Norfolk Southern Corporation

Norfolk Southern reported adjusted Q2 operating ratio of 65.5% and adjusted EPS of $3.52, after $51 million of merger-related expenses, $15 million of Eastern Ohio incident costs, and $6 million of restructuring costs. Management said operating income increased 5% year over year, net income and EPS increased 7%, revenue was helped by a major fuel surcharge contribution, and excluding fuel the company still achieved record revenue. Volumes rose 4% year over year, with merchandise volume up 2%, intermodal volume up 5%, and coal volume up 3%; revenue less fuel rose 4% in merchandise, 7% in intermodal, and 1% in coal. For 2026, operating expense guidance was increased to $8.8 billion-$8.9 billion due to a $400 million-$500 million swing in fuel expense, while CapEx guidance remains about $1.9 billion.

Mark George framed the quarter as a strong performance that exceeded internal expectations, driven by a sharp inflection in volumes that started in energy and spread to intermodal and industrial products. His tone was upbeat but disciplined: he repeatedly stressed safety, service, cost control, and earning customer trust as the company’s priorities. He also said the team is already improving network speed in July and that, if execution stays strong, there is a path to better margins over time.

Jason Zampi highlighted that adjusted Q2 operating ratio was 65.5% and adjusted EPS was $3.52, with $51 million of merger-related expenses, $15 million of Eastern Ohio incident costs, and $6 million of restructuring costs excluded. He said higher fuel prices drove a large part of the cost increase, with OR worsening 210 basis points year over year, including about 110 basis points from fuel and 190 basis points from inflationary pressure, though higher volumes and RPU helped produce a 5% improvement in operating income. He also pointed to a 320 basis point sequential OR improvement and guided full-year operating expenses to $8.8 billion-$8.9 billion, while leaving CapEx at about $1.9 billion.

Analysts focused on pricing power, service recovery, staffing needs, intermodal conversion from truck, industrial demand beyond data centers, merger-related share loss, tariff timing, and the sustainability of the stronger macro backdrop. Management said a tighter truck market and higher fuel prices should flow through to intermodal and merchandise pricing over time, with contract repricing now working on a shorter lag than before. On service and staffing, they said some T&E pockets remain tight but wholesale hiring is not needed; on merger-related share loss, management estimated about a 3-point intermodal headwind in the quarter and said those losses will largely be lapped in the fourth quarter. They also said higher fuel is the main macro risk if it persists too long, potentially pressuring consumers and demand.