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Item 2. Management’s Discussion and Analysis

2025-04-23 compared with 2024-10-22 · 129 added, 192 removed, 130 unchanged (71% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Norfolk Southern Corporation and Subsidiaries

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

We are one of the nation’s premier transportation companies, moving goods and materials that help drive the U.S.

We connect customers to markets and communities to economic opportunity with safe, reliable, and cost-effective shipping solutions.

Our Norfolk Southern Railway Company subsidiary operates in 22 states and the District of Columbia.

We are a major transporter of industrial products, including agriculture, forest and consumer products, chemicals, and metals and construction materials.

In addition, in the East we serve every major container port and operate the most extensive intermodal network.

We are also a principal carrier of coal, automobiles, and automotive parts.

Our focus on providing high-quality service to our customers and delivering on productivity initiatives throughout the organization resulted in improved operating margins and financial results.

We are driving improvements in our operational performance while handling additional volumes.

We also completed the sale of two railway lines that resulted in significant gains and cash proceeds and executed on further strategic rationalization efforts, primarily aimed at technology projects.

Additionally, insurance recoveries related to the Eastern Ohio Incident (as defined further and described in Note 14 in the Notes to Consolidated Financial Statements) outpaced incremental expenses further impacting our financial results.

In the third quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 47.7%, and an adjusted operating ratio of 63.4% (see our non-GAAP reconciliations beginning on page 27).

Our margin improvement demonstrates our commitment to being a more productive, resilient, and efficient railroad with industry-competitive margins.

Since 1827, Norfolk Southern Corporation and its predecessor companies have safely moved the goods and materials that drive the U.S.

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

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

First Quarter

2025 2024 % change

($ in millions, except per share amounts)

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Railway operating ratio (percent) 61.7 92.9 (34%)

Income from railway operations increased in both periods, primarily as a result of lower railway operating expenses, including $380 million of gains on railway line sales and lower net costs related to the Eastern Ohio Incident, with insurance recoveries exceeding incremental Incident-related expenses in the third quarter.

Our financial results in both periods also reflect higher railway operating revenues, driven by increased volumes that were partially offset by an adverse mix of traffic, lower fuel surcharge revenues, and decreased pricing.

Our net income and diluted earnings per share were up significantly in the third quarter and first nine months.

The following tables adjust our GAAP financial results for the third quarter and first nine months of 2024 and 2023 to exclude gains on railway line sales, restructuring and other charges (including the curtailment gain on our other

postretirement benefit plan which is included in “Other income – net” in the first nine months), the effects of the Incident, shareholder advisory costs, and a deferred income tax adjustment.

Income from railway operations increased significantly, the result of lower railway operating expenses, primarily related to the Eastern Ohio Incident as insurance recoveries exceeded incremental Incident-related expenses in the current year.

Our financial results also benefited from the absence of restructuring and other charges, lower fuel expense, and reduced costs for purchased services and equipment rents.

Operating revenue declined slightly due to decreased average revenue per unit, primarily driven by lower fuel surcharge revenue and an adverse mix of traffic.

The following tables adjust our GAAP financial results for the first quarters of 2025 and 2024 to exclude the effects of the Incident.

First quarter 2024 also excludes restructuring and other charges, shareholder advisory costs, and a deferred income tax adjustment.

The income tax effects of these 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 items.

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.

accordance with GAAP.

In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.

Non-GAAP Reconciliation for Third Quarter 2024

Reported 2024 (GAAP) Gains on Railway Line Sales Restructuring and Other Charges Eastern Ohio Incident Adjusted 2024

($ in millions, except per share amounts)

Railway operating expenses $ 1,455 $ 380 $ (60) $ 159 $ 1,934

Income from railway operations $ 1,596 $ (380) $ 60 $ (159) $ 1,117

Net income $ 1,099 $ (287) $ 45 $ (120) $ 737

Diluted earnings per share $ 4.85 $ (1.27) $ 0.20 $ (0.53) $ 3.25

Railway operating ratio (percent) 47.7 12.5 (2.0) 5.2 63.4

Non-GAAP Reconciliation for Third Quarter 2023

Non-GAAP Reconciliation for First Quarter 2025

Reported (GAAP) Eastern Ohio Incident Adjusted

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Railway operating ratio (percent) 61.7 6.2 67.9

In the table below, references to the results for the third quarters of 2024 and 2023 and related comparisons use the adjusted, non-GAAP results from the reconciliations in the tables above.

Third Quarter

Adjusted 2024

(non-GAAP) Adjusted 2023

(non-GAAP) Adjusted 2024

Adjusted 2023

($ in millions, except per share amounts) % change

Railway operating expenses $ 1,934 $ 2,052 (6%)

Income from railway operations $ 1,117 $ 919 22%

Net income $ 737 $ 601 23%

Diluted earnings per share $ 3.25 $ 2.65 23%

Railway operating ratio (percent) 63.4 69.1 (8%)

Non-GAAP Reconciliation for First Nine Months 2024

Reported 2024 (GAAP) Gains on Railway Line Sales Restructuring and Other Charges Eastern Ohio Incident Shareholder Advisory Costs Deferred Income Tax Adjustment Adjusted 2024

($ in millions, except per share amounts)

Railway operating expenses $ 6,159 $ 380 $ (156) $ (368) $ — $ — $ 6,015

Income from railway operations $ 2,940 $ (380) $ 156 $ 368 $ — $ — $ 3,084

Net income $ 1,889 $ (287) $ 104 $ 279 $ 38 $ (27) $ 1,996

Diluted earnings per share $ 8.34 $ (1.27) $ 0.46 $ 1.23 $ 0.17 $ (0.12) $ 8.81

Railway operating ratio (percent) 67.7 4.2 (1.7) (4.1) — — 66.1

Non-GAAP Reconciliation for First Nine Months 2023

Reported 2023 (GAAP) Eastern Ohio Incident Adjusted 2023

Non-GAAP Reconciliation for First Quarter 2024

Reported (GAAP) Restructuring and Other Charges Eastern Ohio Incident Shareholder Advisory Costs Deferred Income Tax Adjustment Adjusted

($ in millions, except per share amounts)

Railway operating expenses $ 7,040 $ (966) $ 6,074

Income from railway operations $ 2,043 $ 966 $ 3,009

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

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

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

Diluted earnings per share $ 5.70 $ 3.22 $ 8.92

Railway operating ratio (percent) 77.5 (10.6) 66.9

In the table below, references to the results for the first nine months of 2024 and 2023 and related comparisons use the adjusted, non-GAAP results from the reconciliation in the tables above.

First Nine Months

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

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

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Railway operating ratio (percent) 67.9 69.9 (3%)

On an adjusted basis, income from railway operations increased in both the third quarter and first nine months.

The increase in both periods was primarily driven by lower adjusted railway operating expenses.

The decline in adjusted railway operating expenses in both periods reflects lower fuel prices and higher gains on operating property sales, partly offset by increased depreciation on our higher asset base.

Third quarter adjusted railway operating expenses also decreased due to lower employee activity levels and a decline in purchased services spend.

Additionally,

adjusted income from railway operations increased in both periods as a result of higher railway operating revenues, driven by an increase in volume but partially offset by an adverse mix of traffic, lower fuel surcharge revenues, and decreased pricing.

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

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

Third Quarter First Nine Months

Revenues 2024 2023 % change 2024 2023 % change

First Quarter

Revenues 2025 2024 % change

Agriculture, forest and consumer products $ 636 $ 629 1%

23 unchanged sentences

Total 1,720 1,747 (2%)

Railway operating revenues increased $80 million in the third quarter and $16 million for the first nine months compared with the same periods last year.

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).

Third Quarter First Nine Months

Merchandise Intermodal Coal Merchandise Intermodal Coal

First Quarter

Merchandise Intermodal Coal

Increase (Decrease)

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Approximately 95% of our revenue base is covered by contracts that include negotiated fuel surcharges.

Revenues associated with these surcharges totaled $238 million and $247 million in the third quarters of 2024 and 2023, respectively, and $757 million and $909 million for the first nine months of 2024 and 2023, respectively.

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 2024, we expect that revenue will decline compared to 2023, as the impacts of lower fuel surcharge revenue, decreased pricing, and adverse traffic mix will offset increased volume.

Merchandise revenues increased in both periods due to higher average revenue per unit, driven by increased pricing partially offset by lower fuel surcharge revenue, and increased volume.

Agriculture, forest and consumer products volume increased in the third quarter and was flat for the first nine months.

Both periods had higher volume in corn, soybeans, and feed.

Increased corn and feed volumes were the result of customers shifting from truck to rail service to meet market demands.

Soybean volume increased due to spot opportunities.

The first nine months were offset by a decline in fertilizer volume due to lower potash shipments due to customer operational issues.

Chemicals volume increased in both the third quarter and first nine months.

Both periods saw increased volume in organic chemicals, plastics, and solid waste due to stronger demand.

Petroleum products and crude oil volume decreased in both periods.

Volume declines in petroleum were related to the conclusion of a spot opportunity handled last year to support a customer during a refinery outage, while declines in crude oil were due to a market share shift.

Metals and construction volume decreased in the third quarter but increased for the first nine months.

The third quarter decreased due to lower coil steel and aggregates shipments.

Coil steel volume decreased due to lower demand and aggregates volume decreased due to inclement weather impacting paving operations and construction sites in the southeast market.

The first nine months increased due to higher demand in aggregates, iron and steel, kaolin, and miscellaneous construction.

Automotive volumes decreased in the third quarter but increased in the first nine months.

The third quarter decreased due to reduced production, quality holds at the manufacturers and extended plant shutdowns.

The first nine months increased due to improvements in equipment availability and their cycle time paired with higher demand, partially offset by reduced production and quality holds at the manufacturers and extended plant shutdowns.

Intermodal revenues increased in the third quarter but decreased for the first nine months.

The third quarter increased due to higher volumes partially offset by lower average revenue per unit, driven by decreased pricing, adverse mix, and lower fuel surcharge revenue.

The decline in the first nine months was driven by lower average revenue per unit, driven by decreased pricing, lower fuel surcharge revenue, adverse mix, and declines in storage service charges, partially offset by higher volume.

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 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 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:

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

First Quarter

2025 2024 % change

Domestic 608.8 590.4 3%

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Total 1,022.9 988.8 3%

Domestic volume increased in both periods due to growth in existing customers and improved service, partially offset by reduced demand for premium shipments.

International volume rose in both periods, driven by increased demand, growth in existing customers, and increased movements of empty containers.

Coal revenues decreased in both periods.

Both periods decreased due to lower average revenue per unit driven by pricing, and for the first nine months, lower fuel surcharge revenue.

The decrease in average revenue per unit in both periods was partially offset by increased volume.

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 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:

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

First Quarter

2025 2024 % change

Utility 7,312 7,019 4%

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Total 18,517 18,747 (1%)

Utility tonnage increased in both periods primarily due to customer outages in the prior year.

Export tonnage increased in both periods due to growth with our customers and increased production in the third quarter.

These items, which more than offset the temporary closure of the Baltimore port which limited export opportunities through that location in the second quarter, impacted the first nine months volumes.

Industrial coal tonnage increased in both periods due to higher demand.

Domestic metallurgical tonnage decreased in both periods as a result of reduced customer demand.

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):

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

First Quarter

2025 2024 % change

Compensation and benefits $ 739 $ 736 —%

Purchased services and rents 497 517 (4%) 1,541 1,519 1%

Fuel 216 289 (25%) 757 867 (13%)

Depreciation 339 326 4% 1,011 968 4%

Materials and other (188) 205 (192%) 200 622 (68%)

Restructuring and other charges 60 — 156 —

Eastern Ohio incident (159) 163 (198%) 368 966 (62%)

Total $ 1,455 $ 2,215 (34%) $ 6,159 $ 7,040 (13%)

Compensation and benefits expense decreased in the third quarter but increased in the first nine months as follows:

• employee activity levels (down $35 million for the quarter and $10 million for the first nine months),

• overtime (down $12 million for the quarter and $26 million for the first nine months),

• incentive compensation (up $11 million for the quarter and $31 million for the first nine months),

• pay rates (up $25 million for the quarter and $66 million for the first nine months), and

• other (down $14 million for the quarter and $33 million for the first nine months).

Average rail headcount for the quarter was down by 560 compared with the third quarter of 2023 due to lower train and engine and management headcount, partially offset by hiring of additional non-train and engine craft employees.

Purchased services and rents decreased in the third quarter but increased in the first nine months as follows ($ in millions):

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

Purchased services 401 420 (5%)

Equipment rents 97 108 (10%)

Total $ 497 $ 517 (4%) $ 1,541 $ 1,519 1%

Purchased services decreased in the third quarter but increased in the first nine months.

The third quarter decreased due to lower operational and technology-related costs as well as lower lease costs, which were partially offset by higher volume-related expenses.

The first nine months increased due to higher volume-related expenses, partially offset by lower lease costs and lower operational and technology-related expenses.

Equipment rents increased in both periods due to higher intermodal equipment expense as a result of higher volumes.

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations decreased in both periods.

Locomotive fuel consumption was down 1% in the third quarter and flat for the first nine months.

Locomotive fuel price decreased in both periods (down 25% in the third quarter and 12% for the first nine months).

Depreciation expense increased in both periods due to a higher asset base.

Materials and other expenses decreased in both periods as follows ($ in millions):

Third Quarter First Nine Months

2024 2023 % change 2024 2023 % change

Fuel 244 284 (14%)

Depreciation 346 337 3%

Materials 100 98 2%

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Other 39 69 (43%)

Restructuring and other charges — 99 (100%)

Eastern Ohio incident (185) 592 (131%)

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

Materials expense increased in both periods due to higher freight car repairs expense.

Claims expense increased in the third quarter but decreased for the first nine months.

The increase in the third quarter was a result of higher costs associated with derailments.

Both periods include decreased costs associated with personal injury claims partially offset by a prior year claims-related recovery.

Other expense decreased in both periods due to increased gains from operating property sales, lower travel and relocation-related expenses, and lower non-income-based taxes.

Gains from operating property sales includes $380 million of gains on the sale of railway lines in the states of Virginia and North Carolina that occurred in the third quarter.

These transactions are described further in Note 3 in the Notes to Consolidated Financial Statements.

Total gains from operating property sales, included in Other, were $400 million and $8 million for the third quarter in 2024 and 2023, respectively, and $425 million and $30 million in the first nine months of 2024 and 2023, respectively.

Compensation and benefits expense increased as follows:

• incentive compensation (up $38 million),

• pay rates (up $19 million),

• employee activity levels (down $40 million), net of weather-related costs,

• health and welfare benefits (down $12 million), and

• other (down $2 million).

Average rail headcount for the quarter was down by approximately 1,350 compared with the first quarter of 2024.

Purchased services includes the costs of services purchased from external vendors and contractors, including the net costs of operating joint facilities with other railroads.

Expense decreased due to reduced operational and transportation expenses driven by network performance improvements and productivity initiatives.

These improvements were also partially offset by weather-related costs.

Equipment rents , which includes our cost of using equipment (mostly freight cars) owned by other railroads or private owners less the rent paid to us for the use of our equipment, decreased due to lower short-term locomotive resource costs.

Fuel expense, which includes the cost of locomotive fuel as well as other fuel used in railway operations, decreased due to lower locomotive fuel prices (down 11%) and decreased consumption (down 4%).

Depreciation expense increased due to a higher asset base.

Materials expense increased due to higher freight car repairs expense, primarily due to weather-related events in the quarter.

Claims expense includes costs related to personal injury, property damage, and environmental matters.

Claims expense increased as a result of higher costs related to environmental clean-up, partially due to weather events in the quarter, and other environmental matters unrelated to the Incident.

Expense also increased due to personal injury case development, and increased insurance costs.

Other expense decreased due to increased gains from operating property sales, lower travel-related expenses, and lower non-income-based taxes.

We had $23 million in gains from operating property sales in 2025, as compared to no gains in the prior year.

Restructuring and other charges

Restructuring and other charges were $60 million in the third quarter of 2024 and relate to expenses associated with the rationalization of certain software development projects that had not been placed into service as well as expense associated with reflecting certain equipment at its net realizable value in advance of the planned disposition of that asset class.

For the first nine months of 2024, these expenses totaled $156 million, as they also include $96 million of costs associated with our voluntary and involuntary separation programs that reduced our management workforce and costs incurred in connection with the appointment of our chief operating officer.

During the first quarter of 2024, we recorded $99 million in expense associated with our voluntary and involuntary separation programs that reduced our management workforce.

Additionally, we incurred costs associated with the appointment of our new chief operating officer.

Eastern Ohio incident

During the third quarter of 2024, our insurance recoveries exceeded additional Incident-related expenses by $159 million as compared to $163 million in expenses, net of insurance proceeds, for the same period last year.

For the first nine months of 2024 and 2023, we incurred expenses of $368 million and $966 million, respectively, for costs associated with the Incident, net of insurance recoveries.

Our cash expenditures attributable to the Incident, net of insurance proceeds received, were $32 million and $511 million for the first nine months of 2024 and 2023, respectively, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows.

During the first quarter of 2025, our insurance recoveries exceeded additional Incident-related expenses by $185 million whereas we incurred $592 million in expenses, net of insurance proceeds, for the same period last year.

Insurance recoveries collected exceeded incremental cash expenditures by $58 million for the first three months of 2025, while cash expenditures attributable to the Incident, net of insurance proceeds, were $117 million for the first three months of 2024, which are presented in “Net cash provided by operating activities” on the Consolidated Statements of Cash Flows.

For further details regarding the Incident, see Note 12 in the Notes to Consolidated Financial Statements.

Other income – net

Other income – net decreased $6 million in the third quarter and $84 million for the first nine months.

The third quarter decrease is due to lower interest income.

The decline in the first nine months reflects costs associated with shareholder matters, lower returns on COLI, and higher pension and postretirement benefits expense, partially offset by a $20 million curtailment gain on our other postretirement benefit plan as a result of our voluntary and involuntary separation programs.

The effective tax rate was 23.0% and 21.3% for the third quarter and first nine months of 2024, respectively, compared with 22.1% for those same periods last year.

The rate for the first nine months of 2024 reflects a $13 million deferred income tax benefit due to a change in a state corporate income tax rate and a $27 million deferred income tax benefit from subsidiary restructuring.

These benefits were partially offset by the absence of certain business tax credits recognized in the prior year.

Other income – net increased $13 million primarily due to the absence of costs associated with shareholder matters incurred in the first quarter of 2024.

This increase was partially offset by lower interest income.

The effective tax rate for the first three months of 2025 was 23.3% compared with (76.7)% for the same period last year.

The negative effective rate for the first quarter of 2024 was driven by low pre-tax income coupled with a $27 million deferred income tax benefit recognized in the quarter, which was the result of a subsidiary restructuring that reduced our estimated deferred state income tax rate.

FINANCIAL CONDITION AND LIQUIDITY

Cash provided by operating activities, our principal source of liquidity, was $3.1 billion for the first nine months of 2024, compared with $2.5 billion for the same period of 2023.

We had negative working capital of $987 million at September 30, 2024 and working capital of $639 million at December 31, 2023.

Cash and cash equivalents totaled $975 million at September 30, 2024.

Cash used in investing activities was $2.8 billion for the first nine months of 2024, compared with $1.4 billion for the same period last year.

The increase was driven by the acquisition of the assets of the CSR as well as increased property additions, partially offset by increased proceeds from property sales.

Please see Note 3 in the Notes to Consolidated Financial Statements for additional details on certain railway line sales and Note 10 for a detailed discussion of the acquisition of the CSR assets.

Cash used in financing activities was $903 million for the first nine months of 2024, compared with $62 million for the same period last year, reflecting lower proceeds from borrowing partially offset by lower repurchases of Common Stock.

We did not repurchase any Common Stock during the first nine months of 2024, while we repurchased $503 million during the same period last year.

Cash provided by operating activities, our principal source of liquidity, was $950 million for the first three months of 2025, compared with $839 million for the same period of 2024.

The increase reflects improved operating results.

We had negative working capital of $749 million and $357 million at March 31, 2025 and December 31, 2024, respectively, with the increase driven in part by COLI loan repayments.

Cash and cash equivalents totaled $1.0 billion at March 31, 2025.

Cash used in investing activities was $1.0 billion for the first three months of 2025, compared with $1.8 billion for the same period last year.

The decrease was driven by the acquisition of the assets of the Cincinnati Southern Railway (CSR) in the prior year, partially offset by an increase in COLI loan repayments in the current year.

Cash used in financing activities was $564 million for the first three months of 2025, compared with cash provided by financing activities of $89 million for the same period last year.

The decrease reflects lower proceeds from borrowing and increased repurchases of Common Stock.

We spent $248 million on repurchases of Common Stock during the first three months of 2025, while we did not repurchase any during the same period last year.

As of March 31, 2025, $6.6 billion remains authorized by our Board of Directors for repurchase.

The timing and volume of future share repurchases will be guided by our assessment of market conditions and other pertinent factors.

Repurchases may be executed in the open market, through derivatives, accelerated repurchase and other negotiated transactions and through plans designed to comply with Rule 10b5-1(c) and Rule 10b-18 under the Securities and Exchange Act of 1934.

Exchange Act of 1934.

Any near-term purchases under the program are expected to be made with internally-generated cash, cash on hand, or proceeds from borrowings.

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The unsecured short-term commercial paper program provides for borrowing at prevailing rates and includes covenants.

At September 30, 2024, we had no outstanding commercial paper.

At both March 31, 2025 and December 31, 2024, we had no outstanding commercial paper.

In May 2024, we renewed our accounts receivable securitization program with a maximum borrowing capacity of $400 million.

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The term of our accounts receivable securitization program expires in May 2025.

We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both September 30, 2024 and December 31, 2023.

We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both March 31, 2025 and December 31, 2024.

In January 2024, we renewed and amended our $800 million credit agreement.

The amended agreement expires in January 2029, and provides for borrowings at prevailing rates and includes covenants.

We had no amounts

outstanding under this facility at either September 30, 2024 or December 31, 2023, and we are in compliance with all of its covenants.

In January 2024, we also entered into a term loan credit agreement that established a 364-day, $1.0 billion, unsecured delayed draw term loan facility under which we can borrow for general corporate purposes.

The term loan credit agreement provides for borrowing at prevailing rates and includes covenants that align with our $800 million credit agreement.

We had no amounts outstanding under this facility at September 30, 2024.

During July 2024, we extended the availability period of the term loan agreement.

The term loan expired undrawn on October 22, 2024.

We had no amounts outstanding under this facility at either March 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

In addition, we have investments in general purpose COLI policies and have the ability to borrow against these policies.

We had no amounts outstanding at both September 30, 2024 and December 31, 2023.

Our remaining borrowing capacity was $625 million and $640 million at September 30, 2024 and December 31, 2023, respectively.

Our debt-to-total capitalization ratio was 55.5% at September 30, 2024 and 57.3% at December 31, 2023.

We had no amounts borrowed against these policies at March 31, 2025 and $605 million borrowed at December 31, 2024.

Our remaining borrowing capacity was $610 million and $40 million at March 31, 2025 and December 31, 2024, respectively.

Our debt-to-total capitalization ratio was 54.3% at March 31, 2025 and 54.6% at December 31, 2024.

We expect cash on hand combined with cash provided by operating activities will be sufficient to meet our ongoing obligations.

In addition, we believe our currently-available borrowing capacity, access to additional financing, and ability to decrease shareholder distributions, provide additional flexibility to meet our ongoing obligations.

There have been no material changes to the information on future contractual obligations, including those that may have material cash requirements, contained in our Form 10-K for the year ended December 31, 2023, except that on April 9, 2024, we announced that we reached an agreement in principle to settle the Ohio Class Action for $600 million.

On September 27, 2024, the court granted final approval of the settlement.

We made a partial payment of the settlement on October 11, 2024 in the amount of $310 million and the remaining balance could be paid as early as November 8, 2024;

however, that payment, including timing, is dependent upon resolution of any appeals to the settlement.

CRITICAL ACCOUNTING ESTIMATES

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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.

Under current moratorium provisions, neither party can serve notice to compel a new round of mandatory collective bargaining until November 1, 2024.

That said, over the past several months, we engaged in voluntary local discussions with our labor unions and, as a result, reached local tentative agreements with a majority of our unions prior to the opening of the national bargaining round.

These new tentative agreements are subject to ratification by

union membership.

If ratified, they will take effect January 1, 2025, and will foreclose the parties from serving new notices to compel mandatory bargaining until November 1, 2029.

We will continue local discussions with the unions with whom we have not yet reached agreement.

If no local agreement has been reached with one or more of these unions when the moratoriums in their contracts expire on November 1, 2024, the parties will exchange bargaining notices and commence mandatory direct negotiations as prescribed under the RLA.

Even if the parties are unable to reach voluntary 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.

We largely bargain nationally in concert with other major railroads, represented by the 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 thirteen 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 had 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 a 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.

In preparing financial statements, GAAP requires the use of historical cost that disregards the effects of inflation on the replacement cost of property.

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FORWARD-LOOKING STATEMENTS

Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended.

Certain statements in this report, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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.

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While we believe these expectations, assumptions, estimates, beliefs, and projections are 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 our control.

These and other important factors, including those discussed under “Risk Factors” in our latest Form 10-K as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements.

The following important factors, including those discussed under “Risk Factors” in our latest Form 10-K as well as our subsequent filings with the Securities and Exchange Commission, may cause actual results, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements:

• changes in domestic or international economic, political or business conditions, including those impacting the transportation industry;

• our ability to successfully implement our operational, productivity, and strategic initiatives;

• 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;

• the outcome of claims, litigation, governmental proceedings, and investigations involving the Company, including but not limited to the Incident Proceedings;

• the nature and extent of the Company's environmental remediation obligations with respect to the Incident;

• new or additional governmental regulation and/or operational changes resulting from or related to the Incident or the Incident Proceedings;

• a significant cybersecurity incident or other disruption to our technology infrastructure.

The forward-looking statements herein are made only as of the date they were first issued, and unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Investors and others should note that we routinely use the Investor Relations, Performance Metrics, and Sustainability sections of our website (norfolksouthern.investorroom.com/key-investor-information, norfolksouthern.investorroom.com/weekly-performance-reports & norfolksouthern.com/sustainability) to post presentations to investors and other important information, including information that may be deemed material to investors.

Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including X (formerly known as Twitter) (www.twitter.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern).

Information about us, including information that may be deemed material, may also be announced by posts on our social media channels, including X (formerly known as Twitter) (x.com/nscorp) and LinkedIn (www.linkedin.com/company/norfolk-southern).

We may also use our website and social media channels for the purpose of complying with our disclosure obligations under Regulation FD.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis