Today. You know, we run a scheduled railroad. We gotta get back on schedule here. There you go. Today, I'm gonna make some forward-looking statements, which are certainly subject to risks and uncertainties. Scott, I would invite your guests and your audience to take a look at our SEC filings, take a look at our website, and take a look at our presentation for greater detail on our risk factors. Let me just start briefly with East Palestine. I was there last week. As you know, I've been there almost every week since. I was there in the immediate aftermath. I go back, and two functions, right? I wanna listen to the community, find out what we can do well, what we can do to support them, and also monitor our work and our progress. I'm really pleased with the progress that we're making. We're making a tremendous effort and move on the environmental remediation. We've moved off over 46,000 tons of soil. We've moved off over 18 million gallons of water. We're investing in the community. We've committed over $35 million so far, in community assistance and investing in the community to help it thrive. That's just a start. I can tell you that the tone and the feel in the community has changed dramatically within the last 100 days, and that's a result of Norfolk Southern's response. You know, we said we were gonna do the right thing here, and we said we're gonna be focused on the long term. We've made promises, and we've kept our promises. We've got more work to do, we approach this in much the same way that we approach our long-term vision for Norfolk Southern. Focused on the long term, focused on a response that five years from now, 10 years from now, is gonna make the folks in East Palestine and Norfolk Southern, and frankly, the industry proud of our response. You know, we are a safe railroad. Last year, the number of derailments on Norfolk Southern was the lowest in two decades, we can do better. Last year, the employee injury rate on Norfolk Southern was amongst the industry's lowest and the lowest in one decade, and we can do better. What you've seen from Norfolk Southern is an internal focus. As soon as we got the preliminary results of the NTSB investigation, which said the NS train crew did everything they were supposed to do, there were no track defects, and the wayside detectors were working. We announced a Six-Point Safety Plan. You also seeing us lean forward on an external view as well because, you know, the NTSB is focused on a rail car that no railroad owns and that touched three railroads before it got to us. I've been on the Hill having really constructive dialogue with senators and congressmen and women on rail safety legislation. I can tell you, in the Vance-Brown bill and in the Johnson-Sykes bill, there are a lot of things that make a lot of sense. You've seen me kinda step forward ahead of much of the rest of the industry and say, "We're willing to support a lot of this stuff." I can tell you know, what's in those bills right now would not be too overly burdensome for the rail industry or our customers. I think it's our response at East Palestine and the feedback that we've gotten from the community there reconfirms my commitment to that unique strategic plan that Norfolk Southern laid out last December in our investor day. You know, we talked about a operation, a customer-centric, operations-driven service model with a balance between service, productivity, and growth. No longer just a near-term over-focus on operating margins, but more of a longer-term focus on top-tier revenue growth, top-tier earnings, EPS growth, on industry competitive margins, and a disciplined capital deployment. We think that's the best thing for Norfolk Southern, and so we charted a new course in the industry. We've got a unique franchise that allows us to really lean forward into this because of the strength of our intermodal franchise, because we serve 60% of the consumption in the U.S. economy, you know, because we serve more than 50% of the U.S. light vehicle production. I've got confidence in our franchise, I got confidence in our customers, and I got confidence in our team, and that allows us to take a longer-term approach. That longer-term approach is emblematic of what we did in East Palestine. It's working. We've got proof points on our strategy as well. We were running really well late last year and in January of this year, and we were delivering really good results. We did have some. We have had some service issues as of recent. It's because of two very consequential decisions that I made to pull up the tracks at East Palestine and remove the soil and recognize that's our mainline corridor between Chicago and Eastern PA and New York, New Jersey. We went from a double main to a single main running at restricted speed. After the Springfield, Ohio derailment in early March, I talked to our operations team. I said, "We need to get really conservative on our train makeup rules and re-engineer every train over every line segment to make sure that we're running appropriately." We've done that. When we pulled back, it created a lot of congestion on our line as cars built up because we were running much smaller trains. We're now working off of that congestion. You can see that in the cars online on Norfolk Southern. We're chewing through that backlog of freight. As a result, terminal dwell is improving, and as a result, train speed is improving. I'm really confident in our trajectory, and I'm encouraged about where we're going. I can tell you that the new train makeup rules will actually enhance our productivity because it increases our use of distributed power. It's actually gonna help our cost structure in the long run, it'll help our service, and it'll help our capacity. As a result, guess what? When you got a better service product and you're a service organization, you got more demand for your product. As our service product is improving, our volumes are improving as well. Now, certainly there's, I'm sure we'll get an opportunity to talk about it. There's a lot of uncertainties out there. I'm pleased to see that the volume metrics are moving in line with what you're seeing on a weekly basis with respect to the improvements in the service metrics. Awesome. Thank you, Alan. I'll start with some questions, but we got, It's great to see a packed room here. As people have questions, raise your hand, we'll get you involved. Let's start on East Palestine. When do you expect all of the track remediation work to be done and reopen the double track? When does that happen? We're working with the Ohio EPA and the US EPA on that, and they continue to do testing. We had originally thought that we're gonna have it all back in early June. Now it looks like early July is gonna be the date. That will come with some additional cost. I think it's also important to note that, you know, the bigger issue for us on enhancing service is working off of that backlog of cars online, which is what we're doing right now, and you're seeing those gains. I guess, do you feel like you've? You showed the slide, we're starting to see some improvement in the service metrics. Have we seen enough that service metrics have sort of definitively bottomed at this point? Yeah. I'm very confident in the trajectory that we have. you know, I'm never gonna give you an absolute, but I can tell you that we're on the path forward to getting service back in the third quarter. Once we get to July, do you think we see sort of a step function in service metrics that we look at every week? I'm not sure that we'll see a step function. What I think we're gonna see is continual improvement. Now, it's not necessarily linear week to week, but as you've seen over the last since last couple of weeks, basically since early April, we'll continue to make improvements as we work off that backlog. I would invite you, Scott, and the audience to really pay attention to the cars online on Norfolk Southern. Once we chew through that congestion on the network, it's really gonna enhance our fluidity, enhance our ability to spin our assets, and enhance our ability to pick up more business, particularly in the merchandise network. If I look back before the derailment, right, early in 1Q, your service metrics were really good. I guess, how quickly can we get back to that, ultimately, is what we're trying to understand. You know, you talked about maybe some smaller trains, maybe, I think you used the word conservative with train makeup. Do we need to add a lot of people ultimately to get back to the service we had in January? Do we have the resources and do we take the January resources, we get through the track work, and we sort of get back to where we were in January? Does that make sense? Yeah, it does. Let's start with service. We've got a good service product in intermodal. We really do. The train makeup rules really impacted our merchandise network. Our service product in intermodal is not where I want it. It needs to get better. We've got a good product right now, and we're delivering that for our channel partners. I think you're gonna have the opportunity to talk to our Hub Group and J.B. Hunt. It's in the merchandise network. We've got to speed that up. We've got the resources. You know, for me, service is about leadership, resources, and plan. My first year as CEO, it's only been a year, you know, we've overhauled the entire operations leadership at Norfolk Southern with a focus on safety and service. We put in the new plan, TOP|SPG, a balance between service, productivity, and growth. We've got resources. We're gonna continue to hire for resiliency in a couple of areas on our network. As we communicated last December, you know, we needed to build resiliency this year into our network. I think that what we're gonna see is gains in the merchandise network, some slight improvement in intermodal, and I think in the third quarter, we're gonna be back to where we were in January. That, that's the proof point for our new strategy, is our January results were really good. Is your expectation as the service improves, the volumes come with it? Are we in this freight recession and service can get better, but the volumes don't necessarily come with it? Yeah, there's like a lot of murkiness out there. I'll tell you, I think that in the intermodal network, we're running really well and we're handling everything that's out there. I think there is some potential that the inventory destocking has ceased. We'll see, right? I'm not ready to call that. Certainly, there's a lot of uncertainty with respect to the consumer in the second half of the year, right? You know, we'll see where that goes. Right now, we could absolutely handle more business in our merchandise network as our velocity improves. I think you would see that. We will see that in automotive, and we'll see that in metals as well. It's kind of a two-part. We've got a good service product in intermodal. We're handling everything that's out there. Merchandise, as we continue to improve, you're gonna continue to see improvements in our merchandise volumes. I understand. Intermodal, the volumes are being constrained by demand right now, whereas merchandise, there's more demand than you're handling. Merchandise volumes are being constrained by service. Right. As service gets better, merchandise is where you'd expect to see. Right The volume improvement. We've got a good product in our intermodal franchise. In fact, we started taking, and we continue taking, share from truck in the international markets in intermodal. Okay. Overall volume's down about 7% quarter to date. How is that just relative to what you were planning for? What segment's doing better? What's doing worse than what you thought? A s we talked about, I think that, we've got opportunity for enhancements in our volumes, particularly in the merchandise network and specifically in automotive and in metals. Just one just quick follow-up on East Palestine. On the Q1 call, you talked about $387 million of sort of one-time cost. Should we expect that sort of each quarter as we go on, there'll be some insurance recoveries that come in and that $387 just trends lower throughout over the next quarters, years? Is that basically how to think about it? One thing is certain is that number's certain to change, right? That was our best estimate at the time. You know, we've announced three funds that we're working with the attorneys general from Ohio and Pennsylvania to handle long-term water monitoring, long-term healthcare, and property valuation. That will change that number. You're also gonna see that number change as insurance claims come in, and certainly that does not include any third-party recoveries either. Recall that in the first quarter we noted that the cash outlay so far is $55 million, so we haven't even hit the floor of our two insurance tiers. There will be a timing differential between when we recognize the estimate and when we start to get the cash from the insurance companies and any third-party recoveries. I'm guessing there have been costs, not remediation costs, but just you've had challenging service, you've had weak volumes. Like, I'm sure there's been some, you know, what you wouldn't call one-time costs, but there have been costs. Is there any way to just quantify how much of that we saw in Q1? I'm guessing Q2 will be even worse 'cause it's a full quarter of it. Q1 was just half a quarter of it, right? Yeah. You know, when you're not running well and you're not providing a good service product, that has consequences. It has consequences on the top line, and it has consequences in the expenses. We've talked in the past about, you know, a good run rate of service recovery costs of, say, $40 million a quarter, right? There's a lot of incentive to run a good railroad, which is why we announced this new plan where we're gonna be resilient and provide good service over time. Right, I mean, I think you've been pretty clear, sounds like Q2 is gonna be tough, right? Yeah. Go ahead. It will, right. Let me get to that. Right. Thank you for bringing that back up. Yeah, you know, we had an awesome January. Right. You know, we exceeded our expectations on the top line and on our margins because our service product was so good and we were outperforming normal seasonality on our volumes. Obviously we had two tough months in the first quarter. We'll have three tough months in the second quarter. We're not taking our eye off the ball on getting service back in the third quarter and taking advantage of the unique growth opportunities on our franchise. Just so we can sort of help set some expectations, like, do you think you did a 65 sort of underlying adjusted OR in Q1? Do you think Can we see any improvement from that from Q1 to Q2 as seasonality would suggest? Given everything going on it, maybe it takes a step back. I don't. Any, any directional color you wanna give us? As you know, we don't give quarterly OR guidance, although I understand why you're asking. Yep. I think going from two tough months to three tough months would indicate kind of where that's headed. Your view would be that second quarter from a service volume, and I'm guessing an OR earnings standpoint, second quarter is the trough and we start to recover from there. I will tell you that second quarter will be the trough for service. What happens with volume and all those other financial metrics is gonna be impacted by the macro. Okay. Yep. Maybe there are a lot of I want to think about the yield environment a little bit. There's a lot of puts and takes. We've got fuel, we've got met coal prices, we've got base pricing and mix. There's just a lot of puts and takes. How should we think about yields, revenue per carload in second quarter, either year-over-year, sequentially? How should we think about that? Yeah. Scott, you and I have been talking about the importance of price for what? About eight years. Right. Right. Back in my previous role. We get it, and we're really focused on pricing to the value of our pro-product over the long term, and you've seen us demonstrate that ability. I think as you talk about year-over-year comps and where we are now, you know, we're gonna be unwinding some fuel, higher fuel surcharge revenue. We're gonna unwind accessorial charges. That's gonna be some headwinds. Export coal prices are lower than they were this time last year. That's a headwind. We're seeing, I'd say negative mix within the intermodal franchise as we're actually picking up share from truck and international, which as you know, is lower rated than domestic. We're getting really good pricing, particularly in our merchandise and particularly in our coal markets, which will help to offset some of that. Okay. Got good price, sounds like most of everything else is a headwind to yield right now. Yes. Okay. When I think about underlying pricing, it feels like you guys, as an industry, maybe underpriced versus your own inflation last year. We got surprised middle of last year with inflation. From my point of view, maybe there's some potential catch-up from a pricing standpoint. We've obviously got truck rates coming under pressure, there's, you know, there's puts and takes. Can pricing accelerate from what we're seeing right now? Or is it, "Hey, truck market's here, it's bound to start to decelerate some." Has anything but underlying price from here? Lot of cross currents. As we talked about, I think we're getting better price in the merchandise network than we thought we were gonna do entering into the year. As our service continues to improve, I'm very confident that our team is gonna deliver on that. Looking at you, Ed. You know, we gotta understand what the market is in the truck market, and certainly the export coal indices are gonna have an impact on price as well. What's the sensitivity? What sensitivity can you give us on those export met prices now in the sort of lower $200s? How much of a and if we take this met price and hold it, how much of a revenue headwind should that be? Yeah, I think this time last year you know, right now the export met is probably right around $245, $240. This time last year it was maybe double that, right? There is a headwind. You're also probably gonna see some positive mix within coal. You know, recognize that there really is very little demand right now for domestic utility volumes. As additional metallurgical production comes online, I think we're looking at additional 5.4 million tons of metallurgical production in the United States this year. That's gotta go somewhere. The domestic steel market will soak up some of that. You'll see a lot more going export, which means we'll probably handle a lot of that. That will be some positive mix, although in an environment where the underlying price for that commodity is going down. Just based on the met price, should coal ARPU takes, I'm guessing, somewhat of a step down from Q1 to Q2, and then maybe one more step down from Q2 to Q3. Is that a fair expectation? Yeah. I think ultimately it's gonna be dependent upon mix within there. Certainly the underlying price in individual segments is kind of following that trajectory. How about on like the intermodal storage piece? It's a little bit tougher to see it for you guys. You embed it within intermodal. CSX has talked about a $300 million headwind for the year. Is that a ballpark fair expectation for the headwind for you guys? Yeah, probably order of magnitude, maybe a little bit lower for us. Less of a headwind. Yeah. A little less of a headwind. Okay. Okay. Again, we've got some challenges right now. Service is gonna start getting better. It is We think volumes are at some point, volumes are gonna get better. They are. Historically, when volumes get better in railroading, service then gets worse. How do we do it differently this time around where as volume gets better, we can sustain better service, which I think is ultimately what you and all the rails are trying to get to, how do we actually accomplish that? How do we get there? Well, I saw you in December. Right At our Investor Day, We charted a new course in the industry, right? It works for Norfolk Southern because of the unique strengths of our franchise. What we talked about is being resilient and thinking about the long term, and investing in that, right? If you think because of our powerful intermodal franchise, because of our automotive franchise, because of the onshoring in the Southeast and in the Midwest, because of the sustainability advantage of rail versus truck, because of the desire for forward positioning of inventory next to the consumer, which is the market that we serve. If you believe that, then you know that we're gonna be a growth franchise. You invest in that. What I think about is instead of trying to time each individual market swing, just know that based on the strength of our customers in the U.S. economy, we're gonna grow over time. Think about the strategic assets that we're gonna need 3, 4, 5 years from now, and that includes track, and locomotives, and intermodal terminals, and freight cars that help us compete with truck, and technology, and crews, right? Invest in that through the cycle. Because as you've talked of our channel partners, as they talk about, it's only a matter of when the economy recovers, and we wanna be positioned for that upswing. In the past, the rail industry hasn't been positioned for that upswing, and so we've provided our customers with a lousy service product every 3 to 4 years. No company is gonna grow when it provides its customers a lousy service product every three to four years. At the Analyst Day in December, you talked about, "Hey, we're gonna do it a little bit differently. Whenever we see a volume downturn, it may, you know, our decremental margins may be a little bit worse than what you've seen in the past. Fine. This focus, though, how should we think about, as volumes recover, should we think about incremental margins any differently? Is there less incremental margin as volumes recover given this new focus or not? It should be accretive. It, it should help, right? Because we Do you think incremental margins as we grow could be better than what we've seen in the past? Yeah. Because we will take on more business on our existing resource base than we would have otherwise, because we're gonna be coiled and ready for that growth. It sounds like, who knows this year, but your long-term plan, you're gonna grow volume. Yes. We're a railroad, we're gonna get price. Yes. If we have volume and price, are we gonna keep getting margin improvement? Yeah. We've talked about a industry competitive margin profile and generating top-tier revenue and EPS growth. I totally get, right, we have more of a balanced focus. We don't wanna just exclusively focus on OR. Maybe just walk us through the rationale though. You've taken OR completely out of sort of the long-term incentive comp. Maybe just some thoughts on that? Right. If you take a look at our incentive comp now, it's completely aligned with that unique vision that we've got to take the long-term best interests of our customers and our shareholders and our employees and the communities we serve. Let's start with there's a service component in there's a safety component in there, and there's a revenue top-line growth component, and there's an operating income component as well. Yeah, we've taken OR out, but by including revenue and operating income, there's an implicit margin in there as well. What you're saying is, if, whether or not we have it in long-term comp, we wanna have an industry competitive OR, so if the industry's here, we'll be there too. We'll be ballpark. Okay. Delivering top-tier revenue and earnings growth, and really focused on other financial measures like EPS and return on invested capital. Is this, given everything going on, is this an environment where you can be buying back stock? Are you Like, when do you restart buybacks? I'm guessing every time you go to D.C. they're telling you you can't buy back stock, what are you doing? Yeah, I think, you know, what we don't talk about is guide to share buybacks, and as you know, right, our priority is investing in the network dividends and then share repurchases. Also recognize that either later this year or early next year, we will intend to purchase the Cincinnati Southern Railway. That, in the preceding months, that will certainly have an impact on share repurchases relative to what you've historically expected from Norfolk Southern. How do you plan to fund that? Through cash flow. Okay. Is that acquisition earnings accretive, dilutive? How should we think about the impact of that deal? Here's how I think about the impact of that deal. That's a line that we've been operating on for, like, 140 years. It's zero risk for operational execution for us. What it does is it takes off the table any volatility associated with lease costs. Okay. Okay. I wanna think about the capital side for a second. We wanna start growing volume again. As we do that, right, does your spending this year give or take 16% of revenue on CapEx? If we can start to put up one, two, three years in a row of volume growth, right, really start growing the network, does CapEx have to start increasing? I mean, I'm guessing it'll grow with revenue. Does it have to start growing faster than revenue, where CapEx starts going back towards high teens, 20% of revenue? Do you feel like you've got capacity in the network where if you can grow volume and not have to increase the capital intensity? You know, one of the things that Mark George brought to us is a different way of thinking about our capital budget. It's not a percentage of revenue because, you know, our capital budget shouldn't fluctuate with fuel surcharge or storage services revenue, right? That doesn't make any sense to us. As, you know, as we think about our capital budget, 55%-65% is safety and resiliency, 35%-45% is, say, growth and productivity. I think the safety and resiliency. The growth in that is gonna be more aligned with underlying inflation for whatever component of it is that we're investing in. The growth and productivity is gonna be probably strong mid-single digits to accommodate the growth that we're talking about. Ultimately, I mean, the spirit of the question is: Do we feel like there's latent capacity in the network as we grow volume, or are we gonna have to start, if we get a year or 2 of volume growth, we're gonna have to start buying a lot of locos and investing a lot more in track? That's ultimately what we're talking about. Yeah. Right now there's latent capacity, right? Right now we're tracking along about 130,000 units. 2019 we were tracking at about 145,000, and 2018 155,000. We're gonna continue to invest in technology. We're gonna continue to invest in safety. We're gonna continue to invest in our intermodal terminals. Like I said, it's gonna be a lot more ratable and consistent over time. We're not gonna try and time the market. We're getting close on time. I just You've spent more time in D.C. than probably anybody. What are you expecting as it relates to this safety bill? You said there's some things we like, there's some things we don't like. I've got concerns about train length, train weight, two-person crew mandates. Do we think that stuff's gonna stay in the bill? Do you think that's gonna get taken out of the bill? Just probably have more insight than anybody. Yeah. As I noted, a lot of the things in that bill have been improved as it came out of markup, particularly as it relates to train length and train weight. We're engaged with the House as well. It's a different bill. We're having really constructive dialogue. It's important that we're up there and part of that process. You know, I don't wanna speak too soon on this thing, 'cause there's a lot of moving parts there, but it's in much better shape than it was, and a lot of the things in there I don't think will be burdensome to us or our customers. They make sense. What about two-person crew mandate? That's in the Senate bill. It's not in the House bill. All right. Thank you so much. That was great. Appreciate it, Al. Thank you.