What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-23 · 154 added, 99 removed, 160 unchanged (61% of the section changed)

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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).

Throughout the first half of 2025, we have remained focused on managing what we can control, including providing safe and reliable service for our customers while continuing efforts to drive productivity in our organization.

During the quarter, we delivered revenue growth that helped drive improved financial performance amid ongoing macroeconomic uncertainty.

We were able to handle additional volumes while generating improvements in labor productivity and fuel efficiency.

Additionally, we continued to experience recoveries related to the Eastern Ohio Incident (as defined further and described in Note 12 in the Notes to Consolidated Financial Statements) in excess of incremental expenses, which further benefited our financial results.

For the second quarter, we achieved an operating ratio (a measure of the amount of operating revenues consumed by operating expenses) of 62.2%, and an adjusted operating ratio of 63.4% (see our non-GAAP reconciliations beginning on page 28).

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

Second Quarter First Six Months

2025 2024 % change 2025 2024 % change

($ in millions, except per share amounts)

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Railway operating ratio (percent) 62.2 62.8 (1%) 62.0 77.8 (20%)

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.

Income from railway operations increased in both periods.

Second quarter financial results rose due to higher railway operating revenues driven by increased volumes, leading to gains in income from railway operations, net income, and diluted earnings per share.

For the first six months, financial results improved primarily as a result of lower railway operating expenses associated with the Eastern Ohio Incident, as insurance and other recoveries exceeded incremental Incident-related costs, in addition to lower expenses associated with restructuring activities.

As a result, we improved our railway operating ratio and delivered significant increases in income from railway operations, net income, and diluted earnings per share.

The following tables adjust our GAAP financial results for the second quarter and first six months of 2025 and 2024 to exclude restructuring and other charges and the effects of the Incident.

The adjusted results for the second quarter and first six months of 2024 also exclude 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.

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.

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

Non-GAAP Reconciliation for First Quarter 2025

Reported (GAAP) Eastern Ohio Incident Adjusted

Non-GAAP Reconciliation for Second Quarter 2025

Reported (GAAP) Restructuring and Other Charges Eastern Ohio Incident Adjusted

($ in millions, except per share amounts)

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Railway operating ratio (percent) 62.2 (0.3) 1.5 63.4

Non-GAAP Reconciliation for First Quarter 2024

Non-GAAP Reconciliation for Second Quarter 2024

Reported (GAAP) Restructuring and Other Charges Eastern Ohio Incident Shareholder Advisory Costs Adjusted

($ in millions, except per share amounts)

Railway operating expenses $ 1,913 $ 3 $ 65 $ — $ 1,981

Income from railway operations $ 1,131 $ (3) $ (65) $ — $ 1,063

Net income $ 737 $ (16) $ (49) $ 22 $ 694

Diluted earnings per share $ 3.25 $ (0.07) $ (0.22) $ 0.10 $ 3.06

Railway operating ratio (percent) 62.8 0.1 2.2 — 65.1

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

Second Quarter

Adjusted 2025

(non-GAAP) Adjusted 2024

(non-GAAP) Adjusted 2025

Adjusted 2024

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

Railway operating expenses $ 1,972 $ 1,981 —%

Income from railway operations $ 1,138 $ 1,063 7%

Net income $ 741 $ 694 7%

Diluted earnings per share $ 3.29 $ 3.06 8%

Railway operating ratio (percent) 63.4 65.1 (3%)

Non-GAAP Reconciliation for First Six Months 2025

Reported (GAAP) Restructuring and Other Charges Eastern Ohio Incident Adjusted

($ in millions, except per share amounts)

Railway operating expenses $ 3,782 $ (10) $ 232 $ 4,004

Income from railway operations $ 2,321 $ 10 $ (232) $ 2,099

Net income $ 1,518 $ 8 $ (176) $ 1,350

Diluted earnings per share $ 6.72 $ 0.03 $ (0.78) $ 5.97

Railway operating ratio (percent) 62.0 (0.2) 3.8 65.6

Non-GAAP Reconciliation for First Six Months 2024

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

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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

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

First Six Months

Adjusted 2025

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Railway operating ratio (percent) 65.6 67.5 (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.

On an adjusted basis, income from railway operations increased in both periods due to higher railway operating revenues, driven by higher volumes, and lower adjusted railway operating expenses.

The declines in adjusted railway operating expenses in both periods reflect lower fuel costs and purchased services.

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.

First Quarter

Revenues 2025 2024 % change

Second Quarter First Six Months

Revenues 2025 2024 % change 2025 2024 % change

Agriculture, forest and consumer products $ 645 $ 622 4% $ 1,281 $ 1,251 2%

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Total 1,734 1,747 (1%) 1,727 1,747 (1%)

Railway operating revenues decreased $11 million compared with the same period last year.

Railway operating revenues increased $66 million and $55 million in the second quarter and first six months, respectively.

The table below reflects the components of the revenue change by major commodity group ($ in millions).

First Quarter

Merchandise Intermodal Coal

Second Quarter First Six Months

Merchandise Intermodal Coal 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 $202 million and $260 million in the first quarters of 2025 and 2024, respectively.

Revenues associated with these surcharges totaled $203 million and $259 million in the second quarters of 2025 and 2024, respectively, and $405 million and $519 million for the first six months 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 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.

Merchandise revenues increased in both periods due to higher volume.

Volume growth in the second quarter was partially offset by lower average revenue per unit, driven by lower fuel surcharge revenue.

The first six months experienced increased average revenue per unit, driven by increased pricing and favorable mix partially offset by lower fuel surcharge revenue.

Agriculture, forest and consumer products volume rose in both periods due to increases in corn and ethanol.

Higher corn volume was the result of increased rail demand.

Ethanol increased due to improved terminal access and new business.

Chemicals volume rose in both periods, primarily due to increased sand and natural gas liquids shipments.

Sand volume increased due to strong demand to support natural gas drilling.

Natural gas liquids volume rose due to increased demand for product bound for export markets.

Metals and construction volume increased in the second quarter but decreased for the first six months.

Scrap metal and iron and steel volume increased in both periods due to stronger demand.

Additionally, volume increased in the second quarter due to higher empty equipment repositioning.

Volume declined in aggregates and coil steel for both periods, driving the decline in the first six months.

Weather-related impacts negatively impacted shipments of aggregates and coil steel volume decreased due to lower demand.

Automotive volumes increased in both periods, driven by shippers increasing volume in anticipation of potential changes to tariffs and growth with existing customers.

Intermodal revenues were nearly flat in the second quarter and increased for the first six months.

Both periods reflect higher volumes, partially offset by lower average revenue per unit primarily driven by lower fuel surcharge revenue.

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

First Quarter

2025 2024 % change

Second Quarter First Six Months

2025 2024 % change 2025 2024 % change

Domestic 603.1 616.3 (2%) 1,211.9 1,206.7 — %

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Total 1,010.9 1,003.5 1% 2,033.8 1,992.3 2 %

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.

Domestic volume decreased in the second quarter but was flat for the first six months.

While domestic volume was positively impacted during both periods by shippers increasing volume in anticipation of potential changes to tariffs, these increases were offset by reduced premium shipments related to economic uncertainties.

Additionally, the second quarter was impacted by reduced traffic originating from the West coast.

International volume rose in both periods primarily driven by new business with existing customers, including increased volume in anticipation of potential changes to tariffs.

Coal revenues declined in both periods due to lower average revenue per unit, driven by reduced pricing, adverse mix, and lower fuel surcharge revenue, partially offset by higher volume.

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

First Quarter

2025 2024 % change

Second Quarter First Six Months

2025 2024 % change 2025 2024 % change

Utility 9,296 7,555 23% 16,608 14,574 14%

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Total 20,417 18,238 12% 38,934 36,985 5%

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.

Utility tonnage increased in both periods due to higher electricity demand and higher natural gas prices.

Export tonnage increased in the second quarter, as prior year volumes were negatively impacted by the temporary closure of the Baltimore port in 2024.

Export tonnage in the second quarter and first six months of 2025 was negatively impacted by unfavorable coal pricing.

Domestic metallurgical and industrial coal tonnage rose in both periods as a result of increased demand.

Railway Operating Expenses

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

First Quarter

2025 2024 % change

Second Quarter First Six Months

2025 2024 % change 2025 2024 % change

Compensation and benefits $ 692 $ 700 (1%) $ 1,431 $ 1,436 —%

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Total $ 1,935 $ 1,913 1% $ 3,782 $ 4,704 (20%)

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.

Compensation and benefits expense decreased in both periods as follows:

• employee activity levels (down $28 million for the quarter and $68 million for the first six months),

• health and welfare benefits (down $11 million for the quarter and $23 million for the first six months),

• incentive compensation (up $6 million for the quarter and $44 million for the first six months),

• pay rates (up $24 million for the quarter and $43 million for the first six months), and

• other (up $1 million for the quarter but down $1 million for the first six months).

Average rail headcount for the quarter was down by approximately 970 compared with the second 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.

Expense decreased in both periods driven by network performance improvements and productivity initiatives, partially offset by higher intermodal lift costs and, for the first six months, increased weather-related response 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, increased in both periods due to higher automotive equipment expense as a result of higher volumes, partially offset by lower short-term locomotive resource costs for the first six months.

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

Locomotive fuel price decreased in both periods (down 15% in the second quarter and 13% for the first six months).

Locomotive fuel consumption was flat in the second quarter and down 2% for the first six months.

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

Materials expense increased in both periods due to higher expenses related to intermodal and engineering material consumption.

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.

Claims expense increased in both periods as a result of higher expenses related to personal injury case development, increased accident-related costs, and higher insurance premiums.

Additionally, for the first six months, expenses incurred on environmental matters, unrelated to the Incident, were higher and included costs related to weather events in the first quarter.

The increases in both periods were partially offset by a favorable third-party settlement for recovery of previously incurred costs.

Other expense increased in the second quarter but decreased for the first six months.

The second quarter increased due to higher allowances for losses, partially offset by increased gains from operating property sales.

The first six months decreased due to higher gains from operating property sales partially offset by higher allowances for losses.

Gains from operating property sales totaled $34 million and $25 million for the second quarter in 2025 and 2024, respectively, and $57 million and $25 million in the first six months of 2025 and 2024, respectively.

Restructuring and other charges

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.

During the second quarter of 2025, we recorded $10 million in expenses primarily related to the restructuring of certain technology functions.

During the first six months of 2024, we recorded $96 million in expense associated with our voluntary and involuntary separation programs that reduced our management workforce, as well as costs associated with the appointment of our new chief operating officer.

Eastern Ohio incident

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.

During the second quarters of 2025 and 2024, insurance and other recoveries exceeded additional Incident-related expenses by $47 million and $65 million, respectively.

For the first six months of 2025, our recoveries exceeded additional Incident-related expenses by $232 million whereas we incurred expenses of $527 million for costs associated with the Incident, net of recoveries, for the same period last year.

Recoveries collected exceeded incremental cash expenditures by $234 million for the first six months of 2025, while cash expenditures attributable to the Incident, net of recovery proceeds, were $133 million for the first six 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 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.

Other income – net increased $7 million in the second quarter and $20 million for the first six months.

Both periods were impacted by the absence of costs associated with shareholder matters incurred in 2024 and a $20 million curtailment gain on our other postretirement benefit plan in 2024.

The effective tax rate for the second quarter and first six months of 2025 was 23.0% and 23.2% compared with 21.9% and 18.9% for the same periods last year.

Both periods in 2024 reflect a $13 million deferred income tax benefit due to a change in a state corporate income tax rate, while the first six months also includes a $27 million deferred income tax benefit, which was the result of a subsidiary restructuring.

On July 4, 2025, OBBBA was signed into law.

The OBBBA makes permanent or introduces certain changes to the Internal Revenue Code, including 100% bonus depreciation, the deductibility of business interest expense, and expensing of domestic research costs.

FASB ASC 740 “ Income Taxes ” requires that the effect of changes in tax rates and laws be recognized in the period in which the legislation is enacted.

The Company is evaluating the impact of OBBBA but expects that the primary effect will be a shift between current and deferred taxes.

FINANCIAL CONDITION AND LIQUIDITY

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.

Cash provided by operating activities, our principal source of liquidity, was $2.0 billion for the first six months of 2025, compared with $1.9 billion 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.

We had negative working capital of $760 million and $357 million at June 30, 2025 and December 31, 2024, respectively, with the increase driven in part by COLI loan repayments.

Cash and cash equivalents totaled $1.3 billion at June 30, 2025.

Cash used in investing activities was $1.4 billion for the first six months of 2025, compared with $2.6 billion for the same period last year.

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

Cash used in financing activities was $930 million for the first six months of 2025, compared with $217 million for the same period last year.

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

We repurchased $456 million of Common Stock, inclusive of excise taxes, during the first six months of 2025, while we did not repurchase any Common Stock during the same period last year.

As of June 30, 2025, $6.4 billion remains authorized by our Board of Directors for future repurchase activity.

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.

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

In June 2024, we entered into an agreement that provides us the ability to issue up to $800 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 both March 31, 2025 and December 31, 2024, we had no outstanding commercial paper.

In May 2025, we issued $400 million of 5.10% senior notes due 2035.

In May 2025, 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 2026.

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.

We had no amounts outstanding under this program and our available borrowing capacity was $400 million at both June 30, 2025 and December 31, 2024.

In June 2024, we entered into an agreement that provides us the ability to issue up to $800 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 both June 30, 2025 and December 31, 2024, we had no outstanding commercial paper.

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 March 31, 2025 or December 31, 2024, and we are in compliance with all of its covenants.

We had no amounts outstanding under this facility at either June 30, 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 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 had no amounts borrowed against these policies at June 30, 2025 and $605 million borrowed at December 31, 2024.

Our remaining borrowing capacity was $600 million and $40 million at June 30, 2025 and December 31, 2024, respectively.

Our debt-to-total capitalization ratio was 54.0% at June 30, 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, 2024.

additional senior notes (see Note 9) and over $400 million of additional unconditional purchase obligations, which extend through 2030.

CRITICAL ACCOUNTING ESTIMATES

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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.

Since then, the NCCC has reached several additional agreements 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.

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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.

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 can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “project,” “consider,” “predict,” “potential,” “feel,” or other comparable terminology.

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

• the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Union Pacific and the Company providing for the acquisition of the Company by Union Pacific (the “Transaction”);

the possibility that the Transaction does not close when expected or at all because required Surface Transportation Board, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transaction);

the risk that the combined company will not realize expected benefits, cost savings, accretion, synergies and/or growth from the Transaction, or that such benefits may take longer to realize or be more costly to achieve than expected;

disruption to the Company’s business as a result of the announcement and pendency of the Transaction;

the costs associated with the anticipated length of time of the pendency of the Transaction, including the restrictions contained in the definitive merger agreement on the ability of the Company to operate its business outside the ordinary course during the pendency of the Transaction;

the diversion of the Company’s management’s attention and time from ongoing business operations and opportunities on merger-related matters;

and reputational risk and potential adverse reactions of Union Pacific’s or the Company’s customers, suppliers, employees, labor unions or other business partners, including those resulting from the announcement or completion of the Transaction.

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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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