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Annual Meeting of Shareholders 2020

May 14, 2020

NS' VIRTUAL-ONLY ANNUAL MEETING
ATLANTA, GEORGIA

Remarks by

James A. Squires
Chairman, President and CEO
Norfolk Southern Corporation

In recent months, the challenges of COVID-19 have been at the forefront of all our minds. We at Norfolk Southern have certainly felt the effects. Through this unprecedented crisis, our story is one of commitment and resilience. I’m pleased to share it with you today.

It begins with our remarkable people.

Ensuring every Norfolk Southern employee goes home safe every night is a responsibility we have always taken seriously. Now, COVID-19 has caused us all to see our responsibility to employee wellbeing in a new light. 

Well before COVID-19 evolved into a global pandemic, Norfolk Southern’s leadership team began moving. Our railroad took decisive, comprehensive measures based on CDC guidelines to put employee health and safety first. We acted quickly to equip every member of the NS team with the information and resources needed to safely and effectively do the job.

We transitioned office employees to remote work environments where possible. For those on the front lines of operations, we implemented social distancing and established rigorous cleaning protocols for their work environments. 

As they always do in a crisis, our employees responded heroically.

Our railroaders and dispatchers in network operations never wavered. They adapted to difficult circumstances and have our trains running as fast as ever. 

Within our Sourcing, Operations, and Safety and Environmental departments, employees ensure we have the supplies to protect our people. Sometimes, that has meant finding creative solutions. As shortages of hand sanitizer swept the country, our employees partnered with enterprising local distilleries to obtain more, and painstakingly transferred that sanitizer into individual bottles for distribution.

IT employees are working tirelessly to enable many groups, including our Customer Service specialists, to work efficiently from the safety of their homes. The transition was so seamless that customers asked our specialists if they would be working remotely in the future – unaware they already were.

Our HR team and Chief Medical Officer are functioning as an in-house public health department, providing guidance to employees and supervisors on how to respond to COVID-related health issues. When notified that an employee has been diagnosed with COVID-19, they immediately initiate a contact tracing investigation to determine whether any other employees may be at risk.

The entire Norfolk Southern team has rallied around our customers. They are counting on us to be reliable and responsive to their changing needs, and we’re delivering with the best service product in the history of our company. 

We’re keeping the steel wheels moving as we play our part to keep the shelves stocked and the lights on.

I couldn’t be prouder of the entire Norfolk Southern team – and I’m confident in our ability to weather the challenging months ahead.

The final weeks of this year’s first quarter saw a significant decline in traffic volumes. We expect that trend to continue. In addition to the economic disruption caused by the pandemic, energy price volatility has also impacted our business.

None of us can predict the severity or duration of this economic downturn, so we are focused on the factors within our control. By continuing to execute our strategic plan and provide superior service to our customers, we will move through this period successfully and be ready to capture opportunities as the economy recovers. 

My confidence comes from our strong management team, our extensive preparation and the commitment of our remarkable employees.

In 2019, as part of our initiative to Reimagine Possible, we began transforming our company to be more efficient and nimble.

We built upon our brand of precision scheduled railroading with the rollout of TOP21 – a new operating plan that overhauls the way we move trains across our network. We’re now running fewer, heavier trains, reducing car handlings, and increasing overall efficiency and network velocity.

We are continuously improving our plan and are delivering its benefits in 18 months instead of the anticipated three years.

As a result of our transformation, we’ve set records for metrics such as train speed, terminal dwell, and shipment consistency. We’ve decongested our yards and road network, allowing cars to turn quicker in the terminals and trains to move faster on the network. Our success enabled us to dispose of 703 locomotives that are no longer needed because our network is more efficient – a strong sign that our strategic plan is working.

After adjusting for a one-time charge in the first quarter related to those unneeded locomotives, we made further improvements to our operating ratio, despite an 11 percent decline in volume during the quarter. Looking ahead, we remain committed to achieving a 60 percent operating ratio as quickly as possible, and we will have powerful operating leverage when growth resumes.

Norfolk Southern has a history of successfully managing through business cycles and challenging economic environments. We’ve weathered world wars, depressions, health crises, and more, because we run a stable, resilient business.

We have a solid balance sheet and access to ample liquidity. We’ve taken proactive measures to reduce our capital expenditures to the lowest level since 2010, while promoting safety and future growth opportunities.

We will get through the challenges ahead and emerge as an even stronger company. We’ll continue to manage our assets well and control our costs.  Our emphasis on superior service will continue to drive our long-term growth strategy. And through it all, our Norfolk Southern employees will continue to get the job done safely, with excellence and pride.

Thank you for your participation in today’s meeting and thank you for your investment in Norfolk Southern.

Forward-looking statements

These annual meeting remarks contain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or future performance of Norfolk Southern Corporation’s (NYSE: NSC) (“Norfolk Southern,” “NS” or the “Company”), including but not limited to statements regarding future financial performance and anticipated results, benefits, and targets related to the strategic plan. In some cases, these forward-looking statements may be identified by the use of words like “will,” “believe,” “expect,” “targets,” “anticipate,” “estimate,” “plan,” “consider,” “project,” and similar references to the future. The Company has based these forward-looking statements on management’s current expectations, assumptions, estimates, beliefs, and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control, including but not limited to: general North American and global economic conditions; changes in energy prices and fuel markets; uncertainty surrounding timing and volumes of commodities being shipped; changes in laws and regulations; uncertainties of claims and lawsuits; labor disputes; transportation of dangerous goods; effects of changes in capital market conditions; and severe weather. These and other important factors, including those discussed under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (the “SEC”), as well as the Company’s subsequent filings with the SEC, may cause actual results, benefits, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. Please refer to these SEC filings for a full discussion of those risks and uncertainties we view as most important.

Forward-looking statements are not, and should not be relied upon as, a guarantee of future events or performance, nor will they necessarily prove to be accurate indications of the times at or by which any such events or performance will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, the occurrence of certain events or otherwise, unless otherwise required by applicable securities law.