Norfolk Southern Corporation

Greetings. Welcome to Norfolk Southern's first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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 begin.

Thank you, and good morning, everyone. Please note that during today's call, we will make certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future performance of Norfolk Southern Corporation, which are subject to risks and uncertainties and may differ materially from actual results. Please refer to our annual and quarterly reports filed with the SEC for a full disclosure of those risks and uncertainties we view as most important. Our presentation slides are available at nscorp.com in the Investors section, along with a reconciliation of any non-GAAP measures used today to the comparable GAAP measures. Turning to slide three, it's now my pleasure to introduce Norfolk Southern's President and Chief Executive Officer, Alan Shaw.

Good morning, and thank you for joining our first quarter earnings call. I will begin with an update on East Palestine and our ongoing focus on safe operations. From the beginning, we have been guided by one principle. We are going to do whatever it takes to make it right for East Palestine and the surrounding areas. We are cleaning the site safely, thoroughly, and with urgency. We are assisting families, supporting local businesses and nonprofits, and investing in long-term projects for the area's future prosperity. I went to East Palestine in the immediate aftermath of the derailment and have returned almost every week to meet with members of the community and monitor our work. I've been in churches, schools, meeting halls, businesses, and living rooms asking how Norfolk Southern can use our resources to help the community recover and thrive. I'm proud of our people and our progress. I'm also proud of the crew and the locomotive that night. According to the National Transportation Safety Board's preliminary report, they were operating the train properly and took the right actions after receiving the alarm. The wayside detectors worked and there were no track defects. As the NTSB continues its work, we have already begun to take actions designed to further enhance safety. such as installing additional safety sensors, accelerating the deployment of advanced early detection technologies, and increasing safety training for first responders. The firefighters and other emergency responders who ran to the scene that night in East Palestine have our deepest gratitude and respect. They are heroes. We also appreciate the leadership of local state and federal officials and agencies in response to these events. We share their goals of helping people affected by the derailment and finding evidence-based approaches to rail safety. We are a safe railroad. In 2022, Norfolk Southern had fewer derailments than any other year in the last two decades, and our rate of employee injuries was the lowest in a decade. We strive to do better While events of the last few months have focused national attention on rail safety, derailments at Norfolk Southern in the first quarter declined from the same period last year, continuing a trend of improvement. We are going to learn from this accident to become an even safer company. I have been personally engaged in Washington to support specific federal legislative provisions to enhance safety. As the initial learnings from East Palestine have made clear, Meaningful enhancements will require the combined efforts of the entire industry, rail car owners, leasing companies, equipment manufacturers, and the railroad companies. Norfolk Southern intends to be a leader in that effort, and we embrace that role. Turning to slide four, at our investor day last December, we charted a new course for sustainable long-term value creation. We were the first railroad to launch a strategy that starts with safe, reliable, and resilient service for our customers, balanced with smart, sustainable growth and productivity improvements. With everything we do, we will focus on long-term priorities and value rather than just the short term. I am reaffirming my commitment to that vision and building the team to drive that strategy. This new direction is even more important today and we have been working to execute our industry-leading strategy. Our customer-centric, operations-driven approach supports both service and safety and will enable us to grow with our customers sustainably for the long term. Our powerful network, desirable geographic footprint, best-in-class channel partners, and strong relationships with our valued customers uniquely position Norfolk Southern to deliver on our strategy. When we spoke in January, service was the best in two years, customers were noticing, and December volumes were at 52-week highs, defying typical seasonality. Consistent with the long-term vision, after the East Palestine and Springfield derailments, we made two decisions we knew would have a near-term impact on service, capacity, and revenue. We are pulling up the tracks at the derailment site in East Palestine and removing the impacted soil in response to feedback from the community and the EPA. Since March 3rd, we have had only one track at a time in service with trains running at restricted speed through this section of our busiest quarter. This mainline segment links Chicago to eastern Pennsylvania, New Jersey and New York and is a strength of our franchise. We anticipate completing the remediation and having both tracks of service by early June. Second, out of an abundance of caution, in early March we accelerated the analysis of train make-up rules as part of our broader efforts to improve safety, service, and productivity, which we began implementing soon thereafter. As a result of these purposeful actions on our part, train capacity was limited initially. Paul will address this in greater detail. We are restoring capacity as we dial in this new set of processes. We do not anticipate any meaningful long-term impacts on service capacity or cost structure. These were the right things to do. They were also the best decisions to enhance our ability to deliver on our long-term strategy of delivering resilient service. It will take some time to build resiliency and we are making progress. We continue to invest to ensure we have the right team and resources where they are needed to provide our customers with safe, best in class service. As we shared when we announced our new strategy last December, we aren't focused on managing short term OR with actions that will undermine our longer term goals. We strive for more. Our longer-term commitment to competitive margins will be balanced with other important financial measures, such as growth in revenue, EPS, and ROIC. Putting that plan into action, we are making strategic investments in the near term that position us to deliver long-term value. One of those investments is to maintain the people and resources we need through economic downturns. This will allow us to respond more quickly and capture revenue growth when markets recover. Even more significant, resilient service enables our customers to confidently build rail into their supply chains and supports highway-to-rail conversions. We will use temporary downturns to invest in training, creating career opportunities for the craft railroaders who are the heart and soul of Norfolk Southern. I enjoy the time I spend in crew rooms and have made it my personal goal to listen to my craft colleagues about what they need. I won't stop working until our service and safety culture is the acknowledged model for the industry. Our strategy is a better way forward for the industry. It's a better way to deliver value to shareholders and it's the right thing to do for our employees, our customers, and the communities we serve. Before I turn it over to Mark, I'd like to take a moment and recognize our customers who have shown a tremendous amount of support throughout the challenges of the first quarter. I have received countless calls, letters, and emails from customers recognizing Norfolk Southern's positive response and dedication to making it right. It's made me proud to be part of the Norfolk Southern team and truly demonstrates the deep partnerships we have forged with our customers. I'll now turn it over to Mark.