NSC - Earnings call transcript Q1 2024 | Norfolk Southern Corporation

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Operator

Greetings, and welcome to Norfolk Southern Corporation's First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Luke Nichols, Senior Director of Investor Relations. Thank you, Mr. Nichols, you may now begin.

Luke Nichols

morning, good and you, everyone. Thank Litigation during Please certain provision we XXXX. Securities make call, statements note of within Private harbor that forward-looking safe the will the of today's meaning Act Reform the of These Southern which and Norfolk may statements performance materially from and to Corporation, relate or are future future to actual of risks differ subject uncertainties events results. important. and of the SEC view full discussion those Please and with as refer for filed most to quarterly reports our we risks annual uncertainties a

are norfolksouthern.com to non-GAAP adjusted at our adjusted an Investors are GAAP note along slides our references the referenced presentation any earnings as Our release. basis that including of with available to call Please being prospective measures section, provided in or operating measures, our in the ratio. operating on reconciliation all today's non-GAAP ratio today used comparable during

It's to Chief to my Executive Turning Alan Norfolk and Shaw. Officer, now X. Southern's President Slide pleasure introduce

Alan Shaw

Quarter Good morning, Call. thank joining you for everyone, Southern's and XXXX Earnings First Norfolk

with Chief Marketing Mark Here our Officer, our on Chief new excited have Ed and John John George, Financial Operating Officer; to me the our I Officer; Elkins, am Chief are Orr. today and John worked Keith team. Southern PSR Creel industry PSR a Mongeau veteran a has XX-year expert implement who Norfolk X with proven Claude countries. railroad across Harrison, railroads Hunter is and to

of plans deliver enhancement. productivity our in metrics and team our already that and furthering operating he that I someone on was going in his action his caliber taking we're XXXX, John is are to share do step immediate would to operational promised the that. to and in improvement. we driving merchandise network in margin John's you productivity accelerate progress another to just Bringing focus our for

service, Our productivity with at about strategy balancing its core. and safety is growth

PSR-driven XXX XXX has industry competitive of a be basis and we the within industry earnings revenue top-tier and margins. anchored to plan to competitive to industry margins, growth This strategy it with average. designed deliver on When operating is say points

response shareholders, Let's Palestine, to on and our prioritized we've our in discuss investments in East to been year, service Last recall we where and franchise and we delivered protect our fronts. both and path forward. safety

We operating XXXX. and producing North better than are seen levels service networks safest we've America the in anything one are of since

Despite to to that work not more done productivity, and back not efficiently remains changes introduce the margins. get industry discipline progress, organizational We changes to our make competitive making running to us be to John or I our fast delivering culminating we with Orr. needed were the hiring culture. enough. recent started we enough to and and progress last process into greater operational that fall, end, accelerate To of were

point productivity, built of in to Now half improvement basis to we a year. foundation this have the OR and XXX drive safely second ] gains we've committed XXX [ the in to substantial

We will close with that gap margin peers.

along with We manner operating will including X operating employees it and deliver in our us shareholders, key at constituents, recognizes X safe, the and brings that regulators environment do our ratio we current our to and sustainable a a will next customers, sub-XX on mission. years,

first to that evolve they disciplined for quarter markets meeting generate shareholders. outsized and will allows over deliver grow to to continues results. to operational returns through now Mark productivity us review serve by financial excellence I'll We positions customers, as it safely turn urgently us our to our our

Mark George

Alan. Thanks,

Palestine exposures agreement the remaining $XXX most by that derailment. the our the impacted resolve million relating out X, As QX Slide for GAAP in to class the we've addresses month, principle in shareholders. we you. Earlier a results to lawsuit X legal announced significant on called in consolidated were for seen items East our That action

impacted adversely insurance cleanup and our quarter, costs by recoveries operating was the income other $XXX in Including million.

million $XXX million of coverage another recoveries tower. at quarter. note our insurance of to toward excess in insurance $XXX billion brings bottom, the date $X.X recoveries You'll our in That the

told We about will QX. our to a headcount, in right. quarter operations million That to initiative, the leadership materialize begin to resulted non-agreement along you which our X% last Moving in for initiative savings reduction drive in with charge. a change $XX

our matter with our costs now Next, advisory in very associated nonoperating. shareholder public recorded

Finally, income we called out here deferred our expense. tax affecting also a adjustment favorable tax

to excluding remaining results, here our as right. the For the slides, I'll on far shown items, adjusted these speak

in QX the headwinds by will up revenues to as later. Moving lower results to surcharge inflation year-over-year from and Ed the Those that detail focus lower as variances Operating Slide increased let's in X% columns. adjusted were workforce. fuel well X, on driven of were X% impacted Intermodal compared XXXX meaningfully the by expenses

waterfall the OpEx in detail. that see an appendix more provides year-over-year You'll

a page operating income drove the year-over-year income, coupled from reductions here EPS was Not million which company-owned is on you on decline, and lower down this on nonoperating our That life gains lower see basis. with $XX insurance. income the net

from with right the on variance XXXX, That's that of range. end exactly to deterioration a lower side basis at seasonality. to which QX the OR, we normal guided in talk the sequential is we where right line Let's our XXX about point XXX where in landed

On revenue the we'll next sequential detail couple charts, and OpEx of from walks QX. the

headwinds premium Intermodal mix moved weaker down volumes X% higher-yield volumes difficult X Coal Intermodal. and by revenue our lower continued by softness So faced driven business. here from and overall with conditions sequentially driven surcharge in Slide and down coal and was pricing on fuel adverse

meaningful returning We sales by well incentive to were headwinds QX. with headwinds taxes, headwinds efficiency comp in property sequential in spend the X% Slide payroll gains down X, to compensation operating those normal They lower offset as as embedded our We purchased compared no first the from accrual we reset prices. fuel to of turning as as services, associated quarter. as in favorable faced typical expenses. levels and well had

a X% sequential and on was headwind basis. was revenue that surcharge fuel drives XX% point that sequentially, expense basis XX While recall OR down a down sequentially,

materially margins from the we the As we of year, turn to see here. balance will our improve

service as productivity strong other to excess and That in initiatives starting along finally productivity downward leave see story with us QX. will as they non-agreement reduction QX. in for trajectory, well a confident costs the in unwind are We accelerate headcount

We is volume confidence beginning some anticipate is disruption. the Despite Coal from port we impact sequentially, revenue to in of our XXX runway believe from the first, to stronger we to Bridge us closure business to about as hand Ed reopens productivity there the John OR the seasonal June. channel the as assuming will to channel half to XX% basis OR the million in be the still range, pressure a per revenues. guidance range. talk the that the The But closure, first modest Baltimore I'll although of $XX volumes, half the lift million will in improvement. More at XXX front within back of discuss XX% points us. momentum that well provides builds over with productivity $XX month in more and

Ed Elkins

on X% X%. I'll in commercial by last and for year-over-year you, over came quarter Thank RPU as good Overall, results the $X Mark, Revenue grew our call. volume by quarter. morning Slide the first to billion, driven just down year, fell above the for XX, versus on Intermodal. go total Starting everyone X%

year-over-year X% by marks fuel. of out grew for increasing revenue price and revenue our again, XX service. Starting led all-time ticked which with setting fuel less value all-time to merchandise, less year, quarterly down a surcharge commitment was also lower reaffirms record, last and to while of flat an driven volume by new record RPU fuel revenue. that quarters XXth versus quarterly This X% year-over-year, merchandise prior once the the our the RPU increased

on primarily year-over-year, X% grew strength Volume Intermodal. in to Turning International.

decreased that This and Revenue sustainable smart operations also demonstrates aligned simplified increase by rationalization productivity our network. and RPU revenue decision and fees how as impacted X% Intermodal marketing, fuel and the was finance drive excluding by However, across lane storage and growth. X% are declined to overall.

weakness as for market volumes the at deliver quarter the utility to export cross-functional X% for declined our example export our a and by by strong by Point our pulling throughput Lamberts coal, shareholders into quarter historically value results NS as offset strong partially only strength great our positive driven These was Digging customers. together terminal efforts yielded of to are a boost results. in for

of XX, revenue fuel declining the surcharge and in main introducing the revenue of quarter view million. Overall, unit. largest Slide the was quarter, that per by to drivers results revenue helps where first I'm frame move a headwind new Let's $XXX our single

coal boosted across positive The That velocity gains mix volumes increases realized by positive of revenue, first from the our and a book. headwinds in revenues prices quarter. Merchandise the experienced by shipments fluidity in fuel, excluding franchise increased the was several the automotive despite by export are and metals same In the from last offset than fluidity higher throughout serve. driven also quarter in one Intermodal improved This fees where Overall that higher with substantial utility as velocity. was car pricing by price headwind plants was were we remained at volumes network manufacturing South. export mix we Coal, more flat lower helped pricing million. weakened volume shipments and higher and entire $XX seaborne storage year-over-year and declining significantly

storage international more mix. in the domestic capacity market shipments fees created adverse drivers were domestic higher shipments as adverse the to lower of RPU. than increased mix and and volumes fuel and Higher slight excluding and headwinds revenue, continued Intermodal truck premium offset main

grew these ocean year-over-year Additionally, their pushing empty higher the carriers from water the elongated containers XX% deploy believe to times quarter. empty increases back which possible, to as ocean in a soon on shipments the transit as reposition back RPU was ports. to as are need the We driving factor impacted international capacity

Turning to XX. Slide

remainder Fed over overshadowing macro a uncertainty manufacturing. actions the The recovery mixed inflation for presents our regarding in market recent and with bag go future outlook 'XX. Let's the landscape rate of

in growth service However, position an to our us opportunities. capitalize product improving places excellent on

across our be merger positive supported generally in also which across varying Starting Triple tailwind the and network expect and we strength such in TDIS project to continue, And of availability our industrial will equipment announced as production development, and with continued Crown into price projects incremental on continued by acquisition, Lakes normalization through increase times, wins. merchandise. positive velocity drive broad reload of A we from the and from the Services widely fluidity. development network merchandise environment markets, the infrastructure Great the portfolio volumes recently view our a auto network. is Improved will support our volume see cycle

are remains volumes robust. as increase international trade Intermodal

market from empty but geopolitical as domestic We truck nonpremium shipments pricing. which stubbornly a weak elevated, dampen Intermodal tensions low expect continued remain impacts mix will international continues rates, to drive higher truck

volumes market demand to fall LTL shipments. Additionally, expect in our forces parcel premium as challenging for reduced freight we domestic business

Finally, stockpiles prices reduce utility will and gas coal volumes natural low be as high shipments. challenged

shipments port shutdown. export addition, In by will Baltimore the affected be

solutions, and on is chain increased We are diligently necessary capacity supply network the customers to to fluidity the those execute with working our solutions. alternate provide providing

coal Finally, global seaborne is has the prices this year. of remainder have to demand supply and as the continue outstripped weakened throughout expected headwind

over to Norfolk Before I our John, I'd turn Southern freight. close like trusting it their to move for by to customers making

John Orr

immediately arrived and supervisors. the colleagues when assessing frontline our and team impressive in with resources ground immersing terminals community a from I've What a operations results robust and Thank met NS and and March NS stakeholders leadership. also I've you, on that executed. people. boots got confirms late Ed. to deliver franchise our at craft the I've work labor, with with connecting is to seen properly regulatory talented I in and myself had the engaging

trended performance action value the safety that. as we safety I a strong building on as provide shown system clarity first are have around was XX, My has safety COO safety. to Our of blitz and Slide observed on commitment, favorably. a

imperative we is with gap profitability the Turning to It that Slide our closed peers. XX.

We are trends in productivity. encouraging delivering now

is strategy Our balanced.

in Our operating excellence achieved are service tandem. efficiency and

days, into of track to profitability gone stored Our our off-line need first value flywheel their or from the intersect these Most people, anchoring my Accountability We're providing key. to performance. In for status approach fleet. accountability [indiscernible]. processes have drive removed and our team is with where creation proposition. is and performance, metrics locomotives a XX we they driven the have of service available approximately XXX

X,XXX is now below units. availability count Our

on over be next the will X the shown by locomotive As X%. slide, able to months. we Terminal increase XX drawdown improved has

waste XX% more fine-tuning in through terminals disciplined targeting planned our Near term, driving are are We workload we improvement. by execution.

these range to initiatives. by improved is this Recrews for and another XX% across down measure, from the network resulting target lastly, plan. improvements are train improve double-digit improvement. rationalization And line. X%. miles terminal trending the Car X%, we as combining are are fluidity we in This productivity reviewing of entire will the core have drive And service main

driving out cost the peers. are We excess as to gap our close we

address a major will To force productivity to for and underperformance, at efforts Referring optimization areas these outcomes network. and Slide network improvement. have deployed terminals. The immediate that XX, have throughput I to identifies to field the out X improvements team I task network established rapidly network scale go drive update. from accelerate throughout X

our to training by results eliminate leaders continuous faster and to instill make decisions operations assets for are railroaders to differently managing relentlessly We is improvement think entire streamline vigorously. My network been The promising. waste and our to context to PSR more develop obligations. discipline execution to commitment have the initial in the commercial across to

people results. Our PSR are driving

can our a near-term I financial of you, and laid have a To I'm runway create introducing accountability tell cost targets, disciplined challenging to long-term metrics. aggressive achieve we're track on comprehensive set significant progress, path. an we and glide and to taking And I've urgent now out approach reduction.

becomes in out composition by assets rents improving cars. benefit the shedding costly materials getting fleet and and and our we efficient, from more more As fleet

value are I operations questions, to lead I to the forward through have terminal Our to we optimize covering the call I and spending of activity. capacity. fleet. a we on turn has the terminals, challenging now be team your we and the as discretionary robust a look have NS. footprint, And and create locomotive to down array back historic excited Alan. our believe rich to fleet able at And I opportunity the efficiencies. capital scale industrial significant will am to will we proud use consolidation

Alan Shaw

of is to that at studs than mirror to the a regardless the recognized who strategy great stories success have PSR tearing down is Canadian of about the Our designed more railroads railroad slashing fallout. its costs

perfect Mongeau, growth of ratio. can Claude we operating revenue an member, Orr Claude's from margins Canadian in strategy, balanced fit sub-XX was a Southern industry John operating and Board of top-tier integral when a team Norfolk part growth. earnings CN at top-tier as of leadership of he model, productivity competitive part pursuit our and PSR was National, and As when demonstrated CEO customer-focused thus, deliver a turbocharge a

to differentiated this Southern. done Core of all and the incredibly they've of progress men proud our I'm execution to women Norfolk strategy. the are of

growth experienced transformational Together, to So you thank leadership are my our railroad, everything and on we strong Southern, customers an Norfolk poised from safer profitable colleagues, team a our for team. execution do for shareholders, you fellow a members. your journey more with for

We the will questions. now call to open Operator?

Operator

[Operator Instructions]

Brian question Our first comes from Ossenbeck with JPMorgan.

Brian Ossenbeck

an to walking help else going Just some traffic And faster? through Can assumptions wanted years? actually there? anything you Meridian down for as that? in the see give the maybe behind productivity Mexico? John numbers there savings or you're what of Or X, team. concession. some benchmarking to sense X go impact? to secondarily, these we to Speedway next have us or underlying understand, assumptions out under with Maybe versus that something out that you you can related going then just your OR from the terminating back the back why does cover you What's Does XX the can't holding And originating of

Alan Shaw

for Brian. Thanks the question,

to by Let business, clear. the largely abundant defined does agreement Meridian consequential Mexico. is part Dallas by John, me which it really his want impacts The capacity. it to be handle said no concession, second one you Speedway the We and is of means do not related impact a question. truck the

John Orr

of direct year-end. I'll And costs. management. for and is And cycle operations network, on basis for to really assessing nice of operating to I've need accelerating a costs the assets the And that plans our rapidly on points our that accuracy you, are the are to ability tell really asset essential talk speed by out today taking And reflection and underway while them, been I'm that. Brian, we're our focused Sure. confident you, why tell our which all to simultaneously our I've reduces XXX track I'll XXX to we're you. got with out

crew our And making and well I'm and value, we're the discipline over-the-road put that the our very smart investments our some to fleets the confident with on underway. dwell, unlock we productivity locomotive we're the performance, of

Operator

line Wolfe Next Scott with of question Research. is from Group the

Scott Group

So QX. improvement to sequential of guiding Mark, points into you're basis XXX XXX

there? much think Just And fuel? about How think proxy. ex a help we the cost us going about the lot How volume? drivers should there's on with

of ISS color second I do was that on Alan. looks of like guys timing there any Any there So for lot is? amendment to expectation is second and filed a want Meridian a A, ask thing. on amendment another yesterday. also, Speedway terms what's in this that -- focus you then what It

Mark George

start. I'll Yes,

the the SEB First, just it whole was things who had had the see think want just that that the some -- amendment other get we to with They of filed. really and formally we that X-K the filed, I formalizing exchange requested stuff. wanted

that. all that communicated. don't new likely of We So we end we nothing did it next week, don't out than already what's know. would but early imagine we it. comes exactly ISS, is, control week, this at the That's been

And quarter to quarter. actually to is typically second those going really, the to quarter. March, into going would gone in would the I unwinding the here in or ben. end accelerate by be it third relief start quarter, service that's X and into I to and see that second the comp And going costs point call of seasonal see to think especially lines will experience walk, But here, cost of started to show most we start then We've think volume of the really the kind to with going expect regard QX QX increased you second X the what into the of of modest increase Scott, you're costs. really the

progress we've made tremendous So there.

benefits, got see non-agreement we're those have end May, of of reduction we've there's some middle of left but few here that April fuel at more leave already the efficiency. of area another start to addition, where really is restructuring benefits to In And those workers. the XXX-plus benefits. and in going harvesting going the Most a with we're

now. very crew that's over productivity The got related is like we've rents, things savings, all really other John car to right starting of focused stuff of then, to time, productivity And start build. on that the that. course,

ben. especially lines, the So you're a going in lot see it and up to show P&L com in of

Alan Shaw

million And productivity Scott, said months. recall next in John's about $XXX that the X over prepared had in chart you a remarks,

Operator

Our Tom the UBS. is from next question line with of Wadewitz

Thomas Wadewitz

changing Yes. on, thoughts Alan, get a you it I you had think risks be aggressive. pretty wanted approach where been new your out, that? to big The kind prior change, John better obviously, was would you've do something customers the aggressive of have resiliency of with about who COO, stated, think approach. the your schedule. guess, team the thought has How Because been I I -- for to locomotives very taking is, how the

think some going pointed of guess assets? before the in on and I I the you guess of reducing operations about a So of how tack that of -- on that the recognizing to risks kind and do aggressive and you people being guess, change of risks also I way too on lot

Alan Shaw

for thanks question. the Tom,

laid last we but a safer enough, in delivering lot improvements we a that really We enough. with made couple same weren't made year clear. weren't weren't focused service of safer, productivity. at We Let and productivity safety me We efficiently its road the that growth be on running core. we fast between And even service. And balance still that's out that and running years ago. of strategy we're we a

improvements. changes, I recently, doing what to last and is And personnel and Most And and a our Orr driving hired John does. productivity changes make and accelerate starting fall. number and improvements, process CEO needed needed of we John to changes we made so service that's I continued some he's what operational a is

that? to And what John, and so want. they of our on that strategy. They service productive. -- want be that's some you us the customers got balance thoughts want That's

John Orr

as I've mutually in exclusive. they're my not Yes. And remarks, prepared said

customers evaluate I to plans, our In our improvements and the what other. drives approach making accelerating fact, and are network, our performance. also is, as our on-ramps and local service, my touch individual standards making improvements those cars, they're and efficiencies, handoffs and but creating complementary basically our new on corridor to the the restructuring And touch it year-over-year, each dwell through yard on times, current cars that

the then as up of network reliability. there's overall the speed picks more And

resources, but to them to So regulators give that's and my I and craft sure to of also clear, ask a supervisors go what days, to very doing. them frontline our do only I we're they them talk do not our leadership forecast the why going our training, quick to even with understood, at in employees that to give first a union give pace, the going more, leadership we're make union few was the And the our them people it. I'm skills give

it ways to they're that results. to But leadership way of going going it amazing capable do be proud that of they'll do be and we're sustainably. and in We're stretched produces years, coming a to grow going a in the in PSR-driven team

Operator

Our line ISI. of coming from is Evercore next with the Chappell Jon question

Jonathan Chappell

and guess, or things families situation follow by line I merchandise reducing laying don't so there off it's have next getting that is in on John, [indiscernible] been far volume Southern, locomotives as X top But would as you've I with already a more the the be the things days. that you that you as and X-month deal it otherwise? relatively you go this through XX chase strong about want you period? quickly have XX%, up last the maybe a Or touched The comps. volumes quarter next network XXX and basis, the couple it as on easy year-over-year beyond things to been a about worrying more recovery to Norfolk done of needs for where relates on volume like to months where

Alan Shaw

And that? don't then, talk about Ed, John, talk the why you market? about why don't you

John Orr

Yes.

the gap drive on and to we network. thing value imperative most the of that the performance, can close do think the reliability is I

being the that out the we're What more effectively. unlocking trains existing as in efficient, to or single capacity longer of far the get line by grow terminals have more capacity driving and those even We to grow ample As more effective pipeline? to that network more on-ramps a trains yield capacity. capacity, are in

I or And So volume else. other. both. not drive is anyone we're whether It's the faster economy or as to the there, don't the on one being close to see what depending we're the going performance, going gap than it gives,

to Ed, you. turn So I'll it

Ed Elkins

We've encouraged Sure. And volume right, that. you're absolutely by seen John. so far this month we're and

way, bid that and volume on by seeing encouraged Our of front is the that highway, the and delivering. delivering a customers are best clear, trust by be to going of the very the Intermodal, encouraged it's customers response sustainable we're to and be to earning we're for continue from from And service which level in that. do service generation We're it's we're our level the very to good new Intermodal. in we're converting in

that in we're going the merchandise is go get that pipeline, that unlocked The includes space use we spent to should from conversion On ours. Norfolk look, out be the on back a to we freight Southern. institutional which growth months last side, augmentation rigor highway be the the converting as freight and X going to deliver are and should John as moving technology merchandise building sales and well capacity

Operator

is question next the line with from Stephens. of Our Long Justin

Justin Long

commentary the Intermodal. I about guess to on of up some follow

not are rationalizing And Or Is those where complete? to talked do these some that is OR general an we to lanes. lines, hit freight? more Or a along about or see wanted to now that objectives? these OR of how you the I you update envision process? about need the come? in to on similarly multi-year there changing? You've merchandise targets, then Do to thinking that shift is mix get necessary more business

Ed Elkins

about the piece Intermodal talk first. I'll

going that and question. that at Looked looked density, capability long-term thirdly, very lanes for terms of low that where couple network there in their not our then on. and our growth very, a we lanes very we of that sight of lanes things. first line Look, have took was think did at believe at I potential view be was your not disciplined strategic customers, we of that did were were Intermodal a looked to

pass those Intermodal that of we XX% tough lane decisions. about our we made Once which should our portfolio, you engaged but and Intermodal the partners partners includes we to the were talked some density lanes the only It's others, about revenue that those and all there. something filters, of portfolio, in port tell some about

exceptional Are we to taught We're is. at potential up our always powerhouse our greatest applying network where we're are this is freeing can thing that that customers. one the looking And we delivering us done? capacity our where we resources lanes growth redeploy that exercise of for that sure value we're make our some toward

Mark George

We at going has the in more we to time, past And where probably kind challenges I years suffered would But consumers. say the service the merchandise from of is grow have. because is. the Intermodal growth the that's serve with regard to of the question. couple mix same

to is to as that recover, network doing, mix. unlocking and really and doing should rates the growth just So start help we course, that John will return better of to enable everything Merchandise

Ed Elkins

as a the has very Intermodal sales well as I view And disciplined said, from -- that we're the Absolutely. the taking in approach the space. toward pipeline the high conversion as labels Merchandise

John Orr

there. That and plan execution would car challenging and to deeper train And Intermodal, out speed is Merchandise and far really drives as velocity, applies facilitates improving we've every And Boat got ultimately ]. performance. increases actively our network, that concerned, say [ into engaging which as and and we're we're compliance, capacity that blocking I asset

or over days, the improvement redundant. We're were turning approved I've the of last consistency. over turnouts in and elimination XX for that to Just small, rock, look XXX every big

Operator

Cowen. Our is line Seidl next the of Jason question from with

Jason Seidl

leave that you've that and bit you regulations there down is seen John, some follow-up little how network, the look a sort the going of and a two sort yards? to is chance to and impact of of are an you how yard sick I the I when guess you at road? wanted you what much or close new talk And quick about the a And of look expect a PTO forward? viewing whole there

John Orr

leave Yes. sick Obviously, a the national is issue.

they've no I other productivity focused or more to yard with crew regulated I'm the of crew the time all introduced each to assignment any we than within on increasing productivity limitation, and different work. and it. capabilities really do think frame to What is have deal got

And trains, that's delivering to getting yield getting most that. connections, we're and on piece, more, balancing so accountability the our important

side, we've day unions flip every our labor that I'm each to on committed making team sure to understand living and And process within on an that to the or with dressed that to come that the CBA availability customers ready the the frames, we're organizations crew that. for work on time deliver to every through our to have obligation day. whatever up and the they sure make

So it's both sides of that coin.

all to concerned, the add challenged want I most of performance. out the reason They hump are I started lot yard, they plan yard our with But them. node. of mechanized because As from get to a already we to of yield costly. as terminals get lot yards why can is the far drive value. as I a can they're node can know, I've yard

the a of multiple eliminate imbalances started terminals. at and in cars all power And we've handlings number bunching between major clock a reestablishing We've causing terminals like were a And reduced that Chattanooga. yards. even assignments at the the place by to the moving we've of decreased terminal

going I yard I'm the meet historic challenging whatever we of So to tomorrow. is for today that the so reason everything and open. need a operational say do is would

we in plan operating Everything redesign that So the yard will of redefined be operating or of plan is And the and out everything is the table. XX most next XX strategies the on days. and drive next then to a XX will yard scrutinized, being rolling over operating days.

Operator

Our of question next Jeff from Research. the comes Kauffman with line Vertical

Jeffrey Kauffman

John, a on your question of impression in. just coming kind

you do. were what have you able had view certain to been not of Norfolk might a As an outsider,

my you not then network to operation. had when chance on outside one, that be you've what And Norfolk insider, and there out came about twofold. appreciate and a and a got I is, question can guess of and might what the second done? an you're Now you about going on. is different aspect do what's Number see chance can't get see my actually on the board think what's an somebody to

John Orr

it. to that first I'm asked issue. tell tell on really act my been the the I'll years. ground Well, that I've you, official you, experienced scope some consequential in commander great boots for was never that had incident I've and community, a to question. some were over and go you XX a concerns. same railroader scope the make has of that's been like a with understand and glad anything Palestine I'll East to here made that. NS number those to that the imminent scale I've at understanding And decisions made of derailments, very commitment resolve to the safety I've of that

sector. only And NS, but so of had I bias with how came and lasting event really a impact understand that could that in have the a not to magnitude across more and had the

operations, yards our because merchandise especially think at for looked a kind coincide. I I I customers in cars environment always where bias yards, and have of As a

is them, we drag how or do evaluate. to we handle accelerate important really how So

going hood performance performance And not at of actually be, of drive or to so balance need a richness make surprised that that's quickly add at through underperformance why burn that kind either was the we but the got lot also where and I data in look to and was unintentionally. check to component a intentionally had something a that field happening. didn't force undermined were was to I a down up the or under data, sure to also driving I task terminals, was the set of realized as but And pleasantly that the

perspective you having good looks think network a the biases. of what outsider, like, an as have I So

Canada and career As now. momentum and lot under you that leveraging operators service across and an very momentum. to unclogging of out rock the And insider, moved United to then the need issue, that smaller competent, know that get capable you here very way creating momentum big of I'm what going those service plans; seeing of that's drains then of plans; a competent, sustained and and creating right improvements. build States capable Mexico, start a to and I've realize, get be may to hood create the made a the out to be rocks okay, but

we're very as in just I networks, XX and working complex that a Eastern and architecture network. my a States, a nonlinear spent density leader complex leader, is in in in. That's as similar It's employee to solid think Canada. east a XX what I the to the And very the I've the industrial I about. years execution, come I of craft know Mexico. down NS it's it of the know is that the does all senior I United in a either leader converted east, mean or senior

with think I So prepared talented resources have But a to impressive lots results. got and robust as to said I my of remarks, a the do. in execute. team franchise We properly deliver it's just to we've work

Operator

is Moore the Stephanie question line from next Jefferies. of with Our

Stephanie Benjamin Moore

customer from Is and response this what a John, changes does into would lag volumes? underway. you, there PSR mindset the the convinced Does focus in a from appreciate just of just given I creating How especially organization. they place as been a priority, helpful. detailed plans With clear customers? initiatives has natural incremental color the happening? the on around there be this of the get the color, productivity translate kind Any changes across

Alan Shaw

address Ed, you that? why don't

Ed Elkins

And Sure. question. for you, thank Stephanie, the

improved merchandise as our the we in service of first see I into well of change terms April. our in book low think a As single-digit as and that one, about our earlier, book, things. improvement. happening double-digit of in held freight on said and growth serve quarter, throughout that time customers you absorbed they Number international encouraged And are domestic our our growth service couple velocity by

So they're encouraged.

like And going On best I deliver in customers. for of I said, deliver generation to level really same a it's that to we're Intermodal delivering. our which continue that the that we're is service, value lot the service to only going more confidence of front, a have

unwind some place. to On to have cases, going in customers in are our side, the merchandise alternatives that they've got

back what is Norfolk what, come really is, service know value natural the those reliable a allows you But them and that's for just that Southern. an to to want. them which and That's exceptional belt, have where they what alternatives unwind conveyor is

Alan Shaw

was You the know, over strategy. by our had approach, me, I've month our number direction supporting approach a announced, encouraged customers and Stephanie, John encouraged since by of our last

John Our wherever customers looking in and customers, enhance they've And for. what are safety large John that's done, to service seen and part. as what productivity, he's noted, the been east with are familiar and enhance enhance he's in

if just it, an our service. us week thanking e-mail got morning, excellent you of but this Ed, I know another don't of know we largest customers, one from for

Ed Elkins

excellent I week of was just about for to close that. you another service. Thank

are out know there. you You who

John Orr

helps them we're And we're understand decisive helping our these we've service try are we're that, on into going decisions. understand why hard where -- engaging to to leaders doing and the to Ed had customers regulatory it's how them work some really, helping but flows, and car had interacting understand create is it's we're people, on very standards. It them to Stephanie, have end, what decisions what work or to front I facilities. even of with take customers, with our the make on having together union how fit doing, leaders, doing, they it whether that

Alan Shaw

our a is and Norfolk customers that employees more product as with making poised safe is our growth. Southern our And our into profitable and a that strategy, organization for regulators us is Stephanie, shareholders sure bring and that with our we service transform and along we

Operator

with the Our Alliger line Sachs. next from is of Jordan Goldman question

Jordan Alliger

maybe, but just Yes, follow-up, sort ways some of is curious. in I'm a this

next You XX months. have do to over extensive of a then the pretty XX and months to list things X

sea in, much As the operational would in level would you and hit call you this the achieving as versus of getting gap you confidence changes to tackling and these margin years. basic your and say, and been scope? sort already kicking blocking knowing that's the How things coming assess Basically in all Norfolk come had of done in off what trying to you of there real what able degree being per expectations talked about.

John Orr

in tell a the luxury I've very of looking you I'll an across architect PSR. rearview agent all I change and Canada, Mexico, mirror the been this, haven't had U.S. that Well, the often. of and

the what to so And rather time the Desired was could have fast a or we the is management out on can gap what don't I current and situation state. spend focused times and been how what having looking desired lot of at drive than get state to -- speed for operation dwell an the the sure, having and is asset closing with reduce that is accuracy waste. reduce times, cycle

on So network taking it has approach that's overview. an a where

point locomotives by strategic we and So reducing resiliency of and speed, like and response lead elasticity performance, very we on accuracy and over-the-road do increasing create meet then like long there's we've how view do dwell, as seen Baltimore. we as in how create productive crews at resources them for can a looking network

them really locomotive future refurbishing be creating into locomotives do can by more then investments, And having things because pushed like we look at off own locomotives capitalizing renewals, how that leverage our our smart the productive. those we're

were I think the this is in a the that started natural evolution elements on some past. linear of

focusing cars and another. service, of disciplined particular multidimensional tandem time railroading, plan. at in handling entire a of the but one the accurate on of cost one and the is taking suite with Disciplined on it, efficiencies thing, operating not point waste Now of really view elevating reduction same

highly on that's are path confident we growth a And that we'll and fosters I today. do the service We're we'll plans, underway. show that achieve disciplined the form and progressive ways the way train a way and will do we'll sustainable and operating the needs operations disciplined the that highly of in targets in and confident, terminals, to the well am meet it in yard plan today. of moving of commercial it

increased that confidence. my So

Operator

of is Our from next RBC Capital. with Walter question Spracklin line the

Walter Spracklin

weren't here, of but any the it customer then didn't to I'm used used saw It dating it -- come maybe I are change. here. need be, It to kind it with was wasn't making substantial lack know ride, happening, and this, you've changes They to -- we disrupted, to I be view. is disruption. the PSR but when I if put that the trying up back do the to square lot time myself a under of that is John and of customers

of And must negative. customers from I We been when you mean guess, kind be to soon have know leave there's lane locomotives, take reductions, out mark. XXX a feedback quite I those locomotives, has been to XXX have that

to So you to on good coming you other you're with a shed and little customers or just some to perhaps and are bit? some I just be good the -- lower-margin they're wondering, those and going back them, getting less service customers just are of refocusing feedback

some these from Just that we're that surprised and you're blowback more significant not customer changes of hearing making. really important

Alan Shaw

in have strategy. committed going and in responsible to a what what we this That's to in to and knows we're We're down PSR to tearing have manner. thing not We happened peer down sustainable XXXX. saw Walter, our implementing the doing. our been implement as he do. to activist without has we're studs And how the it to the John studs. said COO would tearing do that's it

our Ed is customers. close to

Norfolk value. and the drives we're focused appreciate want on Our the and see this in way. Southern shareholder you're about talk plan right John, how long-term for customers We're focused you a service. safety, on doing that sustainable to improved

John Orr

And from set and challenging an George urgent and what a really aggressive example, I we say, hear it's very near-term approach. and onset, to you as that it. balanced manage taking I Walter, don't it's would think said the midterm by Foreman nice forget the I've Grill we're operations. laid you. and I way, targets out the at I'm taking view And approach to disciplined

out sweat You you and alone. this it can't drive

of and of compliance important. then across and that asset have So standard things we delivering building safety, at really rocks those momentum challenging creating team creating on railroaders around stability the building focused and every a network we is have, every time, big rocks same that the and the capable the small fundamental

and sweat is and what it you dwell that know it areas Walter. yes, And lot equity does. respects, time a of in key the focus of really yard So is

order of of that back getting double the those -- mid-'XXs them. our seeing drive seen in by the we'll handling otherwise down trains, discipline than cars they are it cars count, customers means but terminal more terminals, cars dwell XX%, and the we core better When digits the And down further. be them getting taking taking getting -- to by those cars current are our we bad handling even would customers into the faster offerings, 'XX, sooner. from service and the down have only those we're in on Not even the flow almost to

I negative reducing rather So while handlings see a commitment value at than a indication would and we're costs. disruption, time them a to and as that momentum positive same think that the they that building and

Mark George

And were to in stored, just say add locomotives specifically. a of actually Walter, the hole on locomotives that following money had back out materials, of in get dig we the so to Palestine back close year, a and top locomotive Remember amount could last loop, spent fair trying derailment. been into have the to service. We we we East up running

right trajectory. how added locomotives of resiliency the throw had we remove we the to and system. and on of back start costs service some now we've really we're at And attacking those able got other It's costs some to the

to that opportunity customers. be remove So to the there's here a of nondisruptive costs lot will

Alan Shaw

what improvements to our base. summarize, level markets are to, is the reacting and improvements, the and across service level the across customers service dramatic and customer that And our

Operator

Our next Bernstein. question with of is line David the from Vernon

David Vernon

And question problems? kind on far trying kind how root kind property it? the get have you of of of a the John, at be what kind it is Norfolk or over you on any as perspective would Is as you've that of kind they the a a little thoughts been helpful. doing what So here that of month. drove of to to was see were love do I'd cause your what

count thinking fluidly? the that about Obviously, I up XXX Because was locomotives. then XXX. as you out, the -- taking little what that be about start number you up of heads couple coming operating And think for run and a assets XXX a of hundred is locomotives to headcount job maybe assume headcount? out, the trades kind What non-craft the another would more will as head you action free are over down. But non-craft sequential

Mark George

bit his assessment the John you the to handle challenges. I'll about before a little talks of Actually, headcount question

we You agreement John the that over actually room but down the year. would here, X% course have it. where end last overall non-agreement add we We likely would the to some be to folks may see would guided by said flat we out, the be XXX now in total time headcount for headcount recall, with taking year. offset pathway a around likely time people we the were We of

that's So on headcount. the John? path

John Orr

to emphasis add to that. just And Yes.

our operations. locos -- As more X come people and more on to signals over-the-road transits be IT X out and we'll C&S -- and will get a continue more to need specialized or And where and That's see crew be paths bring we'll productivity perspective our very flexibility. critical we accuracy of into I may more all communications. and performance, have yard There plans. alive, hiring from safety our and availability kind to more OT scale like we evolve frozen virtually and our and that able as that of have more we into

accountability discipline delivering to And out. And great do. driving the going and things of so But of the basics gets what the that, too in I've that safest the a that is at the a giving leverage quickly be to and going of the the lot short I'm what Rather, possible that flight building I saw lowest cost to time, inherited. purpose the that's service of and really railroading, we're term not laid midterm, is that and creating these things would challenge basics. also to how in improve of around part way at to same I'm we back recipe I visibility, critical on. it continue able basics I very say we're out plan that's

Operator

of back the the for At time, I'll we've this over Luke reached comments. Nichols closing turn session. to end our question-and-answer call

Luke Nichols

rest know recognize day. feel forward of morning. want through free Rob. the seeing call to the Please We us. to everyone's get Appreciate that ask I everybody quarter. Relations didn't this Investor there's questions. Thanks, is here through our reach chance look the time and folks I a joining to few you out to let to a your

Operator

Ladies and you participation. This teleconference. today's gentlemen, thank for your conclude does

a lines, wonderful You disconnect and your may day. have

Norfolk Southern (NSC) 24 Apr 242024 Q1 Earnings call transcript