also improved, though higher diesel prices drove a 69% increase in fuel expense and pressured the operating ratio. - Merger and outlook: Union Pacific continued preparations for its proposed Norfolk Southern merger, expected to close in the second half of 2027, while reaffirming high-single-digit 2026 EPS growth and raising planned 2026 capital spending to $3.5 billion. - This Corner of the Market Is Outperforming the Benchmark—And It's Not AI Union Pacific (NYSE:UNP) reported record third-quarter financial results as freight volume growth, operating productivity and intermodal demand supported higher revenue and earnings, while elevated diesel prices remained a significant cost headwind. Net income totaled $2.1 billion, and adjusted earnings per share increased 15% year over year to $3.53, Chief Executive Officer Jim Vena said during the company's Oct. 22 earnings call. Operating revenue rose 15% to $7.2 billion, including a 15% increase in freight revenue to $6.8 billion on 6% volume growth. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over - Buffett Spent 60 Years Ignoring Tech and the Bill Is Coming Due "Our third quarter results reflect the strength of our franchise and our ability to execute at a consistently high level," Vena said. He cited the company's volume growth and a 110-basis-point improvement in its core operating ratio, excluding the effects of fuel and merger costs. CFO Jennifer Hamann said total operating expenses increased 15% to $4.3 billion, led primarily by higher diesel fuel prices. Fuel expense rose 69% as the average fuel price increased 64% from $2.56 per gallon a year earlier to $4.21 per gallon. Higher fuel costs added 140 basis points to the operating ratio, she said. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? - AI Broke the Trucks: 3 Transports to Buy After the AI Panic Union Pacific reported an operating ratio of 58.8% and reported earnings per share of $3.49. Compensation and benefits expense increased 4%, reflecting a 5% increase in cost per employee from higher wages, incentive compensation and training costs. However, headcount declined 1% while carload volumes rose 6%, producing the company's ninth consecutive quarter of record workforce productivity. Cash from operations increased 18% to $8.3 billion, while free cash flow totaled $2.4 billion after network investment. The company raised its quarterly dividend by 3%, marking its 20th consecutive year of an annual dividend increase. It ended the quarter with $3.1 billion in cash and short-term investments and an adjusted debt-to-EBITDA ratio of 2.4 times. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Hamann said Union Pacific is continuing to build cash reserves ahead of its anticipated closing of the Norfolk Southern merger in the second half of 2027. The company affirmed its outlook for reported earnings-per-share growth in the high single digits for 2026, compared with reported 2025 EPS of $11.98. It also raised planned 2026 capital spending to $3.5 billion, pulling forward certain projects originally planned for 2027. Executive Vice President of Marketing and Sales Kenny Rocker said freight revenue excluding fuel surcharge reached a record $5.6 billion, up 6%. Business mix muted the pricing contribution because nearly 75% of quarterly volume growth came from domestic and international intermodal traffic. - Bulk: Revenue increased 10% on flat volume. Grain and grain products benefited from export demand and renewable-fuel activity, partly offset by lower wheat shipments. Coal and renewables volume fell 3% amid lower natural-gas prices and elevated inventories. - Industrial: Revenue rose 14% and volume increased 6%, with record industrial carloads and freight revenue excluding fuel. Growth was supported by construction-related metals shipments, domestic steel demand, petroleum products and business-development wins. - Premium: Revenue increased 21% and volume rose 9%. Domestic intermodal recorded its fifth consecutive quarter of record volume and revenue, with volume up 13%. International intermodal volume rose 8%, helped by West Coast imports and business wins. Rocker said domestic intermodal is positioned to deliver its third consecutive record-volume year, supported by over-the-road conversions and service performance. International intermodal volumes are expected to grow by double digits in the fourth quarter after lapping prior-year tariff volatility. He also said Union Pacific expects opportunities for stronger pricing as contracts reset following an improvement in truck-market conditions during the spring and summer. The company said its intermodal operations have benefited from capacity investments in locations including the Twin Cities, Phoenix, Kansas City and the Inland Empire. Executive Vice President of Operations Eric Gehringer said the railroad handled higher demand while improving several operating measures. Freight-car velocity rose 1% to 228 miles per day, while terminal dwell improved 2%. Terminal dwell remained below 20 hours for a fourth consecutive quarter. The intermodal service performance index was 92% as intermodal volume increased 11%, while the manifest service performance index was 93% against what the company described as record industrial carloads. Train length increased 2% to nearly 10,000 feet, and fuel consumption per unit of output declined 2%, setting a quarterly record. Gehringer said Union Pacific added resources to support growth but retained additional buffer capacity. The active locomotive fleet increased 2% to handle a 4% increase in gross ton-miles, while locomotive productivity remained even with the prior year's record third quarter. Vena said the Surface Transportation Board has issued a procedural schedule for Union Pacific's proposed combination with Norfolk Southern. Based on that schedule, he said the company expects to report its first earnings as a merged entity about a year from now. Union Pacific has requested permission for ex parte communications with the STB for a second time, according to Vena, saying it is willing to discuss the details of its merger application. He said the company believes the transaction would lower transportation costs, improve service speed and create more seamless rail options for customers. Vena said Union Pacific has received more than 500 customer letters supporting the merger and is working with about 30 customers on integration planning. He also said the company has provided job protections for employees, while acknowledging that some labor groups remain opposed. Near the close of the call, Vena announced that Hamann will leave the company early next year after extending her tenure by an additional year. He credited her with helping lead the company through its recent performance and merger planning. Union Pacific Corporation (NYSE: UNP) is a transportation company that operates one of the largest freight railroad networks in the United States. Through its Union Pacific Railroad subsidiary, the company moves goods across the western two-thirds of the country, connecting major agricultural, industrial, energy, population and port markets. Union Pacific transports a broad range of commodities and products, including agricultural goods, automotive shipments, chemicals, coal, industrial products, forest products and intermodal containers. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Union Pacific (UNP) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

For questions about this article or underlying research, email [email protected]. Shares of CSX (CSX) rose 6.8% on October 22, 2026, the day after the company released its fiscal Q3 2026 report, while the S&P 500 fell 1.2%. The railroad posted $4.02 billion in revenue, coming in barely above the $4.0 billion consensus estimate. That figure marked a 12% increase from a year earlier, and management raised its full-year sales outlook. Fuel surcharges drove a portion of this increase. So how much of that growth came from hauling more freight? Half Of CSX's Growth Came From Freight And Prices Management said fuel accounted for about half of the revenue growth in fiscal Q3 2026, as average diesel prices ran nearly 50% higher than a year earlier. The other half came from the railroad's own operations: CSX moved 5% more freight, and the CFO cited pricing gains in its merchandise, intermodal and coal markets. The intermodal business illustrates both factors simultaneously. Volume in the segment climbed 7% to an all-time record, yet management said essentially all of the rise in revenue per unit came from fuel surcharges. Management still raised its outlook and now expects full-year revenue growth in the high single digits, up from its previous forecast of the mid to high single digit range. This projection covers total revenue, including fuel. In fiscal Q3 2026, about half of that growth came from diesel prices, which CSX does not set. CSX's Operating Margin Has Widened Each Quarter In 2026 The margin offers a firmer picture. CSX posted an operating margin of 36.0% in fiscal Q1 2026 and 38.3% in fiscal Q2. The metric reached 39.1% in fiscal Q3, compared with 34.9% a year earlier excluding a $164 million goodwill charge. Management said the railroad handled the extra volume while reducing nonfuel costs by 3%. Not every expense declined: higher incentive pay and inflation added over $90 million to labor costs, which were mostly offset by better workforce productivity and the absence of last year's severance costs. CSX controls these operational elements, which is why the margin forms the firmer half of the case for the stock. What CSX Management Expects For Fiscal Q4 2026 Management said it is confident of widening the full-year operating margin by more than 350 basis points in 2026. The company also anticipates the usual fourth-quarter step up in expenses as winter arrives, and said that a service agreement that added new business in the fall of 2025 no longer contributes to year-over-year growth. During the October 21 call, management attributed only about half of the growth to fuel. When asked how much extra revenue the surcharges newly added on tariff traffic generated during fiscal Q3 2026, management said it would not provide a precise number. The stock's rise outpaced other railroads on October 22, with Union Pacific up 3.6% and Norfolk Southern up 3.1%. Following the jump, CSX traded at 26.7 times its trailing earnings at that day's close, against 23.0 for the S&P 500. CSX's margin widened as the company cut nonfuel costs, but about half of its revenue growth came from diesel. For the 6.8% jump to last, more of that growth has to come from freight rather than fuel. CSX is expected to report its fiscal Q4 2026 results in January 2027, and its volume growth from a year earlier is the figure to watch. Your Advisor Retired? Get A Second Opinion Before You Settle One report just changed how CSX looks to the people who own it. When the advisor who built your plan moves on, it is a natural moment to ask whether the plan still fits the life you have now. Our partner advisory firm offers a free review of your holdings, fees and income plan. Get A Free Second Opinion Spot an error or want more like this? Tell us in 10 seconds.

Record-high diesel prices pushed freight off the highway and onto the railroads in the third quarter, lifting CSX, Union Pacific and Norfolk Southern to record revenue. The three carriers shared analogous anecdotes that encompass the current state of Class I railroads, identifying elevated fuel costs, an exodus of truck drivers and capacity from the market and intermodal volume growth as reasons for the strong quarter. More from WWD - Kering's Creative Shake-up Puts Its Turnaround to the Test - P&G Boosts Q1 Beauty Sales, but Says It Can Do Better - Kering Revenues Flat in Q3 as Gucci Misses Forecasts The railroads have yet to reap the price benefits of the volume growth, since intermodal rates are set in an annual bid season each fall and winter. Freight that switched modes mid-year is riding on prices agreed before the truck market tightened until the 2027 bids reset them. CSX opened the sequence on Wednesday with revenue of $4 billion, up 12 percent year over year, as intermodal volume rose 7 percent to an all-time high of 820,000 units. Union Pacific followed on Thursday with a 15 percent increase in operating revenue to $7.2 billion, with intermodal volume climbing 11 percent and domestic intermodal volume growing 13 percent to a fifth consecutive record quarter. The same morning, Norfolk Southern posted revenue of $3.5 billion, up 14 percent, with total volume up 3 percent and domestic intermodal units up 10 percent. The Association of American Railroads (AAR) backed up the impressive showing within the railroads' intermodal category, indicating in its October overview that the third quarter saw the highest volumes in U.S. history. In the Wednesday earnings call, CSX chief commercial officer Maryclare Kenney outlined the benefits clearly. "Reduced trucking availability, high truck rates and elevated diesel cost continue to benefit our intermodal segment. Conversions from the highway remain strong," said Kenney, who noted that intermodal revenue jumped 20 percent while intermodal revenue per unit (RPU) increased 13 percent. "Essentially, all of the RPU increase was driven by fuel surcharges." Diesel prices have skyrocketed since the start of the war in Iran in late February. On-highway costs were $6.276 per gallon as of Monday, with the figure reaching an all-time high of $6.529 per gallon as of Sept. 21. The escalating fuel prices helped surcharge revenue nearly double at each railroad. Union Pacific collected $1.17 billion in fuel surcharge revenue against $602 million a year earlier, accounting for nine of its 15 percentage points of freight revenue growth, while Norfolk Southern attributed eight of its 14 points of revenue growth to higher surcharges and CSX collected $466 million against $234 million. Pricing excluding fuel largely stayed flat to last year, since the newly converted freight is mostly moving at old prices. Execs at Union Pacific and CSX both said the trucking market tightened after this year's intermodal contract bids were already set, noting that the railroads will seek the bulk of the rate benefits in 2027. "We saw a transition in what's going on with the truck rates and truck capacity over spring to summer when much of the bid season was pretty much baked," said Union Pacific executive vice president of marketing and sales Kenny Rocker, in the Thursday call. "Now we're going to have an opportunity at the end of the year and the first several months of 2027 to support the inflection that occurred in the summer. Looking forward, you would expect a better environment for stronger pricing." Whether the converted freight stays if diesel prices retreat became a chief contention point of the two proposed merger partners. Norfolk Southern CEO Mark George warned the forces behind the conversion wave are unlikely to hold and framed the potential acquisition as the industry's structural answer to a potential reversion. "We view most of the macroeconomic factors that are driving the recent truck-to-rail conversions as temporary. But what the freight market today is showing us is that when shippers are given a rail product that offers better value than the highway, they move freight to rail quickly," said George. "The Union Pacific-Norfolk Southern combination is designed to create those conditions permanently." George added that a large portion of the gained freight would return to the highway within one or two years after fuel prices fell back absent industry consolidation. Union Pacific CEO Jim Vena again made his retention case for the Class Is, arguing high fuel prices give railroads a natural advantage over other transportation modes. Vena said the current task is proving service is strong enough to hold customers trying rail, simultaneously conceding that not all will stay. CSX, which opposes the merger, did not address the $85 billion consolidation attempt in its release or call. The Surface Transportation Board (STB) is taking comments on the application through Nov. 18, and Vena said its procedural schedule points to the combined company reporting first earnings a year from now. Best of WWD - These 5 Rising Power Players Are Elevating the Logistics Landscape

- Union Pacific's dividend consumes only 40% of adjusted EPS and extends a 20-year annual raise streak, keeping the payout well-protected for income investors. - While Union Pacific slashed buybacks to $26 million to build merger cash for Norfolk Southern, rival CSX spent $1 billion repurchasing 23 million shares. - Building a portfolio and living off one are two completely different skills, and almost nobody teaches the second. This problem is what The Definitive Guide to Retirement Income helps, and it is free today. Read more here. (Sponsor) Union Pacific (NYSE:UNP) reported third-quarter results this morning. The figures beat expectations on both earnings and revenue. Adjusted EPS was $3.53, ahead of the $3.47 consensus, and revenue rose 15.3% to $7.20 billion. Shares were up 2.86% to $296.10 by midday. For income investors, the real story is behind those numbers, as the payout is well covered and capital returns now run almost entirely through the dividend. Union Pacific declared $1.42 per share for the quarter, up from $1.38. This amounts to about 40% of adjusted quarterly EPS. In 2025, dividends of $5.44 against reported EPS of $11.98 put the payout ratio near 45%. The forward annualized dividend of $5.68 gives a yield of about 1.9%. Cash flow supports those ratios. Cash from operations rose 18% to $8.3 billion, and free cash flow came to $2.4 billion. Management pointed to the earnings strength behind the payout: "Union Pacific reported record financial results as net income totaled $2.1 billion, and our adjusted earnings per share grew 15% to $3.53." A 3% increase marks the company's 20th consecutive year of annual raises. The payment history confirms the steady pattern. The quarterly dividend held at $1.30 into early 2024, then rose to $1.34, then $1.38, and now stands at $1.42. That is about 9% above the $1.30 level. Guidance also commits to "consistent annual dividend increases." ------ Many successful investors eventually reach the same moment. The saving is done, the portfolio is built, and the question quietly changes from how much can I grow this to how much can I take out? Get that second question wrong and decades of good investing can come apart in a handful of years. That is exactly what The Definitive Guide to Retirement Income helps answer. It covers what your retirement could actually cost, which income sources are worth using, and the withdrawal math that decides whether the money lasts. It is free today from Fisher Investments. Read More Here › ------ Share repurchases fell to $26 million over the first nine months, compared with $2,679 million a year earlier. The reason is the pending Norfolk Southern (NYSE:NSC) acquisition: "We will continue growing our cash reserves in anticipation of closing the Norfolk Southern merger in the second half of 2027." Norfolk Southern also bought back no shares through September. CSX (NASDAQ:CSX) did the opposite, spending $1,049 million to repurchase 23 million shares. Union Pacific held $3.1 billion in cash and short-term investments. It ended the quarter with adjusted debt to EBITDA of 2.4 times. The details are simple. Volume grew 6% while headcount fell 1%, so each extra carload added more profit than cost. Intermodal revenue jumped 27%. Pricing increases also continued to outpace inflation. Management expects that to improve: "Looking forward, you would expect a better position, a better environment for stronger pricing." The company itself flags a credit rating downgrade risk from increased indebtedness linked to the acquisition. If borrowing costs rise, more cash goes to interest, and less is left for dividend growth. Fuel is a pressure point as well, with fourth-quarter prices expected to average about $4.85 per gallon. The dividend looks secure. A payout near 40% of earnings and a 20-year record of raises back that up. Starting income is modest at a 1.9% yield, though, and buybacks are on hold until the merger closes. For now, income growth will come from steady raises like this year's 3%. Watch the November 18 merger comment date and fourth-quarter fuel costs. (Sponsor) Most people spend their entire working lives focusing on one thing: growing a pile of money. Then they retire and discover the skill they actually need is close to the opposite. Turning that pile into steady income, year after year, through good markets and bad, without ever running out. It may be the least discussed and most consequential transition in personal finance, and plenty of otherwise careful investors walk into it with no real plan. That is exactly what The Definitive Guide to Retirement Income helps answer. It is a free guide from Fisher Investments covering what your retirement will really cost, where the cash flow should come from, and how much you can safely withdraw each year. Learn more here. Learn More Here › Contact [email protected] for any questions or corrections.

This article first appeared on GuruFocus. - Revenue: Up 14% year over year, including fuel surcharge; revenue less fuel rose 6% to an all-time record. - Operating Income: Increased 7% year over year. - Net Income: Grew 10% year over year. - Earnings Per Share: Adjusted EPS of $3.62, up 10% year over year. - Operating Ratio: Adjusted operating ratio of 65.4%; higher fuel prices negatively impacted the ratio by about 250 basis points versus prior expectations. - Operating Expenses: Up 17% year over year, with over half of the increase driven by higher fuel expense; full-year adjusted OpEx guidance just north of $9 billion, including ~$700 million of incremental fuel expense versus the start-of-year view. - Merchandise: Volumes up 3%; revenue less fuel up 5% to a record; RPU less fuel up 2%. - Intermodal: Volumes up 3%; revenue less fuel up 7%; RPU less fuel up 4%. - Coal: Volumes up 3% on higher export volumes; RPU less fuel up 2%. - Volume: Carload growth of 3%, with volume growth in every business group; gross ton-miles up 5% year over year. - Productivity: Record workforce productivity; 95 crew starts per week eliminated and 200 cars per day taken offline; on-time origin performance up 12 percentage points; train length and weight each up 4%. - Cost Savings: On track to deliver at least $650 million in cumulative cost savings. - Capital Expenditures: 2026 CapEx outlook raised to roughly $2.1 billion from $1.9 billion. - Special Items: $42 million in merger-related expenses and $28 million of net costs related to the Eastern Ohio incident. - Warning! GuruFocus has detected 9 Warning Signs with NSC. - Is NSC fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Norfolk Southern Corp (NYSE:NSC) delivered 14% revenue growth and a 6% increase in revenue less fuel, setting an all-time record. - Volume grew 3% in each business vertical, with record productivity and a 10% increase in earnings per share. - The company achieved a historical best train accident rate of 1.74 and improved on-time origin performance by 12 percentage points. - Norfolk Southern Corp (NYSE:NSC) eliminated 95 crew starts per week and took 200 cars offline per day, accommodating 3% carload growth. - The company expects at least $650 million in cumulative cost savings and is investing in growth with CapEx raised to $2.1 billion. - Higher fuel prices negatively impacted the operating ratio by about 250 basis points from prior expectations. - Norfolk Southern Corp (NYSE:NSC) faces inflationary pressures, including a 3.75% wage increase and double-digit health and welfare benefit increases. - The company incurred $42 million in merger-related expenses and $28 million in net costs related to the Eastern Ohio incident. - Service challenges and plant outages limited Norfolk Southern Corp (NYSE:NSC)'s ability to capture upside in utility coal volumes. - The truck-to-rail conversion gains are considered temporary and could revert if fuel prices decline, with competition from autonomous trucking posing a long-term threat. Q: Scott Group of Wolfe Research asked about Mark George's comment that truck-to-rail conversion is "temporary" does that mean share is lost back to truck when fuel falls, or that incremental gains get tougher? He also asked how the competitive dynamic is evolving and how to think about pricing amid higher truck rates and better rail volumes. A: CEO Mark George said the competitive environment is "pretty robust," with competitors rolling out new products after the merger announcement, but that rails winning share back from the highway is good for the industry overall. On "temporary," he explained that much of the intermodal growth came from highway-to-rail conversion driven by elevated fuel prices; when fuel normalizes, a large portion of those gains will likely revert to the highway over a year or two unless the industry does "structurally different things" which is why he views the UP-Norfolk Southern merger as the real difference maker to make share recapture permanent. Q: Jason Seidl of TD Cowen asked whether the assumption that traffic could be lost over the next two years assumes truck capacity returns as it historically has, given apparent structural/regulatory changes, and what else besides the transcontinental option the industry can do to retain this traffic. A: CEO Mark George said truck capacity will come back when fuel prices fall because barriers to entry are low, and flagged autonomous trucking as a further threat fewer rest-hour requirements would make trucks faster than they already are. To structurally change the equation, railroads must be consistently reliable and far more nimble at flexing resources to volume inflections. He noted the difficulty of hiring T&E crews: roughly half of new hires are lost during the six-month training process, so the company must hire double what it needs and predict volumes six months out citing the decision to add resources in Q4 of last year ahead of the 2026 volume inflection as an example of getting this right. Q: Thomas Wadewitz of UBS asked about capacity utilization at key Eastern intermodal hubs like Harrisburg-Allentown, which a primary competitor has flagged as attractive, and whether granting trackage rights there would be operationally doable. A: CEO Mark George called Eastern Pennsylvania a franchise that is "the envy of others" and said competitors are taking "moonshots" to gain access. He was unequivocal: "We're going to defend our franchise, and we're going to defend our network," trusting the STB to view such requests through "sober eyes," as it rejected every ask during the CPKC merger application. "It's not going to happen. We're not giving up that franchise." Q: Chris Wetherbee of Wells Fargo asked about capacity for growth, noting service appears to have slowed slightly in recent weeks, and where the raised CapEx will be deployed. A: CEO Mark George said the network has capacity and absorbed volume largely by filling out existing trains, though more asset-intensive unit train volume creates some pinch. COO Brian Barr added that train consolidations and removing car touches are creating capacity, localized hiring is building resiliency, and 420 locomotives are in storage for growth. The network absorbed 3% more shipments this quarter while trains were 4% longer and heavier, leaving substantial capacity in existing service. Q: Bascome Majors of Stephens asked about the inflationary components to model for 2027 costs versus 2026, given Q4 cost guidance of roughly $2.4 billion and volume variability into next year. A: CFO Jason Zampi said wage agreements signed 1.5-2 years ago give good visibility: a 3.75% increase took effect in July, with another 3.5% next July. He also flagged double-digit percentage increases in health and welfare benefits and rising insurance costs, neither of which he expects to abate in 2027. CEO Mark George added that the company won't give 2027 guidance now but will likely provide a similar cost envelope next year, and that productivity will continue to offset inflation. Q: Jonathan Chappell of Evercore ISI asked how to frame controllable versus uncontrollable pricing drivers, given strong RPU ex-fuel across all three segments, and where Norfolk Southern is in recapturing price as service improves. A: CMO Ed Elkins credited a strong long-term pricing history and a recovering service product that lets the railroad price to value, aided by a robust industrial backdrop with nine consecutive months of manufacturing expansion and a strong industrial development pipeline. He noted mix headwinds dilute merchandise RPU, and that on intermodal the company has spent significant time renegotiating contracts and reconfiguring for changing market conditions "early innings" of seeing that pay off. Q: Richa Talwar of Deutsche Bank asked about evidence that transcontinental conversion potential may be more limited than eastern conversion, citing an IMC partner's stark growth difference between the two, and whether that is structural or reflects the absence of reliable transcon rail service the merger aims to fix. A: CMO Ed Elkins said conversion opportunities exist regardless of length of haul, but transcon lanes have had 30 years of attention and naturally higher rail penetration, leaving tremendous opportunity east of the Mississippi. The merger would boost transcon penetration with a durable local product rather than an interline service "a perpetual opportunity for share shift" while also converting highway freight in the East. Q: David Vernon of Bernstein asked how to think about intermodal volume excluding the J.B. Hunt repositioning headwind, and whether Norfolk Southern is developing new services to capture the elevated highway cost market while awaiting the merger. A: CMO Ed Elkins said the company is "exploring every opportunity to deliver new value" and is bullish, with more to emerge over coming weeks and months. He highlighted the best domestic non-premium third quarter in history for volume notable given the business lost a year ago crediting great partners driving conversion and a network that can deliver value, with capacity today and more being built. Q: Eric Morgan of Barclays asked how to square the positive coal outlook driven by exports and favorable utility conditions with relatively low natural gas prices, and what it means for RPU. A: CMO Ed Elkins said utility plant burn exceeded delivered tons for most of the year, so he expects some restocking, though low natural gas prices remain strong competition. Export pricing is favorable: U.S. low-vol met coal was around $200 in Q3 versus API 2 at $126, recently about $210 versus $125 constructive levels entering Q4. He is realistic on utility volumes but sees opportunity with eastern partners to For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Norfolk Southern (NSC) came out with quarterly earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.48 per share. This compares to earnings of $3.3 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.02%. A quarter ago, it was expected that this railroad would post earnings of $3.23 per share when it actually produced earnings of $3.52, delivering a surprise of +8.98%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Norfolk Southern, which belongs to the Zacks Transportation - Rail industry, posted revenues of $3.53 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.80%. This compares to year-ago revenues of $3.1 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Norfolk Southern shares have added about 13.6% since the beginning of the year versus the S&P 500's gain of 13.3%. While Norfolk Southern has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Norfolk Southern was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.20 on $3.38 billion in revenues for the coming quarter and $12.81 on $13.23 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Transportation - Rail is currently in the top 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Canadian National (CNI), has yet to report results for the quarter ended September 2026. The results are expected to be released on October 30. This railroad is expected to post quarterly earnings of $1.49 per share in its upcoming report, which represents a year-over-year change of +12%. The consensus EPS estimate for the quarter has been revised 1% lower over the last 30 days to the current level. Canadian National's revenues are expected to be $3.27 billion, up 8.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Norfolk Southern Corporation (NSC) : Free Stock Analysis Report Canadian National Railway Company (CNI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Norfolk Southern Corporation NSC reported impressive third-quarter 2026 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. Quarterly adjusted earnings (excluding 25 cents from non-recurring items) of $3.62 per share surpassed the consensus estimate of $3.48 by 4% and increased 9.7% year over year. Railway operating revenues of $3.53 billion beat the consensus estimate of $3.46 billion by 1.8% and increased 13.6% year over year to a quarterly record. The improvement was driven by higher fuel surcharge revenues, 3% volume growth and improved revenue per unit. Norfolk Southern Corporation price-consensus-eps-surprise-chart | Norfolk Southern Corporation Quote Total railway operating units increased 3% year over year to 1.85 million. Revenue per unit rose 11% to $1,902. Fuel surcharge revenues surged 125% to $468 million. Excluding fuel surcharges, revenues increased 6% year over year to $3.06 billion, while revenue per unit improved 3% to $1,650. Merchandise revenues increased 11% year over year to $2.19 billion, supported by 3% unit growth. Revenue per unit improved 8% to $3,579. Chemicals revenues rose 16% to $658 million, metals and construction revenues increased 15% to $516 million, and agriculture, forest and consumer products revenues grew 10% to $696 million. Automotive revenues declined 1% to $318 million. Intermodal revenues jumped 21% year over year to $919 million, with units increasing 3%. Domestic intermodal units grew 10%, while international units declined 8%. Coal revenues increased 12% to $419 million, supported by 3% unit growth. Export coal tonnage increased 10%, while utility and domestic metallurgical coal tonnage declined 2% and 8%, respectively. Adjusted railway operating expenses increased 17% year over year to $2.31 billion. Fuel expenses surged 77% to $420 million, while adjusted compensation and benefits expenses rose 5% to $753 million. Purchased services and rents expenses increased 5% to $546 million. Adjusted income from railway operations increased 7% to $1.22 billion. However, the adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated 210 basis points year over year to 65.4%. Train speed declined 5% year over year to 20.9 miles per hour, while terminal dwell increased 4% to 23.2 hours. However, train speed improved 5% sequentially, while terminal dwell improved 3%. Workforce productivity increased 5% year over year. Merchandise plan compliance declined to 74% from 80%, while the intermodal service composite fell to 84% from 92%. NSC exited the third quarter with cash and cash equivalents of $1.60 billion compared with $1.53 billion at 2025-end. Long-term debt declined to $15.96 billion from $16.48 billion. Operating cash flow for the first nine months of 2026 declined to $2.72 billion from $3.30 billion a year ago. Property additions totaled $1.41 billion, while dividend payments amounted to $910 million. Norfolk Southern raised its 2026 adjusted operating expense forecast to approximately $9 billion from its original guidance of $8.2-$8.4 billion, reflecting approximately $700 million in incremental fuel costs and higher volumes. Capital expenditures are now expected to be approximately $2.1 billion, remaining below the 2025 level. Management continues to prioritize safety, reliable service and disciplined cost control. Currently, NSC carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Alaska Air Group, Inc. ALK reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum. Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%. Wabtec Corporation WAB reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Norfolk Southern Corporation (NSC) : Free Stock Analysis Report Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report Wabtec (WAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Oct. 22, 2026 - Investor Relations - Luke Nichols - President and Chief Executive Officer - Mark George - Chief Operating Officer - Brian Barr - Chief Commercial Officer - Ed Elkins - Chief Financial Officer - Jason Zampi Operator: Morning, ladies and gentlemen, and welcome to the Norfolk Southern Corporation third quarter 2026 earnings conference call. At this time, note that 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 the call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Thursday, October 22nd, 2026. I would like to turn the conference over to Luke Nichols. Please go ahead. Luke Nichols: 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. Mark George: Well, good morning, everyone, and thank you for joining us. We are here in Atlanta, and I'm joined by Brian Barr, our Chief Operating Officer, Ed Elkins, our Chief Commercial Officer, and Jason Zampi, our Chief Financial Officer. Our third quarter was strong, with steady execution, making notable improvements to our network while delivering solid results. We have an outstanding team of thoroughbreds who remain focused on the fundamentals: operating a safe, reliable railroad, serving our customers, growing the business, and improving productivity across the network. So a big thanks to all our team. Collectively, we delivered very strong revenue and operating income growth while we continued to advance productivity. While we absorbed higher fuel costs this quarter, our team executed well on the controllables, maintaining cost discipline while improving the efficiency of the operations. Overall, we were pleased with how the business performed in a dynamic operating environment and believe that the underlying fundamentals of the franchise remain strong. Demand for rail service is growing, with encouraging trends in areas such as domestic intermodal and chemicals, which Ed will discuss in more detail. The current macro environment is tightening the truck market, and that helps rail be more competitive. What you saw in the quarter is us capturing the increased customer demand. Operationally, we continue to make progress. Under Brian's leadership, we've made targeted adjustments across the network and key service metrics are improving even as we handle higher volumes. Brian will detail some of the changes that helped us achieve record productivity performance in the quarter, and we are making other operational improvements while adding resources that will improve network performance going forward. You should expect to see these efforts show up more clearly as we close out 2026 and continue into next year. Bottom line, we're handling the volume today, and we expect stronger results as the resources come online and our demand pipeline continues to fill out. While we're encouraged by the meaningful progress we're making, we know there's more work to do. We've consistently said that we hold ourselves to a higher standard. We're accelerating some targeted capital investments into this year to accommodate continued volume growth so that we can deliver the level of service our customers expect. Meantime, we've identified opportunities to build more sustainable processes across our network so we can create a more resilient railroad for the long term. With that, let me hand it off to Brian. Brian Barr: Appreciate it, Mark, and good morning, everyone. I want to begin by thanking the men and women of Norfolk Southern. As I spend time in the field, it is clear our team is putting in the work. Our railroaders managed another demanding quarter, overcoming significant weather and operating disruptions while remaining focused on serving our customers and operating safely. As I said on this call last quarter, and say it to our teams frequently, successful railroading comes down to doing the fundamentals exceptionally well. Originate trains on time, reduce terminal dwell, run the plan, and align resources with demand. During the third quarter, our focus on those fundamentals drove clear sequential improvements across the network. Turning to slide five, the most important part of railroading is ensuring our employees and the communities we serve remain safe. Our preliminary year-to-date FRA personal injury index is 1.08. Our train accident rate is 1.74, a historical best for Norfolk Southern. Our accident performance continues to show step function improvement, and it's a clear sign of our railroaders' commitment to safety. We recognize the progress, but we are not satisfied. We will never stop pushing ourselves to be the safest in the industry. Turning to slide six, we entered the quarter with a clear plan to recover network fluidity by improving originations, reducing dwell, increasing velocity, and getting the railroad back on schedule. We delivered sequential improvement across those foundational measures. These are results our customers can see and feel. This quarter-over-quarter improvement demonstrates that our operating actions are producing results. Moving to slide seven, our progress came despite significant August weather across the north. On our network's high-speed corridor, the team quickly restored infrastructure, removing hundreds of downed trees, repairing multiple washouts, and handling widespread power outages by activating strategic reroutes and repositioning resources. While the historic wind and rain interrupted some of our July momentum, it did not derail our progress. We made meaningful improvements versus the prior quarter, as you can see by the metrics on the slide. We also drove substantial year-over-year progress, operating 5% more gross ton miles in quarter three 2025. The network absorbed this growth almost entirely through our existing infrastructure, driving a 4% increase in both train length and weight compared to the same period last year. Turning to slide eight, we generated strong productivity in a higher volume environment. Our on-time origin performance increased by 12 percentage points, and we continue to see progress here daily. Running an on-time network is essential to driving cost out. Workforce productivity was a quarter three record. We have begun localized hiring to support growth, and targeted train plan consolidations will reduce labor intensity where demand is strongest, allowing us to continue capturing truck-to-rail conversions. In the third quarter, the team made improvements by redesigning car connections at terminals and removing costly handlings to reduce dwell. In the quarter, we eliminated 95 crew starts per week and took 200 cars offline per day. These adjustments allow the network to accommodate 3% carload growth in the quarter. Let me give you a couple examples of our recent plan improvements. First, we consolidated smaller trains between Birmingham and Macon. This saves 14 crew starts per week, reduces the number of locomotives needed, and delivers cars faster to the customer. In another example, we shifted 50 daily switch cars from Enola Terminal to Allentown Yard. That change freed up manpower for road service in Enola and moves the switching work to a lower cost per car location. It also removes six blocked crossings at Enola, creating additional yard capacity. Adjustments like these are keeping our network fluid and agile. When trains originate on time and move faster, recrews decline, locomotives turn more efficiently, cars spend less time in terminals, and crews spend more time moving freight. That is how service and productivity reinforce one another. I'm proud of the way our operating team continues to improve the railroad. That work has us on track to deliver at least $650 million in cumulative cost savings. We made meaningful progress during the quarter, but there is more work ahead. Our standard is a railroad that operates safely, executes consistently, and delivers service our customers can plan around every day. We will keep leading from the front, running the plan, and delivering results. I will now turn the call over to Ed. Ed Elkins: Thanks a lot, Brian, and good morning, everyone. Our commercial results this quarter reflect a strong macro backdrop and a tightening truck market, which has allowed NS to drive growth across our network. Volume grew in every one of our business groups, and we set an all-time record for revenue less fuel. Let's move to slide 10. We achieved 14% overall revenue growth for the third quarter, which is inclusive of fuel surcharge. When we look at revenue on a less fuel basis, we delivered a 6% increase to set an all-time record. We finished the quarter with broad-based strength, achieving 3% volume growth in each of our business verticals. These gains were supported by elevated global energy prices, a robust industrial backdrop, and favorable truck market dynamics. RPU less fuel increased by 3% as our teams focused on pricing to the market. Looking within merchandise, volumes increased 3% and revenue less fuel achieved another record, increasing 5% from a year ago, driven by strength in our metals and construction franchise and by strong energy demand in our chemicals markets. RPU less fuel grew 2% year-over-year as strong core pricing was partially offset by some mix. Let's shift our focus to our intermodal business. Volumes there increased 3%, reflecting strong freight demand and tighter truck market conditions that favorably positioned our intermodal partners to succeed, with particular strength in our domestic and premium segments, which was partially offset by international. Overall, intermodal revenue less fuel increased by 7% as positive mix and a positive pricing environment pushed RPU less fuel up by 4%. Looking at our coal franchise, volumes grew 3%, largely due to increased export volumes, which include the new customer that we announced earlier this year. Despite strong demand, utility volumes were relatively flat versus 2025 due to plant outages, along with some localized service challenges that limited our ability to capture upside. RPU less fuel increased by 2%, lifted primarily by tailwinds from favorable seaborne pricing. Let's go to slide 11. Here we highlight several dynamic factors that continue to influence our market outlook. The inflection of fuel price has generated opportunities across energy-related commodities, which could carry forward for the duration of the conflict in the Middle East. However, if energy prices remain elevated in the longer term, it could begin to impact overall customer demand. We're keeping a close eye on this interplay. The tightening truck market bodes well for highway-to-rail conversions across markets such as forest products and consumer products. Lastly, new project activity in industrial development remains ahead of last year, although the pace has normalized following an exceptionally strong second quarter. As we look forward, we remain positive on the outlook for new industrial development activity as tariff-related concerns ease. Additionally, we have a subdued but positive outlook for vehicle production. Industrial activity has maintained its momentum, with manufacturing continuing its expansion for the ninth consecutive month. We are maintaining an optimistic outlook for the industrial sector despite ongoing volatility in the broader economic landscape. Global energy prices, while a significant wildcard, could continue to support near-term opportunities in markets like natural gas liquids, sand, and crude oil. Looking specifically at our intermodal markets, truck market conditions continue to trend positively. Rising rates reflect tighter capacity against a steady demand backdrop, and we expect resilient consumer demand to support our domestic and premium segments in the near term as new orders increase and retail sales have shown modest growth. On the other hand, war and trade uncertainty will continue to weigh negatively on international volumes on our network. Overall, we stand poised to take share from the highway as elevated fuel prices make conversion from truck to intermodal more attractive to our customers. As we turn to coal, the outlook is positive for the remainder of 2026, and we expect growth to be led primarily by our export franchise. It will also be supported by favorable market conditions within our utility business. Let's go to slide 12. Throughout the third quarter, we continued to build momentum across the business. Stronger service performance is enhancing customer confidence, and their confidence is supporting market share growth. At the same time, new digital and operating capabilities are enabling us to grow more efficiently. Our digital investments are delivering tangible benefits for both customers and our operations through greater automation, visibility, and better ease of doing business. Whether customers are requesting a rate or seeking information on active shipments, we're delivering tools that help deliver faster and more consistent answers. We are streamlining the end-to-end rate request process through a single, intuitive platform that allows customers to submit, manage, and track their requests in one place. This reduces manual touch points, it increases transparency, and accelerates decision-making. We're focused on delivering an increasingly seamless customer experience. At the same time, we're also enhancing shipment visibility by combining real-time network data, historical trends, and machine learning and superintelligence to adapt to changing network conditions. The result is a more accurate and more actionable shipment information, enabling customers to plan more effectively, operate more efficiently, and ultimately, make decisions with greater confidence. As these capabilities continue to scale, our goal is simple, make Norfolk Southern the easiest railroad to do business with, so that we win more freight in competitive markets. As always, we want to thank all of our customers for their continued partnership and business. The entire NS team is aligned around delivering the service that our customers need every day, building trust as a vital partner for them in their supply chains. With that, I'll turn it over to Jason to review our financial results. Jason Zampi: Thanks, Ed. I'll start on slide 14 with the reconciliation of our GAAP results to the adjusted numbers that I will discuss today. During the quarter, we incurred $42 million in merger-related expenses and $28 million of net costs related to the Eastern Ohio incident. Adjusting for these items, the operating ratio for the quarter was 65.4%, and earnings per share was $3.62. Slide 15 details the comparison of these adjusted results versus last year. As expected, higher fuel prices were a significant driver of both the revenue and expense increases, accounting for about half of the variance in both line items. Last quarter, we were expecting fuel to be a tailwind to our third quarter operating ratio. However, as I previewed a couple of weeks ago, fuel prices actually increased as we progressed through the quarter, and that negatively impacted our operating ratio by about 250 basis points from where we thought we would be. That said, higher volumes and RPU in the quarter helped drive a 10% improvement in earnings. Drilling further into the expense line items on slide 16, costs were up 17% for the quarter. As I just discussed, over half of that increase was driven by the rise in fuel expense. I will also remind you of last year's significant land sale that impacts the comparison to prior year as well. Setting aside those items, continued inflationary pressures and volumetric cost increases are the primary drivers in our other P&L line items, including comp and ben, purchased services, and materials. Summarizing our financial results on slide 17, despite the inflationary headwinds we faced, we drove an increase of 7% in operating income and delivered a 10% increase in both net income and earnings per share. As we move into the fourth quarter, we continue to manage through the volatility of fuel prices that will influence the trajectory of the operating ratio. That said, we are optimistic about the current demand environment and our ability to grow volumes, revenue, and earnings. Mark, I will turn it back over to you. Mark George: Okay, let us turn to slide 19. Looking ahead, our priorities remain clear. Most importantly, we will continue to operate a safe and reliable railroad. Safety remains the foundation of everything we do, and we remain fixated on that. Network velocity increased from Q2 despite the higher load on the network and some disruptive events that Brian talked about. Our team is actively recruiting and training new T&E employees to augment our resource base to accommodate growth while we still drive smart productivity and efficiency actions. Accelerating and maintaining a fast network is essential to provide the consistent, high-quality service that our customers depend on to grow their businesses. Now, turning to guidance. The fuel environment has remained elevated. As a result, our updated adjusted OpEx guidance for the full year is to be just north of $9 billion, which includes approximately $700 million of incremental fuel expense compared to our view at the beginning of the year. While higher fuel prices continue to pressure our cost structure, our team remains disciplined on managing controllable costs and delivering productivity improvements across the network. I am exceptionally proud of this team as they have managed through the volatile environment this year while managing to keep core operating costs within the original guide we set forth at the beginning of the year, despite stronger volumes. The underlying business remains healthy, and we are committed to balancing growth with operational efficiency. Now, we are increasing our capital expenditure outlook and expect 2026 CapEx to be roughly $2.1 billion, which is up from $1.9 billion originally. The incremental reinvestment in the franchise is geared toward positioning us to capture growth opportunities that we see on the horizon, as well as to enhance network resilience and efficiencies. We are encouraged by the growth we are seeing across parts of our business, but we also recognize that today's environment won't persist indefinitely. We view most of the macroeconomic factors that are driving the recent truck-to-rail conversions as temporary. But what the freight market today is showing us is that when shippers are given a rail product that offers better value than the highway, they move freight to rail quickly, and the Union Pacific-Norfolk Southern combination is designed to create those conditions permanently. Okay. With that, we will now open the call to questions. Operator? Operator: Thank you. Ladies and gentlemen, should you have any questions, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, we ask that you please lift the handset first before pressing any keys. Also, out of consideration to other callers on the line and time allotted today, we do ask that you please limit yourself to one question. Thank you. Your first question will be from Scott Group at Wolfe Research. Please go ahead, Scott. Scott Group Analyst Hey, thanks. Good morning. Just a couple of things. Mark, your comment about the truck-to-rail conversion being temporary, just add some color there. Is your thought that when fuel goes down, we lose this share back to truck? Or are you saying incremental share gains will get tougher whenever fuel goes down? Or maybe, I don't know if you have another thought on that. I am just curious about that. Then, Mark, you have also just, in recent quarters, been talking about the competitive dynamic, and I am just wondering how that is evolving and how we should be thinking about pricing going forward in a world of higher truck rates and better rail volumes. Mark George: Hey, good morning, Scott, and thank you very much. Okay, so yeah, look, the competitive environment, it is definitely pretty robust right now. I think you see all the competitors offering new products coming together in the wake of the announcement of the merger. We have definitely seen a more enhanced competitive environment. So for sure, we are seeing more competition. The good news is, and I think that is all good, by the way, for the rail industry as a whole, because we are now finally getting some share back from the highway, certainly aided by the rising fuel prices. But still, nevertheless, I think the rails cooperating together is really a good thing, even if it creates a tougher situation for us. So definitely, I would confirm that dynamic exists. Look, when I talk about temporary, what I mean here, Scott, is obviously the fuel pricing has pushed freight to the highway. We are seeing a large part of our intermodal growth has been driven exactly by highway-to-rail conversion. No doubt about it. That is having an impact on the trucking market, and certainly, there is some capacity limitations now in trucking. But over time, when fuel goes back to where it was, you can expect that some will revert back to. A large portion of what we have gained will eventually, and it might take a year or two, but it will eventually go back to the highway unless this industry does some very structurally different things, which is really what I was alluding to there at the end. That is why I think the merger is the real difference-maker here in trying to make permanent some upward inflection on share recapture. Hopefully that clarifies it. Thanks again. Operator: Question will be from Jonathan Chappell at Evercore ISI. Please go ahead, Jonathan. Jonathan Chappell: Thank you. Good morning. Ed, every single rail call, every single quarter asks about pricing, and we get some broad-based answer. But if we look at your RPU ex fuel across all three segments, they are all really strong. So I understand that intermodal, you have some truck benefits, coal is kind of the benchmarks, which is out of your control, but merchandise continues to set a record. So can you help us frame out what was controllable versus what was not and where you are in recapturing price as the service continues to improve? Ed Elkins: Sure. Yeah. Thanks for the question. I will try not to be high level and generic, even though it might be unavoidable in some cases. We have had a strong history of price over a long period of time, and having a service product that is recovering has allowed us to exhibit additional value for our customers, and that includes our industrial customers. It also helps that what we see is a pretty robust industrial backdrop when it comes to the macro. We have had nine months of expansion now in terms of manufacturing, and new orders continue to propel what is going on out there. We see a strong industrial development pipeline of our own, which we think is indicative also of a strong macro. It is a growth environment right now on the industrial side of our business, which is where, of course, our merchandise business mostly lives. We have been able to take advantage of the service that we have offered with that value to really try to price to the value of that product. I know other people say that, and we all aspire to it, but it has been a key part for us. That really, in the merchandise segment, you think about it, we have had some mixed headwinds on that side of the business as well, which kind of waters down our efforts when it comes to RPU, which, of course, is not really priced. We are proud of that. On the intermodal side, certainly, mix plays a role there as well. I will tell you that we have spent, and I know I have told you this before, we have spent a lot of time renegotiating our contracts and reconfiguring how we adapt to changing market conditions. I think we are in the really early innings of seeing that happen, and I really expect that we will continue to see that happen as this environment persists. Thanks again for the question. Operator: Next question will be from Jason Seidl at TD Cowen. Please go ahead, Jason. Jason Seidl: Hey, thank you, operator. Hey, Mark and team. Mark, you sort of mentioned if the industry doesn't take a few steps that you fear that some of this stuff that you've gained, the traffic that you've gained can be lost over the next two years. I guess when you look at that assumption, are you assuming that capacity comes back to the trucking market as it has historically? Because it does appear to be some structural changes in at least some of the regulatory regime here. Also, aside from sort of creating that Transcon option that you and the UP are proposing, what are other things that you think the industry can do to retain this traffic? Mark George: Great questions, Jason. Thank you. Look, yes, I think eventually capacity does come back into trucking when the barriers to entry are very low. So capacity will come back when fuel prices go back down. I think that presents a competitive challenge for rail. I think, don't forget the threat of autonomy with trucking and what that also will do to make the product more attractive and appealing. Just aside from the cost benefit for the truckers, they're going to also have a lack of rest hour requirements when trucks are driving. So they're going to also deliver products faster than they currently do today, which is already faster than the railroads. So those are the things that I'm talking about. We have to structurally change. So what we can do, aside from the merger, is we still have to be consistent and reliable with our delivery. The challenge is that railroads can't always flex to sharp inflections in volume. We saw that post-COVID, and I think you see a little bit of that now even. When you start to see volumes hit beyond a couple few points, it starts to stress your crew capacities. So railroads have to be much more nimble. The challenge we all have as an industry is to bring on T&E resources. It's a grind. These are hard jobs to fill. You have considerable attrition through a six-month training process, so you have to basically hire double what you think you need because you're going to end up losing half by the time you get to the end of a six-month training process. That means you have to predict six months in the future what the volumes are going to be. If you get that wrong, you might be either short or you could be wrong on resources. There's this area called Wall Street that thinks that you can be perfectly volume variable, but it's a challenge. So we have to somehow crack that nut and figure out how to ensure that we've got adequate buffer in our resources to be able to accommodate a little bit more volume when we don't expect it. Let's just talk about recent history. In Q4 of last year, we were all feeling really terrible about the volume environment, and we weren't feeling very optimistic looking into 2027 about the volume environment. But it was exactly then you had to have the conviction to go and really augment your T&E resources and significantly increase for what eventually became a volume inflection in the middle part of 2026, or really the second quarter of 2026. If you get that wrong, you saw challenges in your service product. So that's a real-time recent example of the challenge railroads have, and we have to crack that nut. Thank you. Operator: Our question will be from Chris Wetherbee at Wells Fargo. Please go ahead, Chris. Chris Wetherbee: Hey, thanks. Good morning. Maybe I can pick up on that last answer. I guess as we think about service and your capacity for growth and maybe take into context with the bump up in the CapEx guide, can you talk about how much capacity that you have? It seems like service in the last couple of weeks has gotten a little bit slower. Maybe that's from volume growth. Obviously, there's a lot going on out there from a demand perspective. Maybe you can just talk about big picture, how much capacity you have to grow within sort of where you're going to be deploying the capital that you're raising. Mark George: Yeah. I'll start off, and we'll tag team this answer. Look, we have capacity, and I think even in this quarter, you'll see that we've taken on volume. We haven't really added a ton of train starts. A lot of this is through filling out existing trains, so it hasn't really had too big of an impact. That said, there have been some more asset-intensive volume that's come on the unit train side. Certainly, those are areas where when you have more bulk traffic and more unit traffic that you've got to move, that's where you end up feeling a little bit more of the pinch on the capacity side. Otherwise, in our regularly scheduled merchandise product and our intermodal products, we've got capacity. Brian, why don't you jump in with your views? Brian Barr: Yes. We're walking through the service there regularly. As I mentioned here earlier in the call, with some of the operational changes we make, we're creating capacity with train consolidations, with removing touches on existing cars. As we mentioned, we are hiring here at some strategic locations that'll build resiliency into the plan, and we're on path with it in a few strategic locations. Also with the locomotives, we have 420 that are in storage currently that are there for capability as volume increases as we grow. We've already been able to take on 3% more shipments this quarter and absorb that into the existing network. Although we're 4% bigger on length and weight, we still have a lot of capacity there on existing service. Mark George: Okay. Thank you very much. Operator: Next question comes from Brian Ossenbeck at JPMorgan Chase. Please go ahead, Brian. Brian Ossenbeck: Hey, good morning. Thanks for taking the question. Just a quick follow-up for Brian and a broader one about resourcing. Brian, we're hearing a lot about dray driver challenges and availability, and that's not necessarily something you guys covered directly or managed directly, but it's clearly part of the whole supply chain on the intermodal side. So wanted to see if there's anything along those lines, if you're feeling any constraints or if there's any opportunities to work with your channel partners in there as this volume growth continues to be pretty significant, especially the conversion. Then Mark, maybe just big picture, is anything from a technology perspective or maybe even a work contract negotiating perspective to get more flexibility to help out with some of that variability of hiring with that long-lead time item, which is obviously labor? Thank you. Mark George: Thanks, Brian. I will start here, and Brian can kick in as well. Look, we are investing at the terminal level to make sure that our drayage community is as fluid and as efficient as it possibly can be. They are a key component to what we do, specifically, not only in markets where they are doing end deliveries, but we also do a lot of cross-towns in the current environment, and they are really important there, too. Is there stress? Yes, there is stress across the entire supply chain, particularly for trucks and drivers. I think that has really been a part of the story here that people have talked about, but I am not sure how much attention that they have paid to it, but the supply of drivers and the capability there has been drawn down some. But we are investing to make sure that the drivers that come to our terminals are being efficient with their time, and that we are delivering value for them, too. Brian, I do not know if you want to talk about specific investments or where we are doing that, but I know you are looking at a number of places across the network. Brian Barr: Yeah. With growth, we have locations right now that are hitting lift records here currently. We have five locations that are going to hit a quarterly lift record within the intermodal ramps. We have 10 that will hit annual. But we have been doing ongoing expansions and improvements in several of the terminals with the growth mindset and with increasing our capability. We are hitting a few locations there in Chicago, Harrisburg, are a few key corridors specifically. Mark George: Yeah. I think technology in general is something we're investing in. I think in the intermodal terminals, we're looking at a fair amount of autonomy opportunities there that will help us with moving boxes and scanning and hustling and things like that. So those will help with our terminal fluidity. On top of it, Brian, you're doing a lot of investments in some of the yards, automating switches and doing some other things that will help alleviate some of the manual work requirements that we have, correct? Brian Barr: Correct. Mark George: Jason, do you want to add anything else on where the CapEx is, the incremental CapEx? Jason Zampi: Yeah. Our priorities with respect to capital allocation has always been first and foremost to invest in the business, and no change there. I think what you're really seeing here in this increase that we talked about at the end of the year is really preparing for growth, and that's really important. A lot of this takes some time to get in the ground or to purchase these assets, so it's important to get ahead of that. The only other thing I would just add from a technology perspective is really what we've done on the portals and the benefits that we get out of that from efficiency and safety. So I think that's another key thing that's been important for us. Mark George: It sure has been. I think the key thing here is when you look at our accident rates, they have been consistently declining for three years, and we are really at the envy of the industry levels of accidents. That just means more fluidity on line of road, which means less resources required. When you have breakdowns, when you have accidents, it really congests you. You need a lot more human resources to move things. It creates a lot more recrews. We are more fluid because we are better on line of road, thanks to the portal investments we've made. So let's move on to the next question. Operator: Which comes from Bascome Majors at Stephens. Please go ahead, Bascome. Bascome Majors: Thanks for taking my questions. When you originally framed the cost to run the business this time last year, I think that was a helpful framework, and it certainly played out where you've had the capacity to grow and largely maintain service levels on the network. I appreciate the comments earlier about the buffer and how you're managing through that and capacity. As we look to next year, it looks like Q4, the cost guidance is, call it, $2.4 billion. There's obviously a lot of volume variability to serve the business into next year. Can you talk through the inflationary components and sort of the expectations that you're setting so we can get our own expectations for what that number looks like for 2027 versus 2026? Thank you. Mark George: Thanks a lot, Bascome. Yeah, so I'll let Jason talk to that. We're not going to give 2027 guidance now. But certainly, inflation has been a challenge for this industry in the past couple few years. Obviously, the labor contracts are at the root of it. But on top of it, all the inflation we've seen elsewhere in materials and vendor costs have really hit us. We offset as much of that as we can with productivity, and we've had a couple of great years with productivity, and we'll continue to drive cost out of the business there. But Jason, do you have some first looks at inflation? Jason Zampi: Yeah. I think just from an early perspective here, we signed wage agreements with the unions a year and a half, two years ago now. So we have a good line of sight to that. So we've got a 3.75% increase that just went into effect in July and another 3.5% next July. So we know what the headwinds are there from a wage rate perspective. The other two things I'd call out, and I'm putting fuel aside here, obviously, as a bit of a wild card, but the other thing is health and welfare benefits. Those have been very significant, double-digit percentage increases in that, and we see that continuing as we move into next year. Then the other thing that I would just call out is insurance. Our cost to receive insurance coverage continues to go up, and I don't see that abating at all as we move into next year. I think those are some big drivers that you should expect as we move into 2027. Mark George: I'd imagine, Bascome, we'll do similar type of guide next year and give you a cost envelope. Okay, next question. Operator: Comes from Richa Harnain at Deutsche Bank. Please go ahead, Richa. Richa Harnain: Hey, thanks for the time, guys. I wanted to ask maybe a more bigger picture one. One of the key strategic attractions of the merger is obviously the opportunity to convert more over-the-road freight to rail. However, we're seeing more and more evidence that conversion potential in Western and transcontinental corridors may be more limited than in the East. Of course, that makes sense. Your largest IMC partner, for instance, reported a stark difference in growth for East versus transcon. Given your strong Eastern franchise, how are you thinking about that difference? Is it primarily structural, given shorter haul lanes being more truck competitive? Or does it largely just reflect the absence of maybe a sufficiently reliable and competitive rail service offering in Transcon, which the proposed merger is trying to fix? I'm just trying to understand what the structural impediments are and how those get corrected from this merger. Mark George: Okay, thanks, Richa. Ed, why don't you take a shot at that, please? Ed Elkins: Sure. Yeah, look, we think that there are opportunities to convert truckload business to the railroad, no matter what the length of haul, whether it's long or short. Certainly, the transcon lanes have had more attention paid to them over the past 30 years with a variety of services. The penetration in those lanes is naturally higher than it is in the, what I would call the East, which is for us, east of Mississippi. The results that you're seeing from a variety of our partners, I think reflect that reality that there's a tremendous amount of opportunity in the East to convert truckload to the railroad with the right kind of service and value. I think we've become pretty good at that over time. We can always get better. What I think the merger is going to help us do is increase our penetration opportunity in those Transcon lanes because we will have a better service and it will be a permanent change. It will not be an interline product. It will be a local product that is durable across not only months, but years and decades. We view that as a perpetual opportunity for share shift in those transcon lanes. At the same time, the new company will have what I would consider to be a prime opportunity to convert a lot of the freight that still rides the highway in the East that would much rather save money, save fuel, and deliver value to their customers using intermodal. Mark George: Thank you. Next question. Operator: Next question comes from Brandon Oglenski at Barclays. Please go ahead, Brandon. Eric Morgan: Hey, good morning. This is Eric Morgan on for Brandon. Thanks for taking the question. I guess I will just ask one on the coal outlook. It turned positive, I think you mentioned driven by export, but also the favorable conditions in utility business. Can you just help square that with the relatively low natural gas prices and how much line of sight you would say you have on that business and just any thoughts on how that shakes out for RPU? Appreciate it. Ed Elkins: Yeah, sure. On the domestic side, we saw our plants burn exceed the amount of tons that we delivered to them really for most of the year here. We think that there is some replenishment that is going to happen. I agree with you that the low natural gas prices are going to be a strong competitor. We do think that there will be some restocking going on for the remainder of the year and who knows, maybe in the next year, but we will see about that. On the export side, it is a pretty favorable environment when I think about pricing. You look at the third quarter, U.S. low vol ended up somewhere around $200 and API2 was at $126. Right now we are at, or recently I should say, we are at $210 and $145. Those are constructive levels we think going into the fourth quarter. Our outlook is, I would call it level. We are trying to be realistic with what the market can deliver on the utility side, but we think there is still some opportunity, particularly with the good partners that we have in the East here to deliver export tons. Mark George: Thank you. Operator: Next question comes from David Vernon at Bernstein. Please go ahead, David. David Vernon: Hey, good morning, guys. Ed, I wanted to talk a little bit about intermodal. When you think about the trials and tribulations of the last 12 months, obviously losing some volume on the repositioning of some J.B. Hunt volume. How should we be thinking about the volume ex that headwind? Then as you think about your ability to not only touch on price next year, but also to think about new service introductions, things like that, what are you thinking about on the product side? I know you are in this sort of merger waiting game, but are you guys doing more work to think about where you can expand the network or add some services that could kind of tap into this elevated highway truck market? Thanks. Ed Elkins: Well, yeah, we are, of course, and there's an old saying my dad used, which is, you make hay while the sun shines. So we're exploring every opportunity to deliver new value to our customers, and we'll see what emerges from that over the next few weeks and months, but I'm very bullish on that. When I think about our capability and what we've done and think about the third quarter, we had the best domestic non-premium third quarter in history for volume. And that's saying something given where we were a year ago, right? Mark George: And the business we had a year ago. Ed Elkins: And the business we had a year ago. We had a really good quarter on the truckload side of our business, and I'm very encouraged by that in a couple ways. One, we have great partners that are continuing to drive conversion out there on the street, which is incredibly important. And number two, we have a network that can deliver value very ably for those customers. And I'm going to speak right past you and talk to our customer base and say, I really want everyone to be confident that we can continue to deliver that value. We've got the capability, we've got capacity, and we're building more capacity, and I think we're in a really good shape there. Thanks for the question. Operator: Next question comes from Tom Wadewitz at UBS. Please go ahead, Tom. Tom Wadewitz: Yeah, good morning. Wanted to ask a bit, I guess you'll see this, but it's merger related. I think one of your primary competitors has pointed out that you have a really attractive intermodal network and access in Eastern Pennsylvania and I think they'd like to get some access to some of it. How do you think about the capacity utilization of Harrisburg, Allentown, some of those key intermodal hubs, and just the kind of operational complexity of potentially having trackage rights or something where another railroad would get access to it? Not obviously, that you're going to do that, but just kind of high level, is that something that's operationally doable? Where you sit in terms of capacity of eastern intermodal network that I think, kind of fairly presented is a nice advantage for you. Mark George: Look, we have a very attractive franchise in Eastern Pennsylvania. No doubt the envy of others. No surprise, people are going to take moon shots to ask for access for it. Heck, I'd love to have access to Bone Valley in Florida, and I'd love to have access to South Dakota. There's all these other areas on the network everyone wants access to, but guess what? The track's on the ground. We're going to defend our franchise, and we're going to defend our network. We're going to trust that the STB will view things like this through sober eyes and pretty firmly reject it like they rejected a lot of the asks during the CPKC, every ask during the CPKC merger application. It's not really worth answering the rest of that question, Tom, because it's not going to happen. We're not giving up that franchise. I can't see a scenario where the STB would even entertain it. That's it. Thank you. Operator: Next question come from Ari Rosa at Citigroup. Please go ahead, Ari. Ari Rosa: Hey, good morning. It sounds like you've detailed an attractive opportunity set here from a volume standpoint, but I was hoping you could talk about how you see the attractiveness of the business that's available and just how discerning you have to be in terms of freight selectivity and expectations around that business kind of sticking around. I understand there's obviously a service component on your end, but as we think about just kind of apples to apples, is that business that you want and how do you have to price that appropriately to ensure you get attractive returns? Thanks. Mark George: Sure. Thanks for the question. We have a team of folks that are out on the street every day, including right now, looking for new business. And that team is very well trained and really capable, smart folks. They're going to bring opportunities back that are attractive and accretive to the business. And that's the first mission they have, and I'm very confident that they're doing a great job of that, and they're going to continue to. You think about what business sticks around. Well, here's the business that will stick around no matter what happens, and that is if we can deliver value in such a way that our customer can realize that value quickly and demonstrate that value for their customers, then we're going to be in great shape. And that means service, service, and that's what we're focused on. It means capacity, capacity, and that's what we're focused on. And I'm very confident that as we move forward, our portfolio is only going to get more attractive in the current environment. Thank you. Operator: Next question comes from Walter Spracklin at RBC Capital Markets. Please go ahead, Walter. James McGarragle: Hey, this is James McGarragle on for Walter this morning. I just wanted to ask on the volume outlook. Last quarter, you flagged an update on your industrial customer investment activity. You mentioned it's normalized a bit after a strong H1. Was that a surprise to you that normalized? Any specific numbers you can give us surrounding that opportunity just to help us think about the opportunity in terms of carload growth there into next year? Mark George: Thanks for the question. We have over 50 industrial projects that have moved into that design and construction phase, and that's the sort of the demarcation line we think between an opportunity that is theoretical versus one that's actually going to be executed. We're encouraged by that. Yes, the first half of the year, we saw some acceleration and actually outperformance of that pipeline, and it has not decelerated but receded to the what I would call a normalized run rate, and that's okay. A normalized run rate is very sustainable for us over a long period of time. Probably the more surprising thing was the acceleration in the first half. I feel like we're on track. We always have a budget every year for what we think is going to happen, and we're back sort of on that run right now. That's a very healthy thing. Frankly, very encouraging. In terms of carloads, I really can't define that here, but we're encouraged. James McGarragle: Okay. Thank you. Operator: At this time, we have no other questions registered. I would like to turn the conference over to Mark George. Mark George: Okay. Thank you, operator, and thank you everybody for participating in the call. I think I'll just wrap by saying, we've put an application forward for a merger. It's more thorough than any merger proposal ever presented by an American railroad and includes a first ever use of a complete data set as opposed to sampled data. We now have greater visibility to the Board's timeline, and we believe that the case for our merger is going to become clearer as the evidentiary record continues to build. And it is no doubt in my mind that we are very much in the public interest with this merger application. A unified network's going to provide customers with more opportunities to grow and compete, placing new markets within reach, as Ed talked about, at a lower cost, and that enhances affordability for the U.S. consumer and the broader economy. I think second, reducing handoffs, improving network fluidity and delivering a more consistent service outcome. That's what's going to matter to the STB when they look at this, that service reliability, resilience, and broader supply chain performance. And a more fluid network also means it's going to help the communities. We'll have fewer interchanges, fewer stoppages, and that's going to translate into fewer blocked crossings. That's in the public interest for sure. The freight conversion from the highway goes without saying. We're going to save on overall diesel fuel consumption as a nation because we're up to 5x more fuel efficient than trucks. On top of that, we're going to make the highways safer by having fewer trucks on it. When you remove 3.6 billion truck miles, that translates to about 1,750 fewer accidents and injuries, which you can do math and estimate that's about 65 fewer fatalities. Not to mention for our employees being part of a larger company, we are going to have more opportunities for employees, and we're actually going to start growing again well-paid union jobs. So we're excited about the progress we're making on the merger application and the STB's put out this timeline and we'll move on and continue to focus on running the business in the meantime. So thank you all for participating and take care. Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending, and at this time, we ask that you please disconnect your line. Before you buy stock in Norfolk Southern, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Norfolk Southern wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Norfolk Southern (NSC) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Railroad achieves record quarterly revenues and strong earnings growth ATLANTA, Oct. 22, 2026 /PRNewswire/ -- Norfolk Southern Corporation (NYSE: NSC) announced Thursday its third quarter 2026 financial results. For the quarter, revenue was $3.5 billion, income from railway operations was $1.2 billion, operating ratio was 67.4%, and diluted earnings per share were $3.37. Adjusting the results to exclude merger-related expenses and the effects of the Eastern Ohio incident, third quarter income from railway operations was $1.2 billion, the operating ratio was 65.4%, and diluted earnings per share were $3.62. "Norfolk Southern delivered another quarter of solid execution, with record revenues, and strong earnings growth aided by continued productivity gains across the network, reflecting continued momentum in our business and the dedication of our team," said Mark George, Norfolk Southern President and Chief Executive Officer. "Throughout the quarter, we remained focused on safely serving customers, improving operational performance, while maintaining disciplined cost control despite rising fuel costs. Demand for rail service increased during the quarter, as a tighter trucking market highlighted rail's competitive advantages and underscored the opportunity for a more efficient, capacity-enhanced freight network. We remain focused on investing in a stronger, more resilient rail network that can support growth we see on the horizon." Third Quarter Summary - Railway operating revenues of $3.5 billion were a quarterly record, up $423 million, or 14% compared to the third quarter 2025, on a volume increase of 3% year-over-year, and higher fuel surcharges representing eight points of the revenue growth. - Income from railway operations was $1.2 billion, an increase of $52 million, or 5%, compared to third quarter 2025. - Adjusting for the effects of merger-related expenses and the Eastern Ohio incident in both years and restructuring and other charges in 2025, adjusted income from railway operations was $1.2 billion, an increase of $82 million, or 7%, compared to adjusted third quarter 2025. - Operating ratio in the quarter was 67.4% compared to 64.6% in third quarter 2025. - Adjusting for the effects of merger-related expenses and the Eastern Ohio incident in both years and restructuring and other charges in 2025, the adjusted operating ratio for third quarter 2026 was 65.4%, 210 basis points higher than adjusted third quarter 2025. - Diluted earnings per share were $3.37, up $0.21, or 7%, compared to third quarter 2025. - Adjusting for the effects of merger-related expenses and the Eastern Ohio incident in both years and restructuring and other charges in 2025, adjusted diluted earnings per share were $3.62, up $0.32, or 10%, compared to adjusted third quarter 2025. About Norfolk Southern Since 1827, Norfolk Southern Corporation (NYSE: NSC) and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Today, it operates a 22-state freight transportation network. Committed to furthering sustainability, Norfolk Southern helps its customers avoid approximately 15 million tons of yearly carbon emissions by shipping via rail. Its dedicated team members deliver approximately 7 million carloads annually, from agriculture to consumer goods. Norfolk Southern also has the most extensive intermodal network in the eastern U.S. It serves a majority of the country's population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports across the Gulf Coast and Great Lakes. Learn more by visiting www.NorfolkSouthern.com. Cautionary Statement on Forward-Looking Statements Certain statements in this press release are "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 our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or our achievements or those of our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements may be identified by the use of words like "may," "will," "could," "would," "should," "expect," "anticipate," "believe," "project," or other comparable terminology. While the Company has based these forward-looking statements on those expectations, assumptions, estimates, beliefs, and projections it views as reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control, including but not limited to: (i) changes in domestic or international economic, political or business conditions, including those impacting the transportation industry; (ii) the Company's ability to successfully implement its operational, productivity, and strategic initiatives; (iii) a significant adverse event on our network, including but not limited to a mainline accident, discharge of hazardous material, or climate-related or other network outage; (iv) the outcome of claims, litigation, governmental proceedings, and investigations involving the Company, including those with respect to the Eastern Ohio incident; (v) new or additional governmental regulation and/or operational changes resulting from or related to the Eastern Ohio incident; (vi) a significant cybersecurity incident or other disruption to our technology infrastructure; and (vii) those pertaining to the Merger. These and other important factors, including those discussed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 9, 2026, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measures Information included within this press release contains non-GAAP financial measures, including adjusted income from railway operations, adjusted operating ratio, and adjusted diluted earnings per share. Non-GAAP financial measures should be considered in addition to, not as a substitute for, the financial measures reported in accordance with U.S. generally accepted accounting principles (GAAP). Our non-GAAP financial results for the third quarters of 2026 and 2025 exclude merger-related expenses and the effects from the Eastern Ohio Incident (the Incident). Our non-GAAP financial results for the third quarter of 2025 also exclude restructuring and other charges. The following tables adjust our GAAP financial results for the third quarters of 2026 and 2025 to exclude the effects of those items. The income tax effects of the non-GAAP adjustments were calculated based on the applicable tax rates to which the non-GAAP adjustments related. We use these non-GAAP financial measures internally and believe this information provides useful supplemental information to investors to facilitate making period-to-period comparisons by excluding these costs. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation from, or as a substitute for, the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies. Information about the adjustments that are not currently available to us could have a potentially unpredictable and significant impact on future GAAP results. Further information about the Company's non-GAAP measures are available on our website at www.norfolksouthern.com on the Investors page under Events and Presentations. ($ in millions, except per share amounts) | | Third | | | | Quarter 2026 | | | | Income from railway operations | $ | 1,150 Merger-related expenses and effects of the Incident | | 70 Adjusted income from railway operations | $ | 1,220 | | | | Operating ratio | | 67.4 % Merger-related expenses and effects of the Incident | | (2.0 %) Adjusted operating ratio | | 65.4 % | | | | Diluted earnings per share | $ | 3.37 Merger-related expenses and effects of the Incident | | 0.25 Adjusted diluted earnings per share | $ | 3.62 | | | | | | | | | ($ in millions, except per share amounts) | | Third | | | Quarter 2025 | | | | | | Income from railway operations | $ | 1,098 Merger-related expenses, restructuring and other charges, and effects of the Incident | | 40 Adjusted income from railway operations | $ | 1,138 | | | Operating ratio | | 64.6 % Merger-related expenses, restructuring and other charges, and effects of the Incident | | (1.3 %) Adjusted operating ratio | | 63.3 % | | | Diluted earnings per share | $ | 3.16 Merger-related expenses, restructuring and other charges, and effects of the Incident | | 0.14 Adjusted diluted earnings per share | $ | 3.30 | | | | View original content to download multimedia:https://www.prnewswire.com/news-releases/norfolk-southern-reports-third-quarter-2026-results-302916354.html