NORFOLK SOUTHERN CORP - Quarter Report: 2025 March (Form 10-Q)

Common
Stock

Additional
Paid-in
Capital

Accum. Other
Comprehensive
Loss

Retained
Income

Total

($ in millions, except per share amounts)

Balance at December 31, 2023

()

Comprehensive income:

Net income

Other comprehensive loss

()

Total comprehensive income

Dividends on common stock,

$ per share

()

Stock-based compensation

Balance at March 31, 2024

()

($ in millions)

Performance Share Units

PSUs provide for awards based on the achievement of certain predetermined corporate performance goals at the end of a cycle and are settled through the issuance of shares of Common Stock. All PSUs will earn out based on the achievement of performance conditions and some will also earn out based on a market condition. The market condition fair value was measured on the date of grant using a Monte Carlo simulation model.

Common Stock issued net of tax withholding Related tax benefits realized$ $

management employees were separated from service by May 2024. “Restructuring and other charges” reflects separation payments and other benefits to the impacted management employees and amounted to $ million. Additionally, we evaluated the impact of these separation programs on our pension and other postretirement benefit plans, as further discussed in Note 10.

In March 2024, we appointed John Orr as Executive Vice President and Chief Operating Officer of the Company. “Restructuring and other charges” also includes $ million of costs related to this appointment, including an

million payment and certain commercial considerations to CPKC in exchange for a waiver of his non-compete provisions.

$ $ $ Dividend equivalent payments()()()()Income available to common stockholders$ $ $ $ Weighted-average shares outstanding Dilutive effect of outstanding options and share-settled awards Adjusted weighted-average shares outstanding Earnings per share$ $ $ $

million in both the first quarters ended March 31, 2025 and 2024, respectively.

)$ $ $()Other comprehensive income of equity investees() ()Accumulated other comprehensive loss$()$ $ $()Three months ended March 31, 2024 Pensions and other postretirement liabilities$()$ $()$()Other comprehensive loss of equity investees() ()Accumulated other comprehensive loss$()$ $() $()

million shares of Common Stock under our stock repurchase program in the first three months of 2025 at a cost of $ million, inclusive of excise taxes, while we did repurchase any shares of Common Stock in the first three months of

% economic and % voting interest in the jointly-owned entity, and CSX has the remainder of the economic and voting interests. Our investment in Conrail was $ billion and $ billion at March 31, 2025 and December 31, 2024, respectively.

CRC owns and operates certain properties (the Shared Assets Areas) for the joint and exclusive benefit of Norfolk Southern Railway Company (NSR) and CSX Transportation, Inc. (CSXT). The costs of operating the Shared Assets Areas are borne by NSR and CSXT based on usage. In addition, NSR and CSXT pay CRC a fee for access to the Shared Assets Areas. “Purchased services and rents” and “Fuel” include expenses payable to CRC for operation of the Shared Assets Areas totaling $ million and $ million for the first quarters of 2025 and 2024, respectively. Our equity in Conrail’s earnings, net of amortization, was $ million and $ million for the first quarters of 2025 and 2024, respectively. These amounts partially offset the costs of operating the Shared Assets Areas and are included in “Purchased services and rents.”

“Other liabilities” includes $ million at both March 31, 2025 and December 31, 2024 for long-term advances from Conrail, maturing in 2050 that bear interest at an average rate of %.

other North American railroads collectively own TTX Company (TTX), a railcar pooling company that provides its owner-railroads with standardized fleets of intermodal, automotive, and general use railcars at stated rates. We have a % ownership interest in TTX.

Expenses incurred for use of TTX equipment are included in “Purchased services and rents.” These expenses amounted to $ million for both the first quarters of 2025 and 2024. Our equity in TTX’s earnings partially offsets these costs and totaled $ million and $ million for the first quarters of 2025 and 2024, respectively.

million of unsecured commercial paper and is backed by our credit agreement. The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants. At March 31, 2025 and December 31, 2024, we had outstanding commercial paper.

In May 2024, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $ million. Amounts under our accounts receivable securitization program are borrowed and repaid from time to time in the ordinary course for general corporate and cash management purposes. The term of our accounts receivable securitization program expires in May 2025. Amounts received under this facility are accounted for as borrowings. We had amounts outstanding under this program and our available borrowing capacity was $ million at both March 31, 2025, and December 31, 2024. Our accounts receivable securitization program was supported by $ million and $ million in receivables at March 31, 2025 and December 31, 2024, respectively, which are included in “Accounts receivable – net”.

In January 2024, we renewed and amended our $ million credit agreement. The amended agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants. We had amounts outstanding under this facility at either March 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

10.

$ $ $ Interest cost Expected return on plan assets()()()()Amortization of net losses Amortization of prior service benefit ()()Net benefit$()$()$()$()

The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Compensation and benefits” and all other components are presented in “Other income – net” on the Consolidated Statements of Income.

During the first quarter of 2024, we commenced voluntary and involuntary separation programs to reduce our nonagreement workforce. Through these programs, approximately employees were separated from service by May 2024. In accordance with FASB Accounting Standard Codification (ASC) Topic 715, “Compensation-Retirement Benefits,” we evaluated whether a curtailment of our pension and other postretirement benefit plans had occurred. While the reduction in our workforce did t result in a curtailment to our pension benefit plans, a curtailment to our other postretirement benefit plan did occur as the future years of service of plan participants were reduced in excess of %. As a result, we recognized a curtailment gain of $ million in the second quarter of 2024, the period in which the employees departed the Company, for the impacted portion of the prior service benefit previously recorded within accumulated other comprehensive loss.

11.

)$()$()$()

12.

railcars, of which were non-Company-owned tank cars containing hazardous materials. Fires associated with the derailment threatened certain tank cars. There was concern that the pressure inside of the tank cars carrying vinyl chloride was rising and that the pressure relief devices were no longer functioning properly, which would have posed the risk of a catastrophic explosion. As a consequence, on February 6, 2023, the local incident commander (the East Palestine Fire Chief)—in consultation with the incident command that included, among others, federal, state and local officials and Norfolk Southern—opted to conduct a controlled vent and burn of derailed tank cars, all of which contained vinyl chloride. This procedure involved creating holes in the tank cars to drain the vinyl chloride into adjacent trenches that had been dug into the ground where the vinyl chloride was ignited and burned. Any remaining materials released from the derailment or during the vent and burn have been or are being remediated. The February 3rd derailment, the associated fire, and the resulting vent and burn of the tank cars containing vinyl chloride on February 6th is hereinafter referred to as the “Incident.”

In response to the Incident, we have been working to clean the site safely and thoroughly, including those activities described in the Environmental Matters section below with respect to potentially impacted air, soil, and water and to monitor for any impact on public health and the environment. We are working with federal, state, and local officials to mitigate impacts from the Incident, including, among other efforts, conducting environmental monitoring and clean-up activities (as more fully described below), and operating a field office to provide support to members of East Palestine and the surrounding communities.

Financial Impact

Although we cannot predict the final outcome or estimate the reasonably possible range of loss related to the Incident with certainty, we have accrued amounts for probable and reasonably estimable liabilities for those environmental and non-environmental matters described below. Certain costs incurred thus far and related to the Incident may be recoverable under our insurance policies in effect at the date of the Incident or from third parties. For additional information about our insurance coverage, see “Insurance” below. Any additional amounts recoverable under our insurance policies or from third parties will be reflected in future periods when recovery is considered probable.

Amounts recorded related to the Incident, including outstanding liabilities at the end of each period, are summarized in the tables below.

$ $ $()$ Expense/(Recoveries) ()()(Payments)/Receipts()()() At March 31, 2025$ $ $ $()$

$ $ $ $ Expense/(Recoveries) () (Payments)/Receipts()()() ()At March 31, 2024$ $ $ $()$

From the inception of the Incident, we have recognized a total of $ billion in net expenses directly attributable to the Incident, which includes $ million of insurance recoveries from claims made under our insurance policies. At March 31, 2025 and December 31, 2024, we have also recorded a deferred tax asset of $ million and $ million, respectively, related to the Incident expecting that certain expenses will be deductible for tax purposes in future periods or offset with insurance recoveries.

Environmental Matters – In response to the Incident, we have been working with federal, state, and local officials such as the U.S. Environmental Protection Agency (EPA), the Ohio EPA, the Pennsylvania Department of Environmental Protection (DEP), and the Columbiana County Health District to conduct environmental response and remediation activities, most of which have concluded and some which are continuing, including but not limited to, excavating and disposing of potentially affected soil (based on sampling results), air monitoring, indoor air quality screenings, municipal water and private water well testing, residential, commercial, and agricultural soil sampling, surface water and groundwater sampling, re-routing a local waterway around the affected site, and capturing and shipping stormwater that enters the impacted derailment site to proper disposal facilities. The EPA issued a Unilateral Administrative Order (UAO) on February 21, 2023, containing various requirements, including the submission of numerous work plans to assess and remediate various environmental media and performance of certain removal actions at the affected site. On February 24, 2023, we submitted to the EPA our Notice of Intent to Comply with the UAO. We continue to conduct activities required by the UAO and the directives issued thereunder. On October 18, 2023, the U.S. EPA issued a second unilateral order under Section 311(c) of the Clean Water Act (CWA Order), requiring preparation of additional environmental work plans to address local waterways. We timely submitted our Notice of Intent to Comply with the CWA Order and continue to complete environmental assessment and remediation (if needed based on assessment results) as required by the EPA, as well as state agencies, in compliance with the CWA Order. Once approved by the court, the proposed Consent Decree (discussed below) will supersede the UAO and CWA Order.

We are also subject to the following legal proceedings that principally relate to the environmental impact of the Incident:

•The U.S. Department of Justice (DOJ) filed a civil complaint on behalf of the U.S. EPA (the DOJ Complaint) in the Northern District of Ohio (Eastern Division) seeking injunctive relief and civil penalties for alleged violations of the CWA and cost recovery under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Ohio Attorney General (AG) also filed a lawsuit (the Ohio Complaint) in the Northern District of Ohio (Eastern Division) seeking damages for a variety of common law and environmental statutory claims under CERCLA and various state laws. The DOJ and Ohio AG cases have been consolidated for discovery purposes. We have filed an answer, and discovery is ongoing in the Ohio AG case. On June 30, 2023, we filed third-party claims against certain railcar defendants and shippers involved in the Incident. The Court dismissed the third party claims on March 6, 2024, and on March 26, 2024, we filed a motion requesting the Court to enter partial final judgment as to the third party claims. The Court denied the motion on March 24, 2025. On May 23, 2024, the DOJ and the Company reached a settlement to resolve all of the government’s civil claims against the Company related to the Incident, and jointly lodged a proposed Consent Decree with the court. As proposed,

million through November 30, 2023 as well as additional oversight costs from December 1, 2023 until the remediation is complete. The proposed Consent Decree also requires the Company to pay a civil penalty of $ million for alleged violations of the CWA. Other provisions of the proposed Consent Decree relate to injunctive relief for safety, community support including medical and mental health programs, and environmental support, which provisions, if approved by the court, will be in effect between to . The proposed Consent Decree was subject to a mandatory public comment period, which ended on August 2, 2024, and the DOJ filed a motion on October 10, 2024 seeking entry of the Consent Decree. That motion remains pending before the Court. The Ohio AG did not join this settlement and its claims remain outstanding and are proceeding.

In accordance with FASB ASC 410-30 “Environmental Liabilities,” we have recognized probable and reasonably estimable liabilities in connection with the foregoing environmental matters. Our current estimate includes ongoing and future environmental cleanup activities and remediation efforts, governmental oversight costs (including those incurred by the EPA and the Ohio EPA), and other related costs, including those in connection with the proposed DOJ Consent Decree (including civil penalties related to alleged violations of the CWA). Our current estimates of future environmental cleanup and remediation liabilities related to the Incident may change over time due to various factors, including but not limited to, the nature and extent of required future cleanup and removal activities (including those resulting from soil, water, and sediment remediation activities that are currently being, and will continue to be, conducted at the site), and the extent and duration of governmental oversight, amongst other factors. As clean-up efforts progress and more information is available, we will review these estimates and revise as appropriate.

Legal Proceedings and Claims (Non-Environmental) – To date, numerous non-environmental legal actions have commenced with respect to the Incident, including those more specifically set forth below.

•There is a consolidated putative class action pending in the Northern District of Ohio (Eastern Division) (the Ohio Class Action) in which plaintiffs allege various claims, including negligence, gross negligence, strict liability, and nuisance, and seeking as relief compensatory and punitive damages, medical monitoring and business losses. On July 12, 2023, we filed a third-party complaint bringing in multiple parties involved in the Incident. Fact discovery ended on February 5, 2024. The Court denied in part and granted in part all motions to dismiss, as to the plaintiffs’ case and as to our third-party complaint, on March 13, 2024. On April 26, 2024, we entered into a class action settlement with the plaintiffs to resolve the Ohio Class Action for $ million. The settlement agreement resolves all class action claims within a -mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a -mile radius from the derailment. The settlement agreement does not resolve, and expressly preserves, our third-party claims in the third-party complaint. The district court granted final approval of the settlement on September 27, 2024, which was subsequently appealed. We made a partial payment of the settlement in 2024, in the amount of $ million. Payment of the remaining balance, including timing, is dependent upon resolution of any appeals to the settlement.

Another putative class action is pending in the Western District of Pennsylvania, brought by Pennsylvania school districts and students. On August 22, 2023, Pennsylvania school districts and students filed a putative class action lawsuit alleging negligence, strict liability, nuisance, and trespass, and seeking damages and health monitoring. On December 8, 2023, the school districts amended their complaint to add additional companies as defendants in the action. On February 23, 2024, we and the other defendants filed motions to dismiss and those motions are fully briefed and currently pending before the court. Combined with the Ohio Class Action, these lawsuits are collectively referred to herein as the Incident Lawsuits.

million and $ million, respectively. For the reasons set forth below, our estimated loss or range of loss with respect to the Incident Lawsuits may change from time to time, and it is reasonably possible that we will incur actual losses in excess of the amounts currently accrued and such additional amounts may be material. While we continue to work with parties with respect to potential resolution, no assurance can be given that we will be successful in doing so and we cannot predict the outcome of these matters.

•We have received securities and derivative litigation and multiple shareholder document and litigation demand letters, including a securities class action lawsuit under the Securities Exchange Act of 1934 (Exchange Act) initially filed in the Southern District of Ohio alleging multiple securities law violations but since transferred to the Northern District of Georgia, a securities class action lawsuit under the Securities Act of 1933 (Securities Act) filed in the Southern District of New York alleging misstatements in association with our debt offerings, and shareholder derivative complaints filed in Virginia state court asserting claims for breach of fiduciary duties, waste of corporate assets, and unjust enrichment in connection with safety of the Company’s operations, among other claims (collectively, the Shareholder Matters). On February 2, 2024, defendants filed a motion to dismiss the complaint in the Securities Act lawsuit, and on July 26, 2024, the magistrate judge issued a Report and Recommendation to the district judge, recommending that the defendants’ motion to dismiss be granted in part and denied in part. Defendants’ objections to the Report and Recommendation were filed on August 9, 2024, and plaintiffs’ response to defendants’ objections were filed on August 23, 2024. On February 27, 2025, the district judge granted defendants’ motion to dismiss in its entirety, and closed the case. On March 28, 2025, plaintiffs in the Securities Act lawsuit filed a notice of appeal of the decision to the U.S. Court of Appeals for the Second Circuit. In the Exchange Act lawsuit, the plaintiffs filed an amended complaint on April 25, 2024, and the defendants filed a motion to dismiss on June 24, 2024. On March 24, 2025, the district court denied defendants’ motion to dismiss, and ordered defendants to file their answer to the complaint within of the order, and the parties to file their joint preliminary report and discovery plan within of the answer. No responsive pleadings have been filed yet with respect to the other Shareholder Matters.

•We are also named as a defendant in various other Incident-related lawsuits involving other potentially affected third parties, a number of which were filed in the first quarter of 2025. We are continuing to assess the claims and their potential impact on the Company.

With respect to the Incident-related litigation and regulatory matters, we record a liability for loss contingencies through a charge to earnings when we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated and disclose such liability if we conclude it to be material. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. Because the final outcome of any of these legal proceedings cannot be predicted with certainty, developments related to the progress of such legal proceedings or other unfavorable or unexpected developments or outcomes could result in additional costs or new or additionally accrued amounts that could be material to our results of operations in a particular year or quarter. In addition, if it is reasonably possible that we will incur Incident-related losses in excess of the amounts currently recorded as a loss contingency, we disclose the potential range of loss, if reasonably estimable, or we disclose that we cannot reasonably estimate such an amount at this time. For Incident-related litigation and regulatory matters where a loss may be reasonably possible, but not probable, or probable but not reasonably estimable, no accrual is established but the matter, if potentially material, is disclosed.

Our estimates of probable losses and reasonably possible losses are based upon currently available information and involve significant judgement and a variety of assumptions, given that (1) certain legal and

recommendations, of which were issued to Norfolk Southern. The NTSB continues to work on a safety culture investigation, and a report on this part of the investigation is expected to be issued in the spring of 2025.

Concurrent with the NTSB Investigation, the FRA also investigated the Incident. Similar in scope to the NTSB Investigation, the FRA examined railroad equipment, track conditions, hazardous materials train placement and routing, and emergency response (the FRA Incident Investigation). The FRA Incident Investigation will likely result in the assessment of civil penalties, though the amount and materiality of these penalties cannot be reasonably estimated at this time. In addition to the FRA Incident Investigation, the FRA completed a 60-day supplemental safety assessment (the FRA Safety Assessment). The FRA Safety Assessment included a review of findings from a previously completed 2022 system audit and an assessment of operational elements including, but not limited to: track, signal, and rolling stock maintenance, inspection and repair practices; protection of employees; communications between transportation departments and mechanical and engineering staff; operation control center procedures and dispatcher training. The overall scope of the FRA Safety Assessment was to examine our safety culture. The FRA issued a public report in early August 2023 which included its findings and related corrective actions. We have launched initiatives to implement all of these items, and will monitor progress on these initiatives going forward.

include liabilities for other environmental exposures of $ million at both March 31, 2025 and December 31, 2024, of which $ million is classified as a current liability at the end of both periods. At March 31, 2025, the liability represents our estimates of the probable cleanup, investigation, and remediation costs based on available information at known locations and projects compared with locations and projects at December 31, 2024. At March 31, 2025, sites accounted for $ million of the liability, and no individual site was considered to be material. We anticipate that most of this liability will be paid out over ; however, some costs will be paid out over a longer period.

At locations, one or more of our subsidiaries in conjunction with a number of other parties have been identified as potentially responsible parties under CERCLA or comparable state statutes that impose joint and several liability for cleanup costs. We calculate our estimated liability for these sites based on facts and legal defenses applicable to each site and not solely on the basis of the potential for joint liability.

As set forth above, with respect to known environmental sites (whether identified by us or by the U.S. EPA or comparable state authorities), estimates of our ultimate potential financial exposure for a given site or in the aggregate for all such sites can change over time because of the widely varying costs of currently available cleanup techniques, unpredictable contaminant recovery and reduction rates associated with available cleanup technologies, the likely development of new cleanup technologies, the difficulty of determining in advance the nature and full

% of our railroad employees are covered by collective bargaining agreements with various labor unions. Pursuant to the Railway Labor Act (RLA), these agreements remain in effect until new agreements are reached, or until the bargaining procedures mandated by the RLA are completed. Moratorium provisions in the labor agreements govern when the railroads and unions may propose changes to the agreements. We largely bargain nationally in concert with other major railroads, represented by the National Carriers’ Conference Committee (NCCC).

Under moratorium provisions from the last round of negotiations, neither party was permitted to serve notice to compel a new round of mandatory collective bargaining until November 1, 2024. In the months prior to the opening of the current national bargaining round, we engaged in voluntary local discussions with our labor unions and, as a result, reached local tentative agreements with ten of our unions. A majority of those tentative agreements were subsequently ratified by union membership and became effective January 1, 2025, foreclosing the parties from serving new notices to compel mandatory bargaining until November 1, 2029.

For those unions with whom we have not yet reached a ratified agreement, the NCCC, on behalf of Norfolk Southern, sent bargaining notices on November 1, 2024, to commence mandatory direct negotiations as prescribed under the RLA. Since then, the NCCC has reached several additional agreements, subject to ratification, on behalf of Norfolk Southern and other members of the bargaining coalition.

For unions where bargaining currently remains open, even if the parties are unable to reach voluntary ratified agreement during this first phase of RLA bargaining, self-help (e.g., a strike or other work stoppage) related to this collective-bargaining process remains prohibited by law until a lengthy series of additional procedures mandated by the RLA, including federal mediation, are exhausted.

Insurance

We purchase insurance covering legal liabilities for bodily injury and property damage to third parties. Our current liability insurance provides limits for approximately % of covered losses above $ million and below $ million per occurrence and/or policy year. Above $ million per occurrence and/or policy year, we maintain approximately $ million additional liability insurance limits for certain types of pollution releases. We also purchase insurance for property damage to property owned by us or in our care, custody, or control. Our current property insurance provides limits for approximately % of covered losses above $ million and below $ million per occurrence and/or policy year. With respect to the Incident, our insurance in effect at such time

million and below $ million (or up to $ billion for specified types of pollution releases) per occurrence and/or policy year, and with respect to property owned by us or in our care, custody, or control, our insurance covered approximately % of potential losses above $ million and below $ million per occurrence and/or policy year.

Insurance coverage with respect to the Incident is subject to certain conditions, including but not limited to our insurers’ reservation of rights to further investigate and contest coverage, the express restrictions and sub-limits of coverage, and various policy exclusions, including those for some governmental fines or penalties. Some (re)insurers have questioned certain payments we have made, for example, as part of our effort to respond to, mitigate, and compensate for the impact to the community and affected residents and businesses. We are pursuing coverage with respect to the Incident, and we have recognized $ million in insurance recoveries (including $ million and $ million during the first quarters of 2025 and 2024, respectively), principally from excess liability (re)insurers. At March 31, 2025 and December 31, 2024, $ million and $ million was outstanding and is included in “Accounts receivable – net” on the Consolidated Balance Sheets.

13.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes.

OVERVIEW

Since 1827, Norfolk Southern Corporation and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Our dedicated team members deliver a wide variety of commodities annually for our customers, from agriculture products to consumer goods, and help them reduce carbon emissions by shipping via rail. We have the most extensive intermodal network in the eastern U.S. Our network 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.

Our resiliency was evident in the quarter as we responded to numerous weather-related disruptions by quickly restoring the network while focusing on safely providing high-quality service to our customers and delivering on productivity initiatives. As a result, we drove improved financial performance. Additionally, insurance recoveries related to the Eastern Ohio Incident (as defined further and described in Note 12 in the Notes to Consolidated Financial Statements) further benefited our financial results. In the first quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 61.7%, and an adjusted operating ratio of 67.9% (see our non-GAAP reconciliations beginning on page 27). We remain committed to being a safe, productive, resilient, and efficient railroad with industry-competitive margins.

SUMMARIZED RESULTS OF OPERATIONS



	First Quarter
	2025		2024		% change
	($ in millions, except per share amounts)

Railway operating revenues	$	2,993	$	3,004	—%
Railway operating expenses	$	1,847	$	2,791	(34%)
Income from railway operations	$	1,146	$	213	438%


Net income	$	750	$	53	1,315%
Diluted earnings per share	$	3.31	$	0.23	1,339%
Railway operating ratio (percent)	61.7		92.9		(34%)


	Non-GAAP Reconciliation for First Quarter 2024
	Reported (GAAP)		Restructuring and Other Charges		Eastern Ohio Incident		Shareholder Advisory Costs		Deferred Income Tax Adjustment		Adjusted (non-GAAP)
	($ in millions, except per share amounts)

Railway operating	$	2,791	$	(99)	$	(592)	$	—	$	—	$	2,100
expenses

Income from railway	$	213	$	99	$	592	$	—	$	—	$	904
operations

Net income	$	53	$	75	$	448	$	16	$	(27)	$	565

Diluted earnings	$	0.23	$	0.33	$	1.98	$	0.07	$	(0.12)	$	2.49
per share

Railway operating	92.9		(3.3)		(19.7)		—		—		69.9
ratio (percent)

In the table below, references to the results for the first quarters of 2025 and 2024 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the tables above.


	First Quarter
	Adjusted 2025 (non-GAAP)		Adjusted 2024 (non-GAAP)		Adjusted 2025 vs. Adjusted 2024 (non-GAAP)
	($ in millions, except per share amounts)				% change

Railway operating expenses	$	2,032	$	2,100	(3%)
Income from railway operations	$	961	$	904	6%
Net income	$	609	$	565	8%
Diluted earnings per share	$	2.69	$	2.49	8%
Railway operating ratio (percent)	67.9		69.9		(3%)

On an adjusted basis, income from railway operations increased due to lower adjusted railway operating expenses. The decline in adjusted railway operating expenses reflects lower fuel expenses and a decline in purchased services and equipment rents expense.

DETAILED RESULTS OF OPERATIONS

Railway Operating Revenues

The following tables present a comparison of revenues ($ in millions), units (in thousands), and average revenue per unit ($ per unit) by commodity group.


	First Quarter
Revenues	2025		2024		% change
Merchandise:
Agriculture, forest and consumer products	$	636	$	629	1%
Chemicals	535		527		2%
Metals and construction	414		430		(4%)
Automotive	278		277		—%
Merchandise	1,863		1,863		—%
Intermodal	760		745		2%
Coal	370		396		(7%)
Total	$	2,993	$	3,004	—%


Units
Merchandise:
Agriculture, forest and consumer products	183.6	184.1	—%
Chemicals	132.0	130.5	1%
Metals and construction	148.3	160.6	(8%)
Automotive	88.3	88.3	—%
Merchandise	552.2	563.5	(2%)
Intermodal	1,022.9	988.8	3%
Coal	164.7	167.1	(1%)
Total	1,739.8	1,719.4	1%


Revenue per Unit
Merchandise:
Agriculture, forest and consumer products	$	3,466	$	3,415	1%
Chemicals	4,051		4,039		—%
Metals and construction	2,791		2,679		4%
Automotive	3,152		3,133		1%
Merchandise	3,374		3,306		2%
Intermodal	743		754		(1%)
Coal	2,247		2,369		(5%)
Total	1,720		1,747		(2%)

Railway operating revenues decreased $11 million compared with the same period last year. The table below reflects the components of the revenue change by major commodity group ($ in millions).


	First Quarter
	Merchandise		Intermodal		Coal
	Increase (Decrease)

Volume	$	(38)	$	26	$	(6)
Fuel surcharge revenue	(34)		(16)		(8)
Rate, mix and other	72		5		(12)

Total	$	—	$	15	$	(26)

Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges. Revenues associated with these surcharges totaled $202 million and $260 million in the first quarters of 2025 and 2024, respectively. The decrease in fuel surcharge revenues is driven by lower fuel commodity prices.

For the remainder of 2025, while we acknowledge the uncertainty in the economy, we currently expect revenue to increase compared to 2024, driven by higher volume.

Merchandise

Merchandise revenues were flat as declines in volume were offset by higher average revenue per unit, driven by increased pricing and positive mix, offset partly by lower fuel surcharge revenues.

Agriculture, forest and consumer products volume decreased due to lower volume in wheat and fertilizers partially offset by increased volume in corn and soybeans. The decrease in wheat and fertilizers is largely in anticipation of potential changes to tariffs. Corn shipments in the current year were higher due to a poor crop in the southeast in the prior year. Soybean volume has risen due to increased exports.

Chemicals volume increased due to higher volume in sand, partially offset by a decrease in inorganic chemicals. Sand volume rose due to strong demand to support natural gas drilling. Volume declines in inorganic chemicals were due to lower demand for rock salt as a result of higher existing inventory levels and local emergency demand being supported by truck.

Metals and construction volume decreased due to lower aggregates and coil steel shipments. Aggregates volume decreased due to inclement weather across the network and coil steel volume decreased due to equipment availability.

Automotive volume was flat driven by shippers increasing volume in anticipation of potential changes to tariffs, partially offset by reduced parts demand and production downtime for certain manufacturers due to quality holds and weather events.

Intermodal

Intermodal revenues increased due to higher volume, partially offset by lower average revenue per unit driven primarily by lower fuel surcharge revenue.

Intermodal units (in thousands) by market were as follows:


	First Quarter
	2025	2024	% change

Domestic	608.8	590.4	3%
International	414.1	398.4	4%

Total	1,022.9	988.8	3%

Domestic volume increased due to higher demand and improved service. International volume rose primarily driven by shippers increasing volume in anticipation of potential changes to tariffs.

Coal

Coal revenues decreased due to lower average revenue per unit driven by reduced pricing, unfavorable mix, and lower fuel surcharge revenue, in addition to volume declines.

Coal tonnage (in thousands) by market was as follows:


	First Quarter
	2025	2024	% change

Utility	7,312	7,019	4%
Export	8,260	8,749	(6%)
Domestic metallurgical	2,085	2,193	(5%)
Industrial	860	786	9%

Total	18,517	18,747	(1%)

Export tonnage was negatively impacted by unfavorable coal pricing. In addition, export and domestic metallurgical tonnage decreased due to weather-related impacts on coal production. Utility tonnage increased due to higher electricity demand and higher natural gas prices, partially offset by weather impacts. Industrial coal tonnage increased due to higher demand.

Railway Operating Expenses

Railway operating expenses summarized by major classifications follow ($ in millions):


	First Quarter
	2025		2024		% change

Compensation and benefits	$	739	$	736	—%
Purchased services	401		420		(5%)
Equipment rents	97		108		(10%)
Fuel	244		284		(14%)
Depreciation	346		337		3%
Materials	100		98		2%
Claims	66		48		38%
Other	39		69		(43%)
Restructuring and other charges	—		99		(100%)
Eastern Ohio incident	(185)		592		(131%)

Total	$	1,847	$	2,791	(34%)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		NORFOLK SOUTHERN CORPORATION Registrant



Date:	April 23, 2025	/s/ Jason A. Zampi
		Jason A. Zampi Executive Vice President and Chief Financial Officer (Principal Financial Officer) (Signature)


Date:	April 23, 2025	/s/ Claiborne L. Moore
		Claiborne L. Moore Vice President and Controller (Principal Accounting Officer) (Signature)

NORFOLK SOUTHERN CORP - Quarter Report: 2025 March (Form 10-Q)

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