10-QPeriod: Q1 FY2026

NORFOLK SOUTHERN CORP Quarterly Report for Q1 Ended Mar 31, 2026

Filed April 24, 2026For Securities:NSC

Summary

Norfolk Southern Corporation (NSC) reported its first-quarter 2026 financial results, showing a year-over-year decrease in net income and diluted earnings per share. This decline was primarily attributed to increased railway operating expenses, notably higher fuel costs and the absence of significant insurance recoveries related to the Eastern Ohio incident that boosted prior-year results. Additionally, merger-related expenses of $52 million associated with the pending acquisition by Union Pacific impacted the current quarter's profitability. Despite these pressures, the company's railway operating revenues remained relatively flat, with modest growth in merchandise (excluding agriculture, forest, and consumer products) and a slight decrease in intermodal and coal segments. The company achieved an operating ratio of 70.7% (adjusted 68.7%), reflecting disciplined cost control efforts and productivity improvements amidst inflationary pressures. Key balance sheet items show stable total assets and a slight decrease in cash and cash equivalents, while long-term debt remains largely consistent. Investors should monitor the progress and potential impact of the Union Pacific merger, as well as ongoing litigation and environmental matters, which continue to influence financial performance.

Financial Statements
Beta
Revenue$3.00B
Operating Expenses$2.12B
Operating Income$877.00M
Net Income$547.00M
EPS (Basic)$2.43
EPS (Diluted)$2.43
Shares Outstanding (Basic)224.50M
Shares Outstanding (Diluted)225.00M

Key Highlights

  • 1Net income for Q1 2026 decreased to $547 million ($2.43 diluted EPS) from $750 million ($3.31 diluted EPS) in Q1 2025.
  • 2Railway operating expenses increased by 15% to $2.12 billion, driven by higher fuel costs and the absence of $185 million in insurance recoveries from the Eastern Ohio incident in the prior year.
  • 3Merger-related expenses of $52 million were incurred in Q1 2026 due to the pending acquisition by Union Pacific.
  • 4Total railway operating revenues were largely flat at $2.998 billion, with merchandise revenues up 1% and intermodal and coal revenues slightly down.
  • 5The company reported an operating ratio of 70.7% for Q1 2026, an increase from 61.7% in Q1 2025, reflecting higher operating expenses.
  • 6Cash flows from operating activities decreased significantly to $344 million in Q1 2026 from $950 million in Q1 2025, impacted by higher cash payments related to the Eastern Ohio incident and income taxes.
  • 7Share repurchases were suspended due to the merger agreement with Union Pacific, with $6.3 billion remaining under the authorized repurchase program.

Frequently Asked Questions

The primary reason for the decrease in net income is a significant increase in railway operating expenses. This includes higher fuel costs and, crucially, the absence of substantial insurance recoveries related to the Eastern Ohio incident that were recognized in the first quarter of 2025, which had boosted the prior year's results.

The proposed merger with Union Pacific led to $52 million in 'Merger-related expenses' during the first quarter of 2026. These costs are associated with employee retention, advisor fees, and legal services. Additionally, the merger agreement has led to the suspension of share repurchases.

Railway operating revenues were nearly flat year-over-year. Merchandise revenues saw a slight increase, driven by growth in chemicals and automotive segments, while agriculture, forest, and consumer products, as well as metals and construction, experienced minor declines. Intermodal and coal revenues decreased slightly, with intermodal volume down due to lower premium demand and coal tonnage up primarily in the utility sector.

Norfolk Southern made its final settlement payment of $285 million in March 2026, completing the $600 million class action settlement for the Eastern Ohio incident. The company also reached a settlement with the DOJ for $15 million plus oversight costs. However, litigation with the Ohio AG is ongoing, and incident accruals totaled $189 million at March 31, 2026.