Financial Data and Key Metrics Changes - Revenue for Q3 2025 increased by 2% year-over-year, but was below expectations by approximately $75 million due to macro headwinds and competitor responses to the merger announcement [20][14] - The operating ratio for the quarter was reported at 63.3, reflecting a 10-basis point improvement year-over-year [19][24] - Earnings per share for the quarter were $3.30, indicating a solid bottom-line performance despite revenue challenges [19] Business Line Data and Key Metrics Changes - Merchandise volume grew by 6% year-over-year, driven by strong performance in auto, chemical, metals, and construction markets [14] - Intermodal volumes decreased by 2%, impacted by trade uncertainties and competitor reactions to the merger announcement [15] - Coal revenue per unit (RPU) decreased by 7% due to weakening seaborne coal prices, marking a significant revenue headwind [15] Market Data and Key Metrics Changes - The overall volume for Q3 finished flat despite a 4% increase in gross ton miles (GTM) [14] - The company anticipates softer import demand in intermodal markets due to tariff volatility and oversupplied truck capacity [16] - Utility demand is expected to remain strong, supporting coal markets, but export coal markets face significant uncertainty [17] Company Strategy and Development Direction - The company is focused on maintaining safety and service while preparing for growth, particularly in light of the proposed merger with Union Pacific [7][24] - Norfolk Southern is committed to enhancing productivity and efficiency, raising its cumulative efficiency target to approximately $600 million by 2026 [10][24] - The company is investing in technology and operational analytics to improve inspection and reliability across its network [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic environment and the challenges posed by competitor reactions to the merger [23] - The company remains optimistic about its long-term growth potential, particularly with the upcoming merger and ongoing investments in infrastructure [24] - Management emphasized the importance of maintaining strong safety performance and service quality as top priorities [84] Other Important Information - The company recorded a significant land sale at the end of the quarter, contributing positively to financial results [20] - Claims expenses were elevated due to unfavorable developments from previous years, despite improvements in safety metrics [21] Q&A Session Summary Question: Impact of merger-related business losses - Management indicated that the impact is primarily confined to intermodal and is expected to persist until the merger closes, with efforts underway to retain customers [27][28] Question: Cost structure management in a challenging environment - Management highlighted the importance of maintaining productivity and efficiency while being cautious about cost control, especially in light of potential share loss [35][36] Question: Coal RPU pressure and future expectations - Management clarified that while coal RPU is expected to remain under pressure year-over-year, it may stabilize on a sequential basis [44][46] Question: Competitive responses and customer retention - Management expressed confidence in retaining business with key customers due to the strength of their intermodal network and service offerings [52][56] Question: Revenue erosion and volume loss risks - Management acknowledged the risk of further volume loss but emphasized ongoing efforts to market and retain business [96]