Greetings. Welcome to Norfolk Southern Corporation's Q4 2021 earnings call. At this time, all participants are in listen-only mode. A brief Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Meghan Achimasi, Senior Director of Investor Relations. Thank you, Ms. Achimasi. You may begin. Thank you, operator, and good morning, everyone. Please note that during today's call, we will make certain forward-looking statements 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 discussion of those risks and uncertainties we view as most important. Our presentation slides are available at nscorp.com in the Investors section, along with our reconciliation of non-GAAP measures used today to the comparable GAAP measures. Along those lines, recall two adjustments during 2020, including a non-cash charge in the Q1 of 2020 related to the sale of 703 locomotives for $385 million, and a $99 million impairment charge in the Q3 of 2020 related to an equity method investment. We will speak to full-year comparisons excluding those charges from 2020. A full transcript and download will be posted after the call. It is now my pleasure to introduce Norfolk Southern's Chairman and CEO, James Squires. Good morning, everyone, and welcome to Norfolk Southern's Q4 2021 earnings call. I'm pleased to be joined by Alan Shaw, President, Cindy Sanborn, Chief Operating Officer, Ed Elkins, Chief Marketing Officer, and Mark George, Chief Financial Officer. Let me start by acknowledging and thanking the entire NS team for the tremendous effort that's gone into the fulfillment of our financial targets established in our 3-year strategic plan. 2021 serves as the pinnacle of the plan and is marked by the achievement of our 60% full-year operating ratio and record productivity levels across our operation. Through a multi-year effort, we delivered on our commitments, overcoming significant headwinds associated with, first, a freight recession, and then a global pandemic over the course of our plan. In the past 3 years, we've produced industry-leading total shareholder return. We've grown EPS by 27%, reduced our operating ratio by 530 basis points, and returned nearly $10 billion back to our shareholders in the form of share repurchases and dividends. We met and exceeded our goals, albeit with a very different formula than originally anticipated, given the volume headwinds, demonstrating our ability to adapt and innovate and our dedication to deliver upon our commitments. I'm so proud to be a part of this team and humbled to serve as its leader. We're poised to build upon our momentum and write a new record book. The company is in rock-solid position, and we have the right team to guide our next chapter of success. With that, I welcome Ed Elkins to his new role as Chief Marketing Officer and congratulate Alan Shaw on his appointment as President. It's my pleasure now to turn the discussion over to Alan for a detailed look at the Q4 and full-year results. Alan? Thank you, Jim. As Jim noted, 2021 represents the culmination of our multi-year plan, and I'm pleased to share with you the progress we made in the Q4. As you see from our results on slide 5, revenue growth of 11% outpaced our expense increase of 8%, producing an 18% improvement in earnings per share and a Q4 record operating ratio of 60.4%. For the full year, revenues improved 14%, which more than offset the 6% increase in operating expenses. We delivered the hallmark 60% operating ratio for the full year, an improvement of 430 basis points over the adjusted full year 2020 result and our 6th consecutive year of improvement. We are excited to share more details of our results, and you'll hear from both Cindy and Ed about work to iterate on the next phase of our Thoroughbred Operating Plan that will serve as the framework for our continued progress on service, productivity, and growth. I'll first turn to Cindy for a review of our operations. Cindy? Thank you, Alan, and good morning. During the Q4, headwinds from the tight labor market created acute operational challenges across several parts of our network. While working to overcome the workforce planning hurdles, we maintained focused on leveraging productivity initiatives to move freight for our customers. These efforts did bear fruit, but our service quality was significantly below where we needed it to be. I'm going to discuss with you today the strategic approach we are taking to change this. Turning to slide 7, pronounced changes in business mix were evidenced by the unit volume decline of 4%, while GTMs were up 1%. Productivity gains were key to handling volumes in the quarter as the transportation workforce contracted by 8%. The reduction in crew starts of 4%, growth in train weight of 10%, and growth in train length of 8% were critical elements of this productivity formula as well. Though our active locomotive count increased by 5% as the network's load, we kept focused on efficiently deploying those locomotives on the larger trains, which helped drive the 3% improvement in fuel efficiency. As I mentioned a few moments ago, you can see the degradation of network fluidity on slide 8. We regained a modest amount of ground over the holidays, and as we're entering the Q1, our improvements have been sporadic as COVID-related absences have more than doubled from where they were in December. Let me be clear, our top priority is to drive the service improvements our customers expect and need, and we will get there. We are working very hard to leverage an increased hiring pipeline as well as productivity initiatives to drive our performance. Next, I'll provide more details on the hiring process on slide 9. We have made significant progress in ramping up resources to improve the pace of hiring while pursuing productivity. As shown on the slide, we are pulling 5 key levers to do so, including, number 1, incorporating additional recruiting and training resources to increase hiring. Employees from across the company have volunteered to provide support at our principal training facility, and it's all hands on deck. Number 2, streamlining the hiring and onboarding process. We've trimmed weeks from the process of first identifying a candidate to have them on board. 3, increasing trainee pay and offering incentives such as signing, retention, and referral bonuses. 4, lengthening and combining trains. We've made solid progress in this regard. Finally, five, we're using a variety of techniques to optimize our existing crews, including realigning crew districts and making crew bases more fungible. Our people are getting creative and rising to the challenge, and resource additions are bearing fruit as we've onboarded over 3x more conductor trainees in January than any month in 2021. These trainees will promote throughout the Q2, which is when we expect to start improving train and engine service staffing levels. We do expect to see some relief in critical crew bases during Q1 as trainees that started in 2021 became promoted, though we are still experiencing high levels of attrition in those same areas. On average, we expect the number of certified train and engine employees in 2022 to approximate that of 2021 and are expecting GTMs per employee to increase. When looking at the year as a whole, our plan is to leverage productivity gains to absorb volume growth while getting the workforce rebalanced to drive improvements in service quality. Let's unpack the productivity discussion a little more on slide 10. We've improved average train weight and length 21% and 20% respectively since mid-2019 when TOP 21 was launched. This has been a key to our success and will continue to be so going forward. Larger trains reduce labor intensity, improve locomotive productivity, improve fuel efficiency, and provide our customers with a platform for growth. We have efforts in the pipeline to continue this trend. First, on the infrastructure front, in 2021, we launched work on 9 siding extensions, one of which was quickly completed and in service by the Q4. Most of the others will be completed throughout 2022. Second, our very capital-efficient and high-performing DC-to-AC locomotive modernization program is ongoing. As a reminder, this is a dual-purpose program to rebuild engines at the end of their life while converting them to the latest and greatest technology. In 2021, we improved our fleet composition to nearly 60% AC power and 65% of our road fleet as capable of distributed power. Both of these aid with running larger trains. Lastly, our operating plan and growth initiatives must be well aligned to add capacity to existing trains, which brings me to slide 11. In 2022, we have already kicked off the next generation of our PSR-based operating plan, which we are calling TOP SPG. While you may be familiar with NS's legacy of Thoroughbred Operating Plans or TOP, the next generation, SPG, represents a new era of service, productivity, and growth, three equally important facets of our new operating plan. We are embarking on this next era because we have significant improvements that need to be made in each of these areas, service, productivity, and growth, to reach our full potential. We are taking a ground-up approach to the development of the plan in order to explore what is possible when we remove historical constraints and take a fresh look at our business. We are leveraging lessons learned from the first three years of PSR operations under TOP 21 and using a rich data set to execute in a customer-centric collaborative process. We look forward to keeping you updated as this initiative unfolds throughout the year. Thank you, and I'll now turn it over to Ed. Thank you, Cindy, and good morning, everyone. Now, beginning on slide 13, I will highlight our results for the Q4. Total revenue improved 11% year-over-year to $2.9 billion as strong demand and favorable price conditions more than offset the 4% volume decline in the Q4. Volume was impacted by the continuation of the extraordinary global supply chain disruptions and slower network velocity. Pricing strength across all markets contributed to the 15% increase in revenue per unit, and we reached record revenue per unit less fuel across all of our markets. This demonstrates our ongoing commitment to execute our Yield Up strategy and drive value for both our customers and our shareholders. Within Merchandise, volume growth in the Q4 was led by our Chemicals franchise as rising economic activity drove demand for chemical products, particularly for crude oil and natural gas liquids. Gains in our Metals business also contributed to growth with volume in these markets up 6% year-over-year on sustained high demand from the strengthening manufacturing sector. Partially offsetting Merchandise growth was a decline in Automotive shipments, which were down 9% year-over-year due to slower velocity, coupled with strong comps in the Q4 of 2020 when the industry was boosted by pent-up demand. Merchandise revenue per unit increased 6% year-over-year, driving total revenue growth of 8% to $1.7 billion for the quarter. Revenue per unit less fuel for this market reached a record level in the Q4. We've demonstrated year-over-year growth in this metric for 26 of the last 27 quarters, which further demonstrates our ability to drive sustainable revenue growth. Our intermodal franchise continued to face pressure from supply chain volatility, resulting in a volume decline of 7% year-over-year. Strong consumer demand and elevated imports stressed these supply chains and exceeded drayage capacity and equipment availability. This negatively affected both our domestic and our international markets. Despite these headwinds, we achieved record intermodal revenue in the quarter, up 14% year-over-year, and that was driven by increased fuel revenue, storage revenue, and price gains. Revenue per unit less fuel grew for the 20th consecutive quarter. Now, turning to coal. Revenue increased 21% year-over-year in the Q4, which was driven by price gains and higher demand in a tightly supplied market. Coal revenue per unit reached near record levels and increased 16% year-over-year. Our export markets continued to benefit from high seaborne coal prices, which increased the competitiveness of U.S. coals in the global market. Shipments of domestic met and coke were particularly strong this quarter on higher demand to support steel production. If you'll turn to slide 14. Full year 2021 revenue grew 14% to $1.1 billion on 5% volume growth. All of our markets posted gains reflecting strong demand for our product coming out of the pandemic, tempered by supply chain pressures experienced throughout the year. Revenue growth was strongest in our merchandise franchise, where all lines of business, but particularly metals and construction, benefited from higher demand and favorable price conditions associated with the economic recovery. Intermodal growth was driven by elevated consumer activity and tight truck capacity. Coal revenue increased on higher seaborne coal prices and growth in steel production activity. We reached record levels of both revenue per unit and revenue per unit less fuel. Both metrics were up year over year due to price gains, storage charges, and higher fuel revenue in the case of total revenue per unit. As markets have evolved, we've leveraged favorable conditions to drive improvement for our bottom line. Now, let's look ahead to our outlook for 2022 on slide 15. We're optimistic that our business will continue to grow despite the ongoing uncertainty in the economy. We're increasingly confident that supply chain conditions, including rail network velocity, will improve as the year progresses. Overall, the demand environment for our service is strong. We're committed to working with our customers and channel partners to develop sustainable solutions to maximize our opportunities ahead. We remain focused on our ability to deliver value for our customers and leverage market conditions throughout 2022. As Cindy explained, both our hiring plan and the development and implementation of TOP SPG will deliver increased fluidity, efficiency, and network capacity as the year progresses, and our volume pattern will follow that same sequential improvement trend. This will allow our customers to provide additional value to their customers for their product and build a strong platform for future growth. Market conditions for our merchandise franchise are expected to be favorable, with several customers announcing expansions in the new year that will create opportunities. In addition, industrial production is projected to grow 4% in 2022, which will drive demand for most of our markets, particularly for our steel markets. Residential construction spending is forecasted to grow more than 6% this year, following the sharp increase in 2021, supporting continued gains in several of our industrial markets. U.S. light vehicle production is expected to reach 10.3 million units this year, which is approaching pre-pandemic levels of 2019. This recovery will have a positive impact on both our automotive and our metals volumes in 2022. Demand for our intermodal markets is expected to remain favorable despite continued headwinds associated with supply chain congestion impacting our ability to capture new opportunities. These headwinds are expected to ease in the H2 of the year, creating a more favorable environment for growth. Furthermore, a robust consumer economy, elongated inventory replenishment cycles, and a tight truck market support our growth plans. Durable goods consumption is expected to improve 3%, and that's on top of the near record 19% growth in 2021. This also bodes well for our intermodal franchise. Our outlook for coal is more guarded as some of the drivers of 2021 growth show signs of easing in 2022, despite some potential opportunities in the near term. Seaborne prices remain high. However, they have begun to decline, leaving subdued optimism going into the new year. Expected increases in global production will likely contribute to downward pressure on these seaborne coal prices and lower the demand for export coal. In the utility markets, while there's been strength associated with higher natural gas prices, that upside will be determined by coal supply as production levels remain high. Now, before I turn it over to Mark, I would like to highlight our new Insights portal on slide 16. The pandemic has pushed manufacturers to redesign their supply chains in favor of certainty of supply and locating inventory closer to customers. Our best-in-class industrial development team is at the forefront of these efforts, and they've launched an innovative solution to drive value for our customers and support development in the communities that we serve. Insights is a comprehensive search tool for rail-served industrial sites and transload facilities on our network. It allows users to create customized search parameters to quickly identify industrial sites that meet their unique needs. More importantly, this portal makes it easier to do business with NS and helps our customers make informed long-term investment decisions that will promote economic activity and create jobs. We're excited to provide this product to our customers and help them expand their business on Norfolk Southern. Overall, we are grateful for our strong customer partnerships, and we look forward to growing our business in 2022 with a continued emphasis on improving our service and driving value for our customers and for our shareholders. Now I'll turn it over to Mark for an update on our financial results. Thank you. Thank you. Starting with slide 18, as Ed noted, revenue was up 11% despite a 4% volume decline. This more than offset an 8% increase in operating expense, which led to 140 basis points of operating ratio improvement to a Q4 record of 60.4%. Improvements in RPU, coupled with strong productivity, led to a record Q4 operating income, with growth of 15% or $145 million. We set another record for free cash flow, up 30% or $642 million for the full year. Moving to a drill down of operating expenses on slide 19. While operating expense grew $134 million or 8%, it is up less than 3% or $44 million apart from fuel cost increases. The $90 million headwind from fuel is driven almost entirely by price. You'll see purchased services and rents up $46 million, with the majority of the year-over-year increase driven by the same drivers we talked about on the Q3 call. Higher expenses associated with Conrail, higher technology spend associated with our technology strategy, higher drayage expense associated with more hourly drivers used to alleviate terminal congestion, primarily in Chicago, and we continue to see inflationary pressure on lift expenses going forward as it relates to contractor labor availability. Moving on to compensation and benefits, it is up 2%, but you'll note the $33 million in savings from 6% lower headcount, and that more than offsets increases in pay rates and overtime. Meanwhile, incentive compensation comparisons in the quarter are a headwind of $24 million. Materials, claims, and other expenses were all down year over year. Turning now to slide 20. Taking a look at the rest of the P&L below op income, you'll see that other income of $21 million is unfavorable year-over-year by $22 million, due in part to lower net returns from company-owned life insurance, but also fewer gains on the dispositions of non-operating properties. Our effective tax rate in the quarter was in our expected range at 23% and similar to last year. Net income increased 13%, while earnings per share grew by 18%, supported by 3.3 million shares we repurchased in the quarter. Turning to full-year highlights on slide 21. As a reminder, these highlights are compared to adjusted results for 2020, which excludes both the non-cash charge for locomotive rationalization in 1Q and the impairment charge in 3Q. Increased demand across all markets and strong results through Yield Up resulted in 14% year-over-year revenue improvement. Expenses increased at less than half that rate, up 6% compared to 2020 as we continued our operational transformation while responding to market changes. We produced record operating income of over $4.4 billion, up 28%, or $961 million versus the adjusted 2020 results. As Jim noted in his opening remarks, we've brought our operating ratio down to 60.1%, an important milestone for our company. That is 430 basis points of year-over-year improvement, in line with the guidance we provided. Rounding out the results, net income increased 27%, while diluted EPS increased 31%, augmented by our strong share repurchase program, enabled by record free cash flow that we will wrap with on slide 22. Free cash flow is a record $2.8 billion for 2021, up 30% year-over-year, and we reported a strong 93% free cash flow conversion for the year. Property additions were about $100 million lower than our $1.6 billion guidance due to timing issues related to the continued supply chain disruptions. This shortfall in 2021 will carry over into 2022. The sharply higher profitability of the company in 2021 allowed for an over $2 billion increase in shareholder distributions for the year. We had 2 dividend increases in 2021 and more than doubled our share repurchase spend. I'll point out, we just increased our dividend again by $0.15 or 14% to open 2022. With that, I'll turn it back over to Alan. Thank you, Mark. Turning to slide 24, I will wrap up with our 2022 expectations. As you heard from Ed, based on our assessment of economic indicators, we expect markets related to manufacturing and consumer activity to drive growth. We expect total revenue to deliver upper single-digit growth, with merchandise and intermodal both increasing solidly and coal resuming its long-term secular decline. We will develop and leverage our new TOP SPG operating plan to accelerate our service recovery and drive additional efficiency into the organization in support of Norfolk Southern's and our customers' growth. You'll hear a lot more about TOP SPG at our upcoming Q2 Investor Day. From an operating ratio perspective, we expect the H1 of this year to look similar to the back half of 2021, with robust demand and service improvement driving stronger performance in the H2 of this year. With this positive momentum in revenue, productivity, and efficiency, and based on our current expense projections, we expect to achieve greater than 50 basis points of OR improvement in 2022, and we won't stop there. In addition, we expect a dividend payout ratio range of 35% to 40% and CapEx in the range of $1.8 billion to $1.9 billion. We anticipate using remaining cash flow and financial leverage to repurchase shares. As you've heard from Cindy, Ed, and Mark, we are optimistic about service, productivity, and growth in the year ahead and will advance productivity initiatives to attract business to Norfolk Southern more profitably than ever. We are committed to further efficiency improvements to create long-term, sustained value for our customers and shareholders. Thank you for your attention. We'll now open the line for Q&A. Operator? Thank you. We'll now be conducting a Q&A session. If you'd like to ask a question today, please press * one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press * two if you would like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. Due to the number of analysts joining us on the call today, we'll be limiting everyone to one question to accommodate as many as possible. Thank you. Our first question today comes from the line of Brandon Oglenski with Barclays. Please proceed with your question. Hey, good morning, everyone, and congrats, Jim, on quite a career. Alan, you know, congrats as well moving up here. I guess, you know, coming out with this SPG approach, and I guess I heard there was gonna be an analyst meeting, but how can you tell us how does this differ from the PSR, you know, journey that you guys have taken the last few years? And is this a view that balances growth and cost efficiency and price? Good morning, Brandon. It's a continuation of our PSR journey. It's the next generation of it. You know, we implemented TOP 21, and it was really largely focused on our merchandise network. This is gonna be focused on all of our service products. It's a comprehensive plan. We are really expecting and challenging ourselves and demanding of ourselves to have an output that delivers longer trains, a balanced network that's gonna promote better resource efficiency, which is gonna give us the room to grow. It's gonna deliver an operating plan that our field can execute on a daily basis. It's gonna improve our service product as well. Thank you. Our next question comes from the line of Jordan Alliger with Goldman Sachs. Please proceed with your question. Yeah. Hi, morning. I'm just sort of curious, as you sort of think about yields, revenue per carload as we look forward, you know, over the coming year and taking into account price and mix and everything else, you know, I guess, A, how do you see the opportunity around price, particularly with the tightness continuing? And then how do you think about overall yields as we move throughout the year? Thank you. Thank you for the question. You know, it's an inflationary environment out there in the U.S. There's a lot of demand. The U.S. consumer wants to grow, and we intend on delivering value to our customers. We expect as the year progresses, we're gonna see a balance of volume and price that will accelerate as the year moves on. Thanks. Our next question is from the line of Chris Wetherbee with Citigroup. Please proceed with your question. Great. Thanks. Good morning and congrats, guys. I guess I wanted to maybe dig into that volume and service relationship a little bit deeper. Sounds like the H1 of the year, both service and volume will be a little bit muted, but then you expect to see improvements as it goes forward. Can you give us a sense of maybe where you're going to see some of those opportunities or some of the improvements on the service side hit first and what that means or unlocks in terms of opportunity on the volume side? Just wanna get a little bit of a better sense of how much volume is sort of included in that upper single digit, you know, revenue growth target for the year. Cindy, why don't you take the efficiency piece of that and talk about what you view as the trajectory for operations and service improvements throughout the year. Then Ed, maybe you can tackle the revenue implications. Yeah. Okay, Chris. From a service standpoint, you know, we are really focused on improving our availability of crew resources to help us with service. We had some accelerated attrition in several core locations of our network that we had to really increase the pipeline for those locations, and that's largely in place. In fact, of the conductor trainees we have out right now, whether in classroom or in the field, 50% are aimed at those core locations. As they onboard into the Q2 and the rest of the hiring plan that we have, as well, I think we'll start to see our service measures improve and in the back half, you know, kind of accelerate. I would also add that the TOP SPG is a accelerant as well as we take a look at our service product and take a look at our service plan. As Alan noted, it will also be helpful as we think through train length, balance for our crews, and how we operate the railroad and improve executability, which is also a catalyst. When we look out in 2022, what we see is really with the exception of coal, very healthy commodity markets. There's a lot of demand out there right now. As we are able to deliver more payload capacity to our customers, they're gonna move it. I've already said that we have a strong U.S. consumer. We have record low inventory sales ratios. We believe that there's gonna be continued demand, particularly for durable goods, that will bode well for us and for our customers as we're able to deliver more and more value to them as the year progresses. Got it. Thank you. Appreciate it. Our next question is from the line of Jonathan Chappell with Evercore ISI. Please proceed with your question. Thank you. Ed, sticking with you and trying to tie some of these things together. First of all, the high single digit just clarification. From the high single digit revenue, should we think kind of mid-single digit RPU and mid-single digit volume? Secondly, to play into that again, capacity is at a premium here. You're clearly ramping up the trainees. Sounds like that's the Q2. Maybe you're not right-sized from an employment standpoint for a few more months. Are you being more selective in the cargo you're willing to move right now in attempt to maximize mix margin and maintain or improve fluidity with the hope that there's more of an inflection in the H2 of this year? Yeah, we stay very close to our markets and to our customers in those markets. I think we have a pretty good handle on where the demand is. There's pretty strong demand really from every market that we serve currently. What we intend to do is, as the year progresses, again, we're gonna be able to deliver more and more value to those markets and to those customers, whether it's on the bulk side, where we have strong demand, or on the consumer product side, which includes both portions of our industrial products business and of course, our intermodal and automotive franchise. Are you maybe not taking on as much freight as the demand dictates just in order to get that service to where it needs to be in the network rightsize from a labor standpoint? Well, I think Alan said it, and Cindy, we're gonna get our network running the way we need it to run with SPG. That's gonna offer us the opportunity to deliver more value to our customers through service that they need, the productivity that everyone expects, and frankly, a long-term platform for growth across all the markets we serve. Yeah. Appreciate it. Thanks, Ed. Our next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question. Thanks. Can you just unpack the pricing environment a little bit more? Kind of what do you expect in terms of core price on a relative basis in 2022? Kind of how do we think about kind of accessorial kind of impacting the trajectory of RPU, especially in the back half of 2022? Thanks. You know, when you look at the indices out there's clearly a lot of inflation in the U.S. and global economy. There's a lot of demand, and currently, we are servicing our customers, and we're gonna continue to deliver value to them in the long term. You know, price is a substantial portion of our plan. It is an intense focus of us going forward. As we're able to deliver value to our customers, you know, we want to be able to deliver value for our company and our shareholders. That's the combination and the recipe that we're focused on. Thank you. Our next question is from the line of Brian Ossenbeck with J.P. Morgan. Please proceed with your question. Hey, good morning. Thanks for taking the question. Maybe for you, Cindy, we've seen a couple of facilities have engaged shutdown. I hear you're trying to hire a lot more on labor, just as everybody else across the industry. Is there an equipment shortage issue or maybe a volume balance that you're also trying to work through? Can all that be solved by labor? You know, what else has to go right to get things kind of back on balance? Then maybe a quick follow-up for Ed. I hear you on the secular decline for coal in 2022, probably a good place to start expectations. Given that coal inventory levels in the utility side are pretty low, could we see some potential restocking this year? Maybe just not gonna count on that? Thank you. Yeah. I think your first question was on intermodal, and I'll start there. We are part of a network that spans not only the United States, but also the global economy. We're working really hard to make ourselves more efficient on the intermodal side. That includes, of course, everything we've done to deliver value to our customers by reconfiguring some of our terminals, adding chassis and working very, very closely with our customers. As warehouses are able to develop more throughput and more productivity on their side, it will help us not only absorb the volume that wants to move that way, but also help us deliver additional value and improve the velocity of our own network. Same is true on the other end on the port side. As imports are able to become more fluid, we're able to deliver more value in conjunction with them. I think your second question was on coal. Would you mind repeating that part? Oh, sure. Just given where utility stockpiles are right now, obviously a lot depends on how much demand there will be. Could there be a scenario where you see some restocking here on the utility side in the U.S. throughout the rest of the year? Utility stockpiles are low, and it's really gonna be a combination of, you know, the expectation for weather and demand, and frankly, the utility's appetite for inventory replenishment that's gonna dictate where that goes. I would characterize our position on coal pretty simply as we're trying to be very realistic, but also opportunistic when it arises. All right. Thank you, Ed. Our next question is from the line of Scott Group with Wolfe Research. Please proceed with your question. Hey, thanks. Good morning, guys. Any thoughts on just some of the extreme volume weakness to start the year and when it gets better? Mark, maybe just some thoughts on some of the individual costs, items for 2022, the outlook. I think you've got some tough comps on gains on sales, maybe just some color on what you're assuming there. Lastly, anything in terms of H1 or H2, margin expectations would be helpful. Thank you. I'll start and talk about volumes to start off the year. I think every U.S. railroad was slow out of the block, so to speak. Intermodal was particularly. I think that was really a combination of some weather there around the holidays, a holiday that fell on a weekend and probably some COVID impact, either upstream or downstream, with warehouses, et cetera, and truckers. We've seen that demand ramp up since a slow start. On the commodity side of the business, on the bulk side, there's a lot of demand out there, and we're working hard to put every available resource against it. Scott, just to get to some of the cost items. You know, typically you would ask about, say, comp and ben on a per employee basis. I think I guided this past year to 33 being the area to expect in that back half, and that's where it ended up being coming out for 2021. I would say it's probably gonna be in that same vicinity here in 2022, as we're gonna have you know, a little bit of inflation in wages, but that will be largely offset by tailwinds from lower incentive comp assumptions. That's probably the best way to think about the comp and ben line. You know, purchased services had ramped throughout the year. As we told you, we started light in 2021. There were things being pushed out with some of the dynamics that were going on. I would look at the kind of back half of 2021 as a good run rate to assume for 2022 there. You know, similarly, I would say where we ended up on materials, you know, if we could avoid growth off of that 2021 base, that would be great, but you have to expect there's inflation that we're fighting there. I would expect a little bit of creep there. Similarly with rents, you know, it kind of ramped toward the back half of the year now. I think, you know, the current levels here where we're looking at rents, you know, with network velocity down, it puts pressure on our rents. As the velocity starts to increase, we'll be taking on more volume, which will replace that. I think, you know, pretty flat rents here, from Q4 levels. Hopefully that helps. I think, you know, from a margin perspective, as Alan said, you know, we're probably gonna be sideways here to start the year, and we're gonna see some, you know, sequential improvement from there, as volume starts to come on board the network. More volume, I should say. Just when you say sideways, can you just clarify? Maybe I missed what you meant. No, sideways from the Q4 levels here of OR. You know, we've got a 60.4% OR we posted. You know, we had something similar there in Q3. I think we're gonna go a little bit sideways from those levels until we start taking on more volume, and that's when we'll see that improvement in the operating ratio. Okay. Helpful. Thank you, guys. Thank you. Our next question comes from Ken Hoexter with Bank of America. Hey, great. Good morning, Jim, congrats on the next phase. Always enjoyed the trips and congrats to Alan and Ed as well. Just Alan or Ed, just to clarify on those numbers on the volume side there. If volumes are down 14%, can you parse that by the crew shortage, weather or COVID? Should we still expect to see negative Q1 volumes and then kind of ramping up? I just wanna understand the kind of cadence as you look at those volumes, just conflicting with kind of the strong demand comments. Then, Cindy, you mentioned the locomotives in storage or pulled out of storage. What do you still have left and is that part of the CapEx plan or is there still plenty as you pull those locos out? Sure. I'll start with the volume comment. You know, we're watching the volumes very closely and staying very close to our customers as this month has evolved and as this quarter continues. I think we're gonna continue to see the relative acceleration of strength that we've seen so far on the intermodal side continue. You know, we're putting resources up against demand on the bulk side. That's really where we expect to see TOP SPG help us deliver additional value. Ken, I'll on the locomotive question, the engines that we pulled out were really kind of what we would call kind of a dynamic storage environment, where we would have them as protect units in case we had some sort of line outage that would have prevented terminal from operating on time with its outbound trains because the inbound trains were impacted from coming in. We'd activate units, and then as the backlog came into the terminal, we would then lay down different units. It was fairly dynamic, and it's a good process for us to have to help us deal with the variability on the network that we have from time to time. Essentially, we activated all of those units, and there are still units in storage that we would need to do a little bit more work on to activate them, but we have not done so. Next question comes from the line of Walter Spracklin with RBC Capital Markets. Please proceed with your question. Yeah. Thanks very much, operator. Good morning, everyone. On the operating ratio improvement of 50 to 100 basis points, generally, that's something that given the pricing that you're achieving and some block and tackling that you do through the year, that's a more kind of normalized annual level that we would expect to see of a railroad. Curious if that's your view on it. You know, are you in the steady state now level of operating ratio with any major improvements, or closing the gap kind of done and really just kind of on that standard level? Do you see upside to that 50-100 basis points, if some of your initiatives, you know, take hold here in 2022 and allow you to achieve something better than that? Walter, the operating ratio guidance for this year is reflective of what Mark talked about in terms of just the trajectory of OR, particularly in the H1 of the year. You know, we're gonna fix our service product, and we're gonna get resources in place, and we're gonna implement TOP SPG, which is gonna make us less resource intensive. It's gonna allow us to grow and provide value to the market, and it's gonna allow us to provide a very efficient product. What that does is that gives you kind of a sideways OR in the H1 of the year and then some pretty meaningful change and improvement in the H2 of the year. Okay. I appreciate the time. Next question is from the line of Allison Poliniak with Wells Fargo. Please proceed with your question. Hi, good morning. Just wanna ask about technology. I guess, you know, firstly, you know, how impactful is it to support your SPG initiatives going forward? I guess along with that, do we assume technology investment starts to accelerate here if that's the case? Or does it just get pivoted to different initiatives under that operational plan? Any color there? We've got a fairly robust operations planning model that we will utilize with TOP SPG. Frankly, TOP SPG is a clean slate. Now we're gonna put everything out on the table. We're gonna redesign our network based on what's best for Norfolk Southern, and the outcomes of that are gonna be a balance between service, productivity, and growth. You know, Jim started us on our digital transformation, and you've heard us talk about technology improvements and customer-facing technology and our efforts to improve our efficiency on line of road and in our intermodal terminals. We're gonna continue that because we fully believe that that is gonna help us better utilize our resources and make us more consistent and more reliable going forward. Understood. Thank you. Thank you. You know, a great example is the one that Ed highlighted with NSites. Does that mean that some of those? You know, I know productivity is important there, but some of those more customer-facing technology investments, do they start to take more precedence here, or is it still very well-balanced under all of that? It continues to be a balance. We will continue to recognize that our relationships with our customers are shifting from B2B to B2C. Cindy has really helped us focus our technology on operations and productivity improvements as well. Allison, I would put the operating side or the operating improvements into three big buckets. They'd be mobility, automation, and predictive analytics. We've got a robust set of initiatives in each of those areas. We've talked about them in prior earnings calls. That is a big part of our productivity opportunity. Great. Thank you. Our next question comes from the line of Tom Wadewitz with UBS. Please proceed with your question. Yeah, good morning. I guess I'll give you know, I've got kind of two broader things. The SPG, I'm wondering, you know, we think about PSR having, you know, train schedule focus, running longer trains. I know there are a lot of different pieces to it, and then we have certain metrics that we'll watch to see how you're doing. Should we be considering different metrics for the output of SPG, you know, train length, velocity, dwell time? Are those gonna be the, you know, kind of the right metrics, or are there different things that we would look at for kind of outputs of SPG? I guess the other topic would just be on labor. Do you think you're at steady state on labor? You know, when you talk about elevated attrition, is there, you know, still risk that you know you don't make the progress because you're kind of, you know, fighting against that attrition and that remains a challenge? Thank you. Tom, I'll start first. With respect to the metrics for TOP SPG, you know, what we'll be looking for is what we outlined, improved service, improved productivity, and a platform for growth. Then I'll let Cindy talk about, you know, the specifics of that. Tom, you know, from an SPG perspective, we think it's very PSR based at its core. It's three main things. It's driving train length, it's driving balance, and it's driving executability, which then provides service. As you put those together with SPG, meaning service, productivity, and growth, all three of those initiatives drive growth in the future as well as service in the present. You know, we're real excited about it. We had a TOP 21 in 2019. A lot has changed since 2019. We, you know, it's really good timing for us to take on this initiative as well. Let me go to the labor side. You know, I think we are an attractive company to work for, and we are able to attract people to work for us. I think as I've described, our hiring plan is very robust as we head into the Q1. A lot of that work has been done in 2021. In fact, 6 straight months of increased conductor trainees, and 10 out of the last 12 months, we had an increase in conductor trainees. We are gonna continue working towards getting onboarding folks that wanna be here. We have folks that do come are excited about working for us as a company, our benefits that we provide, and enjoy working on the railroad. We'll find those folks and bring them on board. It is a challenging environment, but we feel like we'll be able to get the people that we need. From a measurements perspective, you know, when we look at dwell and train velocity, I mean, those really are the key ingredients to seeing how we're performing. We have a lot of internal measures, both customer facing and network performance and specific customer measures. You know, I don't know that SPG changes the measurement outlook. I think what you will see is an improved service product, and you will see that in the measures that you can see publicly now. Has the attrition stabilized? Can you give a quick comment on that? That seems like kind of a key variable. It's about the same. You know, I think it's very hard to predict. You know, when we looked at you know, the challenges of last year and did a lot of introspection about what we could have figured out, what could we have done differently. You know, we have about 100 hiring locations and saw unusual attrition at 12 of those hiring locations. Those are still challenging locations from an attrition standpoint, but I think we've got our hiring plans aimed to manage through that the best we can. We've got some that we're really seeing an improvement in our pipeline. Some are staying about the same, but we've got our great HR team working on sourcing folks even in a challenging environment. Cause again, we have a very, you know, we're a compelling company to work for. Great. Thank you. Our next question comes from the line of Justin Long from Stephens. Please proceed with your question. Thanks. Jim, Alan, and Ed, congrats on all the transitions. I had a two-part question, first for Cindy. Just curious when you think service can get back to pre-pandemic levels when you put all the pieces together. Then for Mark, when you look at the implied incremental margins, excluding the big gain on sale from last year of a $55 million, it seems to imply incrementals in the mid-50s%. I know the network challenges are weighing on that number, but any thoughts on where incremental margins could normalize once we get through some of these network challenges in the H2 of this year and into 2023? Justin, I'll start with service levels. I think, you know, we'll be challenged in the Q1. I think we'll start to see some improvement in the second. You know, as our new employees come on board, and then I think we'll be back to plan levels of what velocity we have in our plan and what dwell we have in our plan, and that should look close to, you know, what you describe as pre-pandemic levels. That's what we're aiming for, and I think TOP SPG helps us with that as well. Yeah, Justin, I would say to the incremental margin question, you know, your math is right. That's the way it calculates. Look, we have a little bit less tailwind than we did last year when you think about incrementals. Little bit on the coal side, you know, coal pricing and coal volumes won't be as robust. You know, we've got that property gain comp that also impacts the year-over-year look at the incrementals. You know, as volumes increase, some of the accessorials come down, and that is also an impact as well. You know, look, the inflationary environment is certainly stronger than it was last year, although we're hoping that incremental pricing will help mitigate that. Those are really the drivers here and why you see the step down in incrementals from, say, last year, full year to this year, although incrementals in the Q4 is kind of consistent with what you're seeing in the guidance for next year. Okay. Thank you. You're welcome. Our next question is from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question. Hey, thanks a lot. Hi, everyone. Mark, I just wanted to follow up on that question, maybe just ask it a little bit of different way because I know there's a lot of focus on operating ratio on incremental margins, which is perfectly valid. But the industry and I think you guys are also kind of moving to more of a investment for growth phase. And so I'm just trying to think about, you know, maybe the right way to think about, you know, prospective, you know, performance is really about earnings growth potential and total earnings growth potential as opposed to just exclusively on operating ratio expansion. And wondering to get your thoughts on that. It looks like kind of low double-digit earnings growth is what you guys are pointing to for this year, and if you think that type of level or trajectory is kind of sustainable over the course of many years. Yeah. Amit, the bottom line growth is obviously a function of, you know, margin expansion and the top line growth. As the runway for margin expansion lessens, you're gonna have to rely more on top line growth, and that's why, you know, there is a G in the SPG. We're looking to grow this business, and we're not waiting until we get to margins at the right level to do that. The incrementals this year, for example, that we're guiding to, you know, if we can outperform on the top line and even get more revenue and more volume onto this railroad, that should really help the incremental equation. Every extra point of revenue growth you get, I do believe you'll have stronger incrementals. Certainly as we look out from 2022 and when we're back to where we wanna be from a service level perspective, provided the external environment is supportive from an economic growth perspective, we would hope to be able to outperform on the top line and have that be a primary catalyst for that bottom line growth in conjunction with continued improvement on the OR because you are gonna have accretive incrementals. It's just I think your incrementals will be larger the larger your top line growth is. Well, just if I understand what you're saying, I guess the optics around the needed incrementals this year, the answer to your previous question is really reflective of H1. You know, the operating leverage in the business in terms of 60% to 70% incrementals, that's still the right way to think about prospective incrementals in a more growthier environment. Is that correct? Yeah. I mean, I'm not gonna range bound it for the future. Yeah, I do believe incrementals should be better when we don't have some of the headwinds that we're dealing with this year. Yeah. Okay. Thank you very much. Appreciate it. Okay. Our next question comes from the line of Ben Nolan with Stifel. Please proceed with your question. Yeah, thanks. I was a little curious on the coal side. Certainly from what we've heard from some of your competitors, there's a lot more optimism for this year with respect to exports and just coal volumes in general. Is this something that you're hearing from your clients or just macro view and maybe just a differentiated opinion? I wonder if you could put a little color around that. Sure. This is Ed. Thank you for the question. You know, if you look at the futures, they're all pointing in a downward direction for 2022 as it progresses and into 2023. The indices are already down a little bit from where they were in the Q4. Mix is gonna play a part, of course. You know, on the seaborne side, in particular for export, I think there's 20 million tons of new capacity that's coming online globally. While demand right now, I think is being held up by some supply issues, will it keep up with that additional production that's coming online? We're very guarded on that. Okay. All right. Just macro then. All right. I appreciate it. Thanks. Thank you. Our next question is from the line of Bascome Majors with Susquehanna. Please proceed with your question. Yeah, thanks for taking my questions. I mean, Alan, you've been at the railroad for 27 years. You've been in the marketing officer seat for 7. There's probably not a big customer you hadn't met with multiple times. So I know you're probably not gonna have the traditional kind of 100 days to start the CEO role in a couple of months here in May when you take over. Can you give us a little view on really what your near-term objectives are and what constituencies you wanna engage with when you do officially take the reins? Yeah. The near-term objectives are, improving service, continuing the phenomenal momentum that we've had with our efficiency. You know, when you provide a safe and efficient and reliable service product, you can grow. We've got this fantastic franchise that faces the fastest growing segments of the U.S. economy. We're positioned really well over the long term. You know, the folks that I've been spending the most time with right now have been our ops team, and it's the ops leadership and our craft employees out in the field. I'm really engaging in conversations with them. I'm listening and getting their feedback on how we continue to focus on efficiency improvements and restoring our service levels to where we all want it, because that's gonna be a big boost to our efficiency and our margins as well, as Mark noted. Thank you. Thank you. Our next question is from the line of Jeff Kauffman with Vertical Research. Please proceed with your question. Thank you for taking my question and congratulations, Jim, and congratulations, Alan, and the executive changes. Just two quick modeling questions. I'll cram it in the same one. Did I understand you right in that share repurchases going forward are more a function of leftover cash flow after dividends and free cash, and that you're not really looking to lever up to repurchase shares? The second part of that, just any guidance on tax rate for 2022? Yes, Jeff, that's exactly right. The share repurchase is a function of leftover cash. As earnings grow, you know, we're also growing our CapEx, but whatever money is left over being committed to our credit rating, whatever money is left over, we distribute to shareholders in the form of dividends, which we've increased, and share repurchase. That's that. Then with regard to the tax rate, you know, we typically guide to 23% to 24%, and it's just we're not anticipating a change to the corporate tax rate in 2022. That guidance is maintained. That's my 1.5. Thank you. Okay. Our next question is from the line of David Vernon with Bernstein. Please proceed with your question. Hey, good morning, guys. Jim, I'd love to get your perspective on a couple of regulatory issues. Obviously there's more discussions around the access debate and open access, hearings coming up in the next couple quarters here. How worried should investors be about this issue? Can you help kind of frame your perspective on what the proposed changes could mean from a business impact standpoint for Norfolk Southern? And then if you could also kind of comment a little bit around what the objectives are around the responsive application filed in CPKC. Like, what is the size of the opportunity that you're seeing there from looking for more access over the Meridian and potentially more of the KCS? Thanks. Let me tell you what, David, let me take the first part of that, regarding the STB proceedings in flight, and then I'll ask Alan to address the CPKC matter. With respect to the STB proceedings, we've made known to the STB that we oppose reciprocal switching and forced access. I personally was in front of the then sitting commissioners late last year and made the case with our team based on the potential for operational disruption, supply chains in flux, the outdated nature of the evidence and the record, much of it years old and we think stale. We made our case, and we will continue to do so as these proceedings unfold. Alan, talk a little bit about CPKC. Yeah. You know, the STB provides us a forum to protect our customers' and our shareholders' interests. We've had a very constructive dialogue and, you know, for us, it's really centered around the Meridian Speedway, which is part of the fastest route between the southeast and the southwest, which are the two fastest growing regions in the country. We're convinced that that is only gonna continue to grow, and we're gonna make sure that we protect our shareholders' and our customers' interests there. It's a big part of our plans moving forward. Thank you. At this time, this concludes the Q&A session, and I will now turn the call back over to Mr. James Squires for closing comments. Thank you, everyone. We look forward to talking with you again next quarter. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference, and you may now disconnect your lines and have a wonderful day.